Effective Change Management During Restructuring and Reengineering

by
Chan, Teng Heng
Associate Professor, Director of Undergraduate Studies (HRC), Nanyang Business
School, Nanyang Technological University

Executive Summary
This paper encapsulates the change management arrangements in companies facing
restructuring and reengineering, and how management can avoid labour unrest and
management litigations as a result of work reengineering, forced lay-offs and cost
reductions to survive. Based on experiences from consulting assignments, senior line
management challenges and academic reviews, the key success factors in effective
change management are a strong strategic HR group, continuous communication with
the workforce and the public, personal dialogues and negotiations with senior
management, a clear plan of attrition and generous but friendly parting of employees.
The key personnel who should be engaged for the management of change must be
high- level human resource personnel, the chiefs of the divisions and of the company.
These highly strategic levels of engagements cannot be delegated.

Introduction
Ulrich (1998) stated in his review that in the new economy, success and winning will
come from an organization’s ability to move with speed, responsiveness, el arning
capacity, and employee competence to quickly turn strategy into action, to manage
processes intelligently, efficiently, and to create conditions for seamless change.
Hammer (1996) predicted that the rate of change in the economic environment has
become exponential and organizations will face more unexpected and unanticipated
changes with the pace accelerated and the time horizon foreshortened. Business issues
become more unpredictable. He suggested that companies could survive by
institutionalizing within the company a capacity for changing themselves. The most
dramatic impact of the change- intensive environment is that the intellectual capital is
rising in importance relative to physical capital. With these changes, the HR role has
become more strategic and the HR professional is best positioned to champion this
intellectual capital. As change during restructuring and reengineering is very complex,
it requires a very strong HR group. The Human Resource Institute in US monitored
the shift in the HR roles and found that it has changed from a policy setting,
functional expert and consultant role in 1996 to one that is a strategic thinker, an HR
strategist and a change agent by 2001 (HRI, 1998). Ulrich and Eichinger (1996)
suggested that this demand in changing role for the HR is such that if the HR
personnel cannot deliver, they should be replaced by others who are able to take on
the more strategic and important role. Very often, this role in HR is taken by the line
management function. It was noted (Ulrich and Eichinger, 1996) that in National
Semiconductor, IBM, Texas Instrument, ford, Intel and GE, HR operates under a
different paradigm with the HR practitioners spending the majority of the time in
transformational aspects, not transactional, of the organization. Hence, aligning
corporate goals to team and individual behaviour, managing intellectual capital,
performing organizational diagnosis and brokering solutions, coaching managers how
to accomplish the above changes, etc. Kossek and Block (2000) questioned whether
should there be a radical surgery to the HR if the HR cannot hack it? This could be

Conference Paper Presented at Pacific Conferences, Singapore

Associate Professor Dr Chan Teng Heng 18 July 2002
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Pacific Conferences 18 July 2002
the most important step to take to ensure effective change management could take
place during the complex restructuring and reorganizing in companies.

The core concepts in managing change are 1) to build a change-ready organization, 2)

align the people processes with strategic intent, and 3) practise scenario planning
(Kossek and Block, 2000). These steps suggest that the highest level of management
in an organization need to work hand in hand with the HR professional which are
drawn from various discipline and line management. This is to ensure the people
engaged in change management understand all the business processes involved. When
the key strategies and goals are mapped out, the people processes (from hiring
procedures, to contracts, and retirement, and including training, reward systems,
performance appraisal, job evaluation, personnel administration), need to be aligned
which would require changes in the human resource functions and delivery
expectations. In managing the changes, there must be multiple cost and benefit
analyses, which have to be made to determine the outcome of each scenario of change
planned. In some restructuring exercises made by management (Chan, 1990), cost
cutting may be so severe that when the operations resumed the following week, many
operations are crippled as the staff had been removed and no one was knowledgeable
enough or there was insufficient manpower enough to process the sales order or the
bank draft! Hence, Kossek and Block’s suggestions are very beneficial to ensure that
this does not happen. We shall now examine the stages in change management.

The Change Curve

The change curve is depicted as above in Figure 1.

