Leading Organisational Change

Leading Organizational Change

Leading Organisational Change

BUSINESS PROCESS REENGINEERING

Introduction

The purpose of this assignment is to outline a proposal for the present scenario in the organization, which might be the outcome of hasty management decision. Here the intention is to transform the present change decision to one that is of sound change management theory and practice. The proposed planned change will give a more prescriptive approach and issues on the present situation are highlighted. Business process reengineering (BPR) is proposed to focus on building new information system where they can improve their business processes to justify the time, cost and quality of the overall company.

Company Background

The organization is called TSM. It is an international retail chain of Hypermarkets. Its parent company has been in business for over 40 years in Europe and very established financially and also in term of market share. Its main product is, offering good service and great promotions as well as providing a good place for consumers to shop for their daily needs. It is not about how profit margin is derived or how product development is done but it is about how customer are attracted to visit the store for their daily groceries and other needs. On the other hand, being in the retail industry, economies of scale has a major impact on the retailing and also the inventory & supply chain control. These processes are very crucial to the business profits as the major concern is how money can be saved and operations operate in minimum cost.

Its mission strategy is focused towards customer needs. A clear indication that any change that transpires is due to the drive from customer needs and providing that need to ensure the company is always competitive in the market.

Leading Organisational Change The mission strategy is to have a:

Better store for our customers as they shop in convenient and conducive environment Simpler way for our customers to shop and pay for their items Cheaper prices for customers to enjoy great offers

Change Background

Taking the first point of the mission strategy, it is important to ensure the below criteria is followed and maintained daily;

Shopping aisle are always free of carton boxes and handling machines Goods displayed are always tagged and priced Goods displayed are always at its correct location Goods on shelves are always available and to replace with another item if goods not available.

This change is a transformative change, as the organization will be going through a revamp in its processes and machines. As defined by (Dunphy & Griffiths, 2003, pp. 237) that transformative change involves reinventing the organization creating a compelling image of a desirable future organization dramatically different from the current one. Being an international organization and a young company in Malaysia, all staff employed for any position from a clerical to the highest level is computer literate and at least holds an advance diploma or a degree academically. This show that there is unlikely to have resistance to change on technology from the staff on present manual system to the fully enterprise system which will be discussed later.

Leading Organisational Change Drivers of Change

There are a few drivers of change for this change to take place. The main of course are the customers. Here, the effort of implementing a more efficient and presentable store is due to the customer complaints and feedback. Competitors on the other hand are other drivers of change, which keeps the business competitive in the market. Therefore, TSM should reposition to take advantage of changing market and needs. As stated by Dawson (2003, pp. 15) thatthere are four triggers to change that are technology, primary task, people and administrative structures. This would then categorize the change triggers to be of technology change where there is a change in information system.

Case Description

First we need to know where we are now and where do we go from here. The retail store operates business 9 am in the morning up to 11 pm. During this business period, thousands of customers walk into the store and grabs their daily necessities leaving most of the shelves empty by evening hours of the day. Replenishment needs to be done and contract worker are only employed to do the replenishment of goods on shelves after the store is closed for business that is between 11 pm and 6 pm. Replenishment was only done once in a day and it did not serve the purpose and the mission strategy because during the business hours, the shelves often go empty due to good business during peak hours.

Case Diagnosis

After studying the case, now we need to know what do we do next and the need for the change. Therefore, management decided to fill the gaps more often than just doing it during the after business hours. Contract workers were stopped and the management implemented a new system that requires all store staffs to participate in the replenishment program for peak hours that is 11am to 1pm and 7pm to 9pm. The replenishment for the morning crowd is done from 6am (that is when the store staff commences work daily) to 9am. However, the evening replenishment has to be done at 4pm to 6pm. That means the replenishment is

Leading Organisational Change done during business hours. As that, to reduce distraction to shoppers, management

proposed a program called Rumble where all store staff, manager, as well as headquarters staff (whoever is in the store at that point of time) do replenishment together.

The diagram below show the present process and how Rumble is associated with the entire process and how other functional areas work in the system.

