Managing Changes

managing changes

Every enterprise, due to all kinds of internal or external circumstances, being at a certain stage of development, begins to feel the need for changes. External reasons that may cause such a need include:

  • The situation in the market.
  • Technological progress.
  • Government and legislative regulation.
  • General economic factors.

Internationalization of the global market and increasing dynamics of business processes are some of the most powerful incentives for change, which sometimes are impossible without the introduction of a wide variety of technological solutions. For example, more affordable equipment and software created colossal competition in the IT services market.

Governmental and legislative regulations also have a major impact on the activities of different companies, since entrepreneurs cannot ignore such regulations. For example, increasing excise taxes and adopting laws requiring manufacturers to inform consumers about the dangers of smoking have put considerable pressure on tobacco business. They had to reconsider their strategy in order to ensure economic viability.

Finally, general economic changes can have far-reaching consequences for both the domestic and the global market as a whole. This phenomenon can be well traced in the example of the last financial crisis: first, he touched the US, then he reached Europe and Japan, and then all other countries got hit. As a result, businesses around the world had to reduce production and cut staff.

In addition to external factors, there are also internal reasons that pushing for change. These include:

  • Corporate strategy.
  • Workforce.
  • Technologies and equipment.
  • Attitudes to work.

For a company, changing its strategy is not unusual. This, in turn, can lead to further changes if, for example, the company introduces a new method of distribution and logistics of goods. Also, accessing the new markets (for example, Internet commerce) changes the behaviour of the organization.

The emergence of new technologies and equipment is another external force affecting the activities of every enterprise, as the introduction of technical innovations leads to the renewal of processes and organizational structure. Also, in due to innovations, there is a need for personnel training of creation of new services and positions.

The composition of the workforce of an enterprise in terms of age and education level of personnel is always variable value. Some employees retire or are dismissed, new ones come to take their place. According to such changes, managers have to conduct reviews from time to time to control the status of projects and the composition of working groups in order to ensure that the skills correspond to the tasks assigned.

The attitude to work, which can manifest itself through a level of satisfaction, is the cause of both positive and negative changes in the work of the company. Dissatisfaction among employees can lead to systematic absenteeism, which indicates the unsatisfactory work of the HR department.

Depending on the type of business, its organization, experience of entrepreneurial activity and the average age of employees, there are several different approaches to implementing changes.

Direct orders

This method highlights the right of the manager to make changes and use his power to implement them with the involvement of a small number of other employees or without their participation. The advantage of this strategy is the rapidity of introducing changes, but, on the other hand, the wishes and suggestions of employees who are directly affected by these innovations are not taken into account. Thus, valuable information or ideas may not be embodied, and direct instructions, without discussion with the staff involved in the process, often provoke resentment.

Expert approach

In this case, change management is seen as a process of solving problems by “experts”. This approach is most often applied to technical problems, such as changing the management structure, and usually, it is the responsibility of the project team or senior manager, with a little involvement of employees involved in the changes. The main advantage of using this strategy is the speed of its implementation since a small number of people participate in the development. But, again, without considering the opinions of employees, such changes can cause discontent.

Discussion and agreement

This option emphasizes the willingness and readiness of senior management to interact with staff when creating a draft change. Managers should be aware that in the negotiation process it will be necessary to coordinate decisions with employees, and sometimes make concessions. It also takes into account the possibility that people, whose work undergoes transformations, can influence the type and procedure of implementation of changes, and therefore the result. Despite the fact that involvement of employees will cause greater support for future changes, the development and results may not meet the expectations of management.

Educative strategies

“To win hearts and minds” and thus change the values and attitude to work, while providing almost absolute voluntary support — this is the meaning of educative strategies. For this, different types of activities are used: persuasion, training, training, selection and training of specialists, conducted by internal or engaged professional consultants. Using this method takes a lot of time, but it provides a predisposition to innovations from the staff.

All of the above methods are not mutually exclusive, so everyone has advantages and disadvantages. One of the key moments in change management is a successful choice of strategy, as well as its timely application.

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Management Consulting

One of the main conditions for successful business development in a modern economy is the ability to outrun the demands of the market for goods and services. This ability is due to the competence of the company to change the management model in accordance with the current situation.

Management consulting is a complex of services aimed at studying and analyzing the structure and functions of the company or its subdivisions. The main objective is to identify opportunities and develop strategies to increase the efficiency of the enterprise at the managerial level, and, if necessary, assist in the implementation of the proposed solutions.

The counselling process is a logical chain of procedures that are performed jointly by a consultant and a client to solve problems and implement changes in the enterprise.

The consulting involves several major stages (analysis, development and implementation of recommended solutions) that can be divided into specific procedures. The emphasis in the consultation process of the stages is of great practical importance since it provides the opportunity to create a structured basis for decision-making, implement coherent communication, conduct a motivated project organization.

Typically, management consulting services are divided in accordance with the prevailing market management structures: organization of production, marketing and sales, distribution, personnel management, financial management, etc. However, with the development of information technologies, another branch is added —selection and implementation of IT systems, as well as related training of employees, and the modification of relevant procedures, documentation and working methods.

Many consulting services are aimed at solving certain specific tasks that capture several management functions and processes at once. A creative solution to such problems involves the use of new opportunities and overcoming constraints. Examples of solutions to such tasks can be the territorial expansion of business, technology transfer, writing of a license agreement, development of an investment project, the elimination of business on the Internet, etc.

Any business, regardless of the type of activity, is primarily a human system. Therefore, one of the fundamental factors of the company’s activity, which must undergo an organizational transformation, is the management of labour resources. People must understand the essence of change, accept it and have a desire to promote their implementation.

In the process of introducing organizational transformations, employees will have to master new knowledge, learn new methods, refine their skills, change their working habits, even refuse some, change their attitude to fulfilling their responsibilities in the company. It is important to understand that these requirements apply to each employee of the company, starting with the chief executives. Those who expect changes from colleagues and subordinates should be prepared to change their own behaviour and attitude to work.

The main result of the consulting activity is the implementation of changes, and first of all — in the structure and management methods. Any aspect of the company’s business can be transformed: the basic settings of business processes, the level of development, legal mechanisms, the form of ownership, sources of financing, interaction with partners.

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Mcdonaldization

In 1939 brothers Maurice and Richard McDonald, who had tried (and failed) to open a retail store up to that moment, saw that the only business that was permanently profitable during the economic depression in the USA were hot dog stands. So, they’ve decided to open a roadside eatery selling fast food. It brought 40000$ of profit in the first year of operation.

Brothers undertook a comprehensive study of the business to find why it was doing so good and what could be done to boost their benefits. They decided to restructure their enterprise and to make a number of changes:

  • No more waiters. Customers had to come to the counter to make an order (“putting the customer to work”).
  • The number of items on the menu was reduced from 25 to 9.
  • Tableware was replaced with cardboard containers and cups, promoting takeaway sales.

One of the MacDonald’s suppliers was so fascinated with their eatery that he suggested to take over the franchise of its operation. This person, Ray Kroc, created the business model and went on to drive its extension from seven cafes in 1955 to more than 30,000 all over the world today.

The main feature of the McDonald’s business model is the distribution of generic products to market in large amounts. This has a number of aspects, which may be systematized under the next captions:

  • Productivity. Production of such items is usually cost not much, products delivered fast and they are efficient in their consumption of resources.
  • Calculability. The activity pays a lot of attention to assessments such as weight, size, waiting time and price. These are easy to handle and franchise.
  • Predictability. Customers can assuredly purchase any product from anywhere in the world without having a second thought. You can buy a Big Mac in Manