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CHANGE MANAGEMENT

The impact and depth of change can be best understood from an extract from the classic “Alice in Wonderland”

 “In her wanderings Alice was compelled to play a game of croquet. Croquet is ordinarily a game played by knocking wooden balls through metal wickets with mallets. However the game in wonderland was different. In this fictional game everything was alive and changing around Alice. Nothing remained stable for very long. The mallet she used was a flamingo, which faced in another direction just as Alice was trying to hit the ball. The ball in turn was a hedgehog with a mind of its own. Instead of lying there waiting for Alice to hit it, the hedgehog would unroll, get up, and move to another part of the court. The wickets were card soldiers, ordered around by the queen of hearts, who changed the structure of the game, seemingly at whim by barking out an order to the wickets, to reposition themselves around the court”.     

 Substitute technology for the flamingo, employees and customers for the hedgehog, and everyone from government regulators to corporate raiders for the Queen of hearts and the analogy fits a growing number of companies in India today.

 Within the last few years we have witnessed major changes taking place in the politico- economic sphere, technology, markets, social values and so on. The recent changes toward more liberal and deregulated economy have created multiple and simultaneous pressures for the business organizations.

 There are greater demands on the organizations now to

Ø      Deal with intensifying competition

Ø      Develop a quality conscious customer orientation

Ø      Globalize

Ø      Grow

Ø      Diversify and modernize

 

In order to achieve this they need to

Ø      Decrease overheads

Ø      Increase cash- flow and equity base

Ø      Shed corporate fat

Ø      Restructure and professionalise

Ø      Develop

Ø      Upgrade and acquire new technologies

Such pervasive changes are making it more and more imperative for organizations to develop capacities for coping with this dynamic environment. 


OBJECTIVES OF THE STUDY

In order to develop coping capabilities in today’s context “The Experience of the Indian Industries” for “Management of Change” was studied outlining the following objectives.

Ø     To study successful business strategies:

     Ø     To identify the change agents.

    Ø     To understand the causes of resistance to change.

    Ø     To explore ways and means to minimize resistance   

 

RESEARCH METHODOLOGY

 RESEARCH PLAN

·        Data sources

1.      Primary Data: primary data was collected by means of questionnaires

2.      Secondary Data: secondary data was collected by referring to journals, magazines, newspaper clippings, management books, companies’ web-sites (India infoline.com, rediff.com) and various software packages like Capital lineole and Prowess.

 ·        Research approaches

Observational and survey research

 

·        Research Instruments

Questionnaires (open ended, qualitative type)

·        Contact methods

Personal interviews of the arranged type

The data collected by means of the questionnaires was seen in the context of the secondary data in order to check for dissonance.

SAMPLING PLAN

In order to get a clear picture we studied the process of change from three different perspectives: top management, middle management, and operational management.

A non-probabilistic (judgement) sampling was carried out so as to limit the margin of error.

Separate questionnaires were designed for each management cadre and were pre tested via a pilot study prior to actual research.

In order to get a broader perspective of the change process adopted by Indian industries an empirical survey on five companies was carried out. The organizations were selected such that they best reflected different aspects of change occurring in a cross section of industries due to liberalization. The companies studied included

·        Indian Postal service (IPS)

·        Dabur India Ltd

·        Glaxo India Ltd

·        ICICI Ltd

·        Philips India Ltd

Our study was essentially exploratory, aimed at highlighting different facets of change. We adopted a qualitative approach in order not to confine responses to a pre-defined framework.   

FINDINGS

This research revealed that each transformation is a unique response to a specific set of problems and opportunities. Some of the companies analyzed were facing up to future threats; others were on the brink of collapse. Some had to endure wave after wave of change. Change approaches touted as a wild success for one company proved to be a dismal failure for another. Companies need to develop a strategy to create and sustain momentum, a strategy that recognizes what change is needed, and where the energy to drive it will come from.  

SUCCESSFUL BUSINESS STRATEGIES

Ø     DABUR: Identification of Core Competency

With the end of the license raj Dabur realized that there was a great potential in the FMCG sector. The company, which until then was an ayurvedic marketing company, diversified into a number of businesses (confectionery, cosmetics, etc). However somewhere along the line Dabur realized that it was nowhere close to its FMCG competitors on several key financial parameters. A need to change was felt by the top management. Three years and one Mc Kinsey report later Dabur decided to focus on its core competence- health care products, family products and foods.

