Change Management

Final Assignment

* * * * *

Change Management Plan

Arulmani Balasubramanian

MBA

Hult, London Campus

Executive Summary

This report recommends a change management plan for the change in

organisations structure executed in an Indian Subsidiary of an American

MNC Software Product Company. The Indian Subsidiary was changed

from a development organisation (cost center) to a service organisation

(revenue center).

This report has four parts, Introduction, Analysis, Change Management

Plan and Conclusions

The Introduction provides background of the Organisational Change and

lessons learnt from the change execution. The Analysis elaborates the

change management theories that could have been used, and

recommends an approach for the change execution. The Change

Management Plan details the activities, timeline, and key personnel for

the recommended approach.

Since I was part of the Indian subsidiary, the names of the individual and

company have been kept anonymous.

Contents Introduction .............................................................................................. 4

Planning for the change ......................................................................... 4

Execution of the Change ........................................................................ 4

Lessons Learnt ..................................................................................... 5

Analysis .................................................................................................... 6

The Approach ....................................................................................... 6

Change Management Plan ........................................................................... 8

Scope & Purpose .................................................................................. 8

“Kotter’s Eight step model” Framework ................................................... 8

Mckinsey’s 7S Model ........................................................................... 10

Change Management Team (CMT) ........................................................ 12

Conclusions ............................................................................................. 13

References .............................................................................................. 14

Appendix 1 .............................................................................................. 15

Appendix II ............................................................................................. 16

Introduction

The credit crunch in 2008 led to decrease in sales of software products, forcing

the American MNC company to look for other revenue avenues. This led to the

company’s focus towards the service market of its software products.

The top management’s vision was to maximise the service revenue of its

software products, within the least possible time and cost, by creating a new

service team.

Planning for the change

The top management identified the development centre in India for creating the

new service team. As it was a low cost center and had experiences of handling

many of its software products, the cost and time for change would be the

minimum.

A small team was created in US and Europe, to make the change management

plan. The team was instructed to completely transform the existing development

center in India to a Service center.

The small team from Europe and US changed the existing organisation structure

and identified new teams for every employee of the development center.

Execution of the Change

Upon finalising the new organisation structure, the small team along with top

management had a conference call with the local management of the Indian

subsidiary. In the conference call, the local management was directed to execute

the organisational change.

The local management then decided to send an email to all the employees of the

Indian subsidiary informing them about the organisational change. Every

employee was directed to contact his/her reporting manager to their new

positions.

After 2 days, the local management informed the top management about the

completion of the organisational change.

Lessons Learnt

In the ground level, it took around 6 months for the employees of the Indian

subsidiary to acknowledge the new structure, position and job expectations. The

acceptance of the change was very low even after a year, since there was lack of

clarity from HR policies to decision making responsibility.

In short term, Indian subsidiary reached 50% utilisation of resources within first

4 months but after a year, the Indian subsidiary had issues in delivering better

quality service due to no effective internal process. Since after an initial phase,

lot of senior resources left the organisation and customer demand were

unpredictable.

Below are the some of the gaps identified from the above approach to change

management

1. Vision and strategy of top management was not shared with the

employees.

2. The local management was not involved in the planning stage.

3. The small team in Europe and US made the changes without skill set

mapping of the employees.

4. HR’s role was minimal

5. Training requirements to develop skill as per new job expectations was

not done.

6. Buy in and motivation of the employees were not done

7. Local management did not have a communication plan to execute the

change implementation

8. Cultural impact was not considered during the planning process

Analysis

Are there any change models and theories which could have been applied, to

ensure that the gaps are covered and execution of above change was more

successful?

This section is a detail the approach to apply some of the change management

models and theories to the above organisational change.

The goal of the approach is reduce the performance dip during implementation

of organisational change

Figure 01 – Change curve (Sbaglia, R. (2012)

The Approach

To identify the applicable models for the organisational change, it is essential to

identify the “metaphor” of the organisation.

From the various metaphors explained in Gareth Morgan’s work (Cameron, E.,

Green, M. 2009) on organizational metaphors, this organisation resembles both

like a “political system” (since American MNC consists of 40 organisations which

were acquired) and like an “organism” since changes are made in response to an

external change). Hence from the various models explained by Cameron, E.,

Green, M. (2009), the Nadler and Tushman’s congruence model and the Kotter’s

eight steps model (Kotter, J P. 2007) are more applicable since the organisation

is political system and organism metaphor. But Nadler’s and Tushman’s

congruence model is a good tool to organise the change process rather than a

template for implementing the organisation change and it focuses on the

problem rather than the solution (Cameron, E., Green, M. 2009). Hence

Mckinsey’s 7S model is considered as an alternative for Nadler’s and Tushman’s

congruence model (Cameron, E., Green, M. 2009)

Apart for the Kotter’s Eight Step model, the framework of Project Management

Body of Knowledge (PMBOK), created by the Project Management Institute (PMI)

was also considered (SoftExpert Software for Performance Excellence, 2012).

