managing creativity and innovation in the workplace – unit...

8600-302 Planning Change in the Workplace

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Planning Change in the Workplace (8600-302)

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Contents

Contents 1

Unit Specification and Learning Outcomes 2

Introduction 3

Defining Change 4

Reasons for Change 7

Assessing the Reasons for Change – Influences from the Internal and External Environment

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Environmental Scanning 8

Analysing the Operating Environment 8

Systems and Processes 14

The Benefits and Implications of Change 15

The Barriers to Change 18

The Need for Change 19

Managing Change 20

The Change Process – Casting Change 21

The Change Cycle 23

Minimising Resistance to Change 30

Stakeholders in Change – Analysis 30

Developing a Stakeholder Engagement Plan 34

Planning Change 34

Financial Aspects of Change 41

Communicating Change 44

Managing Risk and Interdependencies 47

Taking People with You 52

Evaluating and Monitoring Change 56

Conclusion 57

Bibliography 58



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Planning change in the workplace - Unit Specification

Level: 3 Credit value: 2 Unit guided learning hours 9

Learning outcomes (the learner will)

Assessment criteria (the learner can)

1. Understand the forces for change in an organisation

1.1 Identify the forces that may require own organisation to change by conducting a simple PESTLE or SWOT analysis

2. Know how to identify and plan change in an organisation

2.1

2.2

2.3

2.4

Give an example of change required in the workplace reflecting the SWOT or PESTLE analysis Identify relevant human and financial factors in the consideration of planning change within the context of the example given Explain how to communicate with, and involve people to facilitate effective change Use a technique for planning change within the given context

Unit purpose and aim:

To be able to plan change in an organisation as required by a practising or potential first line manager.

Indicative Content:

• PESTLE analysis • Organisational SWOT analysis • The principles of change management • Methods of planning for change • Use of Gantt charts, Network Planning as tools for planning change • Identification of human and financial factors in the consideration of change • The importance of communication and involving people to facilitate effective change

This table is extracted from the ILM Qualification Specifications



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Introduction To understand change and therefore to be able to successfully plan and implement change in the workplace, managers need to be aware of the different types of change, the origins of change and the way in which people react to and cope with change. The events of the last 30 to 40 years can sometimes lead us to believe that change is a recent phenomenon. The reconstruction of Europe post-World War II, the Cold War, and the Fall of the Berlin Wall – were all momentous events. Also, the rise of globalism, and in particular the emergence of the Pacific Rim as an economic powerhouse, coupled with the inexorable technological growth makes the early part of the 21st Century an exciting, challenging and rapidly changing world in which to live. Change is not, of course, a new phenomenon. Over the centuries, as man’s understanding of the world has grown – from the Age of Enlightenment, to the Renaissance, to the Industrial Revolution – we have seen significant change occurring. Indeed, let us consider the following 2 quotes from the 19th Century:

‘Change is inevitable. Change is constant.’

Benjamin Disraeli (1842)

and

‘It is not the strongest species that survive, nor the most intelligent, but the ones who are most responsive to change’

Charles Darwin

In one sentence, Darwin asserts that change has been here since time began. In primitive times, we know that humans changed and adapted to their environment to survive. As we shall see, the need and desire to survive still drives change. Indeed, from the organisational and business context, an inability to recognise the need for change and to make change that sticks can be the difference between success and failure. This Workbook introduces students to the concept of change and explores how to implement change within the workplace taking into account the ‘human factor’; that is, how to take the people who are affected by the change with you.



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Defining Change

In any study of management it is important to establish a set of definitions for relevant concepts. Change is a word we come across frequently in a wide variety of settings. In its purest form, change is ‘making something different’. Webster’s Dictionary offers the following definitions:

To make different in some particular way – to alter;

To make radically different – to transform; or,

To give a different position, course or direction.

These definitions offer some immediate insight into what change in the workplace might look like. In simple terms, change can take many forms and have different levels of impact, depending upon both the type of change and the timing: each type of change will be perceived by those that are affected as carrying some level of threat. Typically, we find that there are 4 types of change that take place. Each of these has a corresponding indicative level of threat:

Types Threat Level

Incremental Low

Annual Low

Step Significant

Metamorphosis (Major) High/Very significant

(Based on Russell-Jones)

Looking more closely at each type of threat, we can perhaps understand why the indicative level of threat is as it is.

Incremental Change is change that is typically improvement-driven. For example, a company identifies customer dissatisfaction with the way in which telephone calls are handled and changes the process for answering telephone calls to rectify and to improve the service offered. Annual Change is change that takes place annually. An example of an annual change might include the setting of departmental budgets. Step Change is incremental change that is implemented in ‘phases’ or ‘steps’. For example, customer dissatisfaction with a company’s telephone call handling could be addressed by implementing several new processes or procedures in several logical stages. Metamorphosis or Major Change is change that radically transforms the way business is done. The introduction of a central call centre to handle all customer calls would be an example of a major change.

Complete the activity on the next page.



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Activity: Consider the types of change that you have experienced in your organisation or company, or, indeed, change that you have observed elsewhere and make a list of examples for each type of change:

Type of Change

Incremental Annual Step Major

In completing the table, you are likely to have identified that a significant number of organisational change initiatives are as a consequence of, or have their origins in, something that happens elsewhere. Indeed, in every organisation there are a myriad of things that can lead to or initiate change; these are often called ‘change drivers’.



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Other ways of Defining Change Other terms used to describe change, include:

Developmental Change

Similar to incremental change, developmental change involves small changes to processes and procedures that give gradual improvements to ways of working and to give increased levels of performance. Developmental change is a necessity in business and helps maintain the organisation’s competitiveness and ultimately its profitability, through gradual and measured improvement.

Transitional Change

Transitional change describes the period between movements from a relatively stable state to a new order. The new order will provide a radically different ways of doing business. Examples might include restructuring, downsizing, mergers, implementation of new production methodologies or introduction of completely new products and services. High levels of turbulence during the change can induce anxiety and stress in employees and is likely to be uncomfortable for both managers and staff.

Transformational Change

Akin to metamorphosis, transformational change involves radical change to the organisational culture, is wide reaching and leaves the organisation with totally new ways of operating. Often transformational change and transitional change will be simultaneous. The radical nature of transformational change is usually driven by, for example, the emergence of innovative new technologies, changes in supply of resources, or where new entrants enter markets with additional competitive edge to existing organisations. Examples might include the changes to the wristwatch industry following introduction of digital watches in the 1970/80’s or more recently the emergence of China as an industrial powerhouse, with low-cost labour providing the world market with inexpensive products.

Business Turnaround Business turnaround is a term used to describe a rapid and radical change to save a business that is on a trajectory to failure. Often the alternative would be for the business to be put into liquidation. Business turnarounds usually involve drastic measures to return the business to a viable platform. Cutting costs, redundancies for the workforce, disposal of unnecessary assets, along with refinancing tend to be prominent features of turnaround. Refinancing would usually require a business to be able to demonstrate that it is able to recalibrate the business to deliver significant improvement in performance and results in the near future.



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Business Restructuring Business restructuring is a term used to describe a situation where a business seeks to become more profitable by changing the structures of the business. Structure in this context might include the business finances, ownership and legal status of the business or organisation of the operational structure including possible divestment of assets. It is a repositioning of the business to ensure its ongoing viability. Business Redesign or Business Process Re-engineering Business redesign or Business Process Re-engineering (BPR) are terms used to describe radical departure from current ways of operating. Major or step change is implemented following a total redesign of business processes and systems. BPR starts from a ‘blank sheet of paper’ to produce efficiency and effectiveness, especially in terms of quality, cost and response time, assuming that the required improvement could not be achieved through development of existing systems.

