A report on the best practice of organisational change.

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MBA

(Part-time)

Module Title:

Leadership and Change

Module Code:

BMG 899 J1

Students:

Conor Keown

Niall Evans

Michael Deighan

To: Professor Stan Cromie

From: Michael Deighan

Conor Keown

Niall Evans

Date: 7th December 2003

Re: A report on the best practice of organisational change.

Table of Contents

. Executive Summary.

2. Introduction.

3. A definition of change and its historical context.

4. The nature of organisations.

5. The nature of organisational change.

6. An example of change management in Gypsum Industries.

7. Conclusions.

8. Appendices.

9. Bibliography

. Executive Summary

According to Carnall (1992) "We live in a period of accelerating change". Fundamental changes in society restructure our lives. Advances in new technology means that the impossible becomes commonplace (computer generated animation, robotics, space exploration). It is true to say that change has always been an integral part of the manager's job. This has never been truer than it is in today's environment. The recent bombings in Istanbul in Turkey has only underlined what has occurred in the business environment since the events of September 11th 2001 in New York i.e. that no matter how well you plan or indeed plan for change it is impossible to predict the impact that the events in the external environment will have on your organisation. There is no way that the airline industry, stock markets or governments could have planned or prepared for the effects caused by the World Trade Centre disaster, nor indeed the impact on HSBC banks across the globe after the terrible events in Istanbul recently. These events, as well as the corporate scandals of Enron and WorldCom, have battered the global economy and have made it clear that we need to look at the changed world of management and explore how they impact on the manager's job. Change is all around us and the capacity to manage change effectively is a crucial attribute of the successful manager in today's organisation.(Clarke, 1994)

2. Introduction

The purpose of this report is to depict what the theorists have claimed as "best practice" in the management of organisational change. To report this effectively it is essential that we use actual examples of how organisations manage change. Using these examples we will then analyse this process in the context of today's literature on the subject, which will enable us to compare if the theoretical best practice, as purported by the many authorities on the subject, matches with what actually happens in the "real world."

For this report we will use our collective knowledge of the management of change and apply it to Gypsum Industries. We will begin by defining change and introducing the history behind the management of change, providing some background on the development of the theories. We will then introduce Gypsum Industries and the type of change or changes they have introduced. We will continue the report by providing the analysis between the theoretical best practices, introducing concepts such as Kurt Lewins' "three step process and "Force Field Analysis", Johnson and Scholes' "Cultural Web", Paton and McCalmans' "TROPICS" test, and the actual process used and the consequent results. The conclusion of the report will highlight whether the management of change is a practical concept that is applicable in today's rapidly changing, global and extremely turbulent business environment.

3. A definition of change and its historical context.

Zaltman and Duncan (1977) have defined change as "an alteration in the status quo," however it is argued that "real" change occurs when individuals define a situation as different and feel that they must alter their behaviour to cope with the new situation. Change therefore implies some sort of "relearning on the part of the individual."(Zaltman and Duncan, 1977) Change can be studied in terms of its effects at the individual, group, organisational, society, national or international level.(Doyle, 2002) However because of its pervasive nature, change at any one level is interrelated with changes at other levels and it is difficult to study change in isolation. (Mullins, 2002 :818) For this report however we are concentrating on organisational change and therefore it is necessary to first provide some information on the historical context of change followed by an introduction on the nature of organisations.

For the past 300 years change has been taking place in the industrial world and there have been key phases of economic development during this time. In the mid 1700's the industrial revolution transformed Britain from what Senior (2002) claimed was an "agricultural economy" to "the workshop of the world" by 1880. It was an era of mass production where demand outstripped supply and bureaucracy was the dominant organisational structure. This production prosperity lasted until the end of the Second World War. The post-war era 1945 -1965 was according to Goodman (1995) an extension of the suppliers market. However there was more of an effort to become efficient on production in order to reduce costs based of F.W. Taylor's scientific management ideas. Soon however customers became more discerning and advances in technology increased production. Supply now outstripped demand and organisations were forced to look to overseas markets and to focus more on service, not only service in its own right, but also value added service. (Goodman, 1995)

As the world has moved from the agricultural to the post-industrial eras organisations and the people in them have been forced to make major changes as old skills and managerial mindsets have been replaced with new methods of production and people management.(Nadler et al, 1997) These major changes have provided those managers who understand the forces for change and can successfully exploit them, huge opportunities in a competitive world. This is where the management of change has become a key factor.