Well- managed
change (E)
+ve Management
Period of of change (F)
Start of Uncertainty
change (B) -ve
(A)
Level of
Productivity

Valley of
Despair Depression if
(C) unattended
(D)

Time
Figure 1. The Change Curve

The change curve shows that if the change is not managed properly (D), the
productivity of the company could be jeopardised. Properly managed (E), the change
could increase the productivity within a very short time. As a result, the management

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of change (F) could be either positive or negative. The planning of scenarios is to
enable the organization to react faster and better, so that if the change is not going as
planned, the organization can quickly take corrective action. For instance, not
communicating the changes in time to the union leader in the company can forestall
the planned change, and communicating too early or too late could lead to disastrous
results. The president of Global Business Network said “scenarios are about trying to
avoid getting the future wrong in fundamental ways” (Fost, 1998).

A Strong Change Management Team

Looking at the change curve, the types of personnel which are required to effectively
manage change, especially in a restructuring and reengineering environment, would
include the 1) the chief executive, or his designated second in command, with enough
authority from the board of directors, 2) a strong person in human resource, or a line
manager strong in human resource, 3) most senior financial officer, 4) the key line
managers, preferably at vice president level, 5) a person in charge of communications,
for both internal and external, 6) a person familiar with legal and industrial law and
practices, 7) trusted middle level executives whose functions are in running scenario
and financial analyses, and 8) sufficient secretarial support. In summary, a team of
strong management team backed by competent human, legal and operational
resources and sanctioned by the highest authority in the company. There must be no
delegation as there are many failures arising from a) top management’s misperception
that such change is very simple, and b) secrecy, especially, in planning stages, where
some of the scenarios could be very alarming to the employees.

Top management may often deal with the financial outcome of the company in
restructuring and reengineering and leave it to the HR department to deal with the HR
issues. Sometimes, this is misplaced. Hamel and Prahalad (1994) believes that the
biggest underleveraged skill in a large company is in HR. Stewart (1996), editor of
Fortune is more blunt, put forward his view that people need people but they do not
need personnel, and hence, it’s time for human resources department to put up or shut
up. These two views indicate that management cannot take HR for granted in assisting
change, and needs to beef up the department or replace those with people of the right
competence, who can think strategy, restructuring and transformation.

Build a Change Ready Organization

Restructuring refers to structural design changes as a result of business changes or
financial changes to the company, where because of profit/loss impact on the
organisations, the company’s core business needs to be changed. Structural design
changes include the changes to the organisation structure, to the technology used in
the organisation, the processes used and people working in the firm. The most
common changes to structural changes are to move to functional, self-contained units,
to matrix, process-based structures or to network-based structures. Reengineering is
the final restructuring intervention where there is a fundamental rethinking and radical
redesign of business processes to achieve dramatic improvements in performance
(Hammer and Champy, 1993). Hence the changes differ in the degree of change
(Figure 2).

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structural strategic
Techno-Process-
Functional People -Functional Reengineering
Restructuring Restructuring

Degree of complexity
Figure 2. Degrees of Restructuring

Taking an example of downsizing as part of restructuring, we will be able to see what

needs to be built up to create a change ready organizatio n. Downsizing is the
interventions to be taken by management, with and without the help of consultants,
aimed at reducing organisation costs, where the emphasis is on labour reduction by
layoffs, attrition, redeployment, early retirement or by reducing the number of
organizational units or managerial levels through divestiture, outsourcing,
reorganization or delayering (Cascio, 1993). Downsizing is increasingly claiming the
jobs of middle management. As the management levels become impacted, the
fundamental changes need to be more multi-dimensional, involving technology,
redefining processes and changing the titles and roles of the workforce.

To ensure that the change is effective, one of the ways is to take a snapshot of the
company’s profile from 22 dime nsions. Many consulting firms have similar
organisational diagnosis tools. One example familiar to the author is to look and four
dimensions of an organisation and determine how each influence factor is ready for
change.

Table 1. Organizational Snapshot Check

Dimensions State of Process Structure & People
Leadership Infrastructure
vision: is it planning: how is roles, values:
clear? this done? relationships What binds
Influence and form: are them ?
Factors they clear
image: is operations: technology:competences:
internal, Which are What is the state
what are the
external image mission critical? in the firm?
core skills and
good ? competences?
power: controls: are reward: knowledge
who controls controls How is the capital: How is
power in the prohibitive? reward system? this captured
firm? and shared?
openness: is communications: motivation:
the firm how effective? What moves or
innovative? risk hinder them?
taking?