Reasons for Change Activity: Looking at your own organisation, list potential drivers or reasons for change:



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Drivers for change might include some or all of the following:

• New technology; • Government legislation; • The appointment of a new chief

executive or senior figure(s); • Changes in business strategy; • Customer demand for new and

improved products and services; • Internally-driven improvements in

productivity and/or profitability; • Need to reduce costs and/or

become more efficient;

• Financial recession; • Local and (increasingly) global

competition Competitor innovation; • Product obsolescence; • Loss of market share or Increases in

demand; • Entry into new markets; • Loss of revenue; • Higher taxation; • Mergers and take-overs; and/or, • Organisational inefficiency.

The drivers do not of themselves, however, necessarily set out what change has to be made to survive or how that change could be made. For example, a reduction in the annual budget for a given department within an organisation might be addressed in a number of ways: money could be saved by reducing the number of people employed within the department or by changing the output in some way or, possibly, by doing less of whatever the department does.

Assessing the Reasons for Change – Internal and External Influences To enable assessment of the reasons for change you will first need to consider the drivers of change – i.e. what is creating the need for change and then consider how those drivers will impact your organisation. Taking a proactive approach involving on-going analysis of the competitive environment gives organisations a significant advantage if they can respond quickly to changes in the competitive environment. Looking outwards to detect changes in the business environment is known as environmental scanning.

Environmental Scanning

Of course, senior and middle managers do not sit and wait for new ideas from within the workforce: they take the lead in identifying where the business or organisation needs to be in the future. Organisations and businesses that understand the environment in which they operate and which are responsive to, and anticipate, factors that will affect the way business is done are those that flourish and survive difficult times. In successful businesses, management routinely undertakes environmental scanning to ensure that the business remains competitive. Similarly, in public sector organisations, environmental scanning might focus on how to maintain cost-effectiveness.

Analysing the Operating Environment Organisations that are serious about innovation are constantly looking ahead to spot opportunities and to identify where the challenges might lie. SWOT Analysis and PESTLE Analysis are 2 tools that help in isolating issues and opportunities for innovation. SWOT analysis can also be useful in assessing and evaluating an innovative idea.



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SWOT Analysis SWOT analysis – standing for Strengths, Weaknesses, Opportunities and Threats – helps provide focus on key organisational issues. Strengths and weaknesses are internal factors (the ‘as is'). Opportunities and threats are external factors (the ‘future’). Identification of strengths and weaknesses, opportunities and threats is all very well but it is a deeper level of analysis that answers the more difficult questions such as ‘so what’ and ‘what could you do about it’ and ‘what are the implications of your observations’ that are where time is likely to be well invested. Strengths will always give you opportunities, while weaknesses will usually present a threat. When undertaking SWOT analysis, it is good practice to:

Keep it simple

Be realistic in assessing strengths and weaknesses

Be specific and avoid ambiguity

Consider applying SWOT to your competition (opens up new thinking, where identification of others’ strengths might give you opportunities to replicate and their weaknesses might give you opportunities to get ahead)

Avoid over analysis and consider the implications of your observations

The SWOT ANALYSIS Framework (Format: AH Raymondson, 2008)

Strengths Weaknesses

Opportunities Threats

Options & Implications

Set Targets

Internal

External



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Activity: Undertake a SWOT analysis of your department and identify at least 3

possibilities for major change.

The ‘As Is’

Strengths Weaknesses

The ‘Future’

Opportunities Threats

Possible changes:



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PESTLE Analysis PESTLE analysis – standing for Political, Economic, Sociological, Technological, Legal and Environmental factors – is useful in understanding the business environment as a whole, and is often used together with SWOT analysis. It can be useful in analysing drivers for change and in considering the implications and impact of change in the external environment on the organisation. Questions in applying the framework might revolve around:

What key political influences are likely to impact on the business?

What significant economic factors are there?

What sociological aspects are most prominent?

What technological advances are imminent?

What current and future legislation might affect the business?

What environmental issues need to be considered?

The PESTLE Framework (Format: AH Raymondson, 2010)



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The PESTLE Framework Activity: Consider some recent changes made by large organisations. Frame your thinking against the PESTLE model. What has been the impact of those changes for smaller organisations in terms of opportunities and/or threats? Use the following table below to capture your thoughts:

‘PESTLE’ Framework

Element

Change Threats / Opportunities

Political

Economic

Sociological

Technological

Legal

Environmental



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An example of an environmental issue that might span several of the PESTLE elements is the move to reduce greenhouse gasses. Legislation requires organisations to take certain actions and numerous economic benefits have been created for companies providing, for example, low emission materials and equipment, such as ‘clean’ vehicles, loft insulation and low energy lighting. Application of technology has a part to play also in this field – as with development of advanced computer processing units in vehicles to control engine efficiency, which contributes to achievement of ‘lean burn’ engines and lower emissions. Similarly, the creation of low emission zones in cities has created both threats and opportunities. For example, difficulties for transport companies arise (threat of increased cost or limited access) while opportunities appear for those providing solutions through, say, the production of catalytic exhausts for delivery vehicles to enable them to meet the emissions requirements.

Activity: Now, reconsider the PESTLE model to establish what changes might be necessary in your organisation. Consider too, the benefits of each change identified. Use the following table below to capture your thoughts:

‘PESTLE’ Framework

Element

Issue Necessary Change Benefits of the Change

(human & financial)

Political

Economic

Sociological

Technological

Legal

Environmental



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Systems and Processes Many change initiatives relate to and/or require changes or additions to systems and processes. Activity: What do you understand by:

a. A process?

b. A system?

A Process:

‘A structured measured set of activities designed to produce a specified output for a particular customer or market’

(Davenport, 1993)

A System:

‘A set of components that work together for the overall objective of the whole’

(Bertalanffy,1968)

Processes can be thought of as defined actions that create results. A system, however, is where a series of processes work together and are viewed as a whole rather than as individual parts or processes. Anything that you can put the words ‘ … a system to …’ in front of is a system. A system to recruit employees, for example, would comprise numerous processes. ‘Systems thinking’ is the art of seeing things holistically and focuses on the sum of the parts. For example, a bicycle van be viewed holistically as a bicycle or it could be viewed mechanistically as individual parts – brakes, pedals, wheels, etc. The design of processes that sit within a system enables the designer to consider the impact of each process on the whole system. With the bicycle, if we were designing a braking process, we could design a fantastic braking system by taking the air brakes from a lorry. However, the impact on the wider system – the bicycle – would be that it would be much less efficient as a bicycle: the brakes would be likely to be too effective, locking the wheels on application, and, self-evidently, they would be far too heavy and cumbersome for the bicycle – imagine riding a bicycle with an additional 20kg of weight!



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Activity: Articulate below, what the impact of systems thinking might have in planning changes to processes at work.

The significance of systems thinking is that in designing or changing a process for the workplace, we can, and should, consider the impact of the process on the wider system. Merely ensuring that we identify what the system is designed to achieve and then considering the contribution that the process is required to make to the overall system, and where it impacts on other processes, should enable us to implement processes that are congruent with organisational goals. One part of a system cannot be changed without it impacting somewhere else. Systems thinking aims to overcome or prevent parochial, narrow thinking and to create the potential to design and develop better individual processes without creating less efficient and effective systems.

Benefits and Implications of Change Taking, as a starting point, the Darwinian view that change is essential for survival, the logical conclusion would be that change is a good thing. In an organisational context, any proposed change must bring benefit if it is to be meaningful. The concept of derived benefit can be difficult for some organisations to grasp. By failing to understand the benefit(s) to be obtained from a proposed change, and by not being clear about the benefit, these organisations run the risk of failing to successfully deliver the change. One of the biggest challenges organisations face in identifying the potential benefits of a change is the definition of a readily understood measure differently of success. For example, a company decides to manage one of its support functions by outsourcing that function. To quantify the benefit in this case is reasonably easy since a comparison between the cost of in-house delivery and the cost of an out-sourced service might reveal a cost saving. This easily quantified benefit is defined as a tangible benefit.



