Jack Maida |Vermont SC Change Management Unit 4 |

Business Management- Unit 4 | Outcome 2 Summary Notes

Change is any alteration in the internal or external environments.

NOTE: ensure you do
Organisational Change is the adoption of a new idea or behaviour by an organisation. not mix up these
definitions
> Organisational Change

VCAA Key Knowledge: the concept of organisational change

All organisations experience change at some point. In response to changes in the environment, many
organisations have undergone organisational change.

Some organisations are forced to change; others plan their change carefully. Changes should occur at a
pace that allows organisations to absorb and integrate them into their operations. Poorly managed changes
normally result in employee resistance, tension, anxiety, lost productivity and unmet objectives. There is
risk associated with change and strong leadership is required.

Long-term survival of organisations is dependent on the ability of its managers to be aware of the
environments, predict trends and exploit change. Successful change often comes from a proactive
approach (initiating change) rather than a reactive approach (waiting for change to occur then reacting).

> Forces of Change

VCAA Key Knowledge: the dynamic nature of the internal and external (operating and macro) environments
as sources of change

Internal Environment ~ all those things in which an organisation has some degree of control over

A powerful driving force for change as organisations will want to turn their
Poor Financial
financial performance around.
Performance
Responding to an unplanned crisis event will require responsive decision-making
Crisis from management in order to reduce the disruption to the organisation.

Desire to develop new and improve ways of doing things.

Innovation

Is formed over many years, but if it restricts success then it must be changed and a
Corporate Culture more appropriate culture need to be identified.

When new policies are developed and implemented, internal change occurs.
Policies

As new employees and leaders enter the organisation, they bring with them new
Employees/
ideas which may cause changes in the organisation.
Management

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The external environment includes those things over which the business has little control.

Operating Environment ~ The outside factors with which the organisation interacts with I the
course of conducting its business
Organisations need to be very responsive to changes in customer tastes and
Customers preferences in order to satisfy their needs and ensure profitability

Must keep up to date with what the competition is doing and how this is affecting
Competition your organisation. This enables your organisation to make change so plan new
activities if needed to remain competitive.
Need to be aware of alternative suppliers (even if you have a good relationship
Suppliers with your supplier) as this makes an organisation less vulnerable to supply issue.
Need to be aware of price increase and supply chain issues.
Seek to directly influence the behaviour of organisations.
Lobby Groups

~ the broad factors in the economy and society within which the
Macro Environment
organisation operates
The economy experiences a cycle of booms and busts which organisations must
Economic Forces adapt and change in response to.

When new laws are passed organisations must comply with the new legal
Political and Legal
requirements.
Forces
An organisation that wants to be competitive on all levels must adopt appropriate
Technology technology.

Organisations having to respond to now operating on a world-wide market

Globalization

Australia’s location has given opportunities for Australian organisations to expand

Geographic Forces into the Asia-Pacific region.

Society’s attitudes and values are constantly changing; organisations must

Social Forces respond to these.

When answering a ‘sources of change’ question-ensure you discuss the factor and give the
environment it is from.

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 Jack Maida |Vermont SC Change Management Unit 4 |
> Driving and Restraining Forces (8 of them)
VCAA Key Knowledge: driving and restraining forces for change in large-scale organisations, including
management, employees, time, competitors, low productivity, organisational inertia, legislation, cost

A Force-Field Analysis outlines the process of determining which forces drive and which resist a proposed
change.

Managers who are trying to implement a change need to conduct a force-field analysis to identify and
weigh up the driving and restraining forces. When driving forces are more dominate in an organisation,
then a change is more likely to be successful.

Driving Forces are those forces are those forces that initiate, encourage and support the change.

Restraining Forces are those that work against the change, creating resistance.