RUMBLE PROJECT

Headquarters

Independent Suppliers only deal with HQ buyers for stock control Manual System Replenishment by contract workers

Tall Organizational Structure High Red Tape

Inventory System Controls Price and Promotions only The Store Unskilled IT staff in Inventory

POS Cashier Counters

Figure 1: The Present Process In the customers point of view, this program is good as it ensures the store is kept presentable at all times and very safe for shopping as the customer will not come contact with any handling machinery, pallets or carton boxes along the shopping aisles. However, this program is less convenient and not strategic for the organization itself. The proposed change looks at the total systems and procedures change, which are aligned with the companys objectives towards financial, operation, people and customer. 5

Leading Organisational Change Business Process Reengineering

The Need For Inventory Management

The next step for the change would be to develop the vision and asses the readiness for change. It is known that new information systems can be powerful instruments for organizational change, enabling organizations to redesign their structure, scope, power relationship, workflows, products, and services (Laudon & Laudon, 2002, pp. 309). Information technology is not eccentric to this organization as being a leader in retail it has the state of the art technology in place. Somehow down the line or lack of confidence in automation and technology, the management often gets things done manually and existing inventory system technology has not been utilized to its utmost capacity and capability. Information technology can promote various degrees of organizational change, ranging from incremental to far-reaching (Laudon & Laudon, 2002, pp. 309). The diagram below shows the various degrees of change that this organization can implement, however the proposal would be to have a more powerful type of organizational change that is business process reengineering as stated by Laudon & Laudon (2002, pp. 309), in the area of Inventory Management process. Business processes refer to the manner in which work is done, organized, coordinated and focused to produce a valuable product or service (Laudon & Laudon (2002, pp. 309). Here the entire inventory processes will be analyzed, simplified and redesigned and this is what is lacking in Rumble.
HIGH Paradigm Shift Reengineering Rationalization
Automation

RISK

LOW

LOW RETURN

HIGH

Figure 2: Degrees of Organizational Change (source Laudon & Laudon, 2002, p 309)

Leading Organisational Change Referring to the figure above, automation and rationalization is often implemented, but in TSM, we need a more powerful change, which will give us higher Return and rewards. However, the risk to failure like resistance and lack of skill and knowledge of the lower level staff in the stores can occur but it can overcome with the help of skilled change agents or consultants, which will be discussed later in the assignment.

For setting the scene for action, the following assignment addresses and analyses the issues and areas that will need change and the implication of the present (Rumble) and future (BPR). On the other hand, what improvements will it bring with the BPR is also highlighted. This assignment addresses the three (3) issues on organizations definition that are:

Machine Manpower Money

to see how change effect these areas as well as the structures and systems of McKinseys 7S model. A new element that is Statistics, introduced to show its importance to include it in the McKinseys 7s model (Kotler, pp. 83) and how its findings reflects the present process Rumble.

Implications Of Change

Machine Transformation

Presently, TSM uses as simple inventory software that links the retail buyers, IT department, store receiving and the store inventory department only (Please refer to the title case description, above on how the present process works). They are linked for the purpose of their own reporting and not actually for the purpose of replenishment. However, presently all goods in the store are using barcode scanning tool only for the purpose of POS. The proposal is to have an Enterprise Resource System (ERS), which will link all these departments including the suppliers as partners. A company called SAP (Systeme,

Leading Organisational Change Anwendungen, Produkt) a German company distributes software designed to fully link all functional areas within the company and seems to be successful and very useful for information distribution (Stevenson, 2002, pp. 663). There are a few factors that the management should look into in order to implement ERS in the organization and they are:

Reducing transportation cost Reducing out of stock situation and last minute ordering Manage resources effectively Manage Management Information System (MIS) at different level Manage inventory software effectively and effectively

Leading Organisational Change

RUMBLE
Figure 3: The Mind Mapping

Business Process Reengineering

Machine

Manpower

Structure

ERS Supplier-Organization-Employee-Customer Inventory POS Stock JIT Efficiency Effectiveness

Money

System

The above mapping shows that during the change process, some of the issues that will be need attention are drawn as well as the benefits of the ERS. Ones implemented, the diagram below shows that ERS will automatically alarm the backroom warehouse staff on the need for replenishment as and when the stock level reduces. A simple process is shown below. External Warehouse Warehous e Internal Warehouse Stocks
Stock on Display Inventory Price & Stock Control Automatic updating on stock level once barcode scanned at cashier

Customer Purchase POS

Low stock alarms the supplier to send goods to warehouse

Suppliers

Suppliers can access their stock level in ERS software with lowest level password only.

Leading Organisational Change Essential business processes must be redesigned and more closely integrated, especially those for supply chain management. Traditional boundaries between departments and divisions, as well as companies and suppliers can be an impediment to collaboration and relationship building. The digitally enabled enterprise must transform the way it conducts business on many levels to act rapidly and with precision (Laudon & Laudon, 2002, pp.129).