One of the reasons that managing change can be uncomfortable and difficult is that, according to Alvin Toffler in his book "Future Shock," there is now "so much of it." (Toffler, 1990) Indeed Peters et al (1982) have written "every change does not have time to change as there is always another change taking place before the first change has been confronted." (Peters et al 1982) Perhaps this is why Handy has called this turbulent time an "age of unreason."(Handy, 1989)

Having explored the historical context of change we will now investigate the nature of organisations.

4. The Nature of Organisations

Aldrich (1999) defines organisations as "goal directed, boundary maintaining and socially constructed systems of human activity." Even though the nature of organisational goals and their pursuit can be problematic, people act as though they have goals and organisations exist to obtain these goals. Organisations however can have one or many goals and it is argued by many that these goals arise from a bartering process by various stakeholders with a vested interest in the success of the organisation. Not all these stakeholders hold the same amount of power but their support is vital if organisational goals are to be achieved.(Burnes, 1992) Therefore when changes in goals are proposed these stakeholders need to be persuaded to give support to the change. In addition as organisations are social activity systems where people are involved in deciding how to achieve the goals, any proposed change in the way in which goals are to be achieved will have a major impact on the behaviour of the people in the organisation. As Paton and McCalman (1992) have stated "The implementation of strategic change is likely to be problematic. This is especially likely to be the case in situations where this type of change involves people and in which personal relationships and emotional responses are predominant." (McCalman and Paton, 1992:18)

Furthermore, as social activity systems the means for achieving goals in organisations are more times than not pre-planned. Tasks, resources, controls, co-ordination and timings are only some of the parts that are required for organisations to produce something of use, and these do not come together in a haphazard way. The structure of the organisation plays a vital role in the smooth running of these activities as it strongly influences how people behave in them. Indeed because structure has such a powerful and important impact on behaviour managers frequently resort to structural changes as a means of changing behaviour. New work groups, teams, reporting structures, pay and reward systems normally result in new behaviours and managers will therefore plan their structural changes to align new behaviours with the new direction for the organisation.

Goodstein and Burke (1989) view organisations as a "nested set of open, living systems and subsystems dependant upon the environment for survival." This view of organisations as open systems is supported by many including Robbins et al (2003) and Senior (2002) who argues that a system perspective provides a useful insight into the management of change. Senior presents her argument in Figure 1. This perspective gives rise to the "concept of an organisation as a system of interacting subsystems and components set within the wider systems and environments which provide inputs to the system and which receive its outputs." (Senior, 2002) According to Senior the formal systems depicts how things are done and the informal systems determine how things are actually done.

Figure. 1. The organisational system in multidimensional environments.

External Environment

Th

Temporal Environment

Source: Senior, B. (2002, P27) Organisational Change.

According to Robbins et al (2003) as open systems, organisations are affected by the environment as well as impacting upon it. From uncertainty over competitors and customers to changes in economic conditions, laws and regulations and socio-cultural expectations, managers have to be aware of what is happening in the external environment. Furthermore he argues, "If it weren't for organisational change, that is any alterations in people, structure or technology, the manager's job would be relatively easy." (Robbins et al, 2003, p338) But that's not the way it is. Change is an organisational reality. External forces that create the need for change come from various sources such as the marketplace, government and regulations, technology, economy and the labour markets. In addition there are factors internally to the organisation that create triggers for change, such as Strategies, employees, equipment and culture.(Saka,2003)
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Senior (2002) uses the PETS idea to consider some key environmental triggers for change and their strength. These are the political, environmental, technological and socio-cultural forces that impact upon the organisation that provides it with the main reasons for change. Organisations tend to change primarily because of external pressure rather than an internal desire or need to change. However managers should be aware of all the potential forces for change and whether they come from the internal, external or temporal environment, which is often very difficult to do. Furthermore it is essential that we do not overlook how ...

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