Change Management

University Degree Business and Administrative studies

Leading and Managing Change

Final Project

Student: Jeanette-Alexandra Smith

(1406444)

ALBA: MSc in Strategic HRM

Instructor: Haridimos Tsoukas

ATHENS – VOULIAGMENI

July 2008

Double Case Study Analysis

Welcome Aboard (But Don’t Change a Thing) VS

Novotel Hotel Chain ‘Retour vers le Futur’ project

Introduction

Companies expanding in competitive space confront complex activities involving managing change and identifying organisational needs in order to survive the evolving business environment. The change process involving dimensions of implementation, adaptation and resistance will be explored by specifically comparing two case studies: the Lakeland Wonders company and the Novotel world Hotel chain.

In the first case, Lakeland Wonders a family based business, employ a new CEO not belonging to the family, to make organisational changes in the company that would advance it in new market spaces. On the other hand, the Novotel Hotel Chain occupying a leading place in global hotel enterprising steered changing mechanisms to respond to emerging business realities in the hotel industry and meeting evolving customer needs. In describing the change intervention at Novotel while identifying the resistance to change at Lakeland Wonders, the context surrounding important policies and activities in change management will be recognised and outlined.

Lakeland Wonders Co

The Lakeland Worders company, a manufacturer of high quality wooden toys, had three plants in Minnesota and employed 5,000 persons. A family owned business which following the retirement of CEO Walter Swensen, hired outside professional help of Sheryl Hailstrom to take his place as the driving force that would enlarge Lakeland Wonders retail chain and enhance the company’s market growth. Her expansion vision involved offshore manufacturing, outsourcing a top designer and entering the mid toy product market. Six months into her new position and despite her efforts to lead by example, such as setting aggressive deadlines, proposing a bonus scheme to the union, travelling on a fast schedule to meet customers, her ideas were not met in support by the other board members. For instance, by suddenly shifting production facilities overseas would involve not only a negative workers Union reaction (in fear of their work positions being jeopardised) but would also risk losing the company’s identity as being an American toy manufacturer. By overlooking these important issues meant posing a threat to the company’s uniformity. In addition, during management team meetings Cheryl would almost impose these ideas while setting a strict time limit to implement them regardless of the union’s and other board members reactions. The sense of urgency she created for speedy implementation of her ideas, of her radical and new vision of the company along with taking up the role of a solo reformist alienated her from the rest of the management team.

Novotel Hotel Chain

Novotel was founded in 1967 by two entrepreneurs, Paul Dubrule and Gerard Pelisson, and quickly expanded to become the market leader in Europe. Through an innovative approach, which involved emphasising standardisation, employing a flexible workforce, providing four-star facilities and three-star service, building hotels on city outskirts, Novotel pioneered the hotel industry in Europe in the 1970’s and the 1980’s. However, in the early 1990’s due to various factors (e.g Europe recession, Gulf war, market competitiveness creating cheaper accommodation) Novotel started to lose its edge. Moreover internal changes were taking place such as diminish in staff flexibility while the quality control system (Les Boulons) inhibited individual initiative. Despite the profit data that indicated things were doing well, Claude Moscheni believed that a danger signal existed.

A first step was to appoint two new co-presidents, Philippe Brizon and Gilles Pelisson, in which together combined different skills and styles. A second step was to rebuild and transform the top management team by adding members instead of customary reducing the size. To further extent, two anthropologist’s consultants were chosen to shape the platform of the organisation’s culture and encourage brainstorming sessions at meetings.

Overall, the project change at Novotel was named ‘Retour vers le Futur’ – Back to the Future. Rejuvenating the enterprise involved changing the management structure by reducing layers and reinforcing front line managers and employees, thus not only cutting down on costs, but also encouraging autonomy among staff and increasing flexibility ultimately leading to greater customer satisfaction. Moreover communication through the hierarchical structure was enhanced through the creation of ‘reflective clubs’ (Bottom-up) to share problems and solutions and ‘progress groups’ (top-down) to improve service and management. These actions shaped new behaviours at Novotel, strengthening liaisons between departments and reducing rivalry ...

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A Critical Approach to Managing Change at Lakeland Wonders Co

Managing and leading change in a family oriented business involves succeeding on a relationship level. In order to redefine organisational structure and various goals, leading to business advancement, working with business family members calls for making sense of emotional situations and an ability to communicate ideas. A requirement for leading discontinuous change is to understand the importance of behaviour-based communication (Carol Kinsey Goman, 2000). Moreover, a key skill needed by those promoting change and the extent to which it helps others adopt to change is communicating vision and direction to others (Sally Woodward & Chris Hendry, June 2004). In Sheryl’s case the board is ambivalent to her new vision of the company, demonstrating a lack of political skills on her part and failing to create alliances in managing the board. Instead of respecting the company’s values and opinions she insists that things be done her way and does not make an effort to understand the feelings of other board members or the reaction of the Union.

