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Management of change
CHAPTER 27
Management of change This chapter targets the behavioural issues in implementation, and aims to provide an introduction to change management and one view of change leadership. It gives practical guidance on applying the approach to change management discussed. It is not an objective of the chapter to provide a summary of every viable approach to change management and leadership.
In the previous chapter we looked at some of the behavioural issues in implementing plans, but concentrated mainly on the systems rather than the people. Change is going on all the time, and not always as the result of a predetermined strategy, which is why I have given a somewhat broader title to this chapter. However, the subject matter is critical to the successful implementation of strategic decisions. Figure 27.1 shows a typical change sequence. Something triggers off a need for change. It may be the result of a considered strategy, or of a reaction to something that happens outside of the business. Whatever it is, change is unlikely to happen until someone has recognised the trigger event. Since we live in the real world, it is worth stressing that the trigger event is often not a major change in circumstances but the arrival of a new chief executive whose perception is different from that of his or her predecessors. We saw this in the Lloyds Bank example in Chapter 12, where the trigger was not a new strategy but realisation that looking at issues in a different way would lead to innumerable new strategies. We saw it in Chapter 10, where one of the danger points in competitor analysis is when there is a change of top management. Empirically we see it in examples of major transformational change, such as British Petroleum, GE, and British Telecom. In each of these companies, change is associated with a particular chief executive, who recognised triggers that others might have missed. A trigger event can take place, but will only cause change if the need is seen. Thus many organisations miss the signals. Ansoff might well argue that companies which are managing in a style inappropriate to their level of environmental turbulence would probably miss the signals, or react in an inappropriate way (see Ansoff and McDonnell1 ). Chapter 3 discussed the idea of leadership and vision, and as we will see these are important ingredients in the management of change. In Figure 27.1 the
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Figure 27.1 Typical change sequence
reminder is that unless the perceived need is translated into a new vision of what has to be done, change is unlikely to occur. The really hard work starts in the next box on the diagram, making it work. The future course of the company depends on how well each stage of this model is carried out. In the diagram, the thick line symbolises success and movement to a new and appropriate future. The dotted line implies that although much energy is expended, nothing much happens, and the company ends up in the same place from which it started. Not shown, but also possible is the end state being considerably worse than the present, either because the wrong strategy is implemented, or the right strategy is not implemented.
Different circumstances of change Before proceeding further, we should consider a variety of different change circumstances. My thinking here owes a considerable debt to Stace and Dunphy,2 who pointed out that there are both different types of change, and different change strategies that can be successful. Figure 27.2 uses some of their ideas. It draws attention to two fundamentally different types of change: incremental which moves in a series of small steps, some of which may be hardly noticeable, and transformational where the change may be vast and fundamental. This is related to the situation in the company, the degree of support for the change from the key players. Stace and Dunphy provide a spectrum of styles: 䊉 䊉 䊉 䊉
Collaborative Consultative Directive Coercive.
Box A shows incremental change where there is a high degree of support from the key people. The change may be known, as in a marketing plan which involves
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Figure 27.2 Types of change and the degree of support for change. Based on the ideas of Stace and Dunphy2
the launch of a new related product, or it may be unknown in the sense that the aims are clear, but empowered teams or individuals are determining the actions that are to be implemented, as in a continuous improvement process. Under the circumstances of box A, the most appropriate style is likely to be collaborative or consultative. This does not mean that leadership is unnecessary (see Chapter 3), but that there is likely to be minimal resistance to, and possibly even enthusiasm for, change. Because the gap between where the organisation is now and the next step is not too vast, there may be little fear of the effects of change. Continuous improvement and total quality management processes are an excellent example of collaborative incremental change in action. Teams are empowered, but coordinated, and ideally are drawn from across the organisation to avoid a ‘functional chimney’ view. The philosophy under which the teams work is shared, and there is continuous measurement of progress. Under this concept the amount of change attained may be very great, although each action is one step on a journey without end. The continuous improvement concept will only work when there is support through the organisation, widespread involvement at all levels, and adequate training of everyone who is touched by the process. It also requires much top management time. In box B there is an incremental change without the support of the key people. The assessment here is whether support can be gained in a reasonable time, in which case a consultative approach could be appropriate, or whether to use directive means which may involve making people take certain actions. A mix of both is possible. Directive methods do not necessarily imply that commitment by those involved is not achievable. Although attitudes to a large degree affect behaviour, and logic suggests that the right thing to do to build commitment is to change attitudes first, the evidence is that in many situations a change of behaviour can bring about a change in attitudes. In fact there are situations when behaviour is not in line with an attitude: for example a number of smokers may now hold an attitude that smoking is not a good thing, but they may still smoke.
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Box C moves to transformational change. Stace and Dunphy use the term charismatic change to describe this box. Support may be there because of the charisma of the person leading the change, and a willingness by all to accept that the vision painted of the new future is the right one, because of faith in the qualities of the leader, or it may be because the logic of the situation is apparent: the company faces insolvency unless urgent action is taken. Collaborative or consultative styles would be appropriate here, provided there is enough time to apply them. The greater the shared perception of urgency, the more likely are people to be willing to follow a directive style without this causing any negative effects. Transformational change which implies hard actions, like restructuring an entire business, closing down loss-making divisions, or expanding into a new geographical area is usually easier for people to relate to, even if they are numbered among the losers, than accompanying changes in culture. It is hard to see how culture can be related to the new vision, without some flexing of styles between directive and consultative. Scandinavian Airlines went through a major change of strategy and culture during the 1980s, moving from a system driven to an empowered, customer responsive organisation. Much of the change was achieved through communication and consultative methods. At times the style was much more directive, as for example when key managers were asked to leave and replaced by others with empathy for the change. Box D represents the toughest situation of all. The change may be massive, but is not supported by many people. Figure 27.3 pulls together two models which were described in Chapter 3. It is a reminder that whatever change is envisaged will always take place within an existing organisational context. This does not mean that the activity in the inner model will have to take the outer model as immutable. In reality, the need may be to change something in the outer ring. Thus culture change in order to achieve a strategic aim has been very much a part of management thinking through the 1990s. The labels in Figure 27.3 were defined in Chapter 3, so all that is needed now is to offer a few prompts to aid thinking at each step in the inner model. The points made below can be found in expanded form in Hussey.3 Envisioning Points to consider in formulating a vision Remember that vision in this context does not necessarily mean the vision for the whole organisation. Here, it is the picture of what the change will bring, and the benefits of it. It may be a total reshaping of an organisation, or it may be the management of an innovation, a new structure within one department, a re-laying out of the plant in a factory, or any other form of change which affects other people. 1 2 3 4
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Is the vision credible? Is it challenging? Does it have internal integrity? Is it clear?
Figure 27.3 Change leadership and the organization (derived from figures published in Hussey, D.E. Business Driven Human Resource Management, Wiley, Chichester, 1996)
Reward systems
5 How does the vision relate to the past, present, and future? 6 Do you, as the leader of the change, believe in the vision? Barriers to overcome Even when the vision looks sound, there may be barriers which prevent it from being an effective driver for change: 1 2 3 4 5
Does the vision meet most of the above criteria? Do day-to-day actions reinforce the vision? Does every aspect of your own behaviour reinforce the vision? Have the implications of the vision been thought through? Can the vision be converted to strategies and actions?
Activating Ways of activating the organisation 1 Demonstrate your own belief in the vision and feeling of excitement about it all the time. 2 Extend personal contact as far as possible through the organisation, to communicate your own sense of excitement, and to explain the vision. 3 Workshops of key people may be a valuable way of building commitment, and allowing them to participate in the process.
