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Change Management


1.   Problem Identification

In the long-term, Egan and Doyle Publishing (E&D) is facing increasing competition and how to respond to the external opportunities and threats is vital to the continual success of the company.  To tackle this problem, Brian Gray (Chief Executive) has implemented an internal management information system to sustain the competitive advantages of the company.  The short-term problem therefore arises as the divisional directors are resisting to the organisational changes caused by such implementation.   

2.   Analysis

The problem is analysed using the SOGI model ¡V society, organisation, group and individual.

2.1 Society

The impetus for change can arise from a variety of external forces (Schermerhorn, 1996).  Although E&D has achieved great success since its establishment, the company is demanded to keep current and viable in response to increasing dynamic, complex and unpredictable environment.  According to Emery and Trist (Corbett, 2001), E&D is in a disturbed-reactive environment as there are many competitors and only few large companies can dominate the market.  As there is an opportunity in the expansion of interactive computer-aided learning facilities and their competitors are ready to move into this potential market, E&D is therefore required to plan series of tactical initiatives, calculate reactions by others, and evolve counter actions.  This acts as trigger for the organisational change ¡V the implementation of the management information system to improve the effectiveness and efficiency of the company to meet these external opportunities and threats.       

2.2  Organisation, Group and Individual

The implementation of information system has moved E&D to a revolutionary transformation as it involves shifting or redefining existing parameters (Corbett, 2001).    Two broad perspectives are discussed: the systemic conflict approach and the strategic choice approach.  According to Corbett (2001), successful strategic change requires elements of both approaches.  Hence, the organisational change of E&D is evaluated whether Gray has effectively analysed the causes of any imbalances, determined the extent to which he can exercise control over the affected variables, assessed and selected the appropriate course of change action.

2.2.1    The systemic conflict approach

The primary task of Gray as a top management is to understand, contain and direct the inherent imbalances in the organisation.  Schermerhorn (1996) and Tosi et al (2000) argue that any change in one part of the organisation can often create need for change in another part of the system.  The consideration for effective change is the interdependencies of technology, structure, culture, tasks and people. 

Technology

Technology is a major contingency factor influencing the structure of an organisation.  Laudon et al (1998) argue that information technology could change structure by lowering the costs of information acquisition and broadening the distribution of information.  In the case, information technology brings information directly from operating units to Gray.  He is able to adapt the operating technology to align with the strategic objectives of the company such as analysing the strengths and weaknesses of the company at a glance, and responding rapidly to new market opportunities.  However, he has abused the use of information to centralise the authority to himself.  The bypassing the power of the divisional directors has changed the traditional way of working.   On the other hand, Gray is insensitive to expect that the information system could also distribute information to lower-level employees without management intervention.  Consequently, the change is not merely the implementation of information system, but also a serious shift of organisational structure to a flatter and less hierarchical organisation (Stone, 1998).  Gray at this point has failed to take the advantage of technology to support job re-designs, re-arrange workflows, and integrate people and machines in systems.

Structure

The company adopted divisional structure with director for each division responsible autonomous for performance and holding complete strategic and operating decision-making authority.  This decentralised structure was successful so far as it freed up Gray from being concerned with day-to-day operating details and focused on the long-term.  This horizontal differentiation (the division of work at the same level in the hierarchy) was co-ordinated through mutual adjustment between divisions and regularly scheduled strategic management team (SMT) meetings. 

The use of information system has changed the configuration of the company including its bureaucratic features, lines of authority and communications (Schermerhorn, 1996).  The significant change in the information flow has allowed Gray to access information within the company easily.  He has therefore tended to centralise authority and work directly with lower-level mangers bypassing the divisional directors.  Gray has also terminated the SMT meetings and only calls the directors individually if he feels it is necessary.  This has alienated the divisional directors as they view the SMT meetings as the means of communication for testing new ideas and addressing issues that are not reflected in the computer output.  Distrust is therefore arisen as the divisional directors feel that Gray is over relied on the computers that all the benefits of divisionalisation has been undermined by his obsession. 

Culture

It is obviously that the company is shifted from role culture to power culture with the authority centralised on Gray.  The workplace is more emphasised on the individual rather than a culture of participation and consultation as previous.  It is because Gray works and makes decision by himself with the help of the information system.  There are no more SMT meetings and the divisional directors are being neglected until Gray calls when necessary.  This change is suffered from low morale in middle layers - the divisional directors, as they feel that they lose the power and control over their own divisions.  Rosenfeld et al (1999) argue that the change of culture in an organisation is one of the most difficult tasks facing all its constituent individuals.  Hence, it cannot be changed with Gray¡¦s way of working only, but the value system for the whole company, and the norms guiding individual and group behaviour would be changed also.

