ESSAY #1

by
Lena Bucatariu ID95389

MBA, Australian Institute of Business, 2013

BA, Cuza University, Romania, 2004

Assignment 1 Submitted in Partial Fulfillment of the IMM International Marketing

Management Course
To
Kay Green/D Coleman/G Babu?
SMC University
February 2016
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From introducing a paperless environment to implementing six sigma, being acquired or

going bankrupt, change is the only constant in the 21st century business environment. The writer

herself has had a series of experiences with what one might call ‘mismanaged’ change, including

MasterCard (US) call service job being outsourced, Manchester English Academy (Indonesia)

being shut down, and ERC Institute (Vietnam) forced into a local JV to secure its operating

license. Each of the three cases will be discussed in relation to Kotter’s 8-stage model (1996,

cited by Hoffman, 2015).

Sense of urgency

A sense of urgency was certainly created in all three situations: the head of MasterCard

Global Service Center announced in an emergency staff meeting that the entire department

would be outsourced from MC St Louis, Missouri headquarters to Convergys Corporation in

Florida within 6 months. At Manchester English Academy, a small family-run English school in

Surabaya, Indonesia, the primary owner informed the writer informally that the school would be

shut down by the end of the week… Finally, due to a change in the Ministry of Education and

foreign investment law, ERC Vietnam was given a government ultimatum to ‘become

Vietnamese’ or close down by the fatidic date of 12/12/12 i.e. within 8 weeks. While for MC

and MEA the reasons and deadline for change were self-imposed (MC – outsourcing to cut costs,

MEA – to cut losses and exit investment), in the case of ERC, the urgency was triggered

externally by a change in the country’s regulatory environment.

The Guiding Coalition

At MC, the group in charge of leading the change was a mix of insiders (Head of

Department, Assistant Manager) and outsourcing representatives (VP Operations, Head of

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Department, line managers from Convergys Corp.). On each side, the teams were well-formed as

they had worked with each other for several years, and, following a very detailed contractual

agreement between the two companies, they successfully completed the handover. As MEA was

a very small business (6 employees), the change was pushed through by one person, the primary

owner. At ERC Vietnam, the key change agents were all from the established leadership team –

ERC General Manager, Chief Accountant (a key position in Vietnamese businesses as there is no

CFO), Head of Marketing – and an external lawyer.

Developing and Communicating the Vision and Strategy

The author feels that none of the three companies handled this stage appropriately. At

MC, the announcement meeting was rather curt and came as a shock; most staff, including team

leaders who had been with the company for 10-15 years, started crying; rumours circulated that

even the Head of Department had only been notified less than 24 hours before the official

meeting. The ‘vision’ was very blurry, as MC management appeared conflicted between

encouraging staff to transfer internally but at the same time not wanting them to vacate the jobs

before the deadline. That the ‘strategy’ was not fully throught-through was quite obvious as, days

after the announcement, new hires were still being sent to the department on one-year contracts.

During an informal conversation with the writer, the primary owner of MEA mentioned that the

three owners were still discussing what to do about the employees, and hinted that a job would

be found for the writer at a friend’s school. At ERC, the General Manager tried to keep a straight

face as he described the strategic options of 1) partnering with a local school ‘that wants us’, 2)

buying a stake in a local school, or 3) temporarily closing until a local M&A would be

completed. At any rate, the GM was confident that the Group CEO from Singapore would make

the necessary sacrificies (especially financial!) to ensure that Vietnam operations remains in

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business. The expected behavior was for all employees to continue ‘business as usual’ and

ensure the students feel confident about the school’s future.

Empowering Action

Again, this step could have been handled better in all cases: in all three companies,

management generally made all the decisions and communicated very little on an ‘as needed

basis’. MC helped remove some of the paperwork barriers e.g. the writer and other international

interns who opted for the move to Florida had their apartment leases cancelled, were given new

work contracts, and were offered 1 (unpaid) week to move from MC in St Louis to Convergys

Corp. in Florida. At MEA, the owner removed some of the barriers, e.g. arranged new

accommodation in a different part of the city, and used word of mouth to secure a job transfer

into a new school without consulting the author. As a result, the writer was rather shocked to go

from a workload of 16 hours/week of teaching adults about Business English and IELTS to 26

hours/week of teaching primary school children about the names of vegetables… ERC Vietnam

signed a partnership agreement with a local university to remove some of the fear and worry of

being closed down, and guaranteed that no employee would be let go or have salary cuts

throughout the transition period. Still, even when known, very little information about the future

trickled down from the leadership team, which resulted in speculation, low staff morale, and fear

for job safety.

Generating Short-term Wins

Of the three, MC will become more of the focus as it is the only company that completed

this and the following stages quite well: all full-time employees who applied for transfers

obtained them, and all international interns who requested transfers to Convergys in Florida were

accepted within 24 hours. MC encouraged all Florida transfers to fully cooperate with

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Convergys, transfer know-how, and uphold MC’s high quality standards. The MEA primary

owner and new school principal treated the writer to a meal and offered a small pay rise for

having accepted the new job, after which the change was taken for granted. ERC Vietnam went

through about 8 months of gloom and minimal activity punctuated by monthly staff birthday

parties and the occasional ‘we have achieved another milestone with the government’ without

being very precise about its nature. To help the transition, staff were simply asked to continue to

believe in the school and its management. Towards the end of the dark period, staff in sales and

marketing were encouraged to resume full activity (ERC had been banned from recruiting new

students until its legal standing would be clarified), but appropriate staffing and incentives

lagged behind even fore the highest performers as salaries were often late and commissions

overdue by several months.

Consolidating and Anchoring Change

As stated above, MC/Convergys is the only case company that achieved these stages

quite well: transfers from MC HQ (including the author) were switched to a skills-based pay,

which resulted in an average increase of 25% compared to the former flat MC wages. Those who

had been very helpful and enthusiastic during the handover period were promoted to team leader

positions, received public praise, and were showcased as role models. Unofficially, they gained

expert power and credibility [ CITATION Hug12 \l 1033 ] and were often consulted by

managers when making decisions.

In the final analysis, the way businesses handle change depends on a combination of

factors including the nature of change triggers (external causes would be more difficult to

prepare for and manage through), size and type of ownership (small family businesses would

skip most steps while corporations may be more likely to gain employee buy-in through

incentives and rewards), corporate and national culture (humane Asian firms may tie job safety
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into the vision to motivate change while US corporations may put financial incentives first).

Thus, the question could morph into whether the proposed model supports the company’s change

context or not: yes, almost fully for well-structured businesses with strong Western-style

leadership, and only to a certain extent for smaller companies in cultures that display high power

distance [ CITATION Hof151 \l 1033 ].

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References
Hoffman, P. (2015). Change . Zug, Switzerland: Swiss Management Center.

Hofstede, G. (2015). National Culture . Retrieved from geert-hofstede.com: http://geert-

hofstede.com/national-culture.html

Hughes, R. L., Ginnett, R. C., & Curphy, G. J. (2012). Leadership: Enhancing the Lessons of Experience.
Singapore: McGraw-Hill.