Management Of Change

Management Papers

MANAGEMENT OF CHANGE

Yusuf A. Nzibo
Industrial Development Bank
Nairobi Kenya

Introduction

Organizations function in a rapidly changing environment and have to be adaptive to change to survive successfully. They need to be flexible and adapt quickly to change especially in an environment where mergers, acquisition, and takeovers have become the order of the day. Flexibility, adaptability, efficiency, increase in productivity and competitiveness have become a must for the survival of organizations. Organizations have to learn to cope with competition, new products and materials launched by their rivals. They need to know how to survive in extensive markets that are monopolized by few conglomerates. They have to plan ahead and cope with any sudden change in political climate, new legislation that could affect their outlook and operations, and cultural transformations that could occur.

The last few decades have witnessed rapid technological advances in transport, communication, and equipment. These innovations have not only changed the work environment, but have forced organizations to acquire them at the pain of extinction. Technological advances have changed all aspects of industries resulting in massive lay-offs of workers possessing traditional skills. Those in manufacturing, mining, printing, and in the ship-building and even the financial sector have suffered the most. Organizations that retain traditional skills and are slow in adapting to change, have often been forced to lay-off part of their labour force to survive.

Organizations have to be managed efficiently and adapt rapidly to new changes to withstand fierce competitive within their sectors. Change has become inevitable under this new climate; organizations must constantly change and keep up with the pace to survive. Most of the changes usually take place during an economic boom or recession. When faced with a fait accompli, organizations must adapt to new changes in order to withstand difficulties or reorganize to use effectively new opportunities created by an economic boom. A company's structure and corporate culture changes with the expansion or contraction of its business and overall size. Corporations such as IBM, ITT, Exxon, Chrysler and General Motors owe their success to strong and adaptive corporate cultures.

Organizations need to prepare in advance for the implementation of changes and equip their personnel psychologically, if they are to remain successful. Personnel departments and top corporation managers play a key role in the implementation of change. It is their role to introduce, organize, implement, and monitor such change. This change can either be internally or externally initiated. While internal change is largely voluntary, though sometimes inevitable, organizations must learn to cope with external ones over which they have little control. They must be able to respond to government regulations, legislation and public pressure. They must be able to adapt quickly and effectively to the requirements of a new environment.

Change occurs in four major areas: technology, environment, labour market, and in organizations themselves. New technologies affect materials, processes, work locations, and organizational forms. Change can occur as a result of new inventions, discoveries or development of new substitutes for existing resources. Technological innovations such as the new 486 micro-computers and related hardware, automatic equipment and new electronic gadgets, not only change the outlook of an organization, are a threat to job security. The best example is the newspaper industry where British trade unions in the mid-1970s resisted modernization that was to result in large lay-offs. Traditional printing workers faced a nightmare and found it impossible to cope with change. Many felt their traditional corporate culture threatened and therefore resisted such change. Change, despite of its negative repercussions, is inevitable. Company strategic plans must be able to respond quickly to change. If a firm fails to adopt new methods, techniques, and to modernize its equipment, it cannot effectively compete with its rivals. Environmental changes such as legislation dealing with the various aspects of industrial relations, health and social issues need serious attention.

Consumer tastes and expectations, quality of life, moral, and environmental issues have forced companies to address themselves beyond the narrow goal of profits. Gender and Race discrimination acts and government efforts in Britain, the United States and elsewhere have forced firms to redraw their plans and policies to cope with new expectations. Consumer pressure groups have forced companies to acquire pollution free equipment, to be more careful in handling harmful waste materials, and to pay attention to consumer needs. This has led to internal changes in areas of marketing strategies and customer care. Employment expectations have changed as people now prefer jobs that are enriching in experience and those that involve decision making. Workers' participation in setting production targets and running their departments has become popular. Nationalization and privatization policy issues affect how companies operate and relate to their work-force. Companies must be prepared for new changes that could easily change work relationship, decision making mechanisms, and even their corporate cultures.

Organizations need to adapt to mergers, acquisitions and takeovers which change structures of ownership and size. Demographic changes that lead to new diets, tastes, and habits need to be accommodated by the manufacturing sector. In the banking sector, the customer has become more sophisticated than before and demands efficient and faster services. Adaptability to modern banking technology is necessary for any institution to survive in this sector. Modern management information systems have become necessary not only to produce the desired result, but also to keep the top brass abreast with minute global financial changes. The development of an educational system brings change with it. The quality of labour force tends to improve as society becomes better educated. Modern skilled workers are more adaptive to change. This has drastically changed the make-up of training programmes. The well educated labour force, especially university graduates in many parts of the third world, has acquired new expectations. This has resulted in change in the corporate cultures of many organizations.

Organizations need to accept change as inevitable and be prepared to modify their structures in appropriate ways. The need for change could be either internally or externally motivated. Internally motivated change is important for periodic assessment of strengths, weaknesses, opportunities and threats. New technology, employee attitudes and behaviour, and the introduction of automated equipment can cause internal structural and policy changes. Training programmes and work routine could all change. Workers dissatisfaction leading to strikes and a high staff turnover all signal the need for change to correct weaknesses.

An organization must recognize its own inadequacies, plan and forecast and assess the implications of the intended change for its departments and employees. This will improve capacity to respond quickly and effectively to external factors. Organizations need to develop mechanisms for anticipating outside threats and accommodating the consequences. They must recognize where and how change should occur. They must get intended changes accepted by all those affected. Internal and external forces for change are strongly linked especially where changes in attitudes and values are involved. The adoption of new job techniques such as the Japanese style of Management (Theory Z) can drastically alter firms’ internal organizations, workers management relations, and a company's philosophy.