Tasks

The change of technology, structure and culture also influences the tasks.  The nature of the skills required becomes higher and the way of work is also changed.  The span of control of Gray has increased and this would mean that the work of lower level employees becomes more complex while the work of divisional directors must add value for their existence.  The effectiveness of such optimal span of control depends not only the ability and expertise of Gray in the integration or control position, but also the ability and expertise and the degree of interrelatedness of the tasks that are performed in subordinate positions (Corbett, 2001).  Therefore, the nature of work must be re-designed to align the change of company¡¦s mission, objectives and strategy (Schermerhorn, 1996).  It is likely that Gray concerns his tasks more than the others so there are no new policies and procedures such as new job descriptions, job classifications, rewarding systems and reporting relationships to facilitate the change.

People

Any change would most influence people as it includes political imbalances between individuals and groups (Rosenfeld et al, 1999).  At the individual level, the change means a power shift from the divisional directors to Gray.  It has alienated the self-interests of the divisional directors as they fear that the change will make it difficult or impossible for them to continue to satisfy personal needs and desires at work.  They are uncertainty about what to expect and fear of the unknown also arouse anxiety and create resistance, especially when this innovative and radically change is introduced without warning.  At the group level, the resistance of the change from the interest group of divisional directors possibly comes from groupthink.  They perceive that Gray has made a wrong decision to over rely on the information systems and therefore distrust arises.  The situation might spread over to the subordinates when the group cohesiveness is strong for each division.  On the other hand, the change might benefit to the group of lower level managers as they are now more exposed to Gray due to the structural change.  There is possibly a power shift from the middle level to the lower level management.  If Gray does not use human resource systems to support attitudes and competencies of the employees to the change, there is likely conflicts occurred for power struggle. 

The above has revealed that Gray is insensitive and ineffective to recognise the imbalances of the interdependencies of technology, structure, culture, tasks, people, and do nothing to control over the situation.  Resistance and resentful to the change is therefore inevitable. 

2.2.2        The strategic choice approach

After clearly defined the targets for change from the systemic conflict approach, Gray needs to select appropriate solutions and choose the optimal to drive change forward.

Gray¡¦s leadership style has affected his strategic choice approach.  Gray was a participative leader and decentralised authority to allow the divisional directors to run their divisions autonomy.  However, he has changed to an autocratic leader and tends to centralise authority and decision-making by himself.  The problem is not merely the implementation of information system, but also a sudden change of Gray¡¦s style of management and most likely this is the main reason for the resistance.  According to Vroom and Yetton¡¦s decision-making model, Gray has adopted Aii decision-making style for this change without consulting the divisional directors.  This is ineffective as the quality of decision is important and would influence the subordinates¡¦ performances, as well as a direct impact on motivation.  Furthermore, the change involves the interdependencies of the whole company and hence, decision acceptance is critical to effective implementation.  At this point, Gray has failed to appreciate these factors exist in the company and he is employing a wrong style of management entirely.

Gray has adopted unplanned change as he is only reacted spontaneously to the change.  Change is a complicated phenomenon in any setting, and people tend to act habitually and in stable ways over time (Schermerhorn, 1996).  Effective management should recognise and deal with such tendencies.  According to Lewin¡¦s quasi-stationary equilibrium (Wagner et al, 1995; Schermerhorn, 1996), there is an increased likelihood of failure if change is implemented before people feel a need for it.  It is obviously that Gray is moving too quick and has entered the changing phase prematurely, and therefore end up creating resistance to change.  Consequently, additional restraining force is created as a result of the divisional directors¡¦ distrust of management. 

The course of action that Gray has used is a top-down approach to drive the change forward as it can occur rather rapidly and with a comprehensive impact on the organisation (Schermerhorn, 1996).  However, this decision runs the risk of being perceived as insensitive to the needs of lower level personnel, and likely to fail due to excessive resistance and insufficient commitments from the divisional directors.  Rosenfeld et al (1999) argue that unless employees are involved, committed and prepared to adapt, the future desired states is likely to founder on the rocks of resistance.

3.   Conclusion

The analysis shows that it is a right move to implement the management information system to sustain the competitive advantages of the company in responding to the external opportunities and threats in the long-term.  However, Gray is insensitive that changing technology also changes the other interdependencies like the structure, culture, tasks, and people, which are required a planned change for effective implementation.  Also, the sudden change of management style from Gray has alienated the divisional directors as the style does not allow employees¡¦ participation to facilitate the change.  Hence, the change is failed, resistance and conflicts are likely unavoidable.

4.   Alternatives

There are four alternatives courses of actions are suggested:

Alternative 1: Do nothing

This is not a feasible option due to sunk costs of the information system.  In addition, the company must take some kind of action to sustain its competitive advantages in face of external challenges.  Doing nothing might also mean that Gray is a loser in the situation and he will eventually lose his power and control over the subordinates in the future. 

Alternative 2: Go ahead

E&D is still in fit as its divisional structure has achieved great success but needs fine tuning for increasing competition and challenges.  Time is available to implement the change.  However, the key interest group ¡V the divisional directors opposes the proposed change.  According to Dunphy and Stace model, it suggests to use forced evolution in this situation.  Gray can use coerce strategy through his legitimacy, rewards and punishment power to force change without the support of the divisional directors.  However, Gray should expect possible effects when choosing this decision such as alienating the divisional directors, lack of support from the masses, consented silence without any zealous devotion, great resistance to the changes, lack of co-operation and super-ordinate goals. 