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Where things become more difficult is where there is a significant payback period – that is, the benefit of the change will not be derived for several years – or where the benefit is intangible. An intangible benefit is one that is not easily quantified. For example, a company proposes to allow staff greater freedom to choose their own working hours arguing that staff morale will be improved. Finding measures to confirm that the benefit – improved morale – has been achieved is challenging and, indeed, imprecise. Activity: Think of 5 significant changes that have taken place in your organisation and identify the potential benefits and implications of each change to your organisation and the people within the organisation.

Activity: Having identified the potential benefits and implications of change, consider how you might ‘sell’ those benefits to others, so that they would be likely to engage fully in the initiative.



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The benefits of change might typically include:

Organisational Benefits Personal Benefits

- Improving efficiency - Creating new opportunities to grow

the business and increase turnover and profits

- Creating significant differentiation and market space between you and your competitors

- Leading your company to think to the future, to motivate, to inspire

- Reducing costs - Opening up new markets - Creating investor confidence - Utilising partnerships, acquisitions,

licensing options and intellectual property assets

- Operating in and dominating a wider market

- Becoming more competitive - Improving decision making - Providing stimulation for employees

and improving employee retention rates

- Challenge (greater job satisfaction) - Motivation - Excitement - Reward (bonus payments) - Professional and personal

development - Recognition for performance - Opportunity to ‘shine’

It would be fair to say that most organisations tend to think in terms of tangible benefits when considering proposed change initiatives. The reason for this is simple: a quantifiable return on investment makes the decision to proceed with a change viable or justifiable.



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Barriers to Change While change can and should bring significant benefit to organisations, there are usually some barriers that need to be overcome if the change is to be implemented successfully.

Activity: What might constitute barriers to change?

a. In organisations generally? b. In your organisation specifically?



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Typical barriers to change (and innovation) might include:

Lack of funds;

Poor communication;

Poor leadership;

Lack of vision;

Adverse consequences of stress – cognitive, managerial and physical;

Lack of trust;

Fear of the consequences of taking risks;

Abuse of ‘position power’;

Poor interpersonal relationships;

Lack of rewards;

Fear of failure, shame or social disapproval;

Cognitive constriction – thinking ‘inside the box’;

Resistance to change;

Ignorance of applications relating to technological advancement;

Innovation is too complex to manage;

Failure to recognise opportunities;

Overloaded with everyday problems;

Competing priorities;

Lack of resources (including creative individuals);

Management systems that cannot handle innovation and change; and/or,

Innovation costs are perceived to be too high and too hard to control. The above list is not exhaustive and you may have disclosed several other potential barriers to change, particularly within your own organisations. The challenge to any manager involved with a change is to identify the barriers at the earliest opportunity and to plan to address these barriers before they become immovable obstructions!

The Need for Change Force Field Analysis

As a manager you will need to persuade others of the need for change. One tool that can help in identifying the various issues ‘for’ and ‘against’ a particular change is Force Field Analysis. This is particularly useful as other people will be all too willing to present their objections which will be easier to counter if you have considered them beforehand. Popularised by Kurt Lewin, Force Field Analysis allows us to compare forces for and against implementation of an innovation or change. This tool is particularly useful when it comes to identifying and understanding potential risks to the change initiative. By establishing factors for and against the change – some factors will inevitably appear on both sides of the force field – we articulate and define potential benefits and likely hurdles to successful implementation. The forces identified for the change allow us to validate our earlier thinking in terms of potential benefits while the forces against change enable us to think about what we will need to do to ensure that the change is made successfully. Further potency comes from allocation of a score to reflect the importance of each of the forces for and against the change. Using a scale of 1-10 would be one way of achieving this.



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One note of caution: it is very easy when using this tool to skew the results! In other words, if there is a strong appetite for the change, you may be tempted to over-score the forces for change and under-score the forces against change.

Managing Change In its simplest form, managing change is the process of moving from the current state to the vision of the future. The diagram below illustrates this definition, highlighting that the bit in the middle – the change – can be painful! Moving from the Current State to the Vision

Forces For Change Forces Against Change C h a n g e

P r o p o s i t i o n

+ -

Total

Issue

Score

Score Issue

Implications Implications

Total

Force Field Analysis (Format: AH Raymondson, 2010)

Known Steady State

Turbulence and Unease

Unknown Unwanted (by some)

Vision Current Change

Format: KW Hamilton, Adapted from Russell-Jones (1995)



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The Change Process – Casting Change Another way of looking at change and the process of change is to consider what happens when foundries take scrap lead and recycle it into new objects. The foundry process provides a neat analogy for change in organisations. Scrap metal is collected and placed into the furnace in which it is heated until it becomes liquefied. Then it can be recast and when solidified the casts are opened to reveal bright new lead objects. The solidified lead metal is quite malleable – significantly more so than, say, steel, and could fairly easily be bent and gently reshaped cold if enough pressure is applied. The parallels here with organisational innovation and change are that:

The scrap metal might represent the need to move on, to change, or to do things differently. Literally a de-solidifying of, say, the culture, practices, products and services;

The molten metal might represent a state of flux – the opportunity created for rapid, transformational change. It would solidify in the furnace if the fire went out, if, for example, the momentum, control and drive were lost or ineffective. The material has to be carefully monitored and controlled to ensure it arrives in the casts in sufficient quantity and at the correct temperature to avoid cracking and having airlocks that would ruin the new objects. In exactly the same way, the innovation and change process in organisations needs to be managed;

Creation of new lead objects – might represent a re-solidifying of the culture, the way of doing things, the creation of a new order, new, systems, products and services; and,

The malleability of the lead might represent on-going potential for incremental improvements.

Casting Change Model (AH Raymondson, 2012)

Heat lead to molten state

Recast into new objects

Lead (metal) objects/scrap

Solid State

Molten State

Solid State



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Since the early 1970s, much has been written about change and the importance of managing it. Without management of processes it is unlikely to be effective. While change management experts might offer different explanations and advice on how to manage change, there appears to be some consensus that suggests change management involves 2 key activities: project management and people management. It is useful to consider and understand what comprises a typical change management project. There are 7 elements or phases in a change management project, namely:

1. The need or justification for change. The need for change might arise from an external driver – for example, a change in legislation – or from an internally driven activity – an organisation’s Continuous Improvement Agenda.

2. Identification, development and evaluation of options. In this phase, the

need is subject to a rigorous analysis enabling a range of viable options to be identified. Each option is developed to the point where a proper evaluation of the advantages and disadvantages of each option can be made. Typically a high-level Cost Benefit Analysis (CBA) would be developed for each option, including the ‘do-nothing’ option. The ‘do-nothing’ option is used as a benchmark against which to evaluate each option.

3. Selection of preferred option. In deciding on the preferred option,

consideration always should be given to selecting the ‘do-nothing’ option if the other options cannot demonstrate a benefit to the organisation.

4. Initiation of a change project. Initiation of a change project should include

formal terms of reference or guidelines for the project, a clear management structure – who is going to be responsible for leading and managing the project – and the agreed resources available (usually people and budget).

5. Management of project. The organisation should specify the quality standards

and formal procedures under which the Change Manager should project manage the project. This will include formal reporting of progress against an agreed Project Plan and the refined and updated CBA.

6. Change implemented. The Change Manager should deliver the agreed change

within the resources allocated (on time, within cost and to the required quality or specification) ensuring that the anticipated benefits are realised.

7. Lessons learned for future change. At the end of a change project, any

lessons learned – positive and negative – should be recorded and evaluated. Learning should be carried forward to future change projects to ensure that these projects benefit from adoption of good practice and avoid pitfalls experienced previously.



