Leadership & Change

 

“Change is nothing new and a simple fact of life. Some people actively thrive on new challenges and constant change, while others prefer the comfort of the status quo and strongly resist any change. It is all down to the personality of the individual and there is little management can do about resistance to change” (Mullins 2010: 753).

Business world has become extremely competitive. In order to survive in the rapidly changing conditions and to meet customers’ needs the organisation must have all possibilities to make changes quickly.  Today, organisations need to make strategic changes relating to customer demand, competitiveness and innovative technologies. Organisation’s structure and processes must be familiarized flexibly, in regard “to change management”. This concept is known in most business organisations, and the results of business change depend on many factors, including nature of organizations, involved employees and people, understanding of the change process by people.

On the other hand, these changes may cause stress and uncertainty among employees (Callan 1993; Terry & Jimmieson, 2003).  According to statistics about 60 percent of organizational changes fail (CIPD 2011). This happens because employees are not involved in the planning and implementation processes and suffer from stress, consequences of which are very cost for organization (McHugh 1997). Thus, people resist the process of change giving preferences to status quo (Mullins 2013).

According to Klepper (1997), organizations normally have four main changes to go throughout their growth: Formative Period, Rapid Growth Period, Mature Period and Declining Period.

• Formative Period – when an organization starts its activity, and changes as   creativity and discovery are necessary.
• Rapid Growth Period –means changes, focusing on the goals and business strategy of the organization.
• Mature Period –changes are necessary for maintaining established markets and achieved gains.
• Declining Period – in order to survive, changes are directed to tough objectives, to get something new.

Some organizations follow these four stages of growth very quickly, others needs decades. In contrary, the organization stops its activity, if it fails to follow with the needed changes of the four growth periods.

 K. Lewin’s Change Management Model

Kurt Lewin (1950) developed one of the important models of organizational change. This model includes the three-stage change process: Unfreeze – Change – Refreeze.

Figure 1: K. Lewin’s Change Management Model

1. Unfreeze- is used in order not to resist change. It must be initiated by means of motivation.
2. Change– After first change, the organisation has a transition stage for some time. To have success in this process, an adequate leadership is necessary.
3. Refreeze – is the stage, when the organization has become stable after change implementations and employees refreeze, operating under new guidelines.

This change management model needs time for implementation and it is widespread, due to its easy use to many changes.

While this remains widely used today, it is takes time to implement. Of course, since it is easy to use, most companies tend to prefer this model to enact major changes.

McKinsey 7-S Model

The McKinsey 7-S model suggests an integrated approach to organization. This model was created by Robert Waterman, Tom Peters, Richard Pascale, and Anthony Athos and introduces 7 factors for collective change. They are as follows: shared values, strategy, structure, systems, style, staff and skills. According to Joseph and Mohapatra (2009), “the essence of McKinsey’s 7S model is that a firm is the comprehensive sum of its parts, and that the internal dynamics of an organisation clearly determine that organisation’s ability to compete, the premise being that both the strategy and the structure of the organisation determine management’s effectiveness”. The model can be usefully used for reviewing different types of business organisation in implementation of strategic direction and marketing operations.

Figure 2: McKinsey 7-S Model

Benefits of the McKinsey 7-S Model’s use

1. It allows understanding and diagnosing an organisation with highly effective method;
2. It supports an organisational change;
3. It integrates emotional and rational parts;
4. All components are compound in a unified manner

There are some disadvantages of the McKinsey 7-S Model. This model is complex and changes in one part lead to the changes of all parts, because they are closely connected and interrelated with each other. Some differences can be ignored and organisations can meet failure.

Starbucks Corporation

Hard elements

Starbucks Corporation is the example of rationalized changes relating to the McKinsey 7S framework. McKinsey 7-S Model has hard and soft elements.  Hard elements are strategy, structure and systems, while soft elements include shared values, skills, style and staff. Corporation management influences directly and controls the hard factors of the framework, while soft factors are more difficult to control, because of the influence by corporate culture.

Strategy

Starbucks management main strategy is improving quality of products and high level of customer services. Corporation aims to increase revenues by means of effective placing Starbucks stores.

Structure

Management structure suggests the elimination of the assistant managers within the stores, and only three positions of management, including store manager, shift manager and customer assistants. This will save the amount of costs and increase the organisational efficiency.

Systems

 The rotation system of duties must be introduced for reducing workface conflicts and development of the work process.

 Soft Elements

Starbucks promoted set of values to be shared by the workforce.

Skills

Starbucks organizes raining programs to master necessary skills by workforce for achieving a customer satisfaction.

 Style

Corporation changed management style of stores from Laissez Faire style to inspirational management.

 Staff

Starbucks employs only capable employees, providing growth potential.

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I believe that change is very necessary for organizations activity. Only those organisations which regularly have changes to gain the market share are successful and well developed. To do change management well, the organizations require effective communication, involvement of employees, planning and analysis, full support, and the need for the implementation of changes.

 

References

Callan, V. (1993). Individual and organizational strategies for coping with organizational change. Work & Stress, 7, 63-75.

CIPD. (2011) Chartered Institute of Personnel and Development [online] available from <http://www.cipd.co.uk/hr-resources/factsheets/change-management.aspx> [02 March 2016]

Joseph, S.  & Mohapatra, S. (2009, Management Information Systems In Knowledge Economy, PHI

Lewin, K. (1951). Field theory in social science. New York: Harper & Row.

McHugh, M. (1997). The stress factor: another item for the change management agenda? Journal of Organizational Change Management, 10(4), 345-362.

Mullins J. (2013) Management and Organisational Behaviour. Pearson Publications.

Terry, D. & Jimmieson, N. (2003). A Stress and Coping Approach to Organisational Change: Evidence From Three Field Studies. Australian Psychologist, 38, 92-101