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style: is allocation: commitment:
management how are resources How committed
open? allocated? are they?
acceptance :
how acceptable
is training and
new ideas ?
Change ready? ready? ready? ready?

Some of the areas that the organization needs to be ready for change is to have a
project team ready to spearhead the change and be the communication center for
information with regards to changes and clarification of uncertainties and rumours in
the company. The most damaging rumours can cause key personnel at all levels to
jump ship or cause the organization to be paralysed by fear and ambiguities. Hence, a
handpicked team once identified has to be trained in managing the change
management project, and one of their early tasks is to get the organization ready for
change.

The more complex the change, the more planning is required. Where reengineering
involves a radical change in the business, it may need additional planning studies like
impact analysis to determine the changes that may affect other areas in the
organization. For instance, in a bank where there was a radical departure in putting the
best qualified people on the frontline, instead of the usual trainees, this had a great
impact on the recruitment requirements, the motivation of more experienced staff to
man the counters (in conventional bank workforce arrangements, the trainees are put
on the counters and the supervisors will move up and down the counter to train them;
more experienced staff may be hesitant to work on the counters), the supervision and
the authority and controls given to the counter staff.

Aligning the People Processes with the Strategic Intent

When organizations merge, one in nine job cuts during 1998 in US were the result in
the integration of two organizations (Laabs, 1999). Companies need to reduce staff as
a result of the loss of market share and revenue because of technological and
industrial change, due to relocation of factory from a higher cost place like Singapore
to a lower but more centrally market like China. Other losses of staff could be the
result of the necessity to recreate a new business structure like the network based
structure where the administrative and support functions are outsourced. Many banks
have outsourced their payroll functions to IT firms to reduce their overhead costs.
Finally, there is always the belief and business pressure that smaller is better
(MacKinley, Sanchez and Schick, 1995). Hammel and Prahalad (1994) warned that
organizations may downsize for their own sake and not think of future growth,
leading to a symptom of “corporate anorexia”. Whatever the strategic intent, it is of
utmost importance that the people processes need to be aligned, and this needs to be
done fully and not in parts. It is not uncommon for organizations to find that after
delayering their people because of requirements to comply with staff : branch ratio,
that there is not enough of experienced staff, resulting that the overall exercise may
have met the restructuring objectives, but failed in the strategic intent that business
was crippled due to lack of competence in certain branch. One way to counter this is
to review in totality the changes in the HR processes by considering the human-
resource life-cycle components and their individual processes that need to be changed
to meet the new strategic intent. This is shown in figure 3.

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HR Strategy
Ex-staff & Manpower New staff
Planning
Outplacement,
Resignation Recruitment
&Selection
Employee Relations/ contract
Industrial Relations HR LIFE-CYCLE management
Orientation
& Placement
Learning,
Organisation & Self- Interventions
Development Job Evaluation
&Performance
Appraisal
Reward,
Compensation
& Benefits

Figure 3. Human Resource Components

It may be necessary to conduct a job evaluation and change the performance appraisal
if the strategic intent has been changed where all managers are measure by MBOs
(management by objectives) or where all managers have to give key priority to
training and development, otherwise the managers will only pay lip service to the new
management initiatives. As each component of the HR life cycle is interconnected,
even changing the structure from a functional to a network-based organisation
requires changes in the recruitment specifications, the orientation and placement
requirements, the job evaluation and performance appraisal, and the reward,
compensation and benefits system, since the network based organization skills would
be different from a functional skills.

In restructuring and reengineering, especially during the economic downturn, it is

even more important that these changes to the human resources are made as
downsizing and business changes are implemented otherwise a dysfunctional
organisation will result.