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The Change Cycle If we accept that change in an inevitable constant in organisations, then it seems that it should be viewed as a cyclic and on-going process as depicted below:

The Change Cycle (AH Raymondson, 2012)

Recognising the requirement for strategic change sounds like an obvious thing to do. However, many managers find themselves so absorbed in day-to-day operational issues that they miss the opportunities provided by the changing landscape of the strategic environment. Environmental scanning (as we learned earlier) is the process of looking out to spot change drivers. One of the key skills for management is application of sound judgement. Sound judgement is a primary skill needed in reviewing the organisational strategy and in deciding whether the strategic direction of the organisation needs to change. Planning the implementation of any change sounds straightforward enough but with strategic change there can be significant complexity if the change is a major one, affecting the entire organisation. However, time spent developing a detailed plan will inevitably lead to a smoother implementation of the change. It almost goes without saying that implementation requires careful management to ensure that the change moves forward efficiently and effectively, to enable the organisation to capitalise as quickly as possible on any strategic advantage that the change in direction offers.

Recognise Drivers for Change

Review organisational

approach against the drivers for change

Analyse any identified need for

change

Define the required change

Create a change plan

Implement the change

Change Cycle



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A useful model for examining the possibilities for a change is the Pathways to Change Model, below:

Pathways to Change Model (AH Raymondson, 2009)

The Pathways to Change Model highlights that managers need to consider a broad range of options in responding to, and addressing, the drivers of change. Each option will have a range of implications, to which judgement needs to be applied in making recommendations and/or decisions. The final stage of the process is implementation of the change. ‘What, where, when, how and why’ relates to asking questions to broaden the range of options and to draw in all the implications such as:

• What have we missed? • How do other organisations do this? • Why are we doing it that way? • What if we …? • Where could we do that …? • How would we do that? • What would be involved? • What would or might happen if ….?

Judgements Recommendations

What? Why? When? Where? How?

Options Options Options

For Change Options Options Options

Driver(s) for

Change

Decisions

Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications Implications

Implementation



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Activity: Take a current or potential driver for change and work through the Pathways to Change Model as far as making recommendations. Examine carefully a broad range of options and cite the implications of each, prior to applying judgement to making a firm recommendation. Use the notes section at the back of this Workbook for rough working and note the key findings, including the recommended option below.

The 8-Step Change Model – John Kotter To better understand what constitutes effective change management – the act of moving from steady state to a new vision – John Kotter in his book ‘Leading Change’ defines a process comprising 8 stages, The 8-Step Change Model. Specifically, he states that, to successfully implement change, managers must:

1. Establish a sense of urgency. If a change is to be effected, it should be carried through as quickly as possible to avoid a loss of impetus. A lack of urgency can lead to a scenario in which the change is perceived by those affected as ‘death by a thousand cuts’.

2. Create a guiding coalition. Change cannot be successfully implemented by

one person, irrespective of their position in the organisation. Even a chief executive on their own cannot make a change happen: a change initiative needs



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to be driven from the top of the organisation but it must take the people with it. This can only happen where key stakeholders – people of influence, often referred to as change champions or change agents – are fully committed to the change and are in a position to promote and support implementation of the change.

3. Developing a vision and strategy. Every change project, by definition, involves

delivering a vision. Clearly, however, some projects will be more complex than others. On complex change projects (step and major change initiatives), it will be necessary to develop a strategy to explain how the vision will be delivered. The responsibility for developing the strategy and ensuring that the vision is properly stated rests with the Project Lead/Change Manager. Effective change managers seek to involve key stakeholders in the development of the vision and strategy.

4. Communicating the change vision. Change champions will typically support

the Change Manager in communicating the change vision. In successful change initiatives, the initial communication of the change vision is likely to have come from the Head of the Organisation personally. This approach has a number of advantages, most significantly the personal endorsement of a change from the chief executive/managing director adds significantly to the perceived importance of the change.

5. Empowering employees for broad based action. Similar in some respects to

the creation of a guiding coalition, this stage is about engagement with the people who are affected by the proposed change. It is true in most change initiatives that the people who are closest to the problem are best placed to find solutions to that problem. Regular and effective consultation with subject matter experts is likely to be productive in terms of gathering ideas. Moreover, enabling staff to come up with the best solution is a very powerful way of overcoming potential resistance to the proposed change.

6. Generating short-term wins. One of the single most characteristics of

organisations that are successful in implementing change is their ability to maintain momentum. In most cases, this is achieved by a well-considered strategy, which seeks to deliver early success – short-term wins. The concept of Kaizen resonates here: organisations that seek incremental improvement (also called continuous improvement) are particularly adept at generating short-term wins.

7. Consolidating gains and producing more change. This has a link to the

importance of generating short-term wins. Early and frequent success will encourage and enable more innovation and change; indeed, staff will be significantly more positive about change where they see how the change has delivered a benefit and feel that they have and can influence future change.

8. Anchoring new approaches in the culture. This is critical to organisations that

want to be creative and innovative. While there is no guarantee that a particular methodology or approach to change that has worked well in the past will be effective in the future, it makes sense to try to do more of what has worked previously. When the approach ceases to be effective – be innovative, take a new approach!



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The first 4 steps in Kotter’s 8-Step Change Model focus on a ‘de-freezing’ process, whereby individuals who will be affected by the change must see and understand why the change is necessary. The next 3 stages make the change happen and the last stage ‘re-freezes’ the organisation with the new change. Kotter emphasised that all of these stages must be worked through in order and to completion. Skipping even a single step or getting too far ahead without a solid base would almost always create problems and lead to failure. Critical Review of Kotter’s 8 Stage Change Model Activity: What do you view as the strengths and weaknesses (or advantages and disadvantages of the Kotter Model?



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Critical Review of Kotter’s 8 Stage Model It could be argued that Kotter’s view that the 8 stages should be followed in order is unnecessary. For example, you might quite realistically create a guiding coalition before creating the sense of urgency. Also you might want quick wins to punctuate the whole process since these provide motivational benefit and momentum. Similarly, for example, instead of being by implication a linear process of sequenced stages, there are elements that you might see as necessarily cyclic – such as developing the sense of urgency: yes, create it at the start but it needs consistent managerial effort to maintain the urgency throughout the change process. Whilst Kotter does make the case for anchoring the change in the culture, he could have made the link to culture in the earlier stage, Consolidating Gains and Producing More Change. The reality for most organisations is that change is constant. Therefore, it could be argued that the culture itself needs to accommodate agility to respond to constant change and to develop capacity to accept the need for constant change, not just to accommodate anchoring of individual change initiatives. Activity: Your organisation wishes to reduce its staff costs by introducing new ways of working. Specifically, it wishes to sell one of its two buildings. To enable a sale to take place, the organisation needs to change the way in which 50% of its staff currently work. It plans to offer staff the opportunity to work from home, from the car and/or to hot-desk, depending upon their role. Using Kotter’s 8-Step Change Model, outline in bullet points how you might go about managing the change.



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Kotter’s 8-Step Change Model outlines the key activities that will enable successful implementation of change. However, he does not within the model identify the skills required for successful change management. The framework below outlines key skills for success in change management:

8 Key Skills for Successful Change Management (AH Raymondson, 2011)

Activity: Consider each of the 8 Skills for Successful Change Management in relation to a change initiative your have been involved in. Identify an example where each of the 8 skills has led to some element of the change going either really well or really badly.

8 Key skills for successful change management

• Leadership • Project management • Managing uncertainty • Coaching skills • Resilience and

determination in setting and achieving goals

• Systems and process management

• Organisational skills • Listening and

communication skills



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Minimising Resistance to Change One of the biggest challenges for managing strategic and other change is how to deal effectively with resistance to change from any of the organisation’s stakeholders. A stakeholder is defined as ‘a person or group of people with an interest’ in something. For example, patients are a key stakeholder in the NHS. The following model outlines key approaches to minimising resistance to change:

Key Priorities for Minimising Resistance to Change (AH Raymondson, 2011)

Stakeholders in Change – Analysis It is important in any change management initiative to identify the key stakeholders, so that their concerns can be addressed. A simple technique for identifying stakeholders for a particular change is to create a Stakeholder Map like the one on the next page. A ‘stakeholder bubble’ is created for each person, department or external organisation that is affected, or likely to be affected by the proposed change.

