Change and risk management Flashcards
What is change?
=An ongoing process that businesses cannot avoid and have to deal with the consequences. It can be small and incremental or sudden.
What is internal change?
-Initiated in the business.
Examples of internal change?
Introduction of new technology- new apps or robotics.
Change in management structure or leadership style.
Changes in the size of the business through organic growth or external growth- from greater spending on production capacity or downsizing.
Changes in ownership.
What is external change?
Caused by external factors from outside the business.
Examples of external change?
Changes in the market- new competitors, etc.
Economic changes- inflation, consumer incomes.
Social change- tastes and lifestyles of consumers.
Change in legislation.
Workforce changes- adapting to flexible working practices.
What is planned change?
changes that the business has been able to consider carefully and create a strategy to reduce any risks and profits from any benefits.
What is unplanned change?
the business has little or no time to plan, or has made a conscious decision to not plan for. Contingency planning (planning for unwanted and unexpected events) helps to minimise the effect of unplanned change.
What are examples of effects of change on a business?
Change production methods and equipment.
Develop new products.
Meeting new legal requirements.
Retrain the workforce to make new products or use new production systems.
Look for new markets- may need to expand overseas to maintain sales.
Shorter product life cycles because consumer attitudes are constantly changing.
Diminishing brand loyalty because of the frequency of new competitors.
What is managing change?
Managing change ensures the smooth transition from old to new ways of working.
Benefits of managing change?
Assess and understand the need for and the impact of change
-Allocate resources.
-Manage and control the costs.
-Reduce the time needed to implement change.
-Plan and implement an effective strategy to communicate change with stakeholders.
-Maintain or improve performance. Ensures a business remains competitive, improving productivity and financial performance.
How does employee preparation manage change?
No change can occur without the full support of the employees. Consultation and communication is essential. May involve reskilling to carry out new tasks effectively, which makes a workforce more flexible and adaptable May be a need for recruitment.
How does research and development manage change?
used both in preparation for change, and as a reaction to change. Develops new products, new methods of production and new technologies. May give a competitive advantage.
How does capital investment manage change?
Change can create the need for investment in new technology and equipment, and is often an expensive undertaking. If a business does not have access to sufficient finance, it is unlikely it will be able to implement effective change.
What are the four elements of j storey’s approach?
total imposed package, negotiated total package, imposed piecemeal, imposed total package.
Total imposed package?
A whole package of changes simply presented to employees. The senior management team would work out the restructuring they feel is required and then impose this. It will create rapid change and ensure that the vision for the direction of the business is clear, but there may be significant resistance to change.
Imposed piecemeal initiatives?
A more gradual approach. Change is still imposed by senior management, but in stages. Employees have more time to adapt and may help alleviate resistance, but it will still need to be accompanied by changes in the organisational culture to encourage change. The firm may offer incentive payments or perhaps other non-financial rewards.
Negotiated total package?
The aim is to agree on the package of change through negotiation and consultation with the workforce. Helps significantly reduce the level of resistance to change though it may also act as a constraint on the extent of the change. Is more popular with trade unions keen to negotiate changes and ensure that their members benefit from change.
Negotiated piecemeal initiatives?
Similar to imposed piecemeal initiatives, but also has similarities with the negotiated total package approach. The gradual implementation of change will be negotiated at each stage.
Why is change sometimes resisted by stakeholders?
-A perceived threat to job security or maybe suppliers fearing for future orders.
-Misinformation and misunderstanding- stakeholders would not know the reasons for the change.
-Disagreement on if change is needed.
-Many people need security and stability at work so would be reluctant to change the situation.
-Lack of finance.
-Shareholder/owner resistance may be a result of the fear that changes to strategy may increase risk.
-Suppliers may also have to change their systems.
How to manage resistance to change?
-Organisational culture- the staff need to understand the reasons for the change.
-In large businesses, success relies on the ability of middle managers to communicate with subordinates.
-More likely to be accepted if change is slow and incremental, however this costs more.
-Communicate reasons for change and give a notice period.
-Different leadership styles will smooth the transition period of the change.
What was Lewin’s theory?
He recognised that it was not the difficulty of creating change, but of reinforcing the change that mattered. Change should continue into the future and that workers did not slip back into old methods of working.
Believed employees resisted change because they felt safe with the current situation.
Stage 1 of Lewin’s theory?
Unfreezing:
-This involves creating a motivation and a realisation that change is necessary.
-They therefore have to ‘unfreeze’ from current approaches to work and be prepared to adapt.
-Employees have to be shown it is necessary and managers need to create a situation in which change is desired.
Stage 2 of Lewin’s theory?
Change:
-Lewin described it as a potentially difficult time as workers are now moving to a new way of doing things. They need to be given time to understand and adapt to these changes.
-Support from management and supervisors is important, in the form of training, education, and learning from and not being criticised for mistakes.
-Allowing workers to develop their own solutions and maintaining clear communication of the objectives and benefits of the change are also important.