Scenario Planning
The financial, legal, human resource and business implications may be necessary to
be built into the scenario planning. An active planning may involve the impact
analyses on operations if , for example, there is a 10 percent pay cut, a 20 percent pay
cut, a 30 percent pay cut, versus retrenchment of 10 percent of workforce, 20 percent
of workforce or even if a division is totally shut down. Each change in the numbers
may have different impact on the morale, on the key people leaving, on the disruption

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in operations. Hence, these scenario-planning sessions need to be conducted, and the
project team need to be prepared for each eventuality. Questions may include the
following: what happens if there is an outright strike? what would be the drop in
business like once the downsizing takes place? Will there be a mass resignation and
walkover to the competitors? How will the communication be made? Should the
supervisor be told first and then the message passed down to the rank and file? A
check list can be prepared from the same table as Table 1, and this is shown in Table
3:

Table 3. Organizational Scenario Check List

Dimensions State of Process Structure & People
Leadership Infrastructure
vision: what is planning: will roles, values:
the vision of the the planning be relationships how will people
Influence business ? disrupted? and form: who left behind be
Factors should re-write affected?
these?
image: will the operations: technology: competences:
image be Which mission what changes
what are the
affected critical operations require most
core skills and
adversely and will be affected investment? competences
the impact on most? required for
the stock price each scenario?
power: controls: how reward: knowledge
what changes of will controls how will the capital: How is
power will there change? staff be this shared with
be with each compensated for key people
scenario? those left departing?
behind?
openness: is communications: compensation: motivation:
the re a change how should each how much will what is required
in the firm’s change be it cost the to re-motivate
innovative & communicated? company and those remaining
risk taking? how much staff?
disruption will
restructuring
cost?
style: how much allocation: commitment:
management what resources what program of
change will need to be commitment
there be sacrificed and need to be
reallocated? instituted?
acceptance :
how will change
be accepted?
Change positive? positive? positive? positive?

Results of Downsizing
Empirical research on downsizing is mostly negative and the results have proven to be
by and large a failure (Druckman, Singer and Van Cott, 1997). A survey of 1005
companies that used downsizing to reduce costs reported that fewer than half of firms
actually met cost targets. Only 22 percent achieved productivity gains and

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consequently 80 percent of firms needed to rehire the same people they had
previously terminated. Fewer than 33 percent of the companies surveyed reported that
profits increased as much as expected, and only 21 percent achieved satisfactory
improvements in shareholder return on investment (Bennet, 1991; Cascio, 1993).
Another study examined an array of financial performance measures such as return on
sales, assets and equity in 210 companies that announced layoffs (McKinely,et.al,
1994). The increases in financial performance in the first year following the layoff
announcements were not followed by performance improvements in the next year.
There could be three reasons why a bleak picture of downsizing took place. Many of
these survey oriented survey took responses from human resource specialists who
might have viewed downsizing in the negative light. Secondly, the companies
selected for the survey might have been poorly managed. Downsizing alone would
have unlikely improved performance if the other aspects of the organisation have not
been addressed, like managerial competences, reward and control systems. Finally, it
could be due to the way downsizing was implemented. In contrast however, Byrne
(1994) have noted that a number of organizations have posted solid financial returns
and these include Florida Power and Light, General Electric, Motorola, Texas
Instrument, Boeing, Chrysler and Hewlett Packard. Another study showed that
companies that implemented downsizing properly with a planned strategy containing
steps for the process of change management (Cummings and Worley, 2001). The
success of the assignment depends on the size of the layoffs, the amount of delayering
and the extent of change taking place within the organization. It is the experience of
the author that where there is a planned program of change and quick response to
these changes where the steps are not working well, the chances of successful
implementation of restructuring are enhanced.