 

Ø     GLAXO: Mergers and Acquisitions

Ø     ICICI: Redrawing Industry Boundaries

Post 1991 ICICI orphaned suddenly by the government, faced with rising non-performing assets and a threat from multinational banks decided to look beyond project finance. Offering its customer a wide array of financial services through a truly technology savvy and efficient system ICICI projected itself as a universal bank and created a brand identity for itself. Using its insight and maximizing on its first mover advantage it is a fine example of redrawing industry boundaries.

Ø     PHILIPS: Redefining Business Focus

Ø     IPS: Emphasize on Reach and Reliability

The field of communication today is growing by leaps and bounds. Right from private courier services to digitization to free Internet accesses. Amidst all this is our very own Indian Postal Services; a governmental setup that was rudely awoken from its slumber. By the time they realized that the private courier services had gained ground and they introduced speed post as a counter measure they had lost out on large number of customers. This they could have been avoided if the same measure was taken up earlier.  At present the IPS intends to exploit its strengths of reach and customer reliability in order to remain competitive and is also using extensive technological measures. A preliminary stage in developing its core competency of timely delivery of mail.   

STRATEGY & STRUCTURE

Reflecting on the Strategy- Structure link, in the yesteryears, monolithic organizations with a rigid structure adopted strategies independent of their structure. The Indian Postal Services maintained the two hundred year old structure established by the British Raj. Bound by social obligations and government regulations IPO has not been able to adopt any strategy, which would cause them to break free of their structural confines. Thus despite their first mover advantage in the communications industry, Postal Services have lost out on exploiting their potential and are lagging behind the private communications services. Lack of synchronization between the ends and the means has led to organizational ineffectiveness.

In contrast, organizations like Dabur India Ltd, have through aligning of their strategy-structure effectively managed change. Dabur India Ltd. identified their core competency as being marketing of nature based products and hived off businesses not in accordance with their core competency. With Customer orientation being the name of the game, Dabur incorporated an effective supply chain management system to achieve its objectives.

In a time when the rate of change is accelerating, an organization needs to realize that the strategy structure cycle has no precedent or antecedent. An organization undergoing a transformation selects a strategy based on environmental changes and adopts a structure to support this strategy. To sustain its competitiveness the organization needs to continually modify its strategy on the basis of its newly adopted structure.

The organization of the future will require incorporating a high degree of flexibility in its strategy structure link so as to compete effectively.

IDENTIFICATION OF CHANGE AGENTS

Given the purpose and the tools, the successful execution of the change process is guided by change agents at various levels in the organization. Some of the change agents identified include

 

Ø     Feelers- Realization of the need to change transcends from any level in the organization. In the case of Philips, the need was felt first by the sales executives who realized that there was a gap between the product and the customer need, which, reflected in a drop in sales. With Dabur, the top management recognized the need to move from a family run business to a professionally managed enterprise.

 

Ø     Communication- Communication is one of the keys of achieving successful change. Many opportunities for streamlining change efforts come in the form of information sharing. Thus, channels need to be established to enable managers and professionals from different business units and different parts within the organization to communicate. In the absence of an effective, formal communication system, employees receive distorted information, which tends to influence their mind set to a considerable extent. This makes them less receptive to change initiatives.

Considering the example of the Indian Postal Services communication of the directives to the operational management is a slow hierarchical process. More often than not employees receive “misinformation” through informal networks that blocks their minds even before valid and authentic information finds its way to them. This in turn hinders the change process.

 

Ø     Cross Functional Teams- Cross-functional team development is the process of aligning the capacities of individual team members to achieve the results that the organization desires. These teams are essential for thinking through complex organizational issues, which require tapping the potential of multiple and diverse talents. When such a team works in unison, it provides for more coordinated and spontaneous action. Members automatically align with each other, thus reducing the need for external control and shortening response time. These teams have been major influencers in all the organizations studied.

 

Ø     Technology- Computer networks and other information systems serve to enhance the communication systems that knit the company in the process of managing change. A major source of influence is the advancement of technology in a variety of fields. This has implications not only on new product development but also for developing more responsive, cost effective and flexible manufacturing processes.  

In the case of Dabur India Ltd, a 114-year-old organization the maximum utilization of technology in the form of ERP has facilitated an easy transition into a professionally managed enterprise.

 

Ø     Leadership – Making his presence felt throughout the change process – a part of every change agent - the driving force is the leader with qualities like a deep understanding of the organization and the environment, a clear vision, an ability to take risks, and most importantly the conviction to take people of the organization along with him.

RESISTANCE TO CHANGE EFFORTS

The change efforts within the organization have often known to be hampered by resistance faced in a number of forms.

Ø     Disruption in existing power relationships: A change in the formal structure and tasks tends to disrupt the precarious balance of power in the organization where relationships and coalitions are in a state of equilibrium.