Identifying Need For Change

The implementation of change, must be properly planned. For change to be effective, specific manager(s) should be assigned the duty of identifying problem areas and be in charge of the implementation of the recommendations. Their duties should include the monitoring of external events and the assessment of their implications on existing administrative structures. A mature organization tends to be more formal, bureaucratic, and clings to old ways. Care should therefore be taken to ensure that the exercise is not sabotaged by the old guards who tend to feel threatened by the introduction of new changes.

Change is easily welcomed where job extension and enrichment are encouraged as subordinates adjust easily to new tasks. Well educated employees whose training programmes are broad based tend to respond easily and constructively to change. Corporations should have continuity and not encourage dependence on a few individuals. Delegation of authority and responsibility is important in order to impart experience of running the various departments to sectional heads and their assistants. Since change is often resisted, senior management should take the responsibility for implementing it smoothly.

Why People Resist Change

People resist change due to various reasons. Resistance varies from passive, sabotage to indifference. Many factors account for this :

  • loss of status, privileges and reduction in income, and personal security.

  • skills acquired through great efforts over a number of years could become irrelevant.

  • uncertainty about the causes and effects of change especially for their future. Change can disrupt a person's life, create financial hardship, and lead to transfer to a new environment. Worst still, it could lead to job insecurity and mass redundancies.

  • people resist change when they sense potential problems that might have been overlooked by change initiators.

  • Management’s aim should be to reduce resistance by predicting the likely behaviour which could result in resistance and taking quick action to modify it. Normally employees’ response to change related to the importance of job security; the degree of trust in management; and the manner of introducing and implementing the exercise.

The Top Management can facilitate the implementation of change by:

  • explaining to their staff the causes and expected consequences of change. Consultation and active participation of all those affected is important.

  • ensuring that existing workgroups established over a number of years, where subordinate loyalty and affinity lies, remain unbroken where possible. Group norms and cohesion contribute much to individual acceptance of new procedures.

  • preparing psychologically their subordinates to accept change.

  • ensuring that attitudes that are consistent with current realities are developed through training programmes.

  • showing concern over the plight of their workers. Where possible, companies should retrain their workers or assist them to get new jobs. Adequate resources should be budgeted for any such consequences.

Need For Planned Change

For change to be effective, it should be properly planned. Where the proposed change is complex and lengthy, the hiring of a reputable consultant is recommended. Often specialized expertise and skills may be required. Workers find it easy to cooperate with a person who is neutral. Planned change involves a thorough analysis of the situation; the adoption of realistic programmes; and getting worried workers accept the reality. Change should be supervised closely and all channels of communication with the workforce should be maintained and their leaders given active roles.

Change And The Corporate Culture

Corporate culture has to change with time. Under a new situation, a culture that previously assisted an organization to achieve its aims and goals through established norms and work practices could contribute to its downfall. Culture must respond to the needs of business for an organization to remain successful. Change always threatens existing corporate cultures. It strips down relationships, creates insecurities, and undermines values that may have guided a company for many years. Changing a company's culture is therefore the most difficult aspect of managing change for the stronger the existing culture, the harder it is to change it.

Corporate cultural change is necessary where:

  • an environment is undergoing fundamental political, economic, social or technological change. Clinging to traditional values can lead to drawbacks or even disasters.

  • an industry is highly competitive and the business environment changes quickly. It is a must to have a culture that is flexible and can adapt quickly to new products, markets and technological change, etc. Building a responsive and adaptive culture may be the only way to survive in a business world dominated by cutthroat competition, mergers, acquisitions and takeovers.

  • a company is on the threshold of expansion. Corporate culture, like everything else, must change to be able to cope with new expectations. Likewise, where a company is contracting due to financial difficulties, its corporate culture must change to reflect new realities.

  • new legislation affect the way business operate. New social or moral issues, employment practices, and environment issues must all be taken into account. Company cultures have had to be modified to cope with various civil rights and moral issues. Sex and race relations acts had a big impact on company cultures as did consumers and environmental acts. Moral pressure on Western multinational companies operating under the Apartheid situation in South Africa forced many of them to abandon old cultures that are discriminatory.

Affecting cultural change is expensive. Reshaping and consolidating change take a lot of energy, commitment and time. It takes years to achieve meaningful cultural change. Organizations and their employees adopt change only at times of crisis or under pressure. Employees to cooperate they need to be convinced of the necessity to change and the advantages to be derived.

Managing Cultural Change

Corporations embarking on cultural change should proceed carefully in order to avoid resistance and to ensure its success. A thorough study of the situation should be made, and implications analyzed carefully. It must be recognized that peer group’s consensus is a major influence on the acceptance and willingness to change. Consensus-building processes based on natural peer-bonding relationship are a major way to induce change in organizations. Trust and openness are vital; managers should be sensitive to key cultural attributes such as rituals and values. Very often, only chief executives have the power and influence to institute an overall change which may require not only a modification of a company's structure but also symbols, rituals, and beliefs.

Conclusion

For change to be successful, its positive attributes must be emphasized to the employees. Though negative aspects need to be played down, truth no matter how painful must be told to those affected. Warning must be given well in advance and adequate steps taken to enable staff cope with change. Managers must build in their organizations awareness for change, an ability to forecast it in advance, and a flexible system that welcomes it. An organization's philosophy and training programmes need to emphasize positive attributes. Increase in job security, enrichment and enlargement, greater flexibility and improvement in the quality of work life need to be stressed.

The introduction of advanced technology should be welcomed as a positive contribution in making work more satisfying and less routine. It should be seen as a means of providing better opportunities for workers to master their skills and become more productive. The less authoritarian a management style is the greater will be its flexibility staff acceptance. Finally, employees must be given an important role in the management of change for it to be successful.

21 June 1990.