Pressure for change Pressure as Driving Force Pressure as Restraining Force

- Lack of consultation or negative

If there is a positive relationship
relationship with employees may
between employees and
mean change is not accepted
management, management is
Management more likely to allow change to be
- Some mangers make hasty and poor
decisions
discussed and successfully
- Indecisive management may lose
implemented.
employee confidence in ability to
-Links in with management styles make decisions

- Employees who don’t feel part of the

Employees who are in an
organisation or don’t feel appreciated
organisation with a positive
make change difficult introduce
corporate culture are more likely
Employees to be involved with change;
- Employees resist change because they
worry they will not adapt to new
resistance is less likely as
procedures or technology
employees are involve in the
- Fearful that change will affect staffing
whole change process.
and job security

- Not enough time given for people to

Organisations that are able to
think about the change, accept it and
plan ahead and put into place
implement it can lead to resistance’
strategies to deal with change, or
Time potential changes, are more likely
- Timing (of year) can be poor; eg. it is
generally harder to introduce some
to have the time to manage any
major changes during peak Christmas
changes to the organisation
periods

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Pressure for change Pressure as Driving Force Pressure as Restraining Force

- If a competitor dominates the market

Competition between companies
then organisations may be reluctant to
may mean that an organisation is
change because it is seen as a waste of
always aware of what its
Competitors competitors are doing and is able
time and resources
- If an organisation is always behind its
to respond to changes quickly
competitors in responding after
change has occurred, then change in
that organisation will be difficult

- Changes may cause a decrease in

High productivity may mean an
productivity and this fear of a reduction in
organisation is easily able to
productivity may make some
change its operations with few
Productivity issues
organisations hesitant to implement
change
- The impact change can have on people
(loss of security, lack of control) may lead
to low morale, lowering productivity

- Organisations that are stable with little

An organisation that is vibrant and
Organisational quick to take on new activities
change over time are less likely to
respond to changes quickly or in a
Inertia and challenges is likely to change.
positive way
~ an unenthusiastic A new organisation may find that
- Involves moving away from their ‘comfort
response from is more likely to adopt change.
zones’; some organisations will resent this
management to
proposed change

- When legislation places restrictions on

New laws can act as a driving
certain operational practises and
force for change if a new initiative
procedures it may restrain change
is introduced and organisations
Legislation need to change in response

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Pressure for change Pressure as Driving Force Pressure as Restraining Force

The ability to minimise costs will
act as a driving force
Cost
- If the costs involved in the change are
high it may mean that the change is
postponed or not implemented as well as
it should be
- Organisations must weigh up the costs
and benefits of proposed change

> Kotter’s Theory of Change Management (8 Steps)

VCAA Key Knowledge: key principles of the Kotter Theory of change management

A Change Management Process is a sequence of steps a manger would follow for the successful
implantation and adoption of change.

Establish a Form a Create a Communicate

Sense of Guiding Vision the vision
Necessity Group

Institutionalise Consolidate Recognise and Empower

changes Improvements Reward People to
Achievements Fulfil Vision

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❶ Establish a sense of Necessity

- Examine market opportunities and threats (analyse the organisation’s competitive position)
- Inspire people (give them a reason to want change)
↘e.g “we need change because…..”

❷ Form a Guiding Group A Facilitator is someone who helps people achieve an

object by providing unobtrusive assistance

- Establish a team of people to act as facilitators (they will guide the organisation through
the change)
- Team members should have the respect of staff in the organisation
- People in the group should have the right skills to introduce change

❸ Create a Vision
- Provide a clear sense of direction to employees
- Ensure the common objective is known by all
- Clarify how the change will be better than previous methods

❹ Communicate the Vision

- Share the vision with stakeholders
- Communicate the vision via various mediums (bulletins, meetings, intranet, email etc.)
- Lay the ground work (ensure stakeholders understand background and why the change
is occurring)
- Highlight advantages to stakeholders

❺ Empower People to Fulfil the Vision

- Recognise personal involvement through participation
- Involve staff so that they have a sense of ownership
- Offer training and development if required

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❻ Recognise and Reward Achievements

- Recognise staff- staff wish to feel as though their contributions are worthwhile
- Show appreciation for any contributions
- Reinforce the positive aspects of introducing change

❼ Consolidate Improvements
- Modify existing policies that no longer match the changed systems

❽ Institutionalise the Changes

- Clearly show connections between the new procedures and the success of the
organisation
- Use performance indictors
- This closes the change process

Ensure you know some ethical and socially responsible practises that relate to each step of
Kotter’s Theory.

