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
identify the change agents.
Ø
To
understand the causes of resistance to change.
Ø
To
explore ways and means to minimize resistance
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.
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.
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.
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.
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.