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4 Ensure that there are opportunities for two-way communication. 5 Supplement the personal messages with other media, such as the company newspaper, videos for internal use, personal letters to employees, e-mail, and voicemail. 6 Use the everyday meetings to emphasise the message. 7 Consider how external public relations might aid the communication process inside the organisation, and with the influencers outside, such as customers. 8 Seek out and use examples of success that reinforce the vision. 9 Select the members of the team that will work with you with considerable care, and do not be afraid to take tough decisions to sideline or remove people who you fear might obstruct the change (but do this in a dignified and humane way). 10 Audit the nature and content of internal training, to ensure that the key changes are reflected in the courses, and that appropriate skills are provided where appropriate for those who are affected by the changes. Barriers to overcome 1 Resistance to the change, in individuals, departments, or the entire organisation 2 Lack of change management skill in the leader 3 Unwillingness to take tough decisions about individual people whose behaviour is frustrating the change. Supporting Ways of giving support to people 1 Express confidence in subordinates and peers involved in the change. 2 Provide coaching to help them overcome difficulties. 3 Ensure that key people are properly empowered to play their part in the change process. 4 Be empathetic to their situations, and take account of them during the change process, but without deviating from the main thrust of the change. 5 Use praise and thanks as a positive way to enhance motivation. Barriers to overcome 1 Lack of time to manage the change effectively 2 Lack of consistency in the behaviour in change management compared to day to day management. Installing Points to consider to Consider 1 Develop a plan for the change. 2 Ensure that this is carefully related to the organisational context (the outside model in Figure 27.3). 3 Consider contingencies: what might the effect be if things do not turn out as expected, and what should be done about it? 4 Ensure that ambition does not outstrip capability.
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5 Do not underestimate the time that is needed to implement a major change. 6 Make sure that the plan for the change covers descriptions of the actions being taken, and provides a large enough budget to achieve the task. 7 Make it clear what actions are to be undertaken, and who is to take them. 8 Set time limits and short-term goals, to enable monitoring systems to be set up. 9 Think through the interface between the change project budget, and the normal process of budgetary control. 10 Responsibility for the success of the various elements of the change project must be clearly delegated. 11 Ensure that there is adequate project management, particularly with extensive or complex projects. 12 Use appropriate techniques such as Gantt charts and network analysis. Pitfalls to avoid 1 Failure to think through all the consequences of the change, so that unexpected issues keep arising 2 Underestimating the time and resources that complex change requires 3 Planning only the first step of a change and assuming that the rest will follow (for example, assuming that an acquisition plan is implemented when ownership is transferred, but before the objectives of the acquisition have been secured).
Ensuring Factors to consider 1 Are all the controls and incentives driving the organisation in the same direction? 2 Are you satisfied that there is congruence between the personal aims of the key people in the change process and the organisational goals? 3 How far can self-control be used as a driving force in this change? 4 Try to exercise the controls in a way that increases the degree to which the vision of and strategies for the change are shared by all the players. 5 As far as possible use the control process for the change as a learning opportunity, and as a way of overcoming new challenges that emerge as the change is managed. 6 There are two facets which require regular, timely flows of information: did we do the things we said we would at the right time; did the outcome of those actions achieve our expectations? 7 Ensure that the right information flows are set up to monitor all the critical elements of the change. 8 Ensure that the control system does more than pass information along: be willing to replan the change activity when things are not working out as expected. 9 Bring all the control information for the whole process together regularly, so that the person with overall responsibility for managing the change is not taken by surprise.
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10 Pay particular attention to those tasks which will delay the whole project if they are not performed to time. 11 Do not assume that the normal control processes of the organisation will be adequate to monitor the change, and be willing to supplement them. 12 Accept that things will go wrong, and that quick response is therefore vital. 13 Understand that some expense may have to be incurred to monitor and control the project. Recognition Factors to consider 1 Ensure that you give constant recognition for the part others play as the change process moves forward. 2 Use all opportunities to reinforce the behaviour you want from others, by making them feel that what they are doing is important, and has been noticed. 3 Keep any negative comments you might have about a person for private one to one meeting, but take opportunities to acknowledge achievements in public. 4 Make sure that your superiors are aware of outstanding performance by others, and that your team knows that you are not taking all the credit for efforts they have shared. 5 Do not indulge in empty praise, and insincere comments. 6 Have regular reviews of personal performance of people who are reporting to you during the change process, so that you both have the opportunity to develop relationships and avoid surprises. There are, of course, strong arguments for managing change in a way that gains the support of the people in the organisation. However, it is not the only model, and again I am grateful to Stace and Dunphy2 for drawing attention to the coercive approach, where change is steamrollered through by the top person and anyone who does not go along with it is, in a manner of speaking, squashed flat. One example is the way Rupert Murdoch changed the way his newspapers were produced, in the teeth of ferocious opposition by the print unions. The change was imposed, and everything that needed to be done to drive the change through was done. It did not matter if at the end there was a complete change of employees, as the ultimate vision of a cost-effective production process was all that mattered. The power of the unions over the manning levels and methods of production was broken for ever, and few would argue that the industry as a whole is not better for it. But there is no doubt that the methods used were totally coercive. Lewis4 provides a detailed research study of coercive transformation in an Australian college, where change was achieved through ‘short sharp bursts of activity, that is by discontinuous change’. The model mirrored the freeze– unfreeze–freeze approach of Lewin5 and although attempts were made to supplement the coercive change strategy with other methods, these failed because of luck of trust. All the new objectives were achieved and sustained over a lengthy period, and the change was achieved quickly at each unfreezing stage.
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The downside was a long-term situation of demoralised staff, with a gulf of trust and understanding between academic staff and management. A steam roller approach fits the personal style of some managers, and is therefore something that they may feel comfortable with. However if we are trying to make a rational choice of the appropriate method to achieve change, we should exclude this factor (a preference does not necessarily mean that the approach is appropriate) and consider when transformational change might best be achieved by draconian means. I suggest the following circumstances for consideration: 1 When the change has to be completed at maximum speed and there is no realistic alternative 2 When consensus is impossible under any circumstances, which was probably the case in the Murdoch newspaper example 3 When the price that has to be paid in employee motivation, resignations, loss of trust, and complete lack of shared vision and commitment is seen as less important than a fast result, or of little importance at all.
Some examples of transformational change Most major transformational change will follow a mix of styles, and in some way following the thinking if not the letter of the leadership model. It is about creating, defining and building commitment to a new vision, and supporting this with the management effort that enables it to work. The two examples that will be mentioned are of British Telecom and British Petroleum, and in both cases the information has been drawn from published sources.
British Telecom The vision of British Telecom is to become the most successful worldwide telecommunications group. The trigger for changes was a mix of external pressures and internal constraints which by 1990 had reached a point where the chief executive felt that action had to be taken. External pressures included the pace of technological change, with a 30 per cent per annum fall in the costs of telecommunications as new technologies became available. The complexity of the telecommunications industry had increased, to the point when it was difficult to see the joins with other industries, such as computers. The degree of turbulence in the environment had increased dramatically. Internally there was a mismatch of the organisation and its old public utility culture with the vision and the external world. Managers’ perceptions were not always appropriate, and the culture was introspective and controlling, rather than outward-looking and proactive. The desired change included a need to alter the culture of the organisation. Before the change strategy was implemented the culture was prescriptive, with
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individuals being expected to conform to requirements. The desired change was to a culture that enabled individuals to excel, with the company providing the support that made this possible. At the same time there was a need to reduce the number of jobs and, partly to reduce costs and partly to enable the organisation to be more customer responsive, this included a new structure which would remove nine layers of management. On 26 March 1990 the chairman addressed the top 300 managers. They were told that the organisation would change over the next 12 months, and that all 36 000 managers would take on new jobs. They were informed that there would be fewer jobs, and that the new organisation would be in place by 1 April 1991. One purpose of the change arose from a TQM initiative which had begun in 1985, which was to gain more customer focus by using culture change that included values that addressed the customer. A team was set up to implement the changes. After 4 months organisational design had become an industry in its own right. Many of those involved in this new ‘industry’ were demonstrating the behaviours that the new design was intended to remove, such as the withholding of information, arbitrary decision making and a growth in bureaucracy. This led to a measure of cynicism in the organisation. A survey was made which showed that actions were at odds with the vision, help was needed if managers were to behave differently, the whole process had made people more inward-looking, and individuals were seeking sustained and continuous leadership from the board. One result of this survey was the introduction of a two-and-a-half day leadership programme. By 1 April 1991, 600 managers had been through the programme, with a heavy involvement of the chairman. The balance of managers had seen a video presentation, with a board member present to answer questions. By March 1992 there was a widespread recognition that the business was more turbulent, that most senior managers had been operating operationally rather than strategically, and a level of awareness had been developed among many people to enable them to participate in translating the group strategy to action. Much of this change process was highly visible, because of the high profile of the company. The need for communication and effort to build shared values is clear from what happened, as is the need to train people to enable them to play the right part in the changed situation. Also clear is the length of time needed to change values in a long-established organisation.