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 Jack Maida |Vermont SC Change Management Unit 4 |
> Strategies for Effective Change Management
VCAA Key Knowledge: a range of strategies for effective change management, including low-risk practices
and high-risk practices

Low-Risk Strategies
Low-Risk Strategies to achieve successful change rely on communication, employee involvement in the
change process, training, support and negotiation.

Low-risk strategies are more likely to be successful in the long term and allow for all stakeholders in the
organisation to feel valued as their ideas and feelings are taken into account.

Low –risk strategies can involve:

Ensuring
Discussing any
communication is
upcoming
two-way, not just
changes- this
top down
reduces fear of
the unknown Provide constant
Allow employees feedback
to participate in
Offer support-this
the change
reduces anxiety
process Build trust among Low-Risk Strategies
employees Supporting
Avoiding threats
change with new
learning

Specify the Make sure the

nature of change changes are
Outlining the reasonable
positive and Clearly Following a
negative aspects articulating the sensible time-
purpose of the frame
of the change
change
Effective Managers Should:

- Be constantly scanning the environment to understand factors that will impact on an organisation. This
allows them to identify the need for change
- Change in the external environment may cause a need to change objectives. Must set achievable objectives.
- Identify supportive change agents-management, employees, outside consultants-who assume responsibility
for managing the change process.

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Advantages of a Low-Risk Approach:

° Maintain a positive corporate culture

° Job security remains stable
° Job satisfaction levels do not drop

Disadvantages of a Low-Risk Approach:

° Timely to change; this can be bad in a particularly competitive environment.

High-Risk Strategies (3 of them)

High-Risk Strategies are considered high risk because their failure may generate negative outcomes. These
could include manipulation, co-optation or threats.

Ultimately, any gains made when using a high-risk strategy may be outweighed by the instability within the
organisation. Generally high-risk strategies are unethical, leading to detrimental consequences.

Manipulation

Manipulation is the skilful or devious extortion or influence over someone to get them to do what you
want.

Co-optation

Co-optation involves the selection of an influential person among the potential resistors to be involved in
the development and implementation of the change process. They will mainly be symbolic in their role and
will carry little authority over the process; they will have very little input.

If the individual recognises what is being done in this process and feels used this can backfire, causing
widespread instability and greater resistance.

Threat

When a manger cannot invest the time or effort into another method of change they may resort to threats.
Threats can include loss of promotion, overtime or termination.

The danger with this method is that whilst people are compliant, they are resentful underneath. This leads
to an increase in resistance (can lead to grievance complaints, compensation claims for stress, industrial
disputes).

Advantages of a High-Risk Approach:

° Quicker as there is no consultative process

° From a managerial perspective there is less to be done in order to introduce change
° If employees remain unaware of what is occurring the change will be successful

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Disadvantages of a High-Risk Approach:

° Employees could become aware, creating anger and resistance

° Runs a very fine line towards illegal behaviour
° Unethical
° Employees may become more unproductive and take more sick days off, affecting costs.
° Performance Indicators relating to staff satisfaction could decrease

> Change Management in Relation to a Specific Issue - Technology

VCAA Key Knowledge: the process of effective change management in the context of a significant issue

Change management strategies in relation to technological change:

- Before introducing any new technology, analysis of the effects of the new technology must be
undertaken. New technology may impact on job design, health and safety, employee motivation,
and remuneration of employees. The organisation must identify the restraining forces that may
impede the change.
- Employees will need to acquire new skills. The HR management function will play an important role
in training and developing people to adapt to the introduction of technology. In some cases
individuals with the appropriate skills may need to be hired.
- HR will be required to manage those employees who are made redundant as a result of the
technological change.
- NOTE: ^ this links in with
the Australia Post case
> Leadership in Change Management study (page 13)

VCAA Key Knowledge: the role of leadership in change management

Leading is the process of influencing or motivating people to work towards the achievement of an
organisation’s objectives.

