Retail Rescue Plan for David Jones - Case Study Example

CHANGE MANAGEMENT Change Management Report: Retail Rescue Plan for David Jones Name Course Instructor 22 September 2012 Executive Summary Change in modern world is inevitable. Organisations have no choice but to embrace meaningful and quality change that can help them strategically compete in the dynamic business environment. David Jones Limited is a departmental store chain based in Australia. The company in recent times has changed drastically in terms of recording reduced growth, decline in profits, increasing staff turnover, reducing consumer base and stiff competition from key players. This has forced the company’s CEO, Paul Zahra, to develop a rescue plan for the company. Informed by this rescue plan, the report establishes that the company needs to initiate positive change that can see the current situation addressed. Specifically, the company can initiate first-order change strategy that is largely incremental and continuous in nature. Besides, the report identifies Kotter’s eight step-change model as the best model for change process to take place at the company. But success of change management at the company requires the management team to identify existing challenges that may impede the change process. Accordingly, challenges such as ineffective communication, lack of change strategy and programmes, absence of effective coalition change team and lack of empowerment. Therefore, managers have a duty to address these challenges before initiating a change process in the organisation. The report details how David Jones can adopt the suggested change process strategy to address its current problems. Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Case-study: Retail Rescue Plan for David Jones 3 3.0 Change process 4 3.1 Need for change 4 3.2 Nature of change 6 3.3 Change strategies (Kotter’s change model) 7 3.3.1 Set a sense of urgency in the organisation 7 3.3.2 Establish the guiding coalition 8 3.3.3 Development of a vision and strategy 9 3.3.4 Communicate the change vision to members 9 3.3.5 Empower broad-based action team 10 3.3.6 Remain focused on short-term gains 11 3.3.7 Consolidate gains achieved to produce more change 11 3.3.8 Anchor new approaches in organisation culture 12 4.0 Managers and change 12 4.1 Challenges and strategies for change managers 12 5.0 Recommendations 14 6.0 Conclusion 15 7.0 Reference List 17 1.0 Introduction Change in society is inevitable and affects almost all key sectors in the society (Mittal 2012, p.64). This makes change to be inevitable in modern world of humankind. One area change has become inevitable is the modern organisations. Business environment remains dynamic, a fact that continue to force organisation to embrace change in their strategies in order to remain competitive (Mittal 2012, p.64).Therefore, change at any stage, level or situation becomes an important phenomenon to study and evaluate its impact to modern organisations. 2.0 Case-study: Retail Rescue Plan for David Jones David Jones is not the way it was a few years ago. Many changes continue to take place in the business environment that affects the company. For example, attempt by the company to develop and operate an online shop, ten years ago, failed resulting in a big loss amounting to $28 million (Sue 2011, p.1). There is increasing consumer mood shift that can be partly linked to increasing growth in the online retailing. But for DJ, it has been unable to capture and response appropriately to this consumer mood shift and the company has largely under-invested in technology (Sue 2011, p.2). Besides, David Jones has issues to do with people management. The company’s staff exhibit low morale and motivation can be said to be low. The situation has dilapidated into high turnover with top talents and great knowledge in the company moving out (Sue 2011, p.3). The entire scenario has greatly affected activities at DJ especially in service provision. Investors are worried about weakening of company’s brands in the market. To change the current situation, DJ’s CEO, Paul Zahra, aims to implement a strategy in order to restore sales, margin and profit growth in the company. The company also intends to increase and improve its bricks and stores, improve services, create and introduce more brands, improve pricing strategy, improve the quality and style of products and improve overall customer service experience (Sue 2011, p.3). Although the company is determined to build its success on this strategy, the company does not forget or underestimate the difficulties it has faced in the past such as share and debt market volatility, impacts of natural disasters and soft house prices (Sue 2011, p.3). Fixing problem at DJ has invited opinion and analysis of many experts. For example, social researcher, Ross Honeywill, believes that DJ has multiple problems, especially in department store sector, that are deep-rooted and no easy solution available to apply to these problems (Sue 2011, p.3). 3.0 Change process The following is a discussion of how change at David Jones can be initiated and facilitated successful using a specific change management model. 