British Petroleum It is not possible to have a higher profile in a change process than to invite a journalist to sit in and write about the board meetings where the change strategy is decided. This is what BP did, with decisions being taken over several meetings in the presence of a Financial Times journalist. BPs change strategy was the result of a very detailed analysis involving many people. In July 1989, the chairman designate, Robert Horton, commissioned ‘Project 1990’, a major internal study which had the aim of showing
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how to reduce complexity in the organisation, to redesign the head office organisation, and to reposition the company in approach and style for the 1990s. The project team consulted widely inside and outside of BP, undertaking over 500 interviews and processing some 4000 questionnaires. The implementation of the culture change began in 1990, when Horton was appointed chairman. Its objective was to achieve the BP vision through the people, within a simple, supportive organisation. The process followed a number of principles: 1 The need for change was analysed in a way that took information from many people, as described above. 2 Considerable effort was given to inspiring enthusiasm for change, involving communication of various types, and including explanations of the need for change. 3 The emphasis was on building an organisation for the future, and the structure chosen was unusual enough to be exciting. 4 Top management drove the change process, and provided adequate resources for implementation. 5 There was widespread involvement of everyone in the change process, including a major educational initiative. 6 Processes were developed to support the change, including the identification of the competencies needed for employees working under the new culture. 7 There was continuous review of the change process. Of course things did not always go smoothly, and a major problem was an increase in environmental turbulence at the time the change process started. The UK moved into recession in 1990, and the oil industry worldwide found oil prices declining. This meant that certain strategies for disposing of noncore businesses became more urgent, and more costs had to be taken out of the company. This meant that in addition to the planned changes leading to a smaller head office and more putting out of work to third parties, there were other factors which meant that many people had to leave the company. Change was thus implemented against a background of budgetary pressure, terminations and early retirements. Part-way through the process the chief executive left the company. However, the strength of the change process was that culture has changed in the direction desired, despite all the additional complications and individual uncertainties.
Change and people One popular myth is that people resist change. Like all myths, there are some elements of truth in the statement, but we could also argue that many people welcome change. The fact is that our daily lives take place in an environment
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where change of one sort or another is a normal state. What may make people react adversely to change is: 1 2 3 4 5
Lack of understanding of the need for change Belief that the change proposed is not appropriate Failure to appreciate the urgency behind a planned change Concern that the change will have an adverse personal impact Failure to appreciate the many small actions needed to implement a major change.
The leadership model discussed earlier deals with how to overcome some of these problems. There is an additional concept which may help to explain why people sometimes appear to resist change, even though they may agree with its objectives. This is the concept of the psychological contract, the unwritten part of the relationship between employer and employee. It embraces the expectations of both parties, and because it is internal to the parties, and could never be made totally explicit (partly because some components only become critical when they are threatened), it may be difficult to deal with. Let me give an example. A managing director of a subsidiary may have reported direct to the main board, and may have felt that the relationship with the board is a critical part of the job, giving prestige, a feeling that there is an influence on main board strategies, and regular contact with the top people. The structure changes, and the managing director now reports to a regional office, which also determines many aspects of broad strategy. The job title, salary, and subordinate relationships have not changed, but what has been lost is something that the incumbent felt was an important part of the job. The psychological contract has changed, and this change may be enough to make the managing director resist the change. Resistance may take many forms. It may be passive, in that there is apparent acceptance, but the excitement has gone out of the job, levels of effort reduced, and there may be a few telephone calls to executive search consultants. It may be very aggressive, with active opposition of the new order, and even sabotage. Resistance may take the form of working to rules, and no longer doing more than is demanded by the new procedures. The important point in considering change management is that psychological contracts exist at all levels. One argument for consultation during a change process is that it provides the opportunity for the expectations to be clear, and for issues to surface before they become problems. Later in this chapter there will be some discussion of empowerment, but it is worth remembering that the introduction of a process of empowerment is likely to break the psychological contacts of both empowerers and ‘empowerees’, and may be reinforced by uncertainty of both about how they should work under the new concept. Such changes are more likely to be successful if accompanied by counselling and training, as well as the changing of company processes and systems that do not reinforce the concept. Just issuing a policy statement that the organisation follows the principles of empowerment is unlikely to bring about any effective change. Figure 27.4 draws heavily on some ideas by Alexander,6 one of the few people who has undertaken research into the implementation of strategic plans. It suggests that there may be two factors which work either together or against each
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Figure 27.4 Typical responses to strategic change. Inspired by Alexander6
other to contribute to successful implementation: agreement with the change and the degree of effort put in by key implementors. It is possible to have low effort combined with an agreement with the change. This may be because the implementers are preoccupied with normal work, and do not give the time to the change, it may be because they do not understand the role that has to be played by them, or think that it is someone else’s job. It may also be that the psychological contract gets in the way. Alexander calls this tokenism, and it is important for those trying to cause change to develop approaches to overcome it. The second low effort box is when there is little or no acceptance of the change, either because the need is not seen, or because the strategy is believed to be wrong. This can cause outright rejection, cynicism (‘We’ve heard that one before’, ‘Open communication with that lot upstairs!’ or ‘I’ll believe that if it happens’). Good communication, with clear explanation of the need to change may change this situation, although there will always be a problem if the rejection is justified, and the change is inappropriate! The ideal box is where both dimensions are high, and the key implementors take on the task of inspiring others and driving the change forward. The final box may lead to successful change, but can indicate a problem. ‘I don’t agree with it, but I expect the board is right’ as a response may help the change forward, but is unlikely to lead to many creative inputs from the implementors. Making the best of a bad job conceals disagreements that would be better in the open. All the boxes in this diagram reinforce the value of the leadership model in Figure 27.3.
Getting managers to plan the implementation of strategy We saw in the previous chapter that there are many things which may prevent a strategy from being implemented, and in particular we were able to look at the top problems identified in Alexander’s research.6 One of the practical issues
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which I find is that many managers have little experience of planning the implementation of strategies, particularly strategies that are transformational. It is at this stage when we have to move from the broad statements of intent, to the detail of what particular people must do. We touched on this in the last chapter in a system sense. However, just planning the actions that people have to undertake is not the whole story. It may not be enough to agree that a particular action has to happen, and we may also have to ensure that the people who have to carry out the action have the skills and knowledge to do it well. Figure 27.5 is an example of a method I have found useful in strategy workshops to get managers discussing and identifying the mix of hard and soft issues that should be considered. It takes a number of negative statements from Alexander’s research, and turns them into positive things that have to be done.
Figure 27.5 Factors to consider in implementation
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Sixteen items appear on the list. It would be possible to add more, and this may be desirable if there are particular situations in the company that should be considered. All managers in the workshop are asked to rank 10 of the 16 items. The scoring method is designed to make it easy for all the questionnaires to be aggregated, so that a top 10 for the whole group can emerge. After ranking, they are asked to assess the degree of difficulty they see in dealing with each issue. When producing a total difficulty score for all people on the workshop, it is worth remembering that the appropriate average is of the people who have ranked the factor, not of the number who have completed the questionnaire. The value of the approach is that it helps managers to consider the hard and soft issues in the context of what they have to do. This means that there is a norm (the total picture drawn from all questionnaires) with which individuals can compare their answers, which provides a rich ground for discussion. Unless all the managers are from the same function and business unit and are facing the same change, there should be differences between the answers. The facilitator also has a secret weapon. If no one appreciates the importance of what are clearly critical factors, it is always possible to force a discussion by comparing their answers with the overall results of Alexander’s research. The differences between the research results and this questionnaire are in timing. The questionnaire tries to anticipate what must be considered, so that ways of doing this can be constructed. The research looked back at what went wrong in implementing strategies.
Management training and strategic change In Chapter 21 the case was argued for a more strategic view of management training and management development. The value of using training as a key part of a change process cannot be over stressed, although to be successful may involve throwing out some preconceived ideas about the design and delivery of training courses. In Chapter 21 the types of situation where training could contribute to strategic change were listed briefly. In a little more detail they are as follows.
Strategy formulation The right programmes can be used to challenge the assumptions to which current plans are based, or to examine strategic options.
