managing strategic change

• Internal factors that cause change


  • Change in leadership/management
  • Better-than-expected performance
  • Poor financial performance
  • Business growth
  • The type of business can influence the amount of change
• External factors that cause change within a business


  • New technology
  • Changes in consumer taste
  • The economy
  • Changes in legislation
  • Changes in ethical views and social awareness
  • Changes in competition
• Incremental change


  Gradual change, usually the result of a strategic plan being put in place and often attempts to minimise disruption. Managers decide a timescale for the necessary changes and then timetable strategies for carrying them out
• Disruptive change


  Sudden change that forces firms to suddenly do things in a different way to usual. They may have to close or sell off subsidiary companies, spend heavily on promotions to raise customer confidence or totally restructure the way the firm is organised
• Force field analysis


  Shows a plan of action, the forces supporting the plan and the forces opposing the plan
• Force field diagram


  Used to analyse forces for and against change
• Restructuring


  Changing the organisational structure of a business
• Reasons for restructuring


  • To maximise the efficiency of decision-making, communication and division of tasks in the business's current situation
  • To reduce costs which makes the business more competitive
• Delayering


  Removing parts of an organisation's hierarchy, usually a layer of middle managers
• Reasons for delayering


  • Reduces costs
  • Improves communication
  • Gives more responsibility to employees at lower levels of hierarchy
• Flatter structure


  Structure with wider spans of control, usually has quicker communication as there are fewer people to pass messages through, can help with decision-making in changing environments
• Delayering


  Can help a business respond to changes, such as a difficult economic condition, by cutting costs and keeping prices lower than competitors
• Disadvantage of delayering

  • Leads to job losses, risking loss of vital skills and experience which could reduce the flexibility of the business in the future, can lead to bad publicity
• Mechanistic structure


  Centralised structure with a well-defined hierarchy of power, tall structure, suited to businesses that don't need to adapt to change very often, employees are specialised in certain tasks and tend to work separately on them
• Organic structure


  Decentralised structure meaning employees get more say in decision-making, flat structure which allows for fast communication, best suited to an uncertain changing environment, employees usually work within teams rather than having a strict single role each
• Knowledge and information management


  The collection, organisation, distribution and application of knowledge and information within a business
• Resistance


  The most common barrier to change
• Barriers to change


  • Organisational structure
  • Resources
  • Poor management
  • Passive resistance
  • Active resistance
• Passive resistance


  When people carry on with their old ways despite being aware of the new needs and being shown the new processes, the most common in employees and suppliers
• Active resistance


  When people argue against the change and challenge motives for the change
• How workers show active resistance


  • Organise themselves for their trade union and refuse to carry out tasks
• How customers show active resistance


  • Refuse to make further purchases from the company
• Kotter and Schlesinger


  Came up with 4 reasons for resistance to change
• 4 reasons for resistance to change (Kotter and Schlesinger)


  • Self-interest
  • Misunderstanding
  • Low tolerance of change
  • Different assessment of the situation
• Self-interest as a resistance to change


  • People are more concerned with their own situation rather than the success of the business - if they can't see how the change directly benefits them, they will resist it
• Misunderstanding as a resistance to change


  • People resist change when they don't fully understand what it means for them, they will usually think they have more to lose than gain until they are told otherwise
• Preventing misunderstanding resistance

  • Businesses need to have a high level of trust between employees and managers
• Low tolerance for change as a resistance


  • People get used to completing tasks the way they know, they will resist change if they fear they won't be able to develop the new skills required and they may believe they won't perform as well and will lose job security
• Different assessments of the situation as a resistance


  • The key stakeholders may have strong disagreements over the reasons for change and therefore an inability to accept the need for change
• Kotter and Schlesinger


  Identified six ways of overcoming resistance to change
• 6 ways of overcoming resistance to change (Kotter and Schlesinger)

  • Education and communication
  • Participation and involvement
  • Facilitation and support
  • Negotiation and agreement
  • Manipulation and co-option
  • Explicit and implicit coercion
• Education and communication to overcome resistance

  • Managers need to raise awareness of the reasons for change and how it will be carried out, clearly communicate the reasons and identify the benefits
• Participation and involvement to overcome resistance


  • Key stakeholders should be involved in the design and implementation of change, if they participate in the decision-making process they will feel more engaged
• Facilitation and support to overcome resistance

  • Listening to concerns, holding regular meetings, providing support groups and training to help workers adjust
• Negotiation and agreement to overcome resistance

  • Giving stakeholders opportunities to negotiate and compromising over key sticking points, offering financial or non-financial incentives, voluntary redundancy or early retirement
• Manipulation and co-option to overcome resistance

  • Giving a resisting employee a desirable role in the decision-making process to gain their cooperation, or manipulating information about the change
• Explicit and implicit coercion to overcome resistance


  • As a last resort, threatening compliance with the planned changes or face consequences such as redundancy, loss of promotion opportunities or transfers
• Organisational culture


  The way that people do things in a company and the way that they expect things to be done
• Explicit and implicit coercion


  Used to overcome resistance to change
• Explicit and implicit coercion

  1. Threatening to comply with planned changes or face consequences

  2. Consequences could be redundancies, losing promotion opportunities, transferred to other departments