Managing Change

Transforming Organizational Change

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Managing Change

Presentation Coverage
Introduction Why Change ?

What is change Management ?

Types of Change Cultural Dimensions of Change

Typical forms of Teams in Change Management

Competencies important in the future IT to Manage Change Managing Change Implementation Steps Conclusion
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Introduction - Why Change ?

Business Scenario in 1980s - 1990s..

1980s Scenario 1990s Scenario

Effective management of uncertainty

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Introduction - Why Change ?

The pressures of todays business

We call these pressures the 3 Cs :

Customer, Competition,Change

Customer takes charge

Technology Product Variety /Quality / Reliabilty Delivery of products and services After Sales Service Customers Response Cost / Price

Competition Intensifies Constant Change (Political,Social (habits & preferences),Economic, Technological etc.)

Creating Pressure on organisations to change and bring continuous process improvements in

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Introduction - Why Change ?

Business pressures
Customer Requirement
Fast Response Product Variety / Quality/ Reliability Low Cost Dependable Delivery After Sales Service
Leading to

Other Pressures
Import Restrictions Lifted

PROFIT
Taxes and Duties

CASH

Global Competition Product Alternatives

Restructuring - Radical and Drastic Strategic Alliance/ JVs Mergers and Acquisitions Bankruptcy

And yet there are companies which have emerged winners ...
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Introduction - Why Change ?

How to run & win the race ?

Consistent IMPROVEMENT by understanding the OPPORTUNITY makes the difference

CHANGE
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Change Management

What is Change Management?

Change management is the continuous process of aligning an organisation with its market place and doing it more responsively and effectively than competitors. Alignment is the continuous synchronization of four key management levers strategy, operations,culture, and reward. The organisation must accept the fact that change is going to happen and recur frequently. Its a reality. Change management must adapt a culture of Continuous Improvement Process (CIP) in terms of Cost,Quality & Delivery. Change Management should improve response time to customer for delivery of Product or service or complaint handling.
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What is Change Management?

THE PACE OF CHANGE

The pace of organizational change is increasing; Recent studies show that:
In the past decade, about 40 million Americans have been dislocated by restructuring.
Companies expect to cut an average of 15 percent of their workforce. Since 1980, the Fortune 500 have shed 3.2 million jobs.

In the past five years, more than 12,000 U.S companies and corporate divisions have changed hands.
70 percent of mergers end up as financial failures. U.S. manufacturing needs to increase productivity dramatically to remain competitive with foreign industry. During the recent global recession, about 7 million people lost jobs due to downsizing in USA alone.
Source: Managing Change at Work by Cynthia D.Scott & Denis T.Jaffe

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What is Change Management? Impact of change on Indian Industry

Impact of Change on Indian Industry:

More than 50% of Joint Ventures failed
Virtually every large/medium organisation (pvt./govt) has launched VRS/CRS.( 5 lacs+ jobs cut ) Almost 90% of the companies who have entered into Non Banking Financial services have disappeared. Many Dot-com companies came and disappeared over night.
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What is Change Management? Impact of change on Indian Industry

Some Success Stories:

1.Mahindra and Mahindra
adopted major re-structuring (reduction in no of managerial level, change from functional structure to a product based structure, Business process Re-engineering), in 1996 M&M claimed it had: Achieved 75% increase in sales per employee Doubled its productivity Reduced Quality related complaints by 90% Reduced lead times and Increased inventory turnover.

2.Ranbaxy - Quality efforts part of integrated change management programme. Its

average growth in sales and exports was about 31 %.

3.L&T -

strategy of subcontracting low value added jobs to vendors using the concept of JIT for reducing inventory levels and automation wherever possible resulted into cost savings. distribution network was found to be high. This has resulted into into reduction of distribution cost from 2.5 % to 1% of sales.

4.Pfizer Ltd- engaging C&F agents in areas where the cost of maintaining its own

Source: Managing Organisational Change by V.Nilakant & S.Ramnarayan

Managing Change

Re-structuring of Marketing Function: Results of AIMA Survey of 60 Private Sector Organisations

35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0

Creating own sales force Creating central advertising coordination Creating product management Creating market research cell Changing the distribution system

Percentage of companies

Source: Managing Organisational Change by V.Nilakant & S.Ramnarayan

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Managing Change

What is Change Management?

ASSUMPTIONS ABOUT CONSTANT CHANGE

Change can begin anywhere. Everyone is responsible for making change work. There is never enough information . Head for the edge-the customer. The critical skill is learning how to learn. There is no quick fix.

Change is both toxic and tonic.

Change requires exchange and communication. Change is stressless only for the mindless. Change challenges people in power. Change makes the natives restless.
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What is Change Management?