But since in many organisations, the organisation change can be more complex

than a project and to ensure the framework is more generic, the Kotter’s Eight

Step model was choose.

Hence the approach to the organisational change is to have Kotter’s Eight step

model as the overall framework and use Mckinsey’s 7S model in the planning

process.

Figure – 02: PMBOK Knowledge Areas and Respective PM Processes (SoftExpert Software for

Performance Excellence 2012)

Change Management Plan

This change management plan identifies the scope of the organisation change,

key players, the process and the framework to be followed for execution of

organisation change for the Indian subsidiary of an American MNC company.

The Kotter’s Eight step model is used as the framework for this plan.

Scope & Purpose

The purpose of this change management plan is to ensure minimum dip in the

performance level of the Indian subsidiary during the organisational change.

The scope of this plan is from the acknowledgement of need of change due to

external changes (in this case the 2008 crisis) to the post implementation plan

for the Indian subsidiary.

“Kotter’s Eight step model” Framework

The below tables details the Eight steps of Kotter’s model, their significance,

recommended activities, responsibilities and the duration for the organisational

change

Table 01 – Kotter’s Eight-Stage Process for Creating Major Change (Hemmes, C. 2009)

Stage Significance Remarks &

Recommended Activities Responsibility

Time period

Stage 1: Establishing a Sense of Urgency

Help others see the need for change and the importance of acting immediately Identify and discuss crises, potential crises or major opportunities

In this case, the change was external due to the 2008 financial crisis. Even though the Top management was late to react to the crisis, there was urgency within the Top management to act at the earliest.

Top Management team

Less than a week

Stage 2: Creating the Guiding Coalition (Change Management Team (CMT)

Make sure there is a powerful group guiding the change, one with leadership skills, bias for action, credibility, communication skills and authority and analytical skills Assemble a group powerful enough to lead & influence the

Instead of creating the small team only with Europe and US, the top management should include the local management. A credible leader should be projected as the sponsor of the whole organisation change project. There should be a buy in with the local management which would then be cascaded into the employees of the Indian

Top Management team

1 week

change Getting the group to work together like a team

subsidiary. The team should also have an HR representative. Due to the urgency to act, the CMT may not have the time to develop as a high performing team. Hence the top management should ensure that right people are picked.

Stage 3: Developing a Vision and Strategy

Clarify how the future will be different from the past, and how you will make the future a reality Creating a vision to help direct the change effort

Start with a SWOT analysis of the Indian subsidiary to understand the bigger picture. Develop strategies for achieving the vision using the Mckinsey 7S model (detailed in the latter part). Strategy includes communication plan, Organisation needs, workforce planning and Key Performance Indices (KPI) to measure the effect of change.

CMT

4 weeks

Stage 4: Communicating the Change Vision

Make sure as many others as possible understand and accept the vision and the strategy

Communication plan and also identify the risk involved in the whole process. (detailed in the latter part) Communication includes HR policies, defined roles for individuals, training plan and organisation structure

CMT

Stage 5: Empowering Broad-Based Action

Enabling others to act on the vision by getting rid of obstacles, encourage risk taking Altering systems or structures that undermine the change vision

Remove obstacles, encourage risk taking and non-traditional ideas, activities, and actions. So the responsible personnel can execute their role as identified by CMT.

CMT

Stage 6: Generating Short-Term Wins

Planning for and generating short term wins / improvements in performance Recognising and rewarding those people who make wins possible

Create milestones in the timeline to ensure measurable short term wins. Bring out consistent HR polices for recognition and rewards.

CMT

Stage 7: Consolidating Gains and Producing

Press harder and faster after the first success Consolidate improvements and

Develop people who can sustain the new vision CMT should execute the succession process

CMT and local management

1 week

More Change

sustain the momentum for change

Stage 8: Anchoring New Approaches in the Culture

Articulate the connections between new behaviours and organisational success

Institutionalise the new approaches and ensure induction / orientation programs reflect the new way of working. CMT should be dissolved and the local management should start flowing

CMT & Local management

1 week

The total duration for the organisation change to be executed is less than 8

weeks.

Mckinsey’s 7S Model

The planning for the change management is recommended to be done using the

Mckinsey’s 7S model.

Figure 03 – Mckinsey 7S model (Papers4You.Com, 2009)

The seven ‘S’ categories for this organisational change are:

Table – 02 – Mckinsey 7S model (Cameron, E., Green, M. 2009)

Category Description Activities CMT role

Staff Important categories of people

Mapping existing team with required team composition

Change manager, HR manager, respective local manager and

related manager

Skills Distinctive capabilities of key people;

Derive a Training plan and estimate the cost of training (refer Appendix II)

Change manager, HR manager, respective local manager and related manager

Systems Routine processes Review HR systems and other support systems

HR manager and shared services managers

Style Management style and culture

Communication plan, Risk assessment

CMT

Shared values Guiding principles Converting a cost center to revenue center

CMT

Strategy Organizational goals and plan, use of resources

Bring out the vision for the new organisation and detail the workforce plan

CMT

Structure Organization chart. By understanding the strategy, develop the best structure for sustained performance

CMT

By executing the above activities for the 7S model, planning for change

management would be holistic, thereby increasing the success of the

organisation change.