Leadership is the process of positively influencing and encouraging individuals to set and achieve
objectives.

To successfully implement change a manager needs to perform the role of leading. They need to show
leadership. Leaders show empathy and have good listening skills (these will allow them to identify
resistance to change). Successful leaders will also: (know 2-3)

 Promote change in a way to achieve cooperation

 Resolve conflicts
 Keep an open mind
 Share information
 Gather new ideas
 Establish a sense of stability whilst pursuing change
 Communicate a clear vision

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Employee’s acceptance or resistance to change will depend on how their manager treats them. Employees
are more willing to accept risks associated with change if mangers are concerned about their welfare. Less
effective managers tend to focus more on tasks and deadlines.

> Impact of Change on Organisations

VCAA Key Knowledge: the possible impact of change on the internal environment of large-scale
organisations, including the functional areas of operations and human resources

Some organisations respond to the forces of change in a major way. The result is often a complete
restructure of an organisation. This is referred to as transformational change. It may involve such things as;
different (usually flatter) management structures, greater use of technology, new work systems and
procedures and an altered corporate culture

Transformational Change often results in the complete restructure throughout the entire organisation.

Other organisations may respond to change in a smaller way. This may involve just a few employees at a
time undertaking new operational procedures. This is referred to as incremental change.

Incremental Change results in minor changes, usually involving only a few employees.

These changes can impact on various parts of an organisation:

Impact on:

Organisational Structure
Organisations need to continually improve and develop if they are to survive change. The aim of
change in organisational structure is to streamline operations, improve efficiency and empower employees
to make their own decisions.

Structural Changes can include:

>Outsourcing ~is the contracting of some organisational operations to outside suppliers.

Organisations try to limit the number of full-time staff by contracting to external suppliers in order to
reduce labour costs. This involves some jobs in the organisation being lost. Outsourcing helps to improve
efficiency and lower costs, which is needed for a business to survive globally.

>Flatter Structures

The shift of organisations from formal, hierarchical structures to looser, informal structures has meant
many middle-management positions are abolished leading to greater levels of accountability being given to
frontline staff.

This can involve;

° Fewer reporting controls

° Sharing of best practise methods
° Focus on continuous improvement
° Supportive learning environment
° Learning focused on the organisation’s needs

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>Work Teams

Are closely coupled with the emergence of flatter structures. They allow greater flexibility, more creativity,
an increase productivity, enable greater employee contribution across the organisation and enables
employees to develop broader views of goals. They allow organisations to be more flexible and responsive.

Teamwork involves people interacting regularly and coordinating their work towards achieving a common
goal.

Impact on:

Corporate Culture
For an organisation to survive I the long run, changes within the external or internal environments should
be reflected in its culture. If the organisation fits the external environment, managers and employees have
the attitude they need to compete successfully.

Impact on:

Human Resources Management

Organisational change will impact employees on all levels. Some changes include:

- Recruitment and selection processes need to be modified in order to reflect the need for
individuals who can cope with the change
- If employees are to be made redundant due to change, proper termination procedures must be
implemented and carried out
- Training must be offered to existing employees in the areas of teamwork, problem solving and
decision-making
- More autonomous and empowered employees will require changes to traditional roles and
communication methods within the organisation
- A clear vision of where the organisation is headed and the benefits to employees will need to be
developed and clearly communicated.
- Performance appraisals and reward systems that reinforce new behaviours must be put in place

Impact on:

Operations Management

Organisations have to gain a competitive advantage by reducing production costs in response to change.
Thus, organisations are constantly seeking out ways to speed up production time, shorten production
development, streamline distribution and serve customers.

