Managing Organizational Change Retail Rescue Plan for David Jones - Assignment Example

Managing organizational change ‘Retail rescue plan for David Jones’ Student's Name: Course Name and Number: Instructor's Name: Date Submitted: MANAGING ORGANIZATIONAL CHANGE REPORT TABLE OF CONTENTS 1.0 ABSTRACT 3 2.0 INTRODUCTION 4 3.0 FINDINGS 5 3.1 The need for change 5 3.1.1 Changes in environment 5 3.1.2 Changes in senior management team and employees 7 3.1.3 Deficiency in the current organizational structure 8 3.1.4 The desire to be successful 8 3.2 The nature of change 9 3.3 change strategy that could be reasonably considered by the organization 10 Kotter’s 8-step change model 10 3.4 The challenges the managers might face when initiating the change 14 3.5 strategies on how leaders might effectively manage the change process 15 4.0 RECOMMENDATION 17 5.0 CONCLUSION 18 6.0 REFERENCES 19 1.0 ABSTRACT This report was based on the article ‘Retail rescue plan for David Jones’. The report focused on managing organizational change. This report aims at determining the change theories and models. Specifically, the report focused on the need for organizational change, the nature of change, change strategies, challenges faced by leaders when initiating change and strategies on how leaders can effectively manage the change process. The report findings were that; Organizational leaders should make people feel dissatisfied with the current state of affairs and thus, demand for new behaviors. Change is largely influenced by two main factors i.e. factors within the firm and those outside the firm. John Kotter’s eight-step change model is a crucial strategy that organizational leaders can adopt to manage change in their organizations. Leaders usually face challenges while initiating organizational change as people fears losing their current job, current benefits, and obsolescence of skills among others. Leaders can effect change through high involvement of employees, reducing anxiety, retraining employees among others. The recommendations made were that the organization should aim at creating value for money, adopt a systematic approach to change management and prepare the employees well to embrace the new change. The conclusions that were made were that change is a crucial aspect as far as organizational development is concerned. 2.0 INTRODUCTION Change refers to a modification of the organizations’ status quo. Dawson (2003) in his studies argued that there are three main forms of organizational change i.e. developmental change, spontaneous change and planned change. Developmental change is inborn as a business expands and tasks turn out to be more complicated. Spontaneous change occurs randomly and hence cannot be easily determined. Planned change arises constantly within a firm. It occurs when an expected objective is to be accomplished (Dawson, 2003, P. 16). David Jones (DJ), a renowned store chain in Australia have been experiencing tremendous sales growth in the past. Between 2000 and 2009, the share prices rose to A$4.50 due to its high-profile brands. The CEO during this time was McInnes who had steered the company to greater economic heights. In 2010, McInnes leave the organization as a result of sexual harassment allegations and Paul Zahra was hastily endorsed to take charge of the organization. Before McInnes resignation, the company’s sales had started following the economic meltdowns. For the first time, the annual sales declined by 6.4 %. Other domestic and external factors that caused the company’s sales to decline include innovation and competitiveness in the industry, high advertisement budgets by competitors, and entry of new firms in the market among others. In an effort to remain competitive and ensure that DJ restores its past sales margin as well as profitability, Paul Zahra has modified the organization’s activities as well as the processes. The following report focuses on the factors ,that have caused, Zahra to initiate change , the nature of change, proposed change strategies that the DJ could consider, the challenges that managers faces when initiating change in their organizations and strategies that can assist in managing the change process. 3.0 FINDINGS 3.1 The need for change There are four main causes of need of organizational change i.e. changes in environment, changes in senior management team and staff, deficiency in the current organizational structure and the desire to succeed. 3.1.1 Changes in environment An organizational environment is comprised of several independent as well as interdependent aspects such as consumers, competitors, management among others. According to Palmer, Dunford & Akin, (2009), the manner in which a firm decides to respond to each of these aspects causes a need for change. Environmental factors that cause the need for organizational change include economic, technological and political/legal fears. Economic factors that create a need for change include inflation, Interest rates, business competition, and change of global markets among others. The 2008-2009 global financial crises led to a fall of DJ’s annual sales. The entrant of new firms into the Australian market poses a major economic uncertainty to David Jones. These new firms are offering free shipping, wide