Clearly communicate the rationale for the change Be open and honest Involve relevant stakeholders in planning the change Incorporate ideas and suggestions of key stakeholders

where possible Pave the way by getting ‘buy in’ from people holding

influence and power Fully address any concerns expressed Create opportunities for highly visible successes in the early

days of the change process Give people on-going recognition for their contribution Maintain focus on the positive elements of the change Avoid lapses of momentum which people might exploit to

return to the old process and ways of working



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Activity: Assuming a proposed change in working arrangements, requiring staff to hot-desk and to work from home, in order to reduce the office accommodation required by your company, produce a Stakeholder Map for your organisation, identifying the key stakeholders in this change.

Stakeholder Map

Stakeholder 1

Stakeholders

Stakeholder 2

Stakeholder 3

Stakeholder 4

Stakeholder 7

Stakeholder 6

Stakeholder 5



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Of course, in itself, the basic Stakeholder Map only tells us potentially who is affected; it does not attach any relative significance to the stakeholders themselves. This can be achieved by creation of a stakeholder matrix. Stakeholder Matrices Another way to analyse stakeholders is to create a Stakeholder Matrix, with names or roles along one side and categories tailored to the situation along the other, as in the following example:

Stakeholder (Person or Group)

Overt/hidden interests (positive, negative or unknown)

Power and influence (level on scale of 1 high - 10 low & over whom)

Significance to the organisation (high, medium, low)

Their objectives (likely or known)

Relative priority/ importance to the organisation (priority 1 (high), 2, 3)

A

B

C

D

E

F

G

H

Example Stakeholder Matrix



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Activity: Expand your basic stakeholder map to populate a stakeholder matrix:

Stakeholder (Person or Group)

Overt/hidden interests (positive, negative or unknown)

Power and influence (level on scale of 1 high -10 low & over whom)

Significance to the organisation (high, medium, low)

Their objectives (likely or known)

Relative priority/ importance to the organisation (priority 1 (high), 2, 3)

A

B

C

D

E

F

G

H



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Developing a Stakeholder Engagement Plan It is particularly important when considering and implementing change to engage with and involve stakeholders. The fact that people are stakeholders means that they will be affected by the change. Involvement through proactive initiatives to engage them in the process is likely to lead to wider commitment to the goals and less resistance. Consultation where appropriate on issues that impact stakeholders would usually be undertaken prior to construction and acceptance of the business plan. Once the business plan has been accepted, the stakeholder engagement focus would be towards implementation of the change. A documented stakeholder engagement plan would be tailored to the organisational requirement, with the main objectives likely to include:

Consideration of how stakeholders will be involved in the change;

Setting out and explaining the need for change;

Establishing mechanisms for stakeholder communication (what, when and how);

Defining effort required to reduce the possibility of stakeholders not engaging or committing to the change;

Giving clear parameters to stakeholders regarding their roles and responsibilities in the change process; and

Maintaining on-going dialogue with stakeholders and keeping them informed of progress and ensuring that all stakeholders know what is happening, when, and how they will be affected.

Key messages will need to be planned and might include:

Case and urgency for change;

Nature and scope of change, and its impact and implications;

Role of all stakeholders along with individual responsibilities and accountabilities;

Processes for input and feedback;

Time lines; and,

Benefit statements. Essentially the success of stakeholder engagement and involvement comes down to ensuring that communication is both timely and effective and that the change is well planned. Planning Change

Project management techniques and project planning tools are useful for any tasks in which different outcomes are possible. For management of change – where risks of problems and failures exist – it is important to plan and asses options, and to organise activities and resources to deliver a successful result.



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Change projects can be various shapes and sizes, from the small and straightforward to extremely large and highly complex.

Activity: List the types of change projects, large and small, that have taken place in your organisation in the past 2 years.



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In any organisation or business, you will find change projects across all areas and functions, including:

People, staffing and management;

Products and services;

Materials, manufacturing and production;

IT and communications;

Plant, vehicles, equipment;

Storage, distribution, logistics;

Buildings and premises;

Finance, administration, acquisition and divestment;

Purchasing;

Sales, selling, marketing;

Human resources development and training;

Customer service and relations;

Quality, health and safety;

Legal and professional;

Technical, scientific, research and development;

New business development; and,

Anything else which needs planning and managing within organisations. Successful implementation of a change project, for projects large or small, depends on proper planning. Planning Techniques

A plan can be defined as: ‘A description of how we intend to reach an objective’.

Planning is the process of determining how the desired outcome will be achieved. In a change project, planning enables the Manager and Change Project Team to establish what tasks need to be undertaken, the resources necessary to complete these tasks and how work should be scheduled.

The 2 most popular planning tools are the GANTT Chart and Network Diagrams (the product of Project Evaluation and Review Technique).

GANTT Charts

The GANTT Chart is an extremely useful planning and scheduling tool, particularly on projects or complex activities. The GANTT Chart is named after US engineer and consultant Henry Gantt (1861-1919) who devised the technique in the 1910s.

GANTT charts are excellent models for scheduling and for budgeting, and for reporting, presenting and communicating plans and progress easily and quickly. You can construct a GANTT Chart using MSExcel or a similar spreadsheet. Every activity has a separate line allowing you to create an overall time-line for the duration of the series of activities (the example on the next page – decorating a room – shows hours, but normally you would use days, weeks, or, occasionally, months). You can colour code the time blocks to denote type of activity (for example, intense, watching brief, directly managed, delegated and left-to-run). You can schedule review and insert break points.



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At the end of each line you can show as many cost columns for the activities as you need, showing, for example, planned spend, actual spend and spend variances, and calculate any totals, averages, and ratios that you need.

GANTT Charts are probably the most flexible and useful of all planning tools for complex projects and activities and many companies and organisations use them. However, they do not very easily or obviously show the importance and inter-dependence of related parallel activities. Nor do they clearly show the necessity to complete one task before another can begin, as a Network Diagram will do, so you may need both tools, especially at the planning stage, and almost certainly for large complex projects.

GANTT Chart Example – Decorating a Room (Day One)

Hours

Task Activity 1 2 3 4 5 6 7 8 9 10 11 12

Remove furniture and curtains

Dust and hoover room

Sand down blemishes and fill holes

Wash walls, skirting boards and doors

Tape over plugs/switches/wall lights

Mix paints

Paint walls

Paint woodwork

Remove tape and touch up

Tidy away

In the example above, the bold black blocks represent actual work or activity, while the grey shading indicates, in this case, drying time after washing and painting of woodwork. Project Evaluation and Review Technique – Network Diagrams

A second commonly used planning technique is Project Evaluation and Review Technique (PERT). PERT is a specialised method for identifying related and interdependent activities and events within a project. While PERT is not normally relevant in simple projects, any project of considerable size and complexity, particularly when timings and interdependency issues are crucial, can benefit from the detailed analysis enabled by PERT methods. PERT analysis commonly feeds into what is known as Critical Path Analysis. Critical Path Analysis sounds very complicated, but it is simply a very logical and effective method for planning and managing complex projects. A critical path analysis is normally shown as a flow diagram, whose format is linear (organised in a line), and specifically a time-line.

The Critical Path on any project is defined as ‘the longest route through the project’; that is, the total time that it will take for the longest sequence in time of interdependent events/activities to complete. Critical Path Network diagrams are very good for showing



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interdependent factors where timings overlap or coincide. They also enable a plan to be scheduled according to a timescale.

Taking, as an example, a project to organise a family party, we can undertake a Critical Path Analysis and prepare a Network Diagram. We know what activities are involved: identifying a venue, booking a venue, booking catering and entertainment, inviting family and friends to attend, ordering a cake, decorating the room and clearing up. Some of these activities can happen in parallel and some are interdependent. That is to say, if the organiser (project manager) tried to book catering before the number of attendees was known, it could be a very costly mistake! Similarly, certain tasks must be started before others, and certain tasks must be completed in order for others to begin. For example, the venue must be booked before invitations can be sent out and, obviously, we cannot clear up until after the party.

An example network diagram is on the next page. The Critical Path Analysis is indicated by the bold black arrows, while the time calculation is shown at the bottom of the network diagram.



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Example Network Diagram

[Earliest start time]

Day 1 Day 1 + 7 Day 8 + 1 Day 9 + 7 Day 16 + 7 Day 23 + 14 Day 37 Day 38

Decide to have a party

Identify and view venues

Pick venue Invite guests

Book disco and band

Book caterer Pick menu

Pick cake

Collect keys

Set-up venue

Party Clear-up

Set-up venue

= Critical Path

= Critical Path

= Critical Path

Sequential activity

Sequential activity



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The Critical Path Analysis example on the previous page shows just a few activities over a few weeks. Normal business projects would see the analysis extending several times wider than this example, and the time line would be based on weeks or months. It is possible to use MS Excel or a similar spreadsheet to create a Critical Path Analysis, which allows financial totals and time totals to be planned and tracked. A carefully hand drawn diagram – which requires no computer training at all – can put 90% of the thinking and structure in place.

Estimating

In the planning phase, it is important to understand the importance of accurate estimation. Estimation on a project is simply an assessment of:

The likely time an activity will take; and,

The likely cost of that activity Estimation itself is no ‘dark art’; it is simply your ‘best guess’ and is usually based upon experience. It is also something we do every day: for example, we estimate how long it will take for us to complete a piece of work or to travel into the office. Where you lack experience in a particular discipline, you can seek estimations from colleagues who are experienced in the field, by conducting research or, indeed, by seeking input from subject matter experts outside of your own organisation. For example, if you were planning to decorate your kitchen and you had never decorated a kitchen previously, you might draw on experience of decorating other rooms, adjusting the estimate to reflect the greater or lesser complexity of decorating a kitchen. Alternatively, you might obtain an estimate or quote from a local decorator and adjust that to reflect your competence when compared with the professional tradesperson.

One way of estimating is to assess ‘best case’, ‘worst case’ and ‘middle case’ where the ‘best case’ represents your most optimistic estimate and the ‘worst case’ your most pessimistic estimate; the ‘middle case’ being the most likely. So, to decorate a kitchen, we might think it will take 3 days ‘best case’ and 5 days ‘worst case’ and settle upon an estimate of 4 days. By accurately estimating the level of effort and the time that will be required to successfully complete the work, managers retain credibility and authority. The most common reason for poor estimation is a failure to take account of the variables which are difficult to control. For example:

Other competing priorities;

Annual holidays;

Sickness;

Equipment failures;

Missed deliveries;

Unforeseen interruptions; and,

Quality failures. Some project managers, therefore, might choose to err on the ‘worst case’ estimate.



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Financial Aspects of Change Equipment – Acquisition and Operation If a change initiative requires resources or equipment to be purchased, significant financial costs can accrue. Similarly, one resource that is often overlooked is one of the most expensive, namely, people. There are real costs associated with the time spent engaged in change initiatives. Looking at the costs relating to acquisition and operation of equipment, equipment can be defined as:

‘Tangible property (other than land or buildings) used in the operations of a business or organisation. Examples of equipment might include: machines, tools, devices and vehicles.’

(Adapted from: The Business Dictionary)

Activity: What costs might be involved if, for example, you needed to acquire a desktop computer for an office at work?



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Costs Associated with Equipment Purchase In the case of acquisition of a desktop computer for an office at work, your costs might have included:

If purchased, the purchase price of the machine;

Software purchase costs;

Any installation costs, such as broadband connection;

Associated costs – such as compliance with H&S Regulations, for example:

Chairs that enable proper adjustment for different users; Anti-glare lighting; Safe cable covers to avoid trip hazards or maybe a desk at the correct

height; and, 2-yearly eye tests for users.

Maintenance contract;

Lease payments, if not purchased outright;

Costs of any finance;

Delivery;

Training costs for users;

Costs of peripheral equipment – such as a printer, scanner, speakers, webcam;

Consumables, such as paper or inks;

Time taken to research the product; and/or,

Costs of depreciation. Only by considering the full costs of acquisition can you make the business judgements and decisions associated with purchases of equipment and, if appropriate, any ‘payback period’ or ‘return on investment’ (ROI). Other considerations might include the ‘through life’ maintenance costs – i.e. what the likely costs are throughout the useful life of the equipment – and ‘opportunity costs’ – the ‘cost’ of any lost opportunity resulting from the money having been committed to the particular equipment that has been purchased. Activity: Create an estimate of costs associated with providing a PC for an employee, with broadband and a typical range of software/applications for 3 years.



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Operating Costs Operating costs are the costs per unit involved in making a product or delivering a service, or the annual cost incurred on a continuous process. They do not include capital outlays or the costs incurred in design and implementation phases of a new process. Operating costs include:

Costs of producing outputs (goods or services) to meet client/market needs; and,

Costs of resources used to produce goods and services.

Many change initiatives of course are designed to save on costs and it is often the strength of savings that can be made, outlined in a business case, that drive approval and thereafter momentum for a change project. Change Project Timescales and Costs

Delays usually cost money! Most projects come in late because the assessed timescale is over-ambitious, so it makes sense to plan for some slippage. If you have been given a fixed deadline, plan to meet it earlier, and work back from that earlier date. Build some leeway into each phase of the project. Err on the side of caution where you can.

Financial Management

For change projects involving significant budgets, a spreadsheet to plan and report planned and actual expenditure is essential. Financial accounting for small projects can sometimes be managed using a simple Budget Control Chart, like the one below, which shows allocated budget, actual spend and variances.

Budget Control Chart

Project Steps Budget Actual Variance Total

(£) (£) (£) (£)

Purchase Materials 450.00

507.00

57.00

57.00

Preparation of ground 200.00

185.00

15.00

42.00

Concreting 250.00

245.00

5.00

37.00

Erect Shed 125.00

135.00

10.00

47.00

47.00


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In determining the required budget, it is important to understand the difference between ‘fixed’ and ‘variable’ costs, particularly in the assessment of benefits to be accrued from a change. In simple terms:

Fixed Costs are those that do not vary with changing sales or production volume and typically include building lease costs, permanent staff wages, business rates, and depreciation of capital.

Variable Costs are those that do vary with sales or operational volumes, including cost of raw materials, fuel (power, heat and light), commission payments, transport costs, staff overtime and employment of temporary additional staff.

The Change Project Team

Another important part of the planning stage is picking your team. Take great care, especially if you have team-members imposed on you by the project brief. Selecting and gaining commitment from the team members is crucial to the success of the change project, and the ease with which you are able to manage it. Generally try to establish your team as soon as possible. Identifying or appointing one or two people even during the terms of reference stage is possible sometimes. Appointing the team early boosts their ownership and buy-in to the project, and maximises what they can contribute. But be very wary of appointing people before you are sure how good they are, and not until they have committed themselves to the project upon terms that are clearly understood and acceptable. In addition, remember that some of the most valuable team members are informal advisors, mentors, helpers, who want nothing other than to be involved and a few words of thanks.

Change Project Contingency Planning

Planning for and anticipating the unforeseen, or the possibility that things may not go as expected, is called 'contingency planning'. Contingency planning is vital in any task when results and outcomes cannot be absolutely guaranteed. Often a contingency budget needs to be planned, as there are usually costs associated with any slippage or delay. Contingency planning is about preparing remedial actions, and making sure that leeway for time, activity and resources exists to rectify or replace first-choice plans. It may be difficult to anticipate precisely what contingency to plan for in complex long-term projects, in which case a contingency budget is provided, to be allocated later when and if required. This is sometimes referred to as ‘financial tolerance’. The ‘tolerance’ is simply delegated authority to exceed the budget by a percentage (e.g. +5%) or an agreed amount (e.g. £10,000).