3.1 Need for change Different factors exist that explains why change may take place in an organisation. For example, businesses in modern world are not immune to change; they are required to change in order to respond and fit well in the changing business environment (Ramanathan 2009, pp. 35-36). At the same time, change can be seen to be precipitated by changes in business environment such as shrinking markets, changing customer needs, changing workforce, increased government regulation and many more. The need for change at David Jones Limited can be said to be motivated by numerous internal and external factors that the company has to address. Therefore, the need for change at the company is informed by structural changes such as the increasing online retail competition and globalisation of retailing that has become the order of the day (Sue 2011, p.3). For example, there is the sudden shift in consumer mood and rapid growth in online retailing that DJ still experience under-investment (Sue 2011, p.3). Moreover, the company still relies on the traditional technology that has proved to be inefficient. Another need for change at the company is prompted by the current level and nature of people management problems that are prevalent in the company (Sue 2011, p.3). Staff morale remains low, departure of top executives is yet to be addressed, loss of talents is high and overall staff turnover is worrying (Sue 2011, p.3). At the same time, growth of the company cannot be realised when the company’s brand is performing poorly in the environment. As a result, change in the departments of advertising and promotion is necessary. This has to include increasing budget for the department. More so, staff compensation system need to be improved in order to regain the staff morale that has deteriorated. This will also help reduce the high staff turnover in the company. At the same time, the need for change at DJ is informed by the developments and changes in the macro-economic environments that have resulted in the reduction in the retail sales for the company; a situation that has stifled the growth strategy for DJ. Besides, DJ has been affected by issues like increasing labour costs, rent, utilities and financing costs that have to be addressed for the company to return to its earlier growth path. The changing Australian consumer credit market has at same time affected DJ in profound ways. For instance, the company’s card portfolio has been affected by prevailing weak discretionary retail spending environment. Moreover, the Australian consumer market remains challenging and uncertain that DJ has to put in place appropriate strategies. Besides, the credit card agreement the company has with American Express is due to come to an end in 2014; this will affect the company’s growth and profits since a new credit card agreement will be put in place. 3.2 Nature of change Change management in organisations has been described to be of two nature or type. According to Palmer (2009) change management constitute first-order and second order change management (p.86). First-order change is considered to be incremental and continuous type of change. When this change is initiated it may include adjustments in systems in the organisation, processes, or structures. Besides, this type of change does not include change in strategy, core values or corporate identity (Palmer 2009, p.86). On the other hand, second order change is largely discontinuous, transformational, radical, and in most cases transforms core fundamental aspects of the organisation (Palmer 2009, p.86). From this two types of changes, it becomes clear that DJ’s situation warrant the use of first-order change, where there is an urgent need to make key adjustments in systems that are currently dysfunctional in the company. At the same time, there is need to adjust the current processes and structures in order to position the company on a growth pathway. What DJ requires at the moment is revision of its long-term strategy in order to fine tune the strategy to respond to changes in the business. At the same time, the change at the company cannot be just undertaken at once and meaningful results be realised, it is a process that has to take time, has to be continuous and organisational learning and adaptation has to be encouraged. The need for DJ to pursue a first-order change strategy is further informed by the fact that the company already has business or market strategy in place. But, given the current business dynamics and increasing level of uncertainty, the strategic marketing objectives for the company have to be fine-tuned so that they can achieve specific and positive targets for the company. For example, the change in the consumer preferences, as well as, change in consumer buying behaviours, are two aspects that DJ can address by fine-tuning its strategy to address psycho-demographic marketing strategies. Besides, the current state of high level of staff turnover constitutes an aspect the company needs to modify its processes with regard to workforce management. Besides, the increasing competition from online shopping technologies requires the company to revise its long-term structures, as well as, modifying and enhancing its marketing strategies on its website. 3.3 Change strategies (Kotter’s change model) John Kotter asserted that many organisations make critical mistakes when developing and implementing change (Sharma 2006, p.132). As a result, John Kotter advocates for appropriate change management strategy anchored on adequate planning, proper implementation process, and sustenance of the change initiatives in the organisation. Kotter proposes eight steps (eight-step change model) that can facilitate successful change management process (Sharma 2006, p.132). 