Strategy implementation An appropriate initiative can be used to enable an understanding of the strategy to be gained in the broad terms, and in its impact on an individual and his or her job. Commitment can be built as people discover the reason for the strategy, and
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decide for themselves that it makes sense. Implications of the strategy can be explored and converted into personal action plans. Appropriate training can be given to correct deficiencies in the skills or knowledge of those who are involved in implementing the change.
Policy implementation A change in policy, such as a decision to put more effort behind competitor analysis, can often be effectively implemented with the aid of training programmes, which can build commitment to the policy and ensure that people are both able and willing to implement it.
Corporate culture Training may be a major tool in creating a culture or changing a culture. In turn this will help ensure that strategies and culture are compatible.
Environmental change Significant changes in the business environment may provide threats or opportunities. Appropriate training initiatives can help the organisation identify and deal with major changes.
Solving problems Training programmes may also be designed to solve particular problems, such as how to increase market share, or improve profitability. The mechanism is similar to the other categories shown, and among other things is based on shared understanding, involvement, and the enhancement of skills needed to deal with the situation. A glance back at the factors in Figure 27.5 will reveal that many would be partly solved had the power of management training been used to help implement. A training initiative does not have to be positioned as training. It may be logged as work, since it may deal totally with real issues, and the educational element may be hidden. An example is the questionnaire discussed above. A good facilitator could bring out the importance of the issues and their consequences in the context of developing an action plan for implementing a strategy. As can be seen from the example a training initiative can be used to develop knowledge and skills the lack of which would frustrate implementation, it can be part of the communication process, and it can provide a collaborative approach, either in the formulation of strategy itself, or more frequently in defining the detailed implementation issues. It can build commitment to the change.
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I argued that some preconceived ideas may have to be discarded. The first is that we are not talking about a routine programme. The initiative has to be specifically designed, and totally tailored to meet the needs of the company. If issues are included, the materials for the programme must be developed to include those issues. Such a programme cannot be lifted off the shelf, and must be specially designed for the company, which means that it may be more expensive than a routine training initiative. Few internal training staff have the experience and capability to design initiatives of this type, which by their nature stretch across many functional skills, and require a different approach to a standard training course. Even in companies that normally staff all training events from internal sources, there is a need for the services of external, uninvolved, senior consultants to make the concept work. In many companies, the training function lacks the credibility to perform the task, even if it possesses the skills. It is indicative that in both of the transformational case histories given earlier, training was used as a means of facilitating change. Many of the problems that do occur would be removed if more organisations chose this route, and supported it with an adequate budget.
Empowerment The final topic of this chapter is to turn attention to modern concepts of empowerment. In doing this I have drawn on an unpublished paper by Phil Lowe,7 of Harbridge Consulting Group, who has helped me to appreciate the difference between the modern concept of empowerment, and the long established issue of delegation. It is something more than old wisdom dressed in new clothes. Of course, it is possible to argue that empowerment as a concept has been around a long time, even though it may not have found its full place in management. The earliest writing I have found on this, also incidentally about what is probably the first recorded management consulting assignment, is found in the Bible, Exodus, Chapter 18, verses 13 to 27. Moses’ father-in-law watched him judging and counselling the people in the ways of God, and noted that the process lasted from morning to evening, exhausted Moses and tied up most of the people. I pick up the story at verse 17. 17. And Moses’ father in law said unto him, The thing thou doest is not good. 18. Thou wilt surely wear away, both thou, and this people that is with thee: for this thing is too heavy for thee: thou art not able to perform it thyself alone. 19. Hearken now unto my voice, I will give thee counsel, and God shall be with thee. Be thou for the people to Godward, that thou mayest bring the causes unto God.
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20. And thou shalt teach them ordinances and laws, and thou shalt shew them the way wherein they must walk, and the work that they must do. 21. Moreover thou shalt provide out of all the people able men, such as fear God, men of truth, hating covetousness; and place such over them, to be rulers of thousands and rulers of hundreds, rulers of fifties and rulers of tens: 22. And let them judge the people at all seasons: and it shall be that every great matter they shall bring unto thee, but every small matter they shall judge: so shall it be easier for thyself, and they shall bear the burden with thee. 23. If thou shalt do this thing, and God command thee so, then thou shalt be able to endure, and all this people shall also go to their place in peace. 24. So Moses hearkened to the voice of his father in law, and did all that he had said. 25. And Moses chose able men out of all Israel, and made them heads over the people, rulers of thousands, rulers of hundreds, rulers of fifties and rulers of tens. 26. And they judged the people at all seasons: the hard cases they brought unto Moses, but every small matter they judged themselves. 27. And Moses let his father in law depart: and he went his way into his own land.
History does not record the size of the consultancy fee, but in this extract we see aspects of training, competencies, structure, definitions of responsibilities, limits of authority, and delegation. Had the advice been given now, no doubt there would have been some de-layering! In true consultant’s style, Jethro the father in law also painted the benefits to Moses of following the advice. Unusually he seems to have stayed around to see it implemented. Empowerment is defined by Lowe7 as: ‘A process by which individual employees are given the autonomy, motivation and skills necessary to perform their jobs in a way which provides them with a sense of ownership and fulfilment while achieving shared organisational goals.’ An empowered organisation is more responsive, in that people closest to the source of problems are able to deal with them, it gives flexibility in managing change, and is essential if organisations are to function once layers are torn out of the structure. Reaching a state of empowerment is difficult, because it challenges many things that the managed and managers had taken for granted. Managers, for example need to see their roles as facilitators, coaches and sponsors, where historically many have been organisers of others, and supervisors. To make this change, and those managed may find it as difficult as do those who manage them, requires the alignment of company systems and processes to the new concept, considerable training, and counselling over a period to ensure that managers actually apply the new concept. An empowered organisation should provide individuals with: 1 A sense of purpose and a commitment to company goals 2 Recognition of individual achievements, and continuous feed back on performance 3 Training where it is needed 4 Autonomy to perform their jobs in a way that suits them, providing it is consistent with organisational goals and values.
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It means that all employees are able to see the results of their work, accept responsibility for their own performance, feel that they have an identity in the organisation, are able to have a say in things which affect their work, and share a commitment to continuous improvement. TQM is a driver towards empowerment, as is much of the modern thinking on manufacturing. The pressure for improved customer responsiveness is another driver, for adequate responsiveness can only occur when those close to the customer are empowered to make most of the decisions about issues that affect the customer.
Summary What perhaps separates strategic management from strategic planning is perhaps this emphasis on the totality of strategic change. Planning strategy is not easy, but the difficulties are as nothing compared to managing a process of strategic change. If strategies are not implemented they are a waste of time, and as we have seen implementation calls for a variety of different skills, not all of which may be possessed by the average manager. Today’s manager cannot rely on miracles, as Moses is reputed to have done, and few have father in laws who can give such sensible advice. There we have to find other ways of coping, and I would put leadership and the management of change very high in the list of competencies which managers at all levels should possess.
References 1 Ansoff, H. I. and McDonnell, E. Implanting Strategic Management, 2nd edn, Prentice Hall, Hemel Hempstead, 1990. 2 Stace, D. A. and Dunphy, D. C. ‘Translating Business Strategies into Action: Managing Strategic Change’, Journal of Strategic Change, Vol. 1, No. 4, July/August, 1992. 3 Hussey, D. E. How to Manage Organisational Change, Kogan Page, London, 1995. 4 Lewis, D. ‘Power-based Organisational Change in an Australian Tertiary College’, Journal of Strategic Change Vol. 2.6, December 1993. 5 Lewin, K. Field Theory in Social Science, Harper and Row, New York, 1951. 6 Alexander, L. D. ‘Strategic Implementation: Nature of the Problem’, in Hussey, D. E. (ed.), International Review of Strategic Management, Wiley, Chichester, 1991. 7 Lowe, P. ‘The Background to Empowerment’, Harbridge Consulting Group, London (unpublished working paper, 1993).
Further reading Bate, P. Strategies for Cultural Change. Butterworth-Heinemann, Oxford, 1994. Carnall, C. A. (ed.) Strategic Change, Butterworth-Heinemann, Oxford, 1997. Hussey, D. E. (ed.) The Implementation Challenge, Wiley, Chichester, 1996. Sadler, P. (ed.) Strategic Change: Building a High Performance Organisation, Pergamon, Oxford, 1995. Tichy, N. M. and Dervanna, M. A. The Transformational Leader, Wiley, New York, 1990.