Manpower Restructuring

Since the implementation of Rumble, staffs are confused over their job description and not sure of what are they suppose to do when the Rumble period starts. If they are doing an important task at that time, are they supposed to leave it and run to do Rumble? Most of the staff employed in the stores is holding very basic knowledge on computers, as previously the Rumble system did not require such skills in technology. However, the proposal here is to propose renewal in staff capacity and not retrenchment when ERS is implemented. The challenge is to shift is culture and peoples behavior and mindsets to implement it successfully and to sustain it over time (Anderson & Anderson, 2001, pp. 4).

It is essential to develop the staff capacity for reshaping and adapting to this future changes. In this case, we will need to upgrade the staff skills on computer literacy and skilled IT staff on networking needs to be up skilled or employ new staff. The proposal would be to have an IT skilled staff stationed in the store for immediate troubleshooting, as the ERS will require such capabilities. As mentioned by Dunphy (2003, pp. 70) that it makes good business sense to develop the intellectual and social capital of the workforce, particularly in the area relevant to the organizations mission and their ability to identify future strategic opportunities, (Dunphy, 2003, pp. 70). HR will have to create a triple bottom line measurement here by measuring the staff retention and keeping the highly talented people during this sensitive period of employing new skilled IT staff. Staff personal files should be reviewed further to see how this human capital can be further developed instead of just discarding them. As mentioned by Norman & MacDonald (March 2003, pp. 5) thatHR should keep the detailed records of employees and measure employee

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Leading Organisational Change satisfaction. This will mean all employees records, appraisals and reviews and to go one step ahead to interview them again to see how they would like to improve in their career.

Monetary & Statistical Issues

During the proposal of a change process, the financial implications in the business should be looked at. Implementing ERS in TSM would most definitely have an impact on its financial budgets, as ERS would need to fork out the cost for linking from one process function to the other making a total enterprise system. Nevertheless the IT is already equipped with such capacity, but the external hardware like telecommunication lines would be the extra cost. On another perspective, present process does not incur such cost but it has been a wasted asset as the full capacity and ingenuity for this system was under used. If you calculate on a figure, which could amount to possibly, the money spent now, this could have been averted, had the original intension of the technology been achieved initially.

Other than the cost and budget of implementing change, lets look at the statistical calculations of ERS versus the manual system Rumble. It is quite surprising that having a very good management strategies in the organization (as TSM recons), the statistical part of justifying the strategic level managements salaries are not viable. This is because a director earning a salary of approximately, ten thousand Ringgit (RM10, 000.00) is down in the store doing Rumble!. Where are the logical statistics? Therefore the change should take place to ensure the management staff or skilled staffs ability is not upset or undermined. As Johnson & Scholes calls it the cost effectiveness, it is to measure the level of resources needed to create a given level of value. For example the directors job is to analyze issues and create strategic ideas for the organization, which would be of more value qualitatively and financially. Being transparent to the shareholders in the financial year reports is achieving the triple bottom line where the directors efforts are quantified through managing projects for the previous year. Having it successful or not is not the point, its the effort taken to implement the change. As mentioned by Norman &

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Leading Organisational Change MacDonald (2003) that having a transparency claim is the firms obligations to stakeholders to disclose info about how well it performs with respect to all stakeholders.

Management Information System Presently, the information systems here are not interrelated and functional department dont work closely to control the processes. Most of the information systems are decentralized which may be a good system but not properly managed. For example the Schematics department in HQ is in charge of item management and stocking of the goods in the store, while the external and in-house warehouse is responsible for the replenishment. Often there is a dispute of not filling the gap on the shelves and out of stock. When this situation occurs, store personnel (Trading Manager or Section Manager) immediately communicates with the Schematics department through informal communication to immediately fill the gap with an alternative item. This process is not advised and often create problem with pricing because the inventory department is seldom informed of this situation and prices on the shelves remain unchanged even if the item is changed. Both the technical and behavioral components need attention. This means that technology must be changed and designed in such a way as to fit organizational and individual needs. (Laudon & Laudon, 2002, pp. 15).