The key difference in reengineering is the fundamental rethinking how work gets
done. This is not easy as it involves very strategic change and investment in ordering
a massive change, and process changes should not be mistaken for a reengineering as
many companies have done (Chan, 1997). A cross functional team is needed for this
reengineering with the CEO fully briefed as the impact of reengineering is company
wide. There is adequate literature on reengineering and Hammer and Champy (1993)
are the main conceptualizers of this approach. Allen and Nafius (1993) have written
about reengineering on the GTE telephone operations for interested practitioners to
follow and there are many examples that one can read about. The results of
reengineering is equally dismal. Seventy percent of the reengineering efforts failed to
meet cost, cycle time or productivity objectives (Hammer and Champy, 1993);
another study of 1,472 companies in U.S. and Europe found that 60-75 percent of
firms have tried in at least one reengineering project but 85 percent have reported
little or no gain in their efforts (CSC, 1994). The difference between successful and
unsuccessful reengineering depended on the scope of business process selected.
Reengineering key value added processes affected total business unit costs;
reengineering narrow business processes did not. In the author’s experience (Chan
1997), it could be that companies may have done some business process improvement
and mistakenly called it business reengineering, without fundamental shift in thinking
how the business could be changed without incurring high costs. Where there are
successful reengineering, there were clear vision of the future how business could be
transformed (not transacted), specific goals for the change (i.e. planned change
program), use of information technology to support the change, top management
involvement and commitment (in terms of budget, which could be huge sums), clear

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milestones and measurements, and the training of project team in process analysis
and teamwork (Dixon, 1994).

Case Study
Two case studies are described here detailing how some of the fundamental issues
were addressed in restructuring and reengineering, and why some of these were
successful and others failed.

Effective Restructucturing and Reengineering in a Bank in Asia

The bank had called in three groups of consultants to restructure the bank and turn it
around. This happened when the rest of the Asian economy was booming and this
particular bank was losing money. It was taken over by an agency as the main
shareholder. It had a multiple branch banking system but each branch was run down
and staff in general did not have the competencies to run it well. Senior management
were looking after their own interests; training was confined to a few, who went on
overseas training trips, and lavish company cars were excessive.

The chairman of the company hired a strategy consultant to map out the future of the
bank, a financial consultant to review its financial restructuring and a change
management consultant to revamp the bank’s human resources. As the chairman was
the highest management authority, full mandate was given to the consultants to ramp
us the bank’s operations and processes. A team of over 35 management consultants
were involved and more than 10 of the bank’s staff worked together.

The success of the project could be identified as due to the following:

1) Overall: diagnosis: the diagnosis of the bank’s financial, technology, human
and infrastructure support was carried out and the weaknesses/opportunities
identified.
2) These findings were then translated into a strategic business plan where the
finance, technology, human resources and infrastructure were carefully
mapped out in details with definite timelines and goals/milestones.
3) Implementation was backed by the chairman and his team of new managers,
some of which were engaged for the interim period pending the search for
permanent banking staff was in progress.
4) There was continuous communication with the consultants, the management
and with the employees, with all these involving the chairman.
Within a year, the bank achieved its image make over to reflect a new bank.
Customers were attracted back. The financial deposit requirements with the state were
made.

Some of the specific issues that were dealt fell into these areas:
a) Dealing with excess manpower: although the bank was understaffed, it lacked
the right calibre of staff and hence the existing staff was excessive. As each
staff had to take a personality profile test, and then personally interviewed,
those with potential were redeployed to various branches. The excess were
temporarily put into the debt management sectio n as the bank was owed large
sums of debts by borrowers. New staff were brought in to man the counters;
these were fresh university graduates with no more than two years experience.
Some were recruited from other banks. The whole human resource manpower

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were revamped with a new head installed. Those not suitable were given a
generous early retirement benefits.
b) Moving people away from their comfort zone: As many had worked in the
bank for many years, they were of a fixed mind set. A series of
communication programs where the chairman unrolled the new vision of the
bank were made. Many were drafted into the improvement teams with specific
project outcome to be met. The new organisation chart was drawn with new
from, roles and relationships defined.
c) Retention and Separation: Those with potential were immediately put into
their new roles and those targeted for separation were given notice. None of
the staff were immediately fired except the senior management were
immediately suspended of their duties. Even those who eventually separated
from the bank were at least in employment for three months before they were
paid their benefits. At all times, there were continuous communication with
the staff.
d) Humane vs. inhumane way of retrenchment: For the senior management,
there was a number of discussions with them without any accusations or
mistreatment, but the facts were laid before them as to the need for the bank to
retrench them. Each were told of the bank’s financial state, and they knew of
the direction the bank was moving. None of them were let go without personal
explanation and notice.
e) Costs and Retrenchment Benefits: it was felt that their years of service would
be used in retrenching, i.e. a months wage for each year of service. On top of
that, the chairman fe lt that paying slightly more would be better than save a
few dollars and get the bank into industrial action or legal action. This reduced
the number of industrial legal cases that went to the industrial court.
f) Managing internal and external perceptions: A communication center was
set up to issue statements which were vetted by a committee and the chairman.
Newsletters were issued on the new changes (such as the setting up of a model
branch bank). Face to face sessions between the chairman and the employees
went a long way to arrest industrial unrest and mass resignation. At the same
time, there was also new recruitment of new bank officers and staff. Public
announcements of the takeover of the bank and the changes being made to the
bank were made in newspaper and media releases.