3.3.1 Set a sense of urgency in the organisation This stage is characterised by thorough understanding the current business environment and organisation’s needs. It includes conducting environmental scanning using tools such as SWOT and PESTLE. The essence of setting sense of urgency is to draw the attention of key players in the change process to realise the need and why change is inevitable in the organisation (Kotter 1996, p.36). Sources for the need of urgency at DJ Limited include; Declining profits and sales. The growth in the company is stagnated. Competition is increasing especially from online marketing and shopping. The laxity and complacency in the organisation as competitors become fierce. Employees are moving out of the organisation and services have been affected. Consumers are spending less, are shifting preferences and are concerned about quality. 3.3.2 Establish the guiding coalition The stage involves bringing together key players who can play an important role in the change management in the organisation (Kotter 1996, p.52). Establishing a guiding coalition has to include identifying expertise, skills, diversity and all advantages the coalition partners need to have to make the change process successful. The coalition becomes a dependable part that organisation relies on to facilitate change. At DJ Limited, establishment of a guiding coalition should include; Developing a team of experts from key departments in the organisation such as marketing, information technology, human resource, and finances. The selection process should be based on the need to have a team with critical skills to help the company facilitate change. Due to increased staff turnover, especially among the key managers and staff, the company has to recruit qualified personnel from outside immediately. Scrutiny for the members of the team has to be thorough and the team has to reflect diversity. 3.3.3 Development of a vision and strategy Organisations that achieve tangible goals are those with established objectives based on a clear vision and strategy. A clear vision and strategy has to be created in order to guide the change process (Kotter 1996, p.69). Creating a strategic vision in case of DJ requires wide participation and involvement of key stakeholders. Lastly, the strategy should be able to inspire the stakeholders in the organisation. The strategic vision for DJ Limited at the moment should be; To strategically re-position the company in the market place by initiating growth in the store network, strengthening core business of the company, developing effective people management system, developing productive technological system and increasing customer relationship and management. 3.3.4 Communicate the change vision to members Strategic vision is just one means of achieving successful change process that cannot succeed independently. It requires quality and adequate communication throughout the organisation and among key stakeholders Therefore, members in coalition change need to establish clear communication channels and means that guarantee quality and consistent communication to propel the vision of change (Kotter 1996, p.87). Communicating change vision at DJ Limited has to involving; Increase regular meetings in the organisation with key stakeholders. Establish an effective public relation team to handle communication and media issues. Integrate digital marketing plan. Increase allocation for the advertisement and promotion department. Launch new optimized transactional mobile webstore with high activities of communication. 3.3.5 Empower broad-based action team Empowerment should revolve around eliminating obstacles available in the organisation that may impede the change process. Therefore, powerful and positive empowerment can be realised through defining and restructuring jobs, restructuring compensation systems, establishing performance systems and addressing demands of employees appropriately (Kotter 1996, p.105). Develop a productive workforce management system. Increase level of employee participation in decision-making. Enhance employee retention and incentive programme. Invest in staff and training. Increase resources in key areas in the organisation for effective change. Increase service touch points and also increase frontline service roles. 3.3.6 Remain focused on short-term gains Meaningful change is not realised overnight. It takes time through gradual and consistent positive changes. As a result, organisations are required to appreciate and build on short-term gains achieved, and use these short-term gains to establish ground for grand or large-scale forms of changes (Kotter 1996, p.117). At DJ Limited, this should be facilitated through; Build and enhance on personal shopper initiative. Intensive on quality promotion. Inject little romance back in department store retailing by establishing a bridal boutique. Moving swiftly to institute psyche among NEOs (New Economic Order members). 