Types of change Structural Change Cost Cutting Change Process Change Cultural Change
Source: Managing Change & Transition , Harvard Business Essentials

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What is Change Management?

Approaches to Change

Theory E Change Aims at maximizing

shareholder value

Theory O Change Aims at developing

organizational capabilities

Source: Managing Change & Transition , Harvard Business Essentials

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What is Change Management?

Key Factors in Theory E and Theory O Change

Dimensions of Change Goals Theory E Theory O Theories E and O Combined

Maximize shareholder value Manage change from the top Emphasize structure and systems Plan and establish programs Motivate through financial incentives Consultants analyze problems and shape solutions

Develop organizational capabilities Encourage participation from the bottom up Build up corporate culture: employees behavior and attitudes Experiment and evolve Motivate thru commitment use pay as fair exchange Consultants support management in shaping their own solutions

Embrace the paradox between economic value and organizational capability Set direction from the top and engage the people below Focus simultaneously on the hard (structures and systems) and the soft (corporate culture) Plan for spontaneity Use incentives to reinforce change but not to drive it Consultants are expert resources who empower employees

Leadership Focus

Process Reward System

Use of consultants

Source: Michael Beer and Nitin Nohria, Cracking the code of Change, Harvard Business Review

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What is Change Management?

Types of transformation

Planned
Internal Changes in products or services

Unplanned
Changing employee demographics

Changes in administrative Performance gaps system External Introduction of new technologies Government regulations

Advances in information processing and communication

External Competition

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What is Change Management?

Why transformation
Market-driven, competitive environment

Winners and losers - ability to respond to the pace of change

Change happens - it just happens

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Mckinsey 7s model for Strategic Management

2 Develop Strategy

7
Develop Systems for infrastructure 1

3 Design and develop Structure

Shared Vision
6 Define Style 5 Develop and acquire Skills 4

Staffing

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What is Change Management?

Change Style Characteristics When Facing Change, Conservers: Generally appear deliberate, disciplined, and organized

Prefer change that maintains current structure

May operate from conventional assumptions Enjoy predictability May appear cautious and inflexible May focus on details and the routine Honor traditions and establish practice

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What is Change Management?

Change Style Characteristics When Facing Change, Pragmatists: May appear practical, agreeable, flexible

Prefer change that emphasizes workable outcomes

Are more focused on results than structure Operate as mediators and catalysts for understanding Are open to both sides of an argument May take more of a middle-of-the-road approach Appear more team-oriented

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What is Change Management?

Change Style Characteristics When Facing Change, Originators: May appear unorganized undisciplined, unconventional, and spontaneous Prefer change that challenges current structure Will likely challenge accepted assumptions Enjoy risk and uncertainty May be impractical and miss important details May appear as visionary and systemic in their thinking Can treat accepted policies and procedures with little regard
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4 MAJOR CULTURAL MODELS

The HAY CONSULTING GROUP has after substantial research in this area identified 4 major "cultural models" operating in organisations today.

These include the traditional, functional culture along with 3 newer evolving cultures: process, time-based and network. These cultures are driven and shaped by the 4 primary areas that organisations emphasize in order to achieve their desired results- Reliability, Customers, Flexibility and Technology. Note: Few organisations are however "culturally pure" . In most organisations there are variations and hybrids, such as a process/time-based culture OR a time-based/network culture.

Managing Change

Cultural Dimensions of Change

4 MAJOR CULTURAL MODELS

I.The Functional Culture

1.Technology & Engineering

2.Reliability and quality

3.Customer needs 4.Flexibility and agility

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Cultural Dimensions of Change

4 MAJOR CULTURAL MODELS

II.The Process Culture

1. Customer Needs

2. Reliability and quality

3. Technology & Engineering 4. Flexibility and agility

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PROCESS BASED ORGANISATION

( Process Matrix )

CUSTOMERS CORPORATE GOALS

ORDER OBTAINMENT GROUP

(Marketing)

ORDER FULFILMENT
(Supply Chain Group)

NEW PRODUCT DEVELOPMENT GROUP

(R&D)

PRODUCT MANAGEMENT GROUP

( 4 Ps Plus Interface with R&D, Field Sales Force, Production, QC, Processing, Packing & Distribution)

PEOPLE DEVELOPMENT PROCESS / PROGRAM

(Performance Management System, Compensation System, Reward Recognition System, Training & Development System, Talent Management, Competence Building, Leadership Development etc.)