Sheryl’s approach to transformation was viewed as an event rather than a mental and emotional process (Carol Kinsey Goman, 2000). Moreover, successful large scale change involves momentum (Kotter, Ch.1), which in Sheryl’s case is missing, in an effort to try to do too much at once. Thus, successful interaction of leading change that will result in the production of well coordinated performances involves acting with the environment rather than acting on the environment (Sally Woodward & Chris Hendry, June 2004).

Through implementing organisational changes at a fast pace particularly in a small company creates a resistance to change since people want to protect their identity. Changes threaten an individual’s sense of stability and can present anxieties while reducing the sense of autonomy (Nadler, D. 1993). Resisting change may function as a survival mechanism where change is perceived as a threat creating a type of organisational autopoiesis, exhibiting a strong resistance when something valuable is under threat (Goldstein, J. 1988). An important part of a CEO’s competence for managing change is to explore room to manoeuvre ways to expand a sense of identity.

By carrying out a benchmarking process through providing examples of similar companies that have succeeded, would facilitate positive accommodations and adaptations to change. Reducing people’s reaction could be enhanced by explaining and displaying convincing reasons that change would involve incorporating the company’s history while reinventing its identity with new elements.

Novotel – Over viewing the ‘Back to the Future’ Change Project

In Novotel’s case of renewal, a need for change was identified early, as top management paid attention to signals such as a decrease in occupancy despite profits and customer dissatisfaction as part of a general lack of flexibility such as rigid room rates. The process of change was rapid and involved an array of re-engineering strategies and restructuring organizational traits and tactics. The context surrounding intervention was based on three parameters of clients, management and people, all three reflecting business benefit and development. To this extent, emphasis was placed on enhancing human resources capabilities (‘Progres Novotel’) by training and reinforcing workers directed towards responding and adapting to different tasks while establishing changing routines. Structure improvement efforts involved a flattening of the current work system by promoting greater autonomy both for front line workers and managers. By removing layers of management employers were empowered to make decisions while in the procedure communication channels in the hotels were facilitated.

Furthermore, a set of communication and improvement practices were introduced involving informal and formal meetings, called the Reflective Clubs and Progress groups respectively. The Reflective Clubs offered in an informal fashion the chance for workers and managers to set issues of improvement regarding services and clients while the Progress groups were on average monthly formal management meetings to efficiently discuss progress and productivity on the ‘Return to the Future’ Change Project. These meetings contributed to the refinement of the project and designed an emerging organisational change. Thus, rather than seeing change to be top-down driven, this approach tends to see change driven from the bottom up (Banford and Forrester, 2003; Burnes, 1996, 2004).

Overall, organisational change at Novotel could be viewed in terms of three processes-unfreezing, moving, and refreezing (Lewin, 1951). During the unfreezing stage ‘open-space’ meetings between managers indicated a need for change by requesting more autonomy and initiative for employees. At the next change stage moving new people who were committed to change were appointed while the work system underwent a simplification with abandoning the 95’ Boulons quality control system and establishing more flexible one’s. The refreezing stage change became institutionalised by an establishment of new norms of behaviour throughout the organisation, such as cooperation, a union of purpose among staff, displaying a rigour spirit while combined with a sense of fun.

To a further extent, organisational transformation occurred by preserving a sense of Novotel’s past identity and renewing it by adding new elements and enhancing its present structure. For example, the founders of Novotel were two as the appointment of the two new co- CEO’s, representing the company’s past and future. At the same time while denoting a global identity and structure, local Novotel’s were influenced and incorporated different elements relating to the situated area, such at the Quebec Hotel where receptionists were dressed in Canadian attire.

Preserving successful change implementation involved maintaining momentum. This was attained through regular meetings of the progress groups and the clubs, during which valuable feedback was drawn, new flow of concepts were introduced and team work of all levels was strengthened.

Cross Case Comparison

Exploring the relationship between management success at implementing strategic change at Lakeland Wonders and Novotel, contrasting perspectives can be demonstrated. In particular, considering the four stages of communication in change dynamics (Ford & Ford, 1995), the new CEO of Lakeland Wonders (Sheryl) went from the first stage of initiative conversations to the third conversations for performance while bypassing conversations for understanding. Generating understanding through conversation and developing communication to engage in recognising what is valuable and functional constitute an important part of resisting and shaping the change outcome. Instead, in the Novotel case, communication in change went through all four stages: Initiative Conversations (‘open space’ meetings of hotel managers) → Conversations for understanding (launch of ‘Reflective clubs’ and ‘Clubs’) → Conversations for performance (‘Progres Novotel’) → Conversations for closure (‘Progress groups’).