Communicating Change Highlighted earlier, was the importance of communicating the Project Plan to those affected by the change and particularly those who are identified as key stakeholders. Critical to any change project is an effective communications strategy, which can only be developed when a complete understanding of the stakeholders is complete. A stakeholder analysis enables us to determine who the key stakeholders are and what their information needs are likely to be.


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The 5 Ws of Communicating Change An effective change communication strategy can easily be developed by answering the following 5 questions:

1. Who should be told?

Everyone who needs to be told

Openness is crucial (where possible) 2. When should they be told?

Project members first

All affected staff (at the same time)

Internal before external

Announcements to follow significant events and decisions

3. What should they be told?

Tell people when you have something to say

Tell them what has been achieved

Tell them what you plan to do

Tell them what you are doing

Tell them what you will be doing 4. Where should the message be conveyed?

Via the most effective medium

Could be staff meetings, letters, seminars, press releases – whatever gets the message to the right people

5. Who should control the communications process?

Not a junior member of staff!

Managing Director/Chief Executive/Project Sponsor/ Board member/Project Manager/Internal Communications Team

The Stakeholder Map and subsequent categorisation of stakeholders enables us to answer questions 1, 2 and 3. Specifically, a person, department or organisation defined as a priority stakeholder needs to be given full information from the outset and regularly thereafter. Question 4 requires consideration to be given to providing the information in a form that is easily accessible to the stakeholder, while Question 5 demands that the information to be disseminated comes from the most appropriate person.


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Activity: You are the Project Manager on a change project that has been approved by the Chief Executive. You have been tasked with preparing a briefing for key stakeholders. Members of the Project Team have been identified as key players. Using the 5Ws of Communicating Change, outline your strategy for communicating the change project to them:

A broad communications strategy for members of the Change Project Team might include the following:

Chief Executive/Project Sponsor to carry out a verbal briefing:

- Face-to-face communication is always more effective than written brief - All the team together if possible


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To include:

- Need for change and justification for the Project - Anticipated benefits of the Project - Appointment of the Project Manager - How the project is to be managed – roles and responsibilities of Board,

Project Manager, team members - Change Plan, including timescales and key dates - Communications Plan – who else is being told, what they are being told

and when they are being told

Might be supported by dissemination of written notes or dedicated project page on the website:

- Ensures information available for subsequent reference - Ensures that members of the team that may have missed the briefing

have access to the same information as their colleagues

Managing Risk and Interdependencies On any change project, it is reasonable to assume that things will go wrong either through omission (we forget to do something or fail to anticipate a potential problem), or, commission (we do something that we should not). These occurrences are collectively known as ‘risks’; risk can be defined as:

‘A chance or possibility of danger, loss, injury or other adverse consequences’

Concise Oxford Dictionary

or,

‘An uncertainty of outcome’

PRINCE2

Whichever definition you prefer, it is clear that a well-managed change project will take account of, and try to anticipate, potential risks to the organisation – either direct risks or those relating to interdependent activities. An interdependent activity would be one that relies on the results of the particular change project. For example, a project to penetrate markets in the Far East might rely on a separate project to translate brochures and instructions for products and services. Typically, there are 2 categories of risk on any change project: business risk and project risk. A business risk is a risk that will affect day-to-day or future business, while a project risk is one that is specific to and will only affect the project. For example, a company announces that it is going to trade online from a specific date and then fails to have the web technology available on the launch date. The loss of anticipated sales is both a business and project risk while the adverse impact upon its reputation is simply a business risk. The loss of anticipated sales will adversely affect the annual sales figures – the business risk – while the


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delayed implementation will adversely affect the anticipated benefits – the project risk –which could mean that the project does not pay back as expected. The risk management process effectively comprises 2 distinct phases:

The first phase (risk analysis) involves identification and evaluation of a risk, and assessment and selection of a suitable response. The second phase (risk management) is concerned with resourcing the proposed action (carrying out the response) and reviewing what effect the response had. The process of risk management is depicted in the diagram below.

The Risk Management Process (Format: KW Hamilton, 2009)

Risk Management

Risk Analysis

Identify the risk

Evaluate the risk

Identify suitable response(s)

Select response Plan and resource

Monitor and report

Risk Management

Risk Analysis

Phases in Managing Risk (Format AH Raymondson, 2010)


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Activity: Imagine that you an operations manager in a factory. You are teaching a member of staff to operate an industrial sewing machine, used in your production of aircraft seats. Follow the above process and outline what you would do in each of the activity boxes.

Having completed the activity you will have identified a number of risks, such as getting fingers caught in the machine as material is fed through it. You may well have considered what the outcome of such an injury might be. Evaluating the risk of injury might include consideration of the impact of training, the experience of the individual operator, working with sufficient space, appropriate lighting and safety guards on the machine, etc. In risk management, it is customary to specify each individual possibility rather than adopt a ‘one-size fits all’ approach. Having done that, each risk is evaluated on the


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basis of its probability – the likelihood of the risk occurring – and the impact – the consequence of that risk occurring. The grid below illustrates how to evaluate probability and impact:

Probability Impact

High Can be expected to occur sooner or later

Significant impact on the ability of the project to meet its objectives

Medium May or may not happen – fairly high likelihood of occurrence

Some impact on project objectives. May be manageable within tolerances

Low Unlikely to happen, but may still be significant

Marginal effect, but still requiring some extra work/effort to mitigate

Using number values for evaluated probability and impact – Low, Medium and High evaluations each carry a value of 1, 2 or 3 respectively – it is possible to weight each risk according to its severity or significance by simply multiplying probability and impact. Thus, a risk evaluated as a high probability and high impact risk will attract a risk value (Column 6 of template risk log on following page) of 9 (3 x 3). Evaluation of the risk and its significance will have a material effect on the response that is selected. There are 5 different responses to a risk, 4 of which are likely to have a real or potential cost to the change project; these responses include:

Risk Response What it means

Prevention Stop the threat occurring or prevent the impact

Mitigation Actions taken to reduce the probability or the impact

Transference Impact passed to a third party (e.g. insurance)

Contingency Actions to be taken if the threat arises

Acceptance Tolerate the risk

On large or complex change projects, it is customary to see a Risk Log raised setting out each risk and the proposed action that will be taken should the risk materialise. A template Risk Log is overleaf. Note that Column 7 can then be used to rank risks in order of importance and priority while Column 9 allows the Change Project Manager to identify the owner of the risk; that is, the person best placed to manage the risk


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TEMPLATE RISK LOG

(1)

Risk ID

(2)

Date

(3)

Description

(4)

Probability

(5)

Impact

(6)

Risk Value

(7)

Rank

(8)

Actions

(9)

Owner


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Taking People with You

It is easy to forget or ignore that many people are affected in some way by the results of a change project. Too often, well-planned change initiatives fail to deliver what is expected because insufficient attention is paid to the needs of those affected. Change is difficult, even when it is good and for the right reasons.

Involve People Almost invariably a better end-result is obtained if people really understand what is going on and what the implications are for them. One way is to engage them in workshops or consultation groups so that they can understand how the changes affect their own work. People need to talk and think through the issues relating to the changes before they can properly make sense of the situation. Most change initiatives that run into difficulties do so because people become confused, anxious or unsure what is going on. They can easily become upset and angry. To some degree these feelings are inevitable but we can remove any that are caused through lack of information. There can be a temptation to try and keep things secret until the whole picture is available, on the basis that ‘if we tell people they will only worry’. Secrecy however, will often to lead to rumours – which are regularly worse than the reality. Better perhaps to say, for example: ‘We have received this, we are not sure about the implications, but I will give you more detail when I can’.