FINANCE / ACCOUNTING
( Budgeting, Costing, Cash Flow,P & L, Balance Sheet, Taxation )

IT/ ERP
( MIS ,planning system, Order Processing, Inventory tracking system, delivery system )

Managing ChangeTypical

forms of Teams in Change Management

PAT / CFT Existing Organization Hierarchy Team Elements

Directors / VPs / GMs

Corporate council

Managers

Support Services

Process Action Teams (PATs)

Workforce / staff
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Total Employee Involvement

Mission Strategic Planning New Products

TOP
Management

Quality systems

MIDDLE

Task Force CFT/SIT QCC Facilitation DRAM QC Circles TEIAN 5S

Effective Communication is the key

SHOP FLOOR

FACT BASE EFFECTIVE UTILISATION OF PEOPLE POWER

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Cultural Dimensions of Change

4 MAJOR CULTURAL MODELS

III.The Time-Based Culture

1. Flexibility and agility

2. Technology & Engineering

3. Customer needs 4. Reliability and quality

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Cultural Dimensions of Change

4 MAJOR CULTURAL MODELS

IV.The Network Culture

1. Flexibility and agility

2. Customer needs
3. Technology & Engineering 4. Reliability and quality

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Cultural Dimensions of Change Change Management

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Cultural Dimensions of Change Change Management

Change Curve

Change

Performance

Objective
Current Valley of despair

Time

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Managing ChangeTypical

forms of Teams in Change Management Some KEY elements of Work Culture

Maximising Customer Satisfaction Continuously improving operations Responding to customer feedback Acquiring cross-functional knowledge and skills Pushing decision-making to the lowest levels Encouraging creativity and innovation Encouraging training and learning (learning organization ) Treating employees fairly and consistently Encouraging Teamwork and two-way communication Providing secure employment etc. thru performance and accountability

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Managing ChangeTypical

forms of Teams in Change Management

Team-type characteristics
Work Culture Team Type Parallel Attribute Commitment Duration Process Outcome Direction Skills Part-time Short / Long-term Individual Individual Diverse Full- time Full- time Process Project Functional
Quality First

Process

Time based

Permanent
Collective Shared Consolidate Process Skills

Long-term
Collaborative Shared Diverse Project related Skills

Functional Skills

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Managing ChangeTypical

forms of Teams in Change Management

Why teams?

80%

70%

60%

50%

% of Respondents

40%

30%

20%

10%

0% Customer Satisfaction Product / Service Quality Productivity Staffing Flexibility

To Improve
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Employee Satisfaction / Morale

Managing Change

TOTAL EMPLOYEE INVOLVEMENT (TEI)

BPI

HR

TEI

The ultimate success of a company in managing change depends on how it manages its human resource
Human beings have unlimited resources & immense capacities To develop human resources it is necessary to reinforce peoples positive assets

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Competencies Important In the Future

COMPETENCIES IMPORTANT IN THE FUTURE

Most observers agree that the future business environment will include the following :

An ever increasing pace of technological and societal change. A further shift to an information economy requiring highly skilled knowledge workers. Intensifying global competition. Fragmentation of markets into specialized niches. Diversity, with employees and customers of every race, sex, country, and culture in the world

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Competencies Important In the Future

COMPETENCIES IMPORTANT IN THE FUTURE

Organization will need to respond to these changes by innovating more rapidly; continually improving service, quality and productivity; and marketing to, managing, and motivating more diverse kinds of people. Successful organizations will be flatter and leaner, with fewer managerial levels and fewer middle managers than in the early 1990s. Responsibility and decision making will be pushed down to lower levels pf employees closest to customers and production. Much work will be done by empowered knowledge workers formed into multidisciplinary teams. Competencies that researchers.regard as increasingly important for executives,managers, and employees of the organization of the future include the following:
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Competencies Important In the Future

COMPETENCIES IMPORTANT IN THE FUTURE

For Senior Management

Strategic thinking. The ability to understand rapidly changing environmental trends, market opportunities, competitive threats, and strengths and weaknesses of their own organizations, and to identify the optimum strategic responses.
Change leadership. The ability to communicate a compelling vision of the firms strategy that makes adaptive responses to stakeholders Relationship management. The ability to establish relationships with and influence complex networks of people who can be regarded as coequals or are internal or external business associates. The cooperation is needed for the organization to succeed.

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Competencies Important In the Future

For Managers
Flexibility. The willingness and ability to change when needed organizations change strategies. to implement the Change implementation. Change leadership ability to communicate the organizations needs for change to co-workers; change management skills, including communication, training, and group process facilitation to implement change in discrete work groups. Entrepreneurial innovation. and production processes. The motivation to champion new products, services,

Interpersonal understanding. The ability to understand and value the inputs of diverse group of people involved in or impacted by the change process.
Managerial behaviors that are empowering. These include sharing information, participatively soliciting co-workers ideas, fostering employee development, delegating meaningful responsibility, providing feedback, expressing positive expectations of subordinates, and rewarding performance improvement. These steps make employees feel more capable and motivate them to assume greater responsibility. Team facilitation. Group process skills needed to get diverse groups of people to work together effectively to achieve a common goal.