Alternative 3: Use of external change agent

Gray can appoint external change agent to act as intermediary to effect change.  The advantage of external change agents is their political credibility.  However, the downside would be the lack of detailed knowledge of the organisation, which can undermine their role of expert (Rosenfeld et al, 1999).  This course of action also suggests that Gray needs someone to solve the problem and he would lose his power and control over the subordinates in the future.

Alternative 4: Open and participative management style implemented

This alternative suggests Gray to use open and participative management style to implement the change.  Decision-making style of Gii is recommended because it is the traditional way of problem solving in the company for long time and is most preferred by the divisional directors.  Gray should share the problem with the divisional directors as a group.  Together he generates and evaluates alternatives and attempts to reach agreement on a solution.  He must be willing to accept and implement any solution, which has the support of the entire group.  In addition, bottom-up planned change should be used as the initiatives for change come from employees throughout the company and are supported by the efforts of middle- and lower level managers acting as change agents (Schermerhorn, 1996).  It is made possible by empowerment, involvement, and participation.  The commitment also implies motivation to support a change and to work to ensure that it operates effectively (Newstrom et al, 1993).

5.   Recommendations

All of the above alternatives have their advantages and disadvantages.  Alternative 1 is not preferred as the company needs continuous improvement to sustain its competitive advantages to be survived in the long-term.  Alternative 3 is also an unsatisfactory solution as this would mean Gray is unable to solve the problem by himself.  Hence, alternative 2 and 4 are preferable.

Alternative 2 can achieve quickly but it has limited result.  In the short-term, most employees respond to this strategy out of fear of punishment or desire for reward.  This usually results in only temporary compliance and the new behaviour continues only so long as the opportunity for rewards and punishments is present.  In the long-term, neglecting the feelings of the divisional directors would hurt their relationship with the company and eventually detriment to the effectiveness of the company.

Alternative 4 is the most preferred solution.  It has advantages over the other alternatives as it can achieve the short-term goal to implement the change with least effects, while achieving long-term goals for company growth.  This approach is based on empowerment and is highly participative in nature to develop new consensus to support needed change.  Although the process is slow, it is likely to yield high commitment and longer lasting change.

6.   Plan of action

The following plan of action is suggested:

Week

Phase

Action

Involvement

Side effects or resistance

1-4

Unfreezing

Establish a good relationship with the divisional directors, communicate for the reasons and plan of change to minimise resistance

Gray and divisional directors, then divisional directors and their subordinates

This will be a slow process.  Resistance and conflicts are likely occurred.  Gray needs to remove the resistance (such as assurance to build trust) before entering to next phase.

5

Changing

Form task force to manage change

Gray, divisional directors and human resource

 

6

 

Internal audit to identify change required

Task force and all employees

Conflicts and resentful might arise due to diversity and different points of view.  Regularly meeting and openness is required to get consensus.

7-8

 

Evaluate results of audit and develop appropriate change programs

Gray, task force and human resource

Conflicts are likely occurred here as the change programs might affect interest groups.  Also resistance from organisational level might arise due to sunk costs from the change programs.   Openness is required to come up consensus.

9-10

 

Training such as long-range planning, policy implications, answering questions, goal setting

Gray, task force and human resource

 

11-14

 

Pilot testing, revision, orientation, and employees skill training program are conducted

All employees

.

15-26

 

Program is put into effect

All employees

Employees will be most confused at this stage as this is a new way of working.  Frustration or disappointment might be occurred.  Counselling is required

27

Refreezing

Performance review and goal setting (positive reinforcement when required)

All employees

 

28

 

Monitoring, feedback and suggest possible modification

 

 


Reference List

Corbett, Martin (2001), Warwick MBA: Study Notes, University of Warwick, UK

Laudon, Kenneth C and Laudon, Jane P (1998), Management Information Systems: New approaches to Organization & Technology, Fifth Edition, Prentice Hall, New Jersey

Newstrom, John W and Davis, Keith (1993), Organizational Behavior: Human Behavior at Work, Ninth Edition, McGraw-Hill, USA

Rosenfeld, Robert H and Wilson, David C (1999), Managing Organizations: Text, Readings & Cases, 2nd Edition, McGraw-Hill, Berkshire

Schermerhorn, John R Jr (1996), Management, Fifth Edition, John Wiley & Sons, NY

Stone, Raymond J (1998), Human Resource Management, 3rd Edition, Jacaranda Wiley Ltd, Milton

Tosi, Henry L; Mero, Neal P and Rizzo, John R (2000), Managing Organizational Behavior, 4th Edition, Blackwell Business, Massachusetts

Wagner, John A and Hollenbeck, John R (1995), Management of Organizational Behavior, Second Edition, Prentice Hall, New Jersey


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