To further simplify the output from the 7S model, all the required outputs can be

categories into Organisational Needs, Communication Plan and Workforce

Planning. This would facilitate better assignment roles and responsibilities for

execution.

ORGANISATIONAL NEEDS

•Structure

•Management Systems

•Policies

•Procedures

•Protocols

•Software

•Assets

•Resources

COMMUNICATION PLAN

•Employee Meetings

•Newsletters

•Communication Peer Support Team

•Staff integration meetings and workshops

WORKFORCE PLANNING

•Capacity Audit

•Clearly identified roles and responsibilities

•Position Descriptions

•Skills and Knowledge Register of current staff

•Register of required skills and knowledge

•Plans for addition or reduction of staff

•Recruitment and retention strategies

•Salaries, wages, and benefits benchmarks and review processes

Change Management Team (CMT)

Creating the change management team is the step which defines the success of

the organisation change.

The Change management team should consists of

1. Change Manager

2. Local Management

3. Related Managers

4. HR Manager

5. Shared Services Manager

The Change manager is the face of the whole organisation change. A credible

leader whose main role is to ensure buy in from all stakeholders. For this

organisational change, it is recommended that the Change manger is the head of

the Indian subsidiary as this would also help is creating an ownership of the

organisational change among the local management.

The Local Management are the managers in the India subsidiary who understand

the capabilities of their team and can provide inputs on the mapping of the

individual according to the new organisation structure.

Related managers are the stakeholders across the organisation geographies. For

this organisational change, the related managers are the team in US and

Europe.

HR Manager should be part of the CMT to ensure that the policies and

procedures for the new organisations are in accordance to overall organisation’s

HR policies.

Shared Service manager is part of the CMT to ensure that the new organisation’s

process and systems are in accordance with the existing systems.

Conclusions

The proposed framework and process will ensure clear communication of the

change; understanding the concerns of the employees; getting a buy in and

motivating each employee for a successful organisational change and thereby

would resolve the gaps identified (in the introduction section).

Even though the detailed change management plan is specific to the

organisational change discussed, the proposed framework and process are kept

generic to ensure applicability for change management in other organisations.

It should be considered that the proposed framework and process can be applied

to organisation with political system and organism metaphor only. For

organisations with other metaphors, it is recommended to analyse all other

applicable models before considering the proposed framework and processes.

References

Cameron, E., Green, M. (2009). Making Sense of Change Management: A

Complete Guide to the Models Tools and Techniques of Organizational Change

(2nd ed). London: Kogan Page

Hemmes, C. (2009). Kotter Bridges Checklist. Available:

http://www.adelaide.edu.au/hr/strategic/kotter_bridges_chcklist.doc. Last

accessed 02nd July 2012.

Kotter, J P. (2007). Leading Change Why Transformation Efforts Fail. Harvard

Business Review. Jan 2007, p96 - 103.

Papers4You.Com . (2009). What is McKinsey 7S Model?. Available:

http://www.coursework4you.co.uk/essays-and-dissertations/mckinsey-7s-

framework.php. Last accessed 02nd July 2012.

Sbaglia, R. (2012). A Level Playing Field. Available:

http://www.globaleducationconference.com/profiles/blogs/a-level-playing-field.

Last accessed 02nd July 2012.

SoftExpert Software for Performance Excellence. (2012). PMBOK Guide to the

Project Management Body of Knowledge. Available:

http://www.softexpert.com/regulation-pmbok.php. Last accessed 02nd July

2012.

Appendix 1 Short History of the Organisation

(replicated from the pre assignment submitted)

Merger and Acquisitions are very common in the software product industry. Due

to the dynamic changes in the technology field, companies opt for inorganic

growth to ensure sustainable growth. An American software company became a

big player through acquisitions of smaller companies thereby creating forty

organisations within it. Each organisation owned a software product and had its

own business units. To bring in commonality across the company, all the

organisations were merged together and made into three verticals, Development

center, Service center and Sales. The development centers were cost centers

(i.e resource allocation depends on R&D budget) and Service centers and Sales

were revenue centers (i.e. resource allocation depends on revenue generated).

The Indian subsidiary, which was created as a low cost development center

during the late 90’s, had the experience of being acquired twice before it became

part of the American MNC in early 2000’s. Soon after the acquisition, the

American MNC started to move more development work to the Indian subsidiary

to take advantage of the low cost. This increased the employee strength of

Indian subsidiary to more than 500 members.

Appendix II Training Cost - Sample Analysis

Total no of employees in Indian Subsidiary = 500 employees

No of Training hours required for an employee = 40 hrs

Total hours of Training = 500 x 40 = 20,000 hrs

Cost of employee per hour = $ 50 (low cost center)

Opportunity cost of Training = 20,000 x 50 = $1,000,000

Average Cost of Training per employee = $ 15 (low cost center)

Cost of Training = 15 x 500 = $ 7,500

Hence Budget required for Training = $7,500