People perceive change very differently, based upon their personal experience of change, their personality (their personal traits) and the level of threat arising from the proposed change.

The table below shows the typical positive and negative perceptions that people have of a proposed change.

Positive Perception Negative Perception

- Small, incremental - Predictable - Positive - Productive - A small modification to your life - Taken in stride, managed

- Huge, catastrophic - Unpredictable - Negative - Unproductive - A devastating collapse of your world - Continuously stressful

‘People don’t resist change, they resist being changed’

Peter M Senge

The quotation above suggests that the key to successful implementation of change lies in enabling people who are affected by a change to understand the rationale for, and benefits of, the change.


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There are 4 main categories of resistance to change:

1. Self-interest 2. Misunderstanding and mistrust 3. Contradictory information 4. Inability to cope with change

Activity: List some of the signs and/or indicators of resistance to change:

Your list might include some or all of the following:

Complaints

Absenteeism

Wastage

Low standards of efficiency

Deliberate restriction of productivity

Aggression against the management

With the exception of the fourth category of resistance – the inability to cope with change – it could be argued that tackling resistance to change simply comes down to effective communication. Understanding the individual perspective – What’s In It For Me? (WIIFM) – and meeting that individual’s information needs can go a long way towards successful implementation of the change.

The inability to cope with change, however, is often attributed to an individual’s personality, their personal traits: we all know people who are very positive about change and, conversely, others who find change very difficult. There is evidence to suggest that age can have a bearing here and this too links to experience. The phrase ‘change fatigue’ is often associated with an inability to accept change. Change fatigue is, in fact, a form of passive resignation: it is not the acceptance or rejection of change. Instead it is a general sense of apathy towards the organisational change(s). Individuals with change fatigue have neither the energy to defend the status quo nor enough interest to move through the change process.


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Elizabeth Kübler-Ross

Elizabeth Kübler-Ross (1926-2004) was a Swiss doctor who worked with and studied the care and support provided to terminally ill patients and their families. In her book, called 'On Death and Dying', she established the existence of a 5-stage Grief Cycle.

As she developed her thinking, she and others noticed that this emotional cycle was not exclusive just to the terminally ill, but also to other people who were affected by bad news, such as losing their jobs or otherwise being negatively affected by unexpected or unwelcome change. The important factor is not that the change is good or bad, but that they perceive it as a significantly negative event. The diagram below shows Kübler-Ross’s Extended Grief Cycle highlighting the different emotional responses we typically experience during bereavement and change.

The Extended Grief Cycle

The Extended Grief Cycle shows a roller-coaster ride of activity and passivity through which the affected person will go in their efforts to avoid the change. Specifically, the initial state before the cycle is received is stable, at least in terms of the subsequent reaction on hearing the bad news.

Shock Stage: Initial paralysis at hearing the bad news

Denial Stage: Trying to avoid the inevitable

Anger Stage: Frustrated outpouring of bottled-up emotion

Bargaining Stage: Seeking in vain for a way out

Depression Stage: Final realisation of the inevitable

Testing Stage: Seeking realistic solutions

Acceptance Stage: Finally finding the way forward

Time

Stability

Immobilisation

Denial

Anger

Bargaining

Testing

Acceptance

Depression


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This can be a useful tool when managing change, as knowing where an individual is on the curve can help organisations decide how to communicate information and what level of support someone needs. Tackling Resistance to Change In every change initiative, there will be a degree of resistance; some people will openly challenge the change while others will be more covert in their resistance. The challenge to the manager is in deciding what action is necessary. Activity: As the Change Manager, what can you do to reduce the likelihood of resistance to the change?

Kotter’s 8-Step Change Model highlights the steps necessary to effect successful change. Within this framework and to tackle any resistance to the change – ideally before the resistance becomes entrenched – Johnson and others suggest that the project manager should be prepared to:

Communicate openly;

Meet resisters face to face;

Point out unacceptable behaviour;

Build trust and respect;

Bad news – tell people candidly but sensitively; and,

Choose people for key positions.


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Evaluating and Monitoring Change During change, it is incumbent upon managers to monitor and thereafter evaluate the change in relation to the benefits that the change was intended to realise. There are 2 main areas to evaluation: the evaluation of the change process itself and evaluation of the outcomes of change.

Monitoring and analysis of the process will enable adaptions to the processes for later stages and for other change initiatives, providing valuable additions to the organisation in the form of ‘lessons learned’. To maximise the benefit from lessons learned, there needs to be an effective system for informing people what the lessons learned are, so that they are acted upon in future. Methods that enable capture of the relevant change process information include key performance indicators (KPIs) and satisfaction surveys of key stakeholders.

KPIs are also relevant in measuring the success of the outcomes associated with strategic change. For example, if operation of a new type of production line was intended to enable productivity to treble, then it would be very easy to establish if that objective had been achieved.

Key performance indicators that have relevance in the implementation of change include:

Input KPIs which measure assets and resources used (purchases made) to achieve business results. Examples might include:

Raw materials; and Quality of raw materials (e.g. grade 1, 2, 3, etc).

Process KPIs which measure the efficiency or productivity of a business process. Examples might include:

Production time; Days to deliver a completed order; Number of days to reply to customer requests; Number of personnel trained in use of a piece of equipment; and, Days taken to fill vacancies.

Output KPIs which measure the financial and non-financial results of business activities. Examples might include:

Sales revenue; Number of new customers; Increase in full-time employees; Return on investment; and, Customer satisfaction.

A mix of the three types of KPIs – process, input, and output – could be applied to give a broad picture of performance.


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Activity: Think of a recent change management project that you have either been involved in or that you are familiar with. Create 3 specific KPIs that would relate directly to measuring the success of the change initiative.

Conclusion For any practicing manager, planning and managing the implementation of change will be a regular feature of their role. In considering how to make change happen, managers are faced with the biggest challenge of all: taking their people with them. This is more challenging when others initiate a significant proportion of the change that is implemented. For change that is initiated within a department or section, the key to successful implementation is early and full engagement with the various stakeholders, of which many will be immediate colleagues. A manager that communicates with and involves his or her staff in development of ideas, options and solutions is far more likely to get ‘buy-in’ to a change. The biggest challenge for managers is creating an environment in which change is considered as ‘normal business’, an environment that enables staff to bring their ideas forward.


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Bibliography/Further Reading

Author Title Publisher

Esther Cameron & Mike Green Making Sense of Change Management Kogan Page

Daryl R Conner Managing at the Speed of Change John Wiley & Sons

Charles Handy Understanding Organisations Penguin Press

Chip and Dan Heath SWITCH – How to Change Things When Change is Hard Random House Business Books

Dr Spencer Johnson Who Moved My Cheese? Vermillion

John P Kotter Leading Change Harvard Business School Press

Neil Russell-Jones Managing Change Pocketbook Management Pocketbooks Ltd

Bourne Lynda Stakeholder Relationship Management Farnham Gower

Chip and Dan Heath How to Change Things When Change is Hard Random House Business Books

Banogan & Hope Hayley Exploring Strategic Change Financial Times/ Prentice Hall

Bernard Burnes Managing Change Financial Times/ Prentice Hall

Raymondson & Hamilton The Art of Management ULR

Notes

Note: The content of this workbook is intended as a basis for critical review, discussion and further research. Every effort has been made to ensure the accuracy of this workbook. However, no liability can be accepted for misapplication of the content. In particular the legislative elements are subject to frequent change and readers are advised to check the latest legal situation before taking action in the workplace. We are fully committed to preserving the copyright owners’ rights and any 3rd party references are extracted for comment and review in accordance with ‘fair rights’ use. We obtain all relevant permissions for any exceptional use beyond fair use. Any individual who believes that we may have overlooked the necessary courtesies in our use of material is requested to contact us as we would do not wish to have any oversights in our learning resources in relation to rights issues.

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