The fundamental change of the bank from a run down and nearly bankrupt into a new
bank with new image and aggressive marketing followed a well planned document of
strategy and change. Although not all went according to plan, because of the
communication between project group, chairman and the staff, most of the changes
went well.

Some of the changes that did not go well were as follows:

a) Missed deadlines: as the files in the bank were not well kept, information had
to be compiled from data that the computer was generating over the years but
was not being used. Hence, some of the deadlines were missed, and new
deadlines had to be set.
b) Lack of Right Staff : Because the staff training was very much neglected over
the years, the right staff in sufficient numbers could not be found in time, and
the project dragged on longer than anticipated. Recruitment was taking longer
than expected.

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c) Too many activities planned: The chairman had a lot of ideas to ramp up the
bank’s business and too many activities were planned with the limited
competent staff. This new activities also distracted the project team members
from completing their projects within the deadlines.

Ineffective Restructuring in an Industrial Products Trading Company

The company called in the consultants to bring about a change in the trading position
of the business, which essentially dealt with fertilizers, building products and steel
bars. The company was losing money every financial year, and they had just
headhunted a chief executive officer who was a few months in his job when the board
of directors decided to call in the management consultants. The company had a very
strong accountant which was controlling the credit limits of customers, much to the
frustration of the marketing officers. The products were all sold on credit terms of 60
to 90 days, but the debts were sometimes outstanding up to 180 to 270 days! Even the
new CEO could not budge the accountant’s stand on credit limits. To add to the
frustration, the accounting and financial computer system was always late in
generating the ledgers so that customers who had paid up were still penalised because
the new information was not entered or the information on the credit standing was not
updated in time. At the time of the intervention from the consultants, there was much
animosity between the accounting staff and the marketing staff, quite a normal stand
off between two departments, except that this situation was crippling the operations.
A team of the company’s staff were picked to work with the consultants. However, as
they were tackling the sales and the accounting, most of the time they were not
reliable or available, and the project was finally left to the consultants.

The accountant was also attending to the chairman’s personal accounts as the
chairman also had other private businesses, and this access to the chairman made his
heirachical standing in the company as odds with the CEO, and the board of directors
of the company. While the consultants tried to reorganise the company, the lack of
timely financial data hampered the operations. Calling in the computer support firm to
resolve the computer did not help as the computer firm needed to spend more time to
change the software and there was nothing the firm could do as the computer system
was quite outdated and to check the status of the account of a customer require the
staff to go through the first customer account to the target customer account because
the order of search ran in a sequential mode. About three months into the restructuring
without much headway, the board of directors and the management consultants
decided to reengineer to move the accountant out of the company. However, the
chairman’s ties with the accountant were too close so the proposer of the move
decided to back out.

The project of restructuring reengineering was finally abandoned. Looking back as an

academic exercise, some of the reasons could be identified:

1). The team responsible for the restructuring did not have the top management
support, especially from the chairman, who held the final authority for the
restructuring.
2). Restructuring by the consultants without the commitment of the company
and its staff was difficult. The company staff was nto familiar with the
techniques and hence was not a help even if they were available.

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3). There was no superordinate goal to bind the marketing and the accounting
staff together to resolve the financial crisis. There were instead two opposing
teams, each insisting they were right. Hence, a strategic plan supported and
endorsed by both teams would have helped to drive the restructuring plan.
4). There was also no clear leader in the company which seemed to have two
leaders each leading a team.
5). The chairman delegated the task of restructuring to one of the board of
directors who was not brave enough to meet with the chairman to seek the
mandate to remove obstacles to the restructuring.
6). Excess manpower was pushed to debt collection while the marketing
personnel was also called in to resolve the debt situation, rather than address
the deep fundamental issues that poor marketing was making the company
lose its market share. Often, the customer would be faced with two
conflicting messages, with one coming from the marketing that products
would be delivered as the customer met with the credit limits, only to be
overruled by the accounting staff that they have not cleared their debts,
because of the poor financial information the company had. In fact, nobody
in the company knew the actual credit stand ing of the customer.