Ø     Disturbance in the existing employee mind set: If the change efforts contradict some of the implicit or explicit cultural norms that people harbor, they are likely to reject the change.

Considering the example of Indian Postal Services where the work patterns were clearly demarcated any initiative to disturb the established pattern was met with resistance.

Ø     Loss of expertise: Over the years of working in an organization, individuals develop expertise over certain skills and competencies. Any change that renders these skills ineffective is likely to be resisted.

 Ø     Loss of self-control: People do not always resist change but they resist being changed. The despondency that follows the acquisition of ones company leads one to believe that he is more like a pawn than an active contributor to the organization’s evolution.

Ø     Differences in ideology: Often people resist change because they are ideologically opposed to the direction of means of change. Such differences are deep seated in the values that these people cherish.

 

MINIMIZING RESISTANCE:

Realizing that resistance is natural how do organizations then go about minimizing this resistance?

Ø     Participation

A smart way to minimize resistance would be to include in the decision making process itself, the individuals who are the most likely to resist. In fact this is one of the objectives of forming cross-functional teams. At Philips participation is clearly seen as cross-functional teams are formed at all the management levels.

Ø     Negotiation

At Glaxo the management realized that they would face resistance from the Burroughs Wellcome employees with respect to the salary structure. The Burroughs Wellcome employees were used to an uncapped DA and would certainly not accept any ceiling on the same. The management then offered them an option,’ a one time settlement equivalent to seven years of DA’ thus negotiating exchanging something of value to minimize the resistance.

Ø     Coercion

Making the use of direct threats or force, coercion though not one of the most favored ways to minimize resistance has also been used by organizations.

Ø     Send strong signals

Sending strong signals down the lines is also one effective means. At Dabur all the family members in charge of various business units were in one stroke replaced by professional mangers. This send strong signals down the lines. If a top official could be replaced, so could anyone else in the organization. Fearing for their jobs the employees complied with the change efforts. 

Ø     Facilitation and support

Change agents should ideally offer supportive measures. At Glaxo the outbound Leadership program had equal representation from both the Glaxo and Burroughs Wellcome employees. The purpose of this program was to a.) Increase interaction and also b.) To create an understanding of the diverse cultures.

Ø     Communication and training

The loss of expertise is a source of resistance that can be effectively tackled through communication and training. As a matter of fact both these form the basis of an effective change implementation. At the IPS the employees were communicated the importance of computerization and upgrading their skills. In addition to this an in house training cell was also set up.

SUGGESTIONS

The research conducted revealed several interesting insights. On the basis of these insights are proposing the following suggestions.

Ø     Understanding Environmental differences: Companies in Japan, the West and India operate in essentially different environments. Organizations in Japan have always focussed on being different; they use innovation as a basis of their competitiveness. Companies in the west are restructuring, reengineering and are deploying quality consciousness as their basis of competitiveness. In contrast companies in India that have so far operated in isolation, oblivious to the competition, are now waking up to the global reality.

Companies are now trying to restructure and reengineer to become agile and flexible.

With innovative and quality conscious neighbors, Indian companies need to find their niche. Today through acquiring operational efficiency, they need to fit themselves into the global supply chain.

Ø     Don’t loose the people touch: Systems no matter how easy to use do not necessarily guarantee co-operation. Organizations today are emphasizing on the use of intra-net and other such systems. These enhance information sharing, but it shouldn’t be at the cost of the personal touch. Relationship building between people- people and people – systems needs to be equally emphasized. When was the last time that you peeped over the side of your PC and said a personal hi to the guy next to you?

Ø     Resistance to change- A new approach: Individuals are not resistant to change per say, but are resistant to being changed. When change is perceived as a punishment resistance is but natural. Change is unnerving, frightening and unsettling but in the words of Norman Vincent Peale,”In every calamity there lies a seed of opportunity”. Organizations should   therefore move away from those conditions, which make change punishing and concentrate on those factors that can make the same change rewarding. Developing a new perspective in now required.

Times of transition create alternative feelings of frustration and hope, power and powerlessness because we do not know where our world is heading. In order to cope with economic, socio-political and technological changes, any organization must by necessity adapt itself by aligning its goals and strategies, optimizing the balance between its various sub- systems and structuring itself for a more effective interface with its environment. Managing change in the organizations studied by us was an effort on the path of discovering answers to questions that the period of transition raised.

Organizations in India need to become like chameleons. These tiny creatures are a prey to many a predator but they change their colors, survive and grow. Similarly organizations need to develop an ability to analyze threats in the environment, develop skills to combat and develop the flexibility to adapt. This needs to be internalized. So internalized that it becomes an instinct….a basic instinct.