range of products for consumers to choose and lower prices. There are also fears that Nordstrom, which provides motivation to DJ, is intending to relocate its operations to Australia. Also, Australians have reduced their spending power over the last decades. Thus, they are opting to spend more gains on services and less on household goods. The strengthening Australian dollar is also serious economic threat to DJ .The loopholes in Australian tax laws have the effect of attracting new firms into the market due to lower import duties and ,therefore, a threat to DJ. Sooner than later, these factors could have devastating effects as far as DJ is concerned. The new DJ CEO is worried that the organizations’ hard won gains of the past decades will be lost due to these economic uncertainties. To restore sales margin and profit growth, Zahra have put right policies in place such as reviewing the organization’s price policy, enhancing the value of DJ’s products, reducing operating costs among others. Political/legal factors that cause the need for organizational change include change in business laws, political instability, and government intervention among others. One of the political/legal factors that affect David Jones’ sales and profitability is the move by the government to limit the number of student visas. In order to curb the declining DJ’s sales and profits, Zahra puts pressure on the global leaders to enhance stability across the world. This move will play a prominent role of enhancing international trade. Technological factors that cause the need for organizational change include such aspects as the obsolescence rate, innovation and adoption of information technology. In the modern world, innovation has become a key resource for business growth and competitiveness. According to a research which was done by Dawson & Andriopoulos (2009),leading companies have embraced the culture of innovation .Failing organizations ,on the other hand ,do not bother to embrace the concept of innovation (Dawson & Andriopoulos ,2009,P.257) . Over the years, David Jones has not suspected that the lack of innovation has been a key force behind declining profits and growth.DJ have never had an interest to learn what information technology can do as far as market share and customer satisfaction are concerned .Thus, DJ have lagged behind in the race for profitability, and market share and this have seen other organizations that give high priority to innovation programmes like Nordstrom, post huge profits growth. Sisaye (2001), in his studies, stated that innovation is a static state and thus, organizations should attempt to keep ahead of their vagaries of the environment. The moment the organization stops running, it surrenders itself to be overcome by the enemy. According to Dawson & Andriopoulos (2009), past survivors today’s prey. The fact that an organization survived yesterday does not secure its prosperity today. Thus, they need to be on a constant look out for the predator (Sisaye, 2001, P.176). In an effort to ensure that the company survives, Zahra has institutionalized an innovation culture .Thus, he has harnessed the power of innovation to meet customer’s needs. These would enable the organization earn profits and satisfy customers’ expectations. Also, Zahra has introduced the online experience in the organization. Among the technologies that the organization has embraced include e-commerce and online promotion and marketing. 3.1.2 Changes in senior management team and employees Changes in senior leadership team cause the need for organizational change due to the following factors; retirements of senior management team at various levels, promotion of employees to higher positions in the organization, transfers and demotions, managers and staff turnover among others. Thus, organizations act to fill vacant positions following an employees’ retirement, resignation or dismissal. The new managers adopts different managerial skills and thus, employees may react if the new management attempts to introduce a culture that is undesirable .Employees may react by sabotaging the work in order to compel the management change its unacceptable management approach. Thus, a situation occurs to create urgency for change. Following the resignation of McInnes, employees’ morale went low and as such the company experienced high staff turnover. This effect had severe consequences such as low productivity and profitability at David Jones and hence caused a desire for change. 3.1.3 Deficiency in the current organizational structure Deficiency in the current organizational structure is another cause of urgency for organizational change. Management has the role of evaluating the current organizational structure in order to establish whether it is in accordance with the changing needs. The current organizational structure may be weak or have such defects as job duplication. This may lead to serious conflicts and decreased productivity. This may in turn hinder an organization from achieving its set objectives and hence cause urgency for organizational change. The current organizational structure at David Jones is not innovation oriented. As such, it fails to identify the customer’s needs .Employee productivity is low at DJ, and this signifies that the current structure is at fault. The new CEO, Zahra has acted quickly to meet the changing needs by prescribing the acceptable ways for the organization to interact with its stakeholders, setting performance criteria and selecting an appropriate management style. 