Once the ERS is implemented, the shortage or gaps on the shelves will not occur as the stock will be controlled and accessed by the internal and external warehouse, inventory, schematics, IT and suppliers. The ERS is not just a system for filling the gap only but it is a complete management information system as well, for quantifying up to date reporting, scheduling, controlling and planning. As stated by Norman & MacDonald (2003) that if you cant measure it you cant manage it. This is basically the whole idea of getting all boundary system to link to each other and create that triple bottom line information system.

Nevertheless achieving the triple bottom-line effort is part of the investment for the ERS but TSM should be going beyond triple bottom line through this ERS system by linking it to the Internet. This will allow not just the supplier, but also the customers to ensure the

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Leading Organisational Change stock is available in the store before making a trip there. Saving customers cost of visiting the store just to find out the good is out of stock and disappointing customer.

Structures Change As the machines, money, manpower and systems changes during this change process, it would be difficult to say that the structure of the functions doesnt change. Here, the reference is on the functional areas and boundaries. The interconnectedness, the relationship, the chain of authority and levels of hierarchies are all affected during the ERS change project. Presently the functional areas are independent from different departments but they still report to headquarters. Ones ERS is implemented, all the respective departments will be interconnected through the information system of ERS. Within these broad demarcations there are relationships to be built and maintained both internally and externally in ways that are fluid enough to respond to an uncertain environment (Johnson & Scholes, 2002, pp. 443).

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Leading Organisational Change The functional structure will look something like the chart below. CEO

ISO (UK) Support

IT Support (HQ)

Retail Support (HQ)

Commercial (HQ) -Buyers

Inventory (store 2)

Inventory (store 1)

Inventory (store 3)

Internal Warehouse Finance (invoicing & payables)

Internal Warehouse

Internal Warehouse

ERS
Customer Service

Internal Warehouse

Suppliers as Partners

External Warehouse

Figure 4: Functional Structure

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Leading Organisational Change Developing Action Plans Strategies and Techniques

Agenda

The agenda of the entire change process should be scheduled around the timelines needed to tackle and implement the ERS in the organization. Also stated by Turner (1999), that A project is an endeavor in which human, financial and material resources are organized in a novel way to undertake a unique scope of work, or given specification, within constraints of cost and time, so as to achieve beneficial change defined by quantitative objectives . As this change process is dealing with these areas of change, it is necessary to allocate time to design, purchase, train and commission the new system.

A work breakdown structure would be listed to give the timelines of each activity. Time schedule is defined as a series of dates against the work elements in the work breakdown structure, which records when work is forecasts to occur and when work actually occur (Turner, 1999, p 201). This means in a change process, exact timelines, reactions and results cannot be predicted exactly. It would be a trial and error process and may take from 6 months to 1 year to change. The objectives however is to ensure the main purpose of the case is solved and sound change takes place. Knowledge is leveraged for competitive advantage and measures the outcome of change through quantitative and qualitative measurements and control. Shareholder value is created and measure new source of wealth creation like intellectual assets.

Scope Of Change Process

The people involved in the change process are all the levels in the organization like the lower staff, middle level managers and upper level management. However the extent to which the change touches the areas are only the process that are involved and affected by the replenishment process. The scope is the breadth and depth of what is included in the organizations transformation (Anderson & Anderson, 2001, pp. 5).

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Leading Organisational Change The Change Agent

The change agent required for this change should be from the internal IT support team plus the external (parent company) ISO support team and supplier of IT solution. This is because, they come with many years of experience and they will know the actual capacity and requirements of the ERS and what we have already installed in the system. This change process is a techno-structural intervention that focuses on reengineering which radically redesigns the organizations core work processes to create tighter linkage and co -ordination among the different tasks. As mentioned by Johnson & Scholes (2002, pp. 546) it is the co-ordination of and authority over processes of change by a change agent who delegates elements of change process. A transitional change, rather than simply developing the current state, replaces it with a known new state that is intentionally formulated to resolve the inadequacies of the old state (Anderson & Anderson, 2001, pp. 3). Therefore, the change agents are required to use the facilitative style to lead the change. Because in todays business environment it reflects the emerging mindset (conscious transformation), fits the level of readiness and capability and willingness to learn. Other styles like controlling and self-organizing is not suitable as this is a planned and directive change where by facilitating the requirements to the people affected by the change would be most appropriate.

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Leading Organisational Change

Forcefield Analysis A forcefield analysis provides an initial view of change problem that needs to be tackled, by identifying forces for and against change (Johnson & Scholes, 2002, pp. 544). This forcefield will identify the current culture that may aid the change in the desired direction. PUSHING RESISTING

Good ERS system Interrelated functional areas Stock control / JIT replenishment Present system Rumble not good.

Needs training Cannot afford errors in the system Directive planned change. Password integrity / control of ERS access

Evaluation of Change Effort

The evaluation of change effort can be measured by the effectiveness of the process to work. As mentioned by Robbins et al. (2001, pp. 728) that, using Kirkpatricks four-level outcomes will give a thorough analysis of the real outcomes of the change program that can do evaluation whether the program should be continued or be improved. For example here would be the ERS to work up to the expected capacity and serves the purpose of the project. Which is to ensure there is no need for Rumble to take place anymore and that the suppliers would be able to know the stock level of their product and to replenish the warehouse as and when necessary. As for the filling the gap at the display shelves, the internal warehouse should be able to view the stock level through the system and the POS will show the balance on display shelves.

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Leading Organisational Change Summary and Conclusion The requirement of this assignmnet is to propose a sound change management process. The proposal is to transform the present change decision Rumble in TSM to one that is of sound change management theory and practice - Business Process Reengineering (BPR). It is proposed to focus on building new information system where they can improve their business processes to justify the time, cost and quality of the overall company. This planned change is a transformative change. It is unlikely to have resistance to change from the staff from the present manual system to the fully enterprise system because most of the HQ staff are qualified with at least a basic knowledge in computers and with good academic background. Also the change agents are proposed to use a facilitative style of leadership to ensure everyone is empowered and given the space to learn about the new system. The issue is that in order to change to ERS, what are the other areas that need change to ensure all is alligned with the change process. The areas of change is looked at and identified as machines, manpower, money, systems and structures. Another element identified is Statistics. How ERS effects these areas are highlighted, however, no major resistance is seem to take place. This means the readiness exists in the organisation and everyone is happy with what is being changed.

Words without references: 3550 only

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Leading Organisational Change References

Anderson, D., Anderson, L. A., 2001, Beyond Change Management, the practicing organization Development Series Dawson, P. 2004, Understanding Organizational Change The Contemporary Experience of People at Work Dunphy, D., Griffiths, A. & Benn, S., 2003, Organizational Change For Corporate Sustainability

Johnson, G. & Scholes, K. 2002, Exploring Corporate Strategy, Sixth Edition, Chapter 10, Enabling Success

Laudon, K.C., Laudon, J.P., Management Information Systems, Seventh edition, Chapter 4, The Digital Firm, Coordination and Supply Chain Management

Kotler, P., 2000, Marketing Management, The millennium edition, scanning the Marketing Environment

Norman, N., MacDonald, C., March, 2003, In Press, Business Ethics Quarterly, Getting to the bottom of Triple Bottom Line

Robbins, S. P., Millet, B., Cacioppe, R., Waters-March, T., 2001, Organizational Behaviour, 3rd Edition

Stevenson, W.J., 2002, Operations Management, Seventh Edition

Turner, J. R., 1999, The Handbook of Project-Based Management, The McGraw-Hill Companies

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Leading Organisational Change

Leading Organizational Change Assignment 2 Question 2

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Leading Organisational Change

Factors Assisted in Engaging with the Topic of Organizational Change

The lecturer was very helpful and informative as she is a Change Agent consultant
by profession. She helps to explain issues with real life situations and opening issues to class discussion which most of the time was very encourging. Other informative materials like journals and write-ups were very helpful. It gave many examples of change cases and issues to focus on during change. The USQ discussion board was a very good learning hub and open to discussions with various students from diversified backgrounds. Visit by the USQ lecturer was a good experience as we get to know the lecturer and his experience in this area of course help us be more open and friendly to him. Last but not least the assignment for Dawsons approach really explored us into reading many other books on change management to ensure we have the depth to critique his book. That was a very good experience.

What Impeded in Engaging with the Topic Organizational Change

Having difficulties in getting the recommended books was a real nerve wrecking
as the assignment 1 was due but books were still not there. Hopefully future students will not have to go through this.

Very short semester and very few classes to teach an entirely new subject was
insufficient. Many issues were not discussed. Most of the issues that needed in the 21

Leading Organisational Change assignments were only touched on the surface and not to the depth. It was a waste.

Sometimes discussion boards are very dissapointing as suddenly no one replies to

our postings. There should be at least one person from this course incharge of the discussion board. This will encourage students to post more issues.

Overall the leading organisational change was an interesting course and very challenging. Would love to do be a change agent in my career if given a chance!

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