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Management of change This chapter targets the behavioural issues in implementation, and aims to provide an introduction to change management and one view of change leadership. It gives practical guidance on applying the approach to change management discussed. It is not an objective of the chapter to provide a summary of every viable approach to change management and leadership.
In the previous chapter we looked at some of the behavioural issues in implementing plans, but concentrated mainly on the systems rather than the people. Change is going on all the time, and not always as the result of a predetermined strategy, which is why I have given a somewhat broader title to this chapter. However, the subject matter is critical to the successful implementation of strategic decisions. Figure 27.1 shows a typical change sequence. Something triggers off a need for change. It may be the result of a considered strategy, or of a reaction to something that happens outside of the business. Whatever it is, change is unlikely to happen until someone has recognised the trigger event. Since we live in the real world, it is worth stressing that the trigger event is often not a major change in circumstances but the arrival of a new chief executive whose perception is different from that of his or her predecessors. We saw this in the Lloyds Bank example in Chapter 12, where the trigger was not a new strategy but realisation that looking at issues in a different way would lead to innumerable new strategies. We saw it in Chapter 10, where one of the danger points in competitor analysis is when there is a change of top management. Empirically we see it in examples of major transformational change, such as British Petroleum, GE, and British Telecom. In each of these companies, change is associated with a particular chief executive, who recognised triggers that others might have missed. A trigger event can take place, but will only cause change if the need is seen. Thus many organisations miss the signals. Ansoff might well argue that companies which are managing in a style inappropriate to their level of environmental turbulence would probably miss the signals, or react in an inappropriate way (see Ansoff and McDonnell1 ). Chapter 3 discussed the idea of leadership and vision, and as we will see these are important ingredients in the management of change. In Figure 27.1 the
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Figure 27.1 Typical change sequence
reminder is that unless the perceived need is translated into a new vision of what has to be done, change is unlikely to occur. The really hard work starts in the next box on the diagram, making it work. The future course of the company depends on how well each stage of this model is carried out. In the diagram, the thick line symbolises success and movement to a new and appropriate future. The dotted line implies that although much energy is expended, nothing much happens, and the company ends up in the same place from which it started. Not shown, but also possible is the end state being considerably worse than the present, either because the wrong strategy is implemented, or the right strategy is not implemented.
Different circumstances of change Before proceeding further, we should consider a variety of different change circumstances. My thinking here owes a considerable debt to Stace and Dunphy,2 who pointed out that there are both different types of change, and different change strategies that can be successful. Figure 27.2 uses some of their ideas. It draws attention to two fundamentally different types of change: incremental which moves in a series of small steps, some of which may be hardly noticeable, and transformational where the change may be vast and fundamental. This is related to the situation in the company, the degree of support for the change from the key players. Stace and Dunphy provide a spectrum of styles: 䊉 䊉 䊉 䊉
Collaborative Consultative Directive Coercive.
Box A shows incremental change where there is a high degree of support from the key people. The change may be known, as in a marketing plan which involves
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Figure 27.2 Types of change and the degree of support for change. Based on the ideas of Stace and Dunphy2
the launch of a new related product, or it may be unknown in the sense that the aims are clear, but empowered teams or individuals are determining the actions that are to be implemented, as in a continuous improvement process. Under the circumstances of box A, the most appropriate style is likely to be collaborative or consultative. This does not mean that leadership is unnecessary (see Chapter 3), but that there is likely to be minimal resistance to, and possibly even enthusiasm for, change. Because the gap between where the organisation is now and the next step is not too vast, there may be little fear of the effects of change. Continuous improvement and total quality management processes are an excellent example of collaborative incremental change in action. Teams are empowered, but coordinated, and ideally are drawn from across the organisation to avoid a ‘functional chimney’ view. The philosophy under which the teams work is shared, and there is continuous measurement of progress. Under this concept the amount of change attained may be very great, although each action is one step on a journey without end. The continuous improvement concept will only work when there is support through the organisation, widespread involvement at all levels, and adequate training of everyone who is touched by the process. It also requires much top management time. In box B there is an incremental change without the support of the key people. The assessment here is whether support can be gained in a reasonable time, in which case a consultative approach could be appropriate, or whether to use directive means which may involve making people take certain actions. A mix of both is possible. Directive methods do not necessarily imply that commitment by those involved is not achievable. Although attitudes to a large degree affect behaviour, and logic suggests that the right thing to do to build commitment is to change attitudes first, the evidence is that in many situations a change of behaviour can bring about a change in attitudes. In fact there are situations when behaviour is not in line with an attitude: for example a number of smokers may now hold an attitude that smoking is not a good thing, but they may still smoke.
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Box C moves to transformational change. Stace and Dunphy use the term charismatic change to describe this box. Support may be there because of the charisma of the person leading the change, and a willingness by all to accept that the vision painted of the new future is the right one, because of faith in the qualities of the leader, or it may be because the logic of the situation is apparent: the company faces insolvency unless urgent action is taken. Collaborative or consultative styles would be appropriate here, provided there is enough time to apply them. The greater the shared perception of urgency, the more likely are people to be willing to follow a directive style without this causing any negative effects. Transformational change which implies hard actions, like restructuring an entire business, closing down loss-making divisions, or expanding into a new geographical area is usually easier for people to relate to, even if they are numbered among the losers, than accompanying changes in culture. It is hard to see how culture can be related to the new vision, without some flexing of styles between directive and consultative. Scandinavian Airlines went through a major change of strategy and culture during the 1980s, moving from a system driven to an empowered, customer responsive organisation. Much of the change was achieved through communication and consultative methods. At times the style was much more directive, as for example when key managers were asked to leave and replaced by others with empathy for the change. Box D represents the toughest situation of all. The change may be massive, but is not supported by many people. Figure 27.3 pulls together two models which were described in Chapter 3. It is a reminder that whatever change is envisaged will always take place within an existing organisational context. This does not mean that the activity in the inner model will have to take the outer model as immutable. In reality, the need may be to change something in the outer ring. Thus culture change in order to achieve a strategic aim has been very much a part of management thinking through the 1990s. The labels in Figure 27.3 were defined in Chapter 3, so all that is needed now is to offer a few prompts to aid thinking at each step in the inner model. The points made below can be found in expanded form in Hussey.3 Envisioning Points to consider in formulating a vision Remember that vision in this context does not necessarily mean the vision for the whole organisation. Here, it is the picture of what the change will bring, and the benefits of it. It may be a total reshaping of an organisation, or it may be the management of an innovation, a new structure within one department, a re-laying out of the plant in a factory, or any other form of change which affects other people. 1 2 3 4
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Is the vision credible? Is it challenging? Does it have internal integrity? Is it clear?
Figure 27.3 Change leadership and the organization (derived from figures published in Hussey, D.E. Business Driven Human Resource Management, Wiley, Chichester, 1996)
Reward systems
5 How does the vision relate to the past, present, and future? 6 Do you, as the leader of the change, believe in the vision? Barriers to overcome Even when the vision looks sound, there may be barriers which prevent it from being an effective driver for change: 1 2 3 4 5
Does the vision meet most of the above criteria? Do day-to-day actions reinforce the vision? Does every aspect of your own behaviour reinforce the vision? Have the implications of the vision been thought through? Can the vision be converted to strategies and actions?
Activating Ways of activating the organisation 1 Demonstrate your own belief in the vision and feeling of excitement about it all the time. 2 Extend personal contact as far as possible through the organisation, to communicate your own sense of excitement, and to explain the vision. 3 Workshops of key people may be a valuable way of building commitment, and allowing them to participate in the process.
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4 Ensure that there are opportunities for two-way communication. 5 Supplement the personal messages with other media, such as the company newspaper, videos for internal use, personal letters to employees, e-mail, and voicemail. 6 Use the everyday meetings to emphasise the message. 7 Consider how external public relations might aid the communication process inside the organisation, and with the influencers outside, such as customers. 8 Seek out and use examples of success that reinforce the vision. 9 Select the members of the team that will work with you with considerable care, and do not be afraid to take tough decisions to sideline or remove people who you fear might obstruct the change (but do this in a dignified and humane way). 10 Audit the nature and content of internal training, to ensure that the key changes are reflected in the courses, and that appropriate skills are provided where appropriate for those who are affected by the changes. Barriers to overcome 1 Resistance to the change, in individuals, departments, or the entire organisation 2 Lack of change management skill in the leader 3 Unwillingness to take tough decisions about individual people whose behaviour is frustrating the change. Supporting Ways of giving support to people 1 Express confidence in subordinates and peers involved in the change. 2 Provide coaching to help them overcome difficulties. 3 Ensure that key people are properly empowered to play their part in the change process. 4 Be empathetic to their situations, and take account of them during the change process, but without deviating from the main thrust of the change. 5 Use praise and thanks as a positive way to enhance motivation. Barriers to overcome 1 Lack of time to manage the change effectively 2 Lack of consistency in the behaviour in change management compared to day to day management. Installing Points to consider to Consider 1 Develop a plan for the change. 2 Ensure that this is carefully related to the organisational context (the outside model in Figure 27.3). 3 Consider contingencies: what might the effect be if things do not turn out as expected, and what should be done about it? 4 Ensure that ambition does not outstrip capability.
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5 Do not underestimate the time that is needed to implement a major change. 6 Make sure that the plan for the change covers descriptions of the actions being taken, and provides a large enough budget to achieve the task. 7 Make it clear what actions are to be undertaken, and who is to take them. 8 Set time limits and short-term goals, to enable monitoring systems to be set up. 9 Think through the interface between the change project budget, and the normal process of budgetary control. 10 Responsibility for the success of the various elements of the change project must be clearly delegated. 11 Ensure that there is adequate project management, particularly with extensive or complex projects. 12 Use appropriate techniques such as Gantt charts and network analysis. Pitfalls to avoid 1 Failure to think through all the consequences of the change, so that unexpected issues keep arising 2 Underestimating the time and resources that complex change requires 3 Planning only the first step of a change and assuming that the rest will follow (for example, assuming that an acquisition plan is implemented when ownership is transferred, but before the objectives of the acquisition have been secured).
Ensuring Factors to consider 1 Are all the controls and incentives driving the organisation in the same direction? 2 Are you satisfied that there is congruence between the personal aims of the key people in the change process and the organisational goals? 3 How far can self-control be used as a driving force in this change? 4 Try to exercise the controls in a way that increases the degree to which the vision of and strategies for the change are shared by all the players. 5 As far as possible use the control process for the change as a learning opportunity, and as a way of overcoming new challenges that emerge as the change is managed. 6 There are two facets which require regular, timely flows of information: did we do the things we said we would at the right time; did the outcome of those actions achieve our expectations? 7 Ensure that the right information flows are set up to monitor all the critical elements of the change. 8 Ensure that the control system does more than pass information along: be willing to replan the change activity when things are not working out as expected. 9 Bring all the control information for the whole process together regularly, so that the person with overall responsibility for managing the change is not taken by surprise.
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10 Pay particular attention to those tasks which will delay the whole project if they are not performed to time. 11 Do not assume that the normal control processes of the organisation will be adequate to monitor the change, and be willing to supplement them. 12 Accept that things will go wrong, and that quick response is therefore vital. 13 Understand that some expense may have to be incurred to monitor and control the project. Recognition Factors to consider 1 Ensure that you give constant recognition for the part others play as the change process moves forward. 2 Use all opportunities to reinforce the behaviour you want from others, by making them feel that what they are doing is important, and has been noticed. 3 Keep any negative comments you might have about a person for private one to one meeting, but take opportunities to acknowledge achievements in public. 4 Make sure that your superiors are aware of outstanding performance by others, and that your team knows that you are not taking all the credit for efforts they have shared. 5 Do not indulge in empty praise, and insincere comments. 6 Have regular reviews of personal performance of people who are reporting to you during the change process, so that you both have the opportunity to develop relationships and avoid surprises. There are, of course, strong arguments for managing change in a way that gains the support of the people in the organisation. However, it is not the only model, and again I am grateful to Stace and Dunphy2 for drawing attention to the coercive approach, where change is steamrollered through by the top person and anyone who does not go along with it is, in a manner of speaking, squashed flat. One example is the way Rupert Murdoch changed the way his newspapers were produced, in the teeth of ferocious opposition by the print unions. The change was imposed, and everything that needed to be done to drive the change through was done. It did not matter if at the end there was a complete change of employees, as the ultimate vision of a cost-effective production process was all that mattered. The power of the unions over the manning levels and methods of production was broken for ever, and few would argue that the industry as a whole is not better for it. But there is no doubt that the methods used were totally coercive. Lewis4 provides a detailed research study of coercive transformation in an Australian college, where change was achieved through ‘short sharp bursts of activity, that is by discontinuous change’. The model mirrored the freeze– unfreeze–freeze approach of Lewin5 and although attempts were made to supplement the coercive change strategy with other methods, these failed because of luck of trust. All the new objectives were achieved and sustained over a lengthy period, and the change was achieved quickly at each unfreezing stage.
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The downside was a long-term situation of demoralised staff, with a gulf of trust and understanding between academic staff and management. A steam roller approach fits the personal style of some managers, and is therefore something that they may feel comfortable with. However if we are trying to make a rational choice of the appropriate method to achieve change, we should exclude this factor (a preference does not necessarily mean that the approach is appropriate) and consider when transformational change might best be achieved by draconian means. I suggest the following circumstances for consideration: 1 When the change has to be completed at maximum speed and there is no realistic alternative 2 When consensus is impossible under any circumstances, which was probably the case in the Murdoch newspaper example 3 When the price that has to be paid in employee motivation, resignations, loss of trust, and complete lack of shared vision and commitment is seen as less important than a fast result, or of little importance at all.
Some examples of transformational change Most major transformational change will follow a mix of styles, and in some way following the thinking if not the letter of the leadership model. It is about creating, defining and building commitment to a new vision, and supporting this with the management effort that enables it to work. The two examples that will be mentioned are of British Telecom and British Petroleum, and in both cases the information has been drawn from published sources.
British Telecom The vision of British Telecom is to become the most successful worldwide telecommunications group. The trigger for changes was a mix of external pressures and internal constraints which by 1990 had reached a point where the chief executive felt that action had to be taken. External pressures included the pace of technological change, with a 30 per cent per annum fall in the costs of telecommunications as new technologies became available. The complexity of the telecommunications industry had increased, to the point when it was difficult to see the joins with other industries, such as computers. The degree of turbulence in the environment had increased dramatically. Internally there was a mismatch of the organisation and its old public utility culture with the vision and the external world. Managers’ perceptions were not always appropriate, and the culture was introspective and controlling, rather than outward-looking and proactive. The desired change included a need to alter the culture of the organisation. Before the change strategy was implemented the culture was prescriptive, with
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individuals being expected to conform to requirements. The desired change was to a culture that enabled individuals to excel, with the company providing the support that made this possible. At the same time there was a need to reduce the number of jobs and, partly to reduce costs and partly to enable the organisation to be more customer responsive, this included a new structure which would remove nine layers of management. On 26 March 1990 the chairman addressed the top 300 managers. They were told that the organisation would change over the next 12 months, and that all 36 000 managers would take on new jobs. They were informed that there would be fewer jobs, and that the new organisation would be in place by 1 April 1991. One purpose of the change arose from a TQM initiative which had begun in 1985, which was to gain more customer focus by using culture change that included values that addressed the customer. A team was set up to implement the changes. After 4 months organisational design had become an industry in its own right. Many of those involved in this new ‘industry’ were demonstrating the behaviours that the new design was intended to remove, such as the withholding of information, arbitrary decision making and a growth in bureaucracy. This led to a measure of cynicism in the organisation. A survey was made which showed that actions were at odds with the vision, help was needed if managers were to behave differently, the whole process had made people more inward-looking, and individuals were seeking sustained and continuous leadership from the board. One result of this survey was the introduction of a two-and-a-half day leadership programme. By 1 April 1991, 600 managers had been through the programme, with a heavy involvement of the chairman. The balance of managers had seen a video presentation, with a board member present to answer questions. By March 1992 there was a widespread recognition that the business was more turbulent, that most senior managers had been operating operationally rather than strategically, and a level of awareness had been developed among many people to enable them to participate in translating the group strategy to action. Much of this change process was highly visible, because of the high profile of the company. The need for communication and effort to build shared values is clear from what happened, as is the need to train people to enable them to play the right part in the changed situation. Also clear is the length of time needed to change values in a long-established organisation.