3.3.7 Consolidate gains achieved to produce more change Sometimes, there is fear when an organisation starts to make some gains. For example, when short-term goals are achieved, celebration mood sets in and everything may be forgotten. As a result, there is a need to constantly remain alert and vigilant for the gains achieved (Nawaz 2012, p.22). Moreover, it is important to constantly monitor steps being made in the change process and to ensure the pace remain accommodative to all stakeholders in the organisation, especially the employees. At DJ Limited, the important thing to help in consolidation is to; Improve on performance reporting. Harmonising different goals of different departments in the organisation. Enhance quality and efficiency of customer service through integrated scheduling. Providing customers with a seamless retail experience across physical, online and mobile channels. Increase processing efficiency and staff productivity. 3.3.8 Anchor new approaches in organisation culture After all the above steps have been made there is need to make change process part of culture in the organisation that everyone feel to be part and parcel of the change. Members need motivation in order to perceive change as part of their daily life in the organisation (Nawaz 2012, p.22). At DJ Limited, this can be achieved through; Continue to offer the market with best range of superior brands. Introduce a new workforce management tool to eliminate the current and persistent employee problems. Eliminating manual processes and replacing them with technologically-efficient processes. Reducing on the overall costs and expenses especially in the long-term. 4.0 Managers and change Change in organisations is in most cases facilitated and guided by managers. These managers are likely to experience both success and failures in their initiatives to create change in the organisation. Hence, it becomes important to look at some of challenges that managers face in the process of managing change in an organisation. 4.1 Challenges and strategies for change managers In some cases, managers are likely to be faced with lack of appropriate and clear change management programmes. The understanding is that meaningful change programmes are critical in the process of change management. Furthermore, in instances change programmes lack clear strategic plan, then, it becomes possible for change initiatives to fail (Waldt, Toit and Stroh 1999, p.288). Moreover, Adequate, supportive and inclusive leadership is required in order to realise success of change processes (Sisaye 2001, p.13). Subsequently, some managers develop and implement strategic change management plans without unfreezing the current unsupportive environments in their organisations that derail or block change (pp. 3-4). The understanding is that change is a process that receives objection and a lot of resistance when introduced in the organisation. As a result, the managers have a role of unfreezing the current state by winning members in the organisation on their side in order to facilitate successful change. Another obstacle that impacts the ability of managers to initiate successful change in an organisation includes ineffective communication strategy in the organisation (Turner 2003, p.132). Effective communication is necessary for any change process to be successful. Subsequently, change agents have to foster productive communication, besides having strong negotiation skills (Turner 2003, p.133). At the same time, they require appropriate motivational strategies for various stakeholders, where open, participative and constant communication is encouraged (Turner 2003, p.134). The importance of communication and planning in the change process can be captured in the Kotter’s fourth step of change process which involves communication of vision and strategy. At the same time, using Kotter’s eight-step model of change it can be argued that managers who fail in change management are the ones who fail to build and utilise effective coalition teams that reflect diversity. Any genuine change can only take place when organisations are able to build strong, acceptable, flexible, and well represented coalition teams with members from diverse backgrounds. In fact, well constituted and managed coalition teams assume the frontline position in pursuing a strategic change programme successfully. Presence of coalition team to drive change process is characterised with numerous positive aspects that stimulate positive change. Such aspects include; consultation, collectivism in decision-making, sense of belonging, and increased contribution and participation (Shieh and Wang 2009, pp. 17-20). Furthermore, managers fail in change management process due to inability to initiate and build a supportive organisational culture of empowerment (Grover and Kettinger 2000, p.79). For examples, studies have shown how an empowered manpower in an organisation can facilitate change and transformation of an organisation very fast (Grover and Kettinger 2000, p.80). Empowerment of employees is critical, where such empowerment can be realised through motivating employees to take an active role in change process. Empowerment needs to be an aspect that a manager anchors in the organisation’s culture, where employees are considered to be important in the change process. Empowerment of employees can come from different ways, but the prominent ones include: training, improving compensations schemes for employees, integrating employees in the decision-making process, appreciating and recognising diversity in the organisation and motivating employees to be innovative in their various capacities (Shieh and Wang 2009, pp. 17-20). 