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Some responses to change include:

- Refitting and reorganising of factories in order to streamline productions

- Emphasis on quality management in order to ensure the production of products that satisfy
customers
- The introduction of new advanced technology

> Ethics and Social Responsibility

VCAA Key Knowledge: ethical and socially responsible management of change

Organisations need to change in order to meet their ethical and social responsibilities.

 They should conduct a thoughtful and sensitive implementation and consultation process
 They should ensure all stakeholders understand and are involved in the change and therefore feel
some ownership of the process
 At all times, communication should be open, continuous and involve all parties affected.

> Business Case Study~ Australia Post

VCAA Key Knowledge: the process of effective change management in the
context of a significant issue

Australia Post is a Government business enterprise (Def: An organisation

that is government owned and operated)

NOTE: you need to be able to link
The Significant Issue ~ Technology Australia Post examples in with each
dot point of the study design
As the use of technology increases, organisations need to change the
way they conduct their business. Context:

 Australian shoppers spent $14.4 billion a year online

 More than 50% of Australians shop online
 70% of Australia post deliveries are generated through online shopping

Immediate impact of technology on Australia Post:

 An increase in online sales led to an increase in parcel deliveries

 30% decline in letter volumes over the past 5 years (expected to decrease further) on the back of
increased email use
 Australia Post suffered a $218 dollar loss in its domestic mail business in 2013
 Loss in letters are now, for the first tie, overwhelming the profits made in parcels
 Australia Post has also faced intense competition; Australia Post is losing market share to
competitors

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Pressures for Change on Australia Post: (3 of them)

1. Increasing use of technology: email, bPay, online purchases and parcel deliveries
(MACRO ENV  Technological Development)
2. Increased participation in Workforce : increased hours of work
(MACRO ENV  Societal Attitudes)
3. Poor Financial Performance
(INTERNAL ENV)

Due to the impact of technological change, Australia Post has had to change the way that it operates in
order to avoid increasing financial losses.

Some of the changes it has introduced are:

 Introduction of Load-and-Go cards reloadable visa pre-paid cards

 Introduction of express post, parcel post, other postage products and stamp collections
 Creation of ‘My Online Shop’ website- helps customers to build their own website and take
bookings, sell products and deliver orders using Australia Post integrated payment services
 Developed an App - calculates costs, search for a postcode, view and track parcels, pay bills, find
post boxes, locate retail outlets
 Created ‘My Post Digital Mailbox’ - allows customers to receive/pay bills, receive mail, securely
store documents online
 Extending operating hours
 Introducing vending machines for stamps
 Enabling electronic tracking of parcels
 Introducing parcel lockers (available to be opened 24/7)
 Introduced regular letter service for business customers that is delivered on a slower timetable
 Cut 900 jobs in 2014 (is estimated that it could cut a further 10,000 jobs over next 3 years)

Some of the possible changes it may introduce are:

 Reducing the daily mail service to 2/3 days per week (on government approval)
 Increasing the cost of parcel products and stamp prices

Performance Indicators that could be used to see effectiveness of change:

- Number of Sales- Record number of deliveries of parcels, resulting in increased sales due to online shopping
- Number of Customer Complaints- delays in parcel deliveries, cards left when people were not home
- Level of Wastage- 31% of non-hazardous material waste was recycled
- Profitability-increased profits from parcel deliveries

Impact of Change and Technology on Australia Post:

Operations;

° Extended operating hours

° New range of products-load and go cards
° 33 superstores opened across the country where customers can access online shopping, 24/7
lockers and self-serve terminals

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Human Resources;
° Staff trained in new products-$20 million was spent on ‘future skills’ (training in areas of parcels
and digital services).
° Increased number of employees and contractors to deliver parcels in peak periods
° Workforce reduction of 900 managerial jobs (HR would ned to deal with transition and entitlement
issues)

Innovation (Research and Development);

° 24/7 parcel lockers developed, My post digital mailbox launched, app created, new technology to
track parcels created

Finance;

° Developed new costing structures- increased stamp prices, invested $2 billion in infrastructure and
products and services in support of the digital economy

Corporate Culture;

° Health and wellbeing program introduced to support employees

° Employees consulted throughout the process of job cuts

Structure;

° Restructured their business to include separate divisions: retail services, parcel and express
services, digital and technological services.