British Petroleum It is not possible to have a higher profile in a change process than to invite a journalist to sit in and write about the board meetings where the change strategy is decided. This is what BP did, with decisions being taken over several meetings in the presence of a Financial Times journalist. BPs change strategy was the result of a very detailed analysis involving many people. In July 1989, the chairman designate, Robert Horton, commissioned ‘Project 1990’, a major internal study which had the aim of showing
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how to reduce complexity in the organisation, to redesign the head office organisation, and to reposition the company in approach and style for the 1990s. The project team consulted widely inside and outside of BP, undertaking over 500 interviews and processing some 4000 questionnaires. The implementation of the culture change began in 1990, when Horton was appointed chairman. Its objective was to achieve the BP vision through the people, within a simple, supportive organisation. The process followed a number of principles: 1 The need for change was analysed in a way that took information from many people, as described above. 2 Considerable effort was given to inspiring enthusiasm for change, involving communication of various types, and including explanations of the need for change. 3 The emphasis was on building an organisation for the future, and the structure chosen was unusual enough to be exciting. 4 Top management drove the change process, and provided adequate resources for implementation. 5 There was widespread involvement of everyone in the change process, including a major educational initiative. 6 Processes were developed to support the change, including the identification of the competencies needed for employees working under the new culture. 7 There was continuous review of the change process. Of course things did not always go smoothly, and a major problem was an increase in environmental turbulence at the time the change process started. The UK moved into recession in 1990, and the oil industry worldwide found oil prices declining. This meant that certain strategies for disposing of noncore businesses became more urgent, and more costs had to be taken out of the company. This meant that in addition to the planned changes leading to a smaller head office and more putting out of work to third parties, there were other factors which meant that many people had to leave the company. Change was thus implemented against a background of budgetary pressure, terminations and early retirements. Part-way through the process the chief executive left the company. However, the strength of the change process was that culture has changed in the direction desired, despite all the additional complications and individual uncertainties.
Change and people One popular myth is that people resist change. Like all myths, there are some elements of truth in the statement, but we could also argue that many people welcome change. The fact is that our daily lives take place in an environment
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where change of one sort or another is a normal state. What may make people react adversely to change is: 1 2 3 4 5
Lack of understanding of the need for change Belief that the change proposed is not appropriate Failure to appreciate the urgency behind a planned change Concern that the change will have an adverse personal impact Failure to appreciate the many small actions needed to implement a major change.
The leadership model discussed earlier deals with how to overcome some of these problems. There is an additional concept which may help to explain why people sometimes appear to resist change, even though they may agree with its objectives. This is the concept of the psychological contract, the unwritten part of the relationship between employer and employee. It embraces the expectations of both parties, and because it is internal to the parties, and could never be made totally explicit (partly because some components only become critical when they are threatened), it may be difficult to deal with. Let me give an example. A managing director of a subsidiary may have reported direct to the main board, and may have felt that the relationship with the board is a critical part of the job, giving prestige, a feeling that there is an influence on main board strategies, and regular contact with the top people. The structure changes, and the managing director now reports to a regional office, which also determines many aspects of broad strategy. The job title, salary, and subordinate relationships have not changed, but what has been lost is something that the incumbent felt was an important part of the job. The psychological contract has changed, and this change may be enough to make the managing director resist the change. Resistance may take many forms. It may be passive, in that there is apparent acceptance, but the excitement has gone out of the job, levels of effort reduced, and there may be a few telephone calls to executive search consultants. It may be very aggressive, with active opposition of the new order, and even sabotage. Resistance may take the form of working to rules, and no longer doing more than is demanded by the new procedures. The important point in considering change management is that psychological contracts exist at all levels. One argument for consultation during a change process is that it provides the opportunity for the expectations to be clear, and for issues to surface before they become problems. Later in this chapter there will be some discussion of empowerment, but it is worth remembering that the introduction of a process of empowerment is likely to break the psychological contacts of both empowerers and ‘empowerees’, and may be reinforced by uncertainty of both about how they should work under the new concept. Such changes are more likely to be successful if accompanied by counselling and training, as well as the changing of company processes and systems that do not reinforce the concept. Just issuing a policy statement that the organisation follows the principles of empowerment is unlikely to bring about any effective change. Figure 27.4 draws heavily on some ideas by Alexander,6 one of the few people who has undertaken research into the implementation of strategic plans. It suggests that there may be two factors which work either together or against each
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Figure 27.4 Typical responses to strategic change. Inspired by Alexander6
other to contribute to successful implementation: agreement with the change and the degree of effort put in by key implementors. It is possible to have low effort combined with an agreement with the change. This may be because the implementers are preoccupied with normal work, and do not give the time to the change, it may be because they do not understand the role that has to be played by them, or think that it is someone else’s job. It may also be that the psychological contract gets in the way. Alexander calls this tokenism, and it is important for those trying to cause change to develop approaches to overcome it. The second low effort box is when there is little or no acceptance of the change, either because the need is not seen, or because the strategy is believed to be wrong. This can cause outright rejection, cynicism (‘We’ve heard that one before’, ‘Open communication with that lot upstairs!’ or ‘I’ll believe that if it happens’). Good communication, with clear explanation of the need to change may change this situation, although there will always be a problem if the rejection is justified, and the change is inappropriate! The ideal box is where both dimensions are high, and the key implementors take on the task of inspiring others and driving the change forward. The final box may lead to successful change, but can indicate a problem. ‘I don’t agree with it, but I expect the board is right’ as a response may help the change forward, but is unlikely to lead to many creative inputs from the implementors. Making the best of a bad job conceals disagreements that would be better in the open. All the boxes in this diagram reinforce the value of the leadership model in Figure 27.3.
Getting managers to plan the implementation of strategy We saw in the previous chapter that there are many things which may prevent a strategy from being implemented, and in particular we were able to look at the top problems identified in Alexander’s research.6 One of the practical issues
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which I find is that many managers have little experience of planning the implementation of strategies, particularly strategies that are transformational. It is at this stage when we have to move from the broad statements of intent, to the detail of what particular people must do. We touched on this in the last chapter in a system sense. However, just planning the actions that people have to undertake is not the whole story. It may not be enough to agree that a particular action has to happen, and we may also have to ensure that the people who have to carry out the action have the skills and knowledge to do it well. Figure 27.5 is an example of a method I have found useful in strategy workshops to get managers discussing and identifying the mix of hard and soft issues that should be considered. It takes a number of negative statements from Alexander’s research, and turns them into positive things that have to be done.
Figure 27.5 Factors to consider in implementation
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Sixteen items appear on the list. It would be possible to add more, and this may be desirable if there are particular situations in the company that should be considered. All managers in the workshop are asked to rank 10 of the 16 items. The scoring method is designed to make it easy for all the questionnaires to be aggregated, so that a top 10 for the whole group can emerge. After ranking, they are asked to assess the degree of difficulty they see in dealing with each issue. When producing a total difficulty score for all people on the workshop, it is worth remembering that the appropriate average is of the people who have ranked the factor, not of the number who have completed the questionnaire. The value of the approach is that it helps managers to consider the hard and soft issues in the context of what they have to do. This means that there is a norm (the total picture drawn from all questionnaires) with which individuals can compare their answers, which provides a rich ground for discussion. Unless all the managers are from the same function and business unit and are facing the same change, there should be differences between the answers. The facilitator also has a secret weapon. If no one appreciates the importance of what are clearly critical factors, it is always possible to force a discussion by comparing their answers with the overall results of Alexander’s research. The differences between the research results and this questionnaire are in timing. The questionnaire tries to anticipate what must be considered, so that ways of doing this can be constructed. The research looked back at what went wrong in implementing strategies.
Management training and strategic change In Chapter 21 the case was argued for a more strategic view of management training and management development. The value of using training as a key part of a change process cannot be over stressed, although to be successful may involve throwing out some preconceived ideas about the design and delivery of training courses. In Chapter 21 the types of situation where training could contribute to strategic change were listed briefly. In a little more detail they are as follows.
Strategy formulation The right programmes can be used to challenge the assumptions to which current plans are based, or to examine strategic options.
