Change Flashcards
Change
Businesses today have to operate in rapidly changing markets and conditions. They can no longer rely on a constant stream of customers, production process and product over a long period of time. To be successful business have to try and anticipate change rather than always reacting to it.
They must be proactive than reactive
Flexible and responsive
Major causes of change
Developments in technology - new products, processes
Market changes - new competitors, new markets, globalisation
Consumer tastes - more efficient ways of purchasing (internet)
Legislation - taxation of pollution, government aid, safety standards
Changes in the workforce - age, part time working and increased flexible working
Changes in the economy - inflation, interest rates, unemployment
Internal causes of change
Changes in management style
new leaders may wish to implement new statergies which lead to change in the culture of the business. Eg move from an autocratic style to Laissez-Faire.
Change in business ownership
New management may wish to introduce a new ethos within the business. Merges/takeovers may bring about a change in corporate culture.
Change in business size
Businesses can grow organically, carefully building on product ranges, investing in new technologies
Introduction of new technology
New technology can affect both the pattern of consumer demand and methods of production.
External causes of change
Introduction of new technology
- Developments in new technology will force business to change. Methods of production are constantly changing and introduction of robotic technology is deemed to be essential if quality and output are to be improved.
Labour market
- the minimum wage, the living wage have all pushed up costs
Changes in economic conditions
- business have to react to economic circumstances.
Competition
- existing competitors can change their strategy, or new competitors can enter the market place.
Changes in consumer tastes
- tastes can change abruptly, completely altering demand patters. Can create opportunities for business as well as challenges
New legislation
- governments can change legislation, not to limit or free up business activity.
Types of change
Anticipated and within business control
Unanticipated but within business control
Anticipated but outside business control
Unanticipated and outside business control
Effects of change
Shorter product life cycles
Dimished brand loyalty
New products need to be developed
Changes in production methods are required
Retraining the workforce
Flexible workforce
The need to comply with constantly changing legislation
Managing change effectively
Employee preparation
- the first stage is preparing employees for change. This may involve re-skilling to enable employees to carry out new tasks effectively making them more flexible.
Increased research and development expenditure
- this is used both in preparation for change, and as a reaction to change
Additional capital investment
- change can create the need for investment in new technology and new equipment
Implementing change - Storeys 4 methods of implementing change
Negotiated total package
- management and employees negotiate on how a major change in the way a business functions will be implemented. This is more likely to result in a coordinated process of change with is understood and accepted by all stakeholders. Likely to be the most effective method, although not always possible due to the time it can take in a competitive market.
Negotiated piecemeal initiatives
- management and employees will consult and agree on various changes as they become necessary. There is no overall agreement or coordinated process that is in place for the negotiated total package. Can be easy to implement.
Imposed piecemeal initiatives
- managers plan and implement changes. This saves time and in the hands of the management who understand the objectives of the business. However, this can be met with resistance from employees due to the lack of consultation.
Imposed total package
- senior management plan and introduce a major change all at once without consultation with employees. This might occur due to rapidly changing external factors that need responding to quickly. Likely to be heavily resisted by middle management and employees.
Resistance to change in business
Employee resistance
Lack of finance
Lack of management expertise can cause
- a fear of new markets
- lack of firm leadership
- inability to adjust to new situations
Supplier resistance
Owner resistance
- owners may feel that change will increase risk
Lewin’s three step process of change
Lewin recognised that it was not the difficult of creating change, but of re-enforcing the change that really mattered. He was concerned with ensuring that the change continued into the future and that employees did not slip back into old methods of working.
1.) Unfreezing
- involves creating a motivation for change and creating a realisation amongst employees that change is necessary. Therefore having to unfreeze from the current approach’s to work.
2.) Change or transition
- Lewin described this period of transition as a potentially difficult time as employees are now moving towards a new way of doing things.
3.) Refreezing
- establishing stability once the changes have been made. Employees have now accepted the change, and the new methods of working have become the new norm and they are comfortable with their routines.
Kotter & Schlesinger
Kotter & Schlesinger’s study highlights 4 reasons why people resist change
Self Interest
- they would be worse of if the change occurred e.g job loss
Fear and misunderstanding
- they don’t trust the managers motives
Different assessments
- they understand the reasons for change but disagree with they
Prefer things as they are
- they do not like change
Kotter & Schlesinger - Overcoming resistance to change
They also proposed a model of six ways for dealing with resistance to change
Education
- explain why changes are needed to staff.
Participation
- involve potential resistors in designing the changes to weaken resistance
Facilitation
- managers provide extra training and support to staff to overcome their resistance.
Negotiation
- offer incentives to staff to adopt changes
Manipulation
- weaken resistance by including resistors in the change management team but not giving value or listening to their opinions
Coercion
- threaten job losses or reduced promotion changes if changes not accepted.
Evaluating change management
Businesses are dynamic in nature and subject to constant change in their internal and external environments
The rate of change is accelerating with increasing globalisation and the application of new technologies making markets even more competitive.
Change is both an opportunity and a threat to a business. Successful business constantly monitor markets and anticipate and plan for change.
Evaluating Change management
Change is never easy to implement and it is likely to be resisted by both employees
Significant change may consider a business to reconsider theri mission and vision statements and the way it structures.
65-70% of business change results in failure showing how difficult it is to get right.