5.0 Recommendations David Jones in real sense cannot ignore the challenges that the CEO, Paul Zahra has identified. The company has to develop and implement successful change programmes that can establish the company back on the growth track. As a result, the following recommendations are critical to the growth of David Jones. Develop a strategic change management plan based on first-order change management where incremental and continuous change is encouraged in the organisation. Communication is vital for change to succeed and it is recommended that DJ should establish appropriate communication channels and strategies that motivates and encourages change process in the organisation to reduce resistance. Change in itself without key stakeholders (employees) on board is unproductive. The company needs to urgently establish a new workforce management system that empowers, motivates, rewards, retains and improves key skills and manpower in the organisation. The change process at the company should also incorporate other stakeholders like customers, whereby, DJ needs to establish appropriate customer management and service systems. Marketing strategies for the company should also be modified, where integrated marketing communication and tools should be developed and enhanced in the organisation. 6.0 Conclusion Change has been described to be the only permanent phenomena standing tall as other phenomena have to change at any given time in space. Among organisations, change is vividly reflected in the way organisations transform in such areas as decision-making, establishing concise strategies for the organisation, changing the direction of growth and creating stronger systems in the organisation to weather competitive environment. David Jones is one of the organisations that require first-order form of change that is incremental and continuous. The company faces challenges that have affected its ability to perform. The current structures, processes and systems at the company have to be modified. At the same time, CEO, Paul Zahra, has to agree to the fact that change of any nature or level is likely to face resistance and this calls for the need of thorough preparedness to ensure the change management process is successful. First, there is need for the manager to inform the company’s stakeholders on the need to initiate strategic changes in the company. As a result, communication has to be established in the organisation to facilitate change process. Company’s employees have to be brought on the board, where they should understand the importance of change in the organisation. Later, the manager has to move swiftly in establishing coalition change teams to facilitate the process. The change coalition teams should have critical goodwill, skills, expertise and rapport to ensure the process does not fail. Besides, the manager has to know that change process should not send general perception that it is all about replacement and removal, but rather, it should inspire confidence among the stakeholders that it is about improvement, addition and augmentation. Lastly, change is about human beings and this requires the management team to ensure maximum consideration to human elements does not fail. These are some of the steps management team at David Jones can initiate to have successful change management. 7.0 Reference List Cameron, E., and Green, M., 2004. Making Sense of Change Management: A Complete Guide to the Models, Tools & Techniques of Organizational Change. London: Kogan Page Publishers. Grover, V. and Kettinger, W. J., 2000. Process Think: Winning Perspectives for Business Change in the Information Age. London: Idea Group Inc (IGI). Kotter, J. P., 1996. Leading Change. Boston: Harvard Business Press. Mittal, S., Managing Employee Resistance to Change A Comparative Study of Indian Organisations and MNCs in Delhi-NCR Region. Researchers World; Journal of Arts, Sciences and Commerce, vol. 3, no. 4, pp. 64-71. Nawaz, M., 2012. Planning and Implementing Change for Successful Mergers: A Construct for Successful Change Events. Norderstedt: GRIN Verlag. Palmer, I., 2009. Managing Organisational Change: A Multiple Perspectives Approach. The New York: McGraw-Hill. Ramanathan, T. R., 2009. The Role of Organisational Change Management in Offshore Outsourcing of Information Technology Services: Qualitative Case Studies from a Multinational Pharmaceutical Company. Boca Raton: Universal-Publishers. Sharma, R., 2006. Change Management. New Delhi: Tata McGraw-Hill Education. Shieh, C. and Wang, M., 2009. The Relationships among Cross-Cultural Management, Learning Organization, and Organizational Performance in Multinationals. Journal of Social Behavior and Personality, vol. 37, no. 1, pp. 15-30. Sisaye, S., 2001. Organizational Change and Development in Management Control Systems: Process Innovation for Internal Auditing and Management Accounting. London: Emerald Group Publishing. Sue, M., 2011. Retail Rescue Plan for David Jones. Australian Financial Review. Turner, P., 2003. Organisational Communication: The Role of the HR Professional. London: CIPD Publishing. Waldt, V. D., Toit, D. F., and Stroh, E. C., 1999. 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