3.1.4 The desire to be successful The desire to be successful is one of the organizations’ long term objectives. In order to achieve growth, organizational leaders should provide the required motivation to employees to enable them perform their duties enthusiastically. In today’s world, managerial leadership of CEO is the key behind an organization’s growth. As such, the CEO should set a clear vision, build a strong mission that drives both the management and employees and also shape the company’s culture. One of the strategies that Zahra is intending to adopt to perform better than the competitors and achieve organizational growth is robustness.Robustness provides the firm with core competence by making it difficult for competitors to imitate. David Jones aims at achieving this through complexity i.e. managing complex activities or processes hence making it hard for competitors to imitate. Also, DJ aims at enhancing delivering value for money. The CEO has realized that customers are prepared to pay a certain price only to those products that give them value. Another strategy that Zahra is considering is managing costs to make DJ products affordable to many. Through cost management, the organization will be able to deliver value for money. 3.2 The nature of change The nature of change of change as applied in the case is both internal and external. Internal change emanates from aspects within the firm such as revision of vision and mission statements, changes in organizational leaders, company relocation and change in methods of production. Palmer, Dunford & Akin, (2009) in their research argued that, external change is influenced by factors outside the firm. Such factors that triggers this change as evidenced in the case include; change in customers’ expectations, threat caused by the entrant of new rival firms, change of business laws among others. David Jones had neglected the environmental factors that cause change for many years. The leaders were not sensitive to these factors until the firm had reached disastrous levels. 3.3 change strategy that could be reasonably considered by the organization It is apparent that organizations must experience change process for them to grow. In 1958, John Kotter, a famous change expert proposed a change strategy that could enable an organization to manage change. According to him, there are eight steps that organizational leaders should follow when initiating change (Cameron & Green, 2012, P.126). Kotter’s 8-step change model Obtained from danspira.com The first step is the creation of change urgency. In organizational behavior, employees’ readiness for change is reliant upon creating urgency for change. Kotter argued that, creating urgency entails employees to be displeased with the existing state of affairs in the organization. According to him, dissatisfied employees are motivated to seek other new activities. Creating this urgency is a challenging task. Organizational leaders can adopt the following strategies in order to create sufficient urgency to produce change; communicating with employees on the threats that the organization could face if it avoid change, identifying the positive outcomes that could be achieved as a result of the proposed change, communicating to people about the proposed changes in an open manner and gathering support from stakeholders such as suppliers ,potential inventors and clients (Cameron & Green,2012,P.126).DJ is facing unprecedented pressures to change itself. Some of these pressures include intense local and international competition and rapid change of technology. Zahra should thus put innumerable pressure in order to generate a need for change. He should direct efforts towards creating urgency before proceeding to the next stage. Step two involves developing support from various stakeholders. During this stage, organizational leaders attempt to convince the stakeholders that change is beneficial unto tem and organization at large. Managing organizational change is often a complex task and; therefore, leaders should bring a structured collection of people with diverse backgrounds. Thereafter, the leaders should encourage people to work together harmoniously (Cameron & Green, 2012, P.126). With this regards, Zahra should start by identifying those employees that have leadership capabilities in his organization. He should then demand these leaders to be fully committed to the change process. Zahra should enhance working groups and also assess each leader’s strengths as well as weaknesses. Step three is concerned with the pursuit of vision for change. Generally, this process provides people with an image of what the organization will look like. The vision plays a key role of energizing commitment. It also provides employees with a convincing rationale as far as the value of change is concerned (Cameron & Green, 2012, P.126).With this regards, Zahra should identify the organizational values. Zahra should then create a brief summary of what the organization aspires to achieve. He should then proceed to develop a strategy of implementing the vision. During this stage, Zahra should ensure that the coalition support he created earlier can tell the vision statement in the shortest time possible e.g. within four minutes. Thus, he should keep reminding the coalition about the vision on a regular basis. Communicating the vision is the fourth step and involves conveying the vision frequently .The senior leadership team should incorporate the vision with all the organization’s activities. Leaders should communicate the vision at all times in order for it to remain fresh in peoples’ minds (Cameron & Green, 2012, P.126). Thus, Zahra should communicate about the vision on a regular basis to David Jones’ employees .He should discuss the people’s worries in an open manner. The CEO should encourage the staff members to use the vision. In order to ensure that employees apply the vision, Zahra should lead from the front. Removing barriers is the fifth step and involves getting rid of all the processes and structures that hinders effective management of the change process. The top management team should be observant of change barriers. Removing these obstacles play a significant role of encouraging employees to move forward and achieve their goals (Cameron & Green, 2012, P.126). With this regards, Zahra should identify key change leaders to support the change. He should ensure that the company’s structure is in accordance with the vision. The CEO should also reward those people who administers the desired change .He should also identify powerful individuals who thwart change and in turn, convince them to support the change process. Zahra should act promptly to remove the obstacles i.e. people or structures. Step six involves developing short-term wins i.e providing people with motivation after they have achieved success. According to Kotter, people feel motivated when they achieve the desired results (Cameron & Green, 2012, P.126). Zahra should look for smaller targets that can be achieved in a short time. The targets should be relatively inexpensive .He should also explain clearly to critics the reason for choosing such target. An evaluation should be conducted in order to determine the advantages and disadvantages of the target. Also, the CEO should reward people who have facilitated the attainment of the desired goals. Building on the change is the next stage that leaders need to apply in managing the change process. According to Kotter, organizational leaders should ensure that change real change is achieved before declaring victory (Cameron & Green, 2012, P.126). Thus, Zahra should analyze each victory critically in order to determine areas that need to be improved. He should then set targets in order to sustain momentum that he has achieved. The last stage of change management according to Kotter is making the new change stick. According to Kotter, leaders should incorporate the change in all the organization’s activities. The senior leadership team should continue supporting the change (Cameron & Green, 2012, P.126). Zahra should do the following in order to make the change stick to David Jones staff members; he should tell the staff members about the change progress that the organization has attained .Also, should consider incorporating the change values in the organization’s recruitment policy. Zahra should also publicly praise the staff members’ contributions to the change process and put up measures to reinforce new behaviors. 3.4 The challenges the managers might face when initiating the change Managers usually face the following challenges when initiating change in their organizations; staff members usually fear to lose something that they dearly uphold i.e. parochial self-interests. They fear losing their status, work groups and independence once the change is effected. This parochial interest causes staff members to oppose the proposed changes (Lewis et .al, 2006, P.135-138). The other challenge that managers face when initiating change is the lack of trust and confusion by employees. When staff members are not fully aware of the proposed changes, they openly resist it. Confusion occurs mostly when there is a lack of trust between the senior leadership team and the employees (Lewis et .al, 2006, P.135-138). Employees might be having a negative attitude towards the proposed change. Different people have different assessments on the proposed change .Organizational leaders who are initiating the change normally view it optimistically. On the other hand, employees view the proposed change negatively because of its implications (Lewis et .al, 2006, P.135-138). Employees do not usually approach the proposed changes with an open mind i.e. they may oppose changes with a view of saving their reputation. They thus hold the view that embracing the new changes would be a failure (Lewis et .al, 2006, P.135-138). Staff members also oppose change due to worry that their skills will be deemed unnecessary in the new organization. For instance, employees fear that the introduction of computers in the organization would render their skills obsolete. This causes them to resist change and hence a challenge to managers (Lewis et .al, 2006, P.135-138). 