Strategy implementation An appropriate initiative can be used to enable an understanding of the strategy to be gained in the broad terms, and in its impact on an individual and his or her job. Commitment can be built as people discover the reason for the strategy, and
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decide for themselves that it makes sense. Implications of the strategy can be explored and converted into personal action plans. Appropriate training can be given to correct deficiencies in the skills or knowledge of those who are involved in implementing the change.
Policy implementation A change in policy, such as a decision to put more effort behind competitor analysis, can often be effectively implemented with the aid of training programmes, which can build commitment to the policy and ensure that people are both able and willing to implement it.
Corporate culture Training may be a major tool in creating a culture or changing a culture. In turn this will help ensure that strategies and culture are compatible.
Environmental change Significant changes in the business environment may provide threats or opportunities. Appropriate training initiatives can help the organisation identify and deal with major changes.
Solving problems Training programmes may also be designed to solve particular problems, such as how to increase market share, or improve profitability. The mechanism is similar to the other categories shown, and among other things is based on shared understanding, involvement, and the enhancement of skills needed to deal with the situation. A glance back at the factors in Figure 27.5 will reveal that many would be partly solved had the power of management training been used to help implement. A training initiative does not have to be positioned as training. It may be logged as work, since it may deal totally with real issues, and the educational element may be hidden. An example is the questionnaire discussed above. A good facilitator could bring out the importance of the issues and their consequences in the context of developing an action plan for implementing a strategy. As can be seen from the example a training initiative can be used to develop knowledge and skills the lack of which would frustrate implementation, it can be part of the communication process, and it can provide a collaborative approach, either in the formulation of strategy itself, or more frequently in defining the detailed implementation issues. It can build commitment to the change.
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I argued that some preconceived ideas may have to be discarded. The first is that we are not talking about a routine programme. The initiative has to be specifically designed, and totally tailored to meet the needs of the company. If issues are included, the materials for the programme must be developed to include those issues. Such a programme cannot be lifted off the shelf, and must be specially designed for the company, which means that it may be more expensive than a routine training initiative. Few internal training staff have the experience and capability to design initiatives of this type, which by their nature stretch across many functional skills, and require a different approach to a standard training course. Even in companies that normally staff all training events from internal sources, there is a need for the services of external, uninvolved, senior consultants to make the concept work. In many companies, the training function lacks the credibility to perform the task, even if it possesses the skills. It is indicative that in both of the transformational case histories given earlier, training was used as a means of facilitating change. Many of the problems that do occur would be removed if more organisations chose this route, and supported it with an adequate budget.
Empowerment The final topic of this chapter is to turn attention to modern concepts of empowerment. In doing this I have drawn on an unpublished paper by Phil Lowe,7 of Harbridge Consulting Group, who has helped me to appreciate the difference between the modern concept of empowerment, and the long established issue of delegation. It is something more than old wisdom dressed in new clothes. Of course, it is possible to argue that empowerment as a concept has been around a long time, even though it may not have found its full place in management. The earliest writing I have found on this, also incidentally about what is probably the first recorded management consulting assignment, is found in the Bible, Exodus, Chapter 18, verses 13 to 27. Moses’ father-in-law watched him judging and counselling the people in the ways of God, and noted that the process lasted from morning to evening, exhausted Moses and tied up most of the people. I pick up the story at verse 17. 17. And Moses’ father in law said unto him, The thing thou doest is not good. 18. Thou wilt surely wear away, both thou, and this people that is with thee: for this thing is too heavy for thee: thou art not able to perform it thyself alone. 19. Hearken now unto my voice, I will give thee counsel, and God shall be with thee. Be thou for the people to Godward, that thou mayest bring the causes unto God.
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20. And thou shalt teach them ordinances and laws, and thou shalt shew them the way wherein they must walk, and the work that they must do. 21. Moreover thou shalt provide out of all the people able men, such as fear God, men of truth, hating covetousness; and place such over them, to be rulers of thousands and rulers of hundreds, rulers of fifties and rulers of tens: 22. And let them judge the people at all seasons: and it shall be that every great matter they shall bring unto thee, but every small matter they shall judge: so shall it be easier for thyself, and they shall bear the burden with thee. 23. If thou shalt do this thing, and God command thee so, then thou shalt be able to endure, and all this people shall also go to their place in peace. 24. So Moses hearkened to the voice of his father in law, and did all that he had said. 25. And Moses chose able men out of all Israel, and made them heads over the people, rulers of thousands, rulers of hundreds, rulers of fifties and rulers of tens. 26. And they judged the people at all seasons: the hard cases they brought unto Moses, but every small matter they judged themselves. 27. And Moses let his father in law depart: and he went his way into his own land.
History does not record the size of the consultancy fee, but in this extract we see aspects of training, competencies, structure, definitions of responsibilities, limits of authority, and delegation. Had the advice been given now, no doubt there would have been some de-layering! In true consultant’s style, Jethro the father in law also painted the benefits to Moses of following the advice. Unusually he seems to have stayed around to see it implemented. Empowerment is defined by Lowe7 as: ‘A process by which individual employees are given the autonomy, motivation and skills necessary to perform their jobs in a way which provides them with a sense of ownership and fulfilment while achieving shared organisational goals.’ An empowered organisation is more responsive, in that people closest to the source of problems are able to deal with them, it gives flexibility in managing change, and is essential if organisations are to function once layers are torn out of the structure. Reaching a state of empowerment is difficult, because it challenges many things that the managed and managers had taken for granted. Managers, for example need to see their roles as facilitators, coaches and sponsors, where historically many have been organisers of others, and supervisors. To make this change, and those managed may find it as difficult as do those who manage them, requires the alignment of company systems and processes to the new concept, considerable training, and counselling over a period to ensure that managers actually apply the new concept. An empowered organisation should provide individuals with: 1 A sense of purpose and a commitment to company goals 2 Recognition of individual achievements, and continuous feed back on performance 3 Training where it is needed 4 Autonomy to perform their jobs in a way that suits them, providing it is consistent with organisational goals and values.
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It means that all employees are able to see the results of their work, accept responsibility for their own performance, feel that they have an identity in the organisation, are able to have a say in things which affect their work, and share a commitment to continuous improvement. TQM is a driver towards empowerment, as is much of the modern thinking on manufacturing. The pressure for improved customer responsiveness is another driver, for adequate responsiveness can only occur when those close to the customer are empowered to make most of the decisions about issues that affect the customer.
Summary What perhaps separates strategic management from strategic planning is perhaps this emphasis on the totality of strategic change. Planning strategy is not easy, but the difficulties are as nothing compared to managing a process of strategic change. If strategies are not implemented they are a waste of time, and as we have seen implementation calls for a variety of different skills, not all of which may be possessed by the average manager. Today’s manager cannot rely on miracles, as Moses is reputed to have done, and few have father in laws who can give such sensible advice. There we have to find other ways of coping, and I would put leadership and the management of change very high in the list of competencies which managers at all levels should possess.
References 1 Ansoff, H. I. and McDonnell, E. Implanting Strategic Management, 2nd edn, Prentice Hall, Hemel Hempstead, 1990. 2 Stace, D. A. and Dunphy, D. C. ‘Translating Business Strategies into Action: Managing Strategic Change’, Journal of Strategic Change, Vol. 1, No. 4, July/August, 1992. 3 Hussey, D. E. How to Manage Organisational Change, Kogan Page, London, 1995. 4 Lewis, D. ‘Power-based Organisational Change in an Australian Tertiary College’, Journal of Strategic Change Vol. 2.6, December 1993. 5 Lewin, K. Field Theory in Social Science, Harper and Row, New York, 1951. 6 Alexander, L. D. ‘Strategic Implementation: Nature of the Problem’, in Hussey, D. E. (ed.), International Review of Strategic Management, Wiley, Chichester, 1991. 7 Lowe, P. ‘The Background to Empowerment’, Harbridge Consulting Group, London (unpublished working paper, 1993).
Further reading Bate, P. Strategies for Cultural Change. Butterworth-Heinemann, Oxford, 1994. Carnall, C. A. (ed.) Strategic Change, Butterworth-Heinemann, Oxford, 1997. Hussey, D. E. (ed.) The Implementation Challenge, Wiley, Chichester, 1996. Sadler, P. (ed.) Strategic Change: Building a High Performance Organisation, Pergamon, Oxford, 1995. Tichy, N. M. and Dervanna, M. A. The Transformational Leader, Wiley, New York, 1990.
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