This is an example how restructuring should not take place if all the essential
requirements for such changes are not in place. Two case studies have been described
which constrasted the successful and the unsuccessful management of change during
restructuring and reengineering.

Summary
It is difficult to come up with a well-planned program of change. Every program of
change needs refining or changing as the implementation progresses, due to shortage
of resources or unforeseen circumstances cropping up, for example, not getting the
approval from the Board in implementing the change because it exceeded the limits of
authority of the CEO because someone has omitted this request. A more important
requirement is that the human resource group has to be beefed up with a multi
functional team to implement the change. An effective human resource group would
be invaluable in bringing on essential staff with the right competencies and skills,
supported by line management, strategic and analytical staff. However, the human
resource group need to be involved early in the program and not, like in many cases
encountered by the author, this group is only brought in for specific inputs. Training
and communications are so vital; the training forms part of the communication and
resistance reduction mechanism, and the communication is to disally, rebut and
correct rumours that may drive the company into the valley of despair as part of the
change. Nothing can beat a planned program of change to manage the multiple
activities taking place simultaneously, and a central document to refer to and to focus
on the key deliverables and deadlines will certainly help in the successful
management of the changes needed. Sometimes the program for change may
unexpectedly meet with an obstacle that is totally unexpected. For instance, in making
the change, a share holder or a creditor may impose a court injunction to freeze all
activities until their grievances are resolved. There is no answer to all problems and
hindrances to change, but a plan to get the organization ready for change will
certainly help the organization to respond better.

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Pacific Conferences 18 July 2002
In closing, the effective management of change cannot be delegated by the chairman
or CEO but needs to be sanctioned and supported by the highest authority in the
company. The HP’s merger with Compaq would not have been successfully carried
out without the sanction of the board of directors, even if one of them happened to
oppose the merger. A continuous communication with the public and employees help
to contain the mass employee movement to other companies. Even as the merger was
taking place, there was a continuous thrust towards its strategic plan which had
spelled out the business decisions and the organisation changes clearly to the staff.
Where the excess employees need to be redeployed or outplaced, this needs to be
done quickly and without too much quibbling over the compensation to be paid to
those leaving, as the main objective is to continue on with the new merged company.

In this paper, some of the activities essential for restructuring and change have been
described, and although not comprehensive or exhaustive, the activities are to pre-
empt and prevent any obstacles in the implementation of change. Practitioners are
advised to consult with other companies who have carried out their restructuring and
use some of the successful strategies in managing the change. There is sufficient
literature on the Internet and in written publications to help any firm implement their
objectives successful. A team of professionals is required to manage the change and
the bigger the dimension of change, the more the planning period is required.

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Notes on the Author

Dr. Chan Teng-Heng started his career in the commercial sector as a management
trainee in an international marketing company, then progressed to be the General
Manager of a diversified investment company and then a private medical centre.
From here, he worked as a management consultant in two international consulting
firms, a British and an American firm. He was head of the change management
division in the consulting firm before he moved into line management as the Human
Resource Director in a first board public listed company, and then as the Chief
Operating Officer in a second board public listed company. His current position is as
Associate Professor at Nanyang Business School, Nanyang Technological University,
Singapore. He is also the Director of Undergraduate Studies (Human Resource
Consulting) in the Division of Strategy, Management and Organization. He is a
certified ISO9000 lead auditor and also the 1997 Singapore Quality Award assessor.
He has consulted for all types of industries. He holds a Ph.D. from the University of
London and an M.B.A. from the University of Aston, United Kingdom.

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Pacific Conferences 18 July 2002

The paper is based on his experiences in managing change in consulting, in line

management and in academia. He may be contacted at achanth@ntu.edu.sg or at
6790 6926.

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