To a further extent, the approach to organisational change in the first case portrayed a behavioural and mechanistic perspective. The change agent in question attempts to forcefully and rapidly implement change by overlapping an understanding of the company’s culture and identity and the reactions of the organisational members, while in the process appearing to stand outside the undergoing change. In order to achieve a stable change and shape new forms of behaviour it is of central importance to evoke meaning and be perceptive to the way people view things (Tsoukas, H. 2005). Changes of greater complexity are likely to generate more negative and more intense emotions (Kiefer, 2004) and more resistance (George and Jones, 2001), and therefore require more careful management.

At Novotel change was implemented through a discursive approach (Tsoukas, H. 2005) by establishing an excellent communication between all management levels (progress groups, reflective clubs and other meetings), by being perceptive and open to other people’s ideas (the name of the project ‘Back to the Future’ was suggested by a manager), and the potential to persuade others to move in another direction.

Sheryl missed understanding the reactions of the board in order to effectively install change, thus lacking the power for influencing others (Dahl, 1957). Attaining sustainable change and acceptance among organisational members envelops consensus, since members are less likely to become committed to decisions to which they disagree (Rune Lines, 2007). At Novotel, consensus was created through a dialectical framework during which change was stimulated by emerging view oppositions. For instance, managers requirements for more autonomy simplified the organisational structure.

Moreover, transformation at Novotel occurred by creating a sense of preserving the company’s original identity by adding renewal aspects and aligning the past, to the present and to the future. In Shery’s case, the approach to implement rigid steering change mechanisms by overlooking the set of assumptions of the board members sense of identity, induced defence mechanisms to preserve their existing identity.

To a further extent, organisational change at Novotel became aware to staff through a variety of mechanisms, from formal communication to other observable cues (R. K. Smollan, 2006), for example the appointment of two new CEO’s, abolishing the 95 boulons quality control, redefining the roles of managers and establishing flexibility tasks for front line workers. Moreover, response to organisational change at Novotel was received as positive and favourable. In the first steps of the building stage organisational citizenship behaviours (Organ, 1988; Spector and Fox, 2002) were reflected by encompassing a range of prosocial behaviours and resulting in an overall

increased effort such as helping others, showing initiative, altruistic actions and loyalty (R. K. Smollan, 2006).

Furthermore, Sheryl’s transformational leadership to successfully implement change did not display any association with emotional intelligence (Ashkanasy and Tse, 2000). Key qualities of leaders with high EI are empathy and integrity (Parry and Proctor-Thomson, 2002). Emotionally intelligent leaders use personal power rather than positional power or authority (R. Gill, 2003). Considering the uncertainty and negative emotions that accompany change, the ability to discern the emotional reactions to change of employees and board members enhances influence levels and provides the necessary support to the change process (Kiefer, 2004). Displaying an autocratic fashion behaviour by failing to address the concerns of people in the organisation and not devoting ample time and energy in building commitment, inhibits effective change implementation.

Conclusion

The core context of organisational change at Novotel and Lakeland reflected identity perceptions. The extent to which organisational members conceive their identity influence’s the subsequent implementation process. Balancing the need for change with the motivation to preserve existing identity, determine the elements that contribute to the development of change capacity. Incorporating a company’s history by expanding it’s sense of identity, alters the perspectives on the change prescription. Moreover, building a series of interventions such as creating an understanding, building skills (for instance training Progres Novotel), gaining commitment enhances people’s motivation and consequently a favourable and sustainable change. A further important factor is communicating the urgency for change as is in maintaining momentum. In addition, as equally important is providing meaning and purpose in influencing employees’ attitudes and intentions towards change. Underlying factors of resistance may improve implementation outcomes by minimising uncertainty and coping with change, understanding innovation and renewal ultimately shaping behaviours to gain involvement and sustained commitment to organisational change.

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--STEPHEN E. CLAPHAM_, CHARLES R. CHWENK__ & CAM CALDWELL

Organisational Change Management: A Critical Review, Journal of Change Management, Vol. 5, No. 4, 407–428, December 2005,

- STEPHEN E. CLAPHAM_, CHARLES R. SCHWENK__ & CAM CALDWELL

CEO Perceptions and Corporate Turnaround, Journal of Change Management,

Vol. 5, No. 4, 407–428, December 2005