3.5 strategies on how leaders might effectively manage the change process Organizational leaders are vested with the role of ensuring that change process is effectively managed. A research, which was done by Finch, (2011) stated that organizational leaders should direct their efforts towards enhancing employees’ productivity. The following strategies can help organizational leaders to manage the change process in their firms; Organizational leaders should encourage staff participation in the change process especially when key decisions affect their productivity. Among the benefits of employee participation in the change process is that, employees feel engaged in the change process. Thus, they readily accept the proposed changes, as opposed to a situation where they are not provided with an opportunity of playing a part in the change process (Harigopal, 2006, P.335-338). The senior management team should keep in touch wit the employees throughout the change management process. Communication ensures that employees are provided with a chance to express their main worries. Employees are also able to make enquiries as well as provide their views openly. The leaders should answer well all the concerns raised by the staff members. Also, the opinions raised by the employees should be followed (Harigopal, 2006, P.335-338). Organizational leaders should tell their staff members in good time what their new roles in the company will be in order to reduce their anxiety. With this regards, leaders should communicate the functional requirements of the new roles to employees. All the details of the proposed change should be precisely defined .This allows employees to know in advance the effects that the proposed change has on them (Harigopal, 2006, P.335-338). Organizational leaders should proceed to retrain staff members. This plays a crucial role of phasing out worries that their skills will be redundant in the new company. During the change process, the old behaviors together with ideas that are contained in the organizational culture are substituted wit new ones. Thus, staff members should be retrained in order to prepare them well for other roles within the company. Training provides the staff members with morale to carry out their duties enthusiastically. Also, it enables staff members to know their main duties during the change process (Harigopal, 2006, P.335-338). The other strategy that organizational leaders should adopt in order for them to manage the change process effectively is reserving the current work groups instead of disbanding them .Working groups relate to a gathering of staff members who have a common objective to pursue. Existing groups allow Staff members to interact well with each other to attain certain goals. These dynamic interactions , which are enhanced, by working groups play a significant role of enabling employees to develop a deeper understanding of the change process (Harigopal, 2006, P.335-338). The senior management team should promise to compensate employees who may experience losses due to the change process. As organizations implement change, various aspects such as business processes and cultural values also changes. As such, staff members may experience financial losses (Harigopal, 2006, P.335-338). Also, the senior leadership team should adopt a systematic approach while implementing organizational change. With this regards, organizational leaders should involve all the stakeholders. This act of involving all the key players within the firm allows change process to be effectively managed. It provides the organization with an opportunity to respond promptly to its demands (Harigopal, 2006, P.335-338). 4.0 RECOMMENDATION David Jones should benchmark its services in order to perform better than its rivals. With this regards, the company should aim at enhancing robustness for its products. David Jones should also adopt a systematic approach during the change management process. The organization should prepare workers well in order for them to embrace change. 5.0 CONCLUSION Change pressures emanate from various inside and outside forces. The task of managing change lies on organizational leaders. Thus, organizational leaders should possess the necessary skills in order to enable them manage change effectively. 6.0 REFERENCES Cameron, E & Green, M. 2012. Making Sense of Change Management: A Complete Guide to the Models Tools and Techniques of Organizational Change .Ed:3 .London: Kogan Page Publishers. Dawson, P & Andriopoulos, C.2009.Managing Change, Creativity and Innovation .New York: SAGE Publications Ltd. Dawson, P.2003.Understanding Organizational Change: The Contemporary Experience of People at Work. New York: SAGE. Finch, E.2011 .Facilities Change Management. Hoboken: Wiley & Sons. Harigopal, H.2006.Management of Organizational Change: Leveraging Transformation.Ed:2.New York: SAGE. Lewis, P.S et.al.2006.Management: Challenges for Tomorrow's Leaders.Ed:5.London: Cengage Learning. Palmer, I, Dunford, R. & Akin, G. (2009). Managing Organizational Change: A Multiple Perspectives Approach. Ed: 2. New York: McGraw-Hill. Sisaye, S.2001.Organizational Change and Development in Management Control Systems: Process Innovation for Internal Auditing and Management Accounting. Bradford: Emerald Group Publishing. Read More