Driving and Restraining Forces for Change at Australia Post:

Driving Forces Restraining Forces

Technology - Australia Post has been able to
take advantage of society’s increased use of
technology and developed new products and
ways of going about their business in order to
improve their profitability
Cost - Implementing change can be costly and
Australia Post had to develop marketing
campaigns to inform customers of their new
products, they also had t spend millions of
dollars retraining employees in light of their
new responsibilities and products.

Poor Financial Performance - due to their Employees - employees need time to adapt to
financial losses in delivering small parcels and new procedures and work routines, they may
letters, Australia Post needed to change their be reluctant to do so if they believe their job
business operations to avoid further losses is in danger

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Ethical Issues in Technological Change:

> Managers must ensure that they do not set impossible deadlines and that workers are not working
excessive hours (due to increase in parcel deliveries)
> Vulnerable employees must not be exploited
> Australia Post has a Code of Conduct which sets out how to deal with ethical dilemmas

Social Responsibility:

> Sponsorship Programs; Stawell Gift, melanoma research, breast cancer research, staff health
and wellbeing
> Aims to reduce greenhouse gas emissions by 25% by 2020
> Have an “Our Neighbourhood” Program
 Workplace giving program- raised $500,000 in 2012/13 from staff for the program.
Australia Post matches this dollar for dollar and donates to 9 different charities
 Partnership with ‘Boots for All’ charity, providing footy boots to the disadvantaged
 Supported disaster relief (Tasmanian bushfires)
 Has a partnership with the AFL in supporting local community footy camps

> Definitions

Term
Change
Change Management
Process
Co-optation
Corporate Culture
Driving Forces
Ethical Management
External Environment
Facilitator
Force-Field Analysis
High-Risk Strategies
Definition
Any alteration in the internal or external environments
The sequence of steps that a manager would follow for the successful
implementation and adoption of change
Involves the selection of an influential person among potential resistors to be
involved in the development and implementation of the change process. They
will mainly be symbolic in their role and will carry little authority over the
process; they will have very little input
The values, ideas, beliefs and expectations shared by members of an
organisation
Are those forces that support a change
Abiding by moral standards and doing the ‘right’ thing in the interests of all
stakeholders
Includes those things over which the business has little control.
Someone who helps people achieve an objective y providing unobtrusive
assistance
Outlines the process of determining which forces drive and which resist a
proposed change
Are considered high risk because their failure may generate negative outcomes.
These could include manipulation, co-optation or threats.

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Incremental Change Results in minor changes, usually involving only a few employees.
All those things in which an organisation has some degree of control over
Internal Environment
The process of positively influencing and encouraging individuals to set and
Leadership achieve objectives.

The process of influencing or motivating people to work towards the

Leading
achievement of the organisation’s objectives
Methods taken achieve successful change, which rely on; communication,
employee involvement in the change process, training, support and
Low-Risk Strategies
negotiation.

The broad factors in the economy and society within which the organisation
Macro Environment operates

The skilful or devious extortion or influence over someone to get them to do

Manipulation
what you want
The outside factors with which the organisation interacts with I the course of
Operating Environment conducting its business

Organisational Change The adoption of a new idea or behaviour by an organisation

Organisational Inertia An unenthusiastic approach from management to proposed change
Outsourcing The contracting of some organisational operations to outside suppliers
Restraining Forces Are those forces that work against a change
The responsibilities a business has above and over its legal obligations to
Social Responsibility ensure the wellbeing of its employees, customers, shareholders, the
community and the environment
Involves people interacting regularly and coordinating their work to achieve a
Teamwork
common goal
Transformational Often results in the complete restructure throughout the entire organisation.
Change

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