Adaptability ,ability to adapt to any kind of change.

Managing Change

Competencies Important In the Future

For Employees
Flexibility . An example would be treating the adoption of a new technology
Motivation to seek information and ability to learn. Genuine enthusiasm for opportunities to learn new technical and interpersonal skills. Achievement motivation. The impetus for innovation and kaizen, which is the continuous improvement in quality and productivity needed to meet and preferably move ahead of ever-increasing competition. Work motivation under time pressure. A combination of flexibility, achievement motivation. Stress resistance, and organization commitment that enables individuals to work under increasing demands for new products and services in constantly shortening periods of time. This often is expressed as: I would best under pressure- the challenge really gets my juices flowing.

Collaborativeness. The ability to work cooperatively in multidisciplinary groups with diverse co workers.
Customer service orientation. A genuine desire to be help to others, interpersonal understanding sufficient to hear customers needs and the initiative to overcome obstacles in ones own organizations to solve customer problem.
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Managing Change

IT to Manage Change

Dont Automate a Lousy Process !

Effort /cost Benefit
Simplify

Simplify

Automate

Automate Integrate

Integrate

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IT to Manage Change
Business Integration Model
External environment
Match internal / external stakeholder values Business

Organization Technology

Strategy (vision)

Work Worker

Business

Work place

Culture

Structure Skills Leadership

Organization / people

Operations

Technology

Architecture

Usability Value added

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IT to Manage Change
External environment
Customers Suppliers Competitors

Regulatory Organizations

Describe the changes that have taken place and are likely to take place in each of the environment.

Customer Competition Suppliers Last Three Years Next Three Years

Source: Managing Organisational Change by V.Nilakant & S.Ramnarayan

Regulation

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IT to Manage Change
(I) HUMAN RESOURCES INFORMATION SYSTEM (HRIS) (For integration of HR systems)

In the PAST
Employee profile Manpower Planning and Recruitment/ selection systems Training and Development systems Payroll systems etc etc.

TODAY...
Performance management systems
Compensation management systems Skill inventory and development

Comprising

of

Employee Database

Management Development Systems (Career and Succession Planning Focused systems )

on

Benchmarking best practices in industry EVA / ESOP modules Self-learning Desk (through Company Intranet for knowledge creation )

Why this?

Competitive advantage in business through people and processes

Benefits to the organisation

To attract and retain talent
Creation of invisible Assets for the organisation ( Eg. Cycle time reduction,Robust supply chain management, JIT etc etc. Flexibility in operations Creation of knowledge and skill based learning organisation Attainment of company goals

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IT to Manage Change

Impact of Technology
The management approach that will get technology users to these goals is a holistic effort that knits together these corporate functions:

Business strategy and planning .

Technology strategy and research. Business process reengineering Human resource planning

Education and training

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IT to Manage Change

Impact of Technology
Corporate change managers cannot go very for without bumping into technology Technology facilitates integration of various core processes Technology can streamline business processes by doing following:
Eliminating redundancies. Shortening the time to do work Improving quality . Improving productivity and effectiveness .

Upgrading communications.
Cutting costs. Improving service.
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Managing Change - Implementation Steps

BASIC GUIDELINES DURING CHANGE

Following are eight guidelines for changing a corporate or team culture.

1. Have a good reason for making the change Culture changes are usually not fun. Take them seriously. Make sure you understand why you are making the change and that it is necessary. 2. Involve people in the change People who are involved are less likely to resist. Being a part of the planning and transition process gives people a sense control. Ask for opinions about how they would do it. Consider conducting surveys, focus groups and polls. 3. Put a respected person in charge of the process Each change needs a leader. Select someone who is seen in a positive light by the group.

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Managing Change - Implementation Steps

BASIC GUIDELINES DURING CHANGE

4. Create transition management teams You need a cross-section of your group to plan, anticipate,troubleshoot, coordinate and focus the change efforts. You cant do it alone. 5. Provide training in new values, skills and behaviors People need guidance in understanding what the new way consists of and why it is more desirable. Training brings groups together; it allows them to express their concerns and reinforce newly skills. 6. Bring in outside help For some reason, there is often more power in what an outsider says than in the same suggestions coming from inside. Use this power to reinforce the direction in which you want to go. Outsiders bring important information and a fresh perspective.

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Managing Change

Managing Change - Implementation Steps

BASIC GUIDELINES DURING CHANGE

7. Establish symbols of change Encourage the development of newsletters, new logos or slogans and / or recognition events to help celebrate and reflect the change. 8. Acknowledge and reward people As change beings to work, take time to recognize and recall the achievements of the people who made it happen. Acknowledge the struggle and sacrifices people have made.

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Managing Change

Managing Change - Implementation Steps

Steps

Managing Change- Structuring the change Initiative

After carefully studying the need for change and identifying what has to changed an organisation should do the following
Change Readiness assessment Implementation Plan ( action plan, Major milestones, Responsibilities assignments, Completion date., cost / benefits Target etc.) Communication strategy / workshop Role of Sr.Management Steering / Monitoring committee Implementation Task Force. Building the change Process -Effective implementation -Ongoing Communication -Effective Management reporting Technology Support
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Managing Change

Managing Change - Implementation Steps Seven Steps to Implementing Change

1.Assemble a Change Management Team 2.Establish a New Direction for the Organisation 3.Prepare the Organisation for Change 4.Set Up Change Teams to Implement Change 5.Align Structure, Systems and Resources to Support Change 6.Identify and Remove Roadblocks to Change

7.Absorb Changes into the Culture of the Organisation

Source: Managing Organisational Change by V.Nilakant & S.Ramnarayan

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Managing Change

Facilitating Organizational change

Sensitivity Training: Developing personal insight Survey feedback: Change by sharing information

Team building: Creating effective Work Groups

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Managing Change

Facilitating Organizational change

Grid Training: Improving Managerial Effectiveness Quality of Work Life programs: Humanizing the workplace Management by Objectives: Clarifying Organizational Goals

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Managing Change

Managing Change - Implementation Steps So how do we manage change effectively ?

A. Redefining organisational strategy and goals. B. Re-engineering of core business processes
New Product Development process ( NPD)

Order obtainment and fulfillment process (SCM)

People development process ( through right work culture / methods , competency building, employee development initiatives , compensation and rewards etc.) (PDP) Proper Integration of core processes through appropriate IT /ERP systems etc ( to create a database for on-line decision making. )

RESULTS IN
Increased efficiency in operations ( in terms of Cost,Quality and Delivery of product and services ) Increased Economies of scale (EOS) in operation Improved productivity of assets ( Man,Machine,Material and Money )

.. And thereby WINNING in the market place

Examples of Effective change managers : TVS Suzuki , GE, Sundaram Fasteners, Britannia etc.

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Re-engineered HR System : A Conceptual Framework

Organisational purpose

How work is designed

Human Resources System

How people are selected / Nurtured / Developed

How people are rewarded

How performance is planned /Managed / Reviewed / Monitored

Integrated IT system

Managing Change - Implementation Steps

Statement of Values at Crompton Greaves Ltd. Concern for Customers

>Perceived value / price higher than competition. >Integrity to specifications >Completeness of Delivery >On time delivery >Receipt of delivery in good condt. >Considerable and timely response to service needs.

Concern for people

>Provide environment conducive to self-dev and growth. >Adequate education and Training >Right Tools & Systems High Achievement Standards and objective appraisal >Usefulness and worth of every job

New Attitude for Success

Concern for Product Concern for Cost
>High Value-Price Ratio >High Value- Cost Ratio >Integrity of Specifications >Ease of Manufacture Ease of Installation, maintenance and service. >Design Optimization >Material Purchase Effectiveness >High Personnel Productivity >Integrating Process Flow, Work structure and Information Systems >Elimination of waste.

Concern for Innovation

>Entrepreneurial environment >Encourage Risk Taking >Value suggestions and implement them >Promote venture funding >Look for small / incremental innovations

Managing Change

CONCLUSION

Creation of an organisation which has the elements of :

1. Organisational Learning 2. Continuous Improvement Process 3. Competitive Culture

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SUCCESSFUL ORGANIZATIONS ARE NOT DEAF, MUTE OR BLIND ABOUT THE FUTURE
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A BEND IN THE ROAD IS NOT THE END OF THE 59FAIL Of 72 ROAD UNLESS YOU TO MAKE THE TURN.

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TEAMWORK DIVIDES THE TASK AND DOUBLES THE SUCCESS

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IN THE CONFRONTATION BETWEEN THE STREAM AND THE ROCK, THE STREAM ALWAYS WINS..... NOT THROUGH STRENGTH, BUT PERSISTENCE. 70 Of 72

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The Race For Quality Has No Finish Line

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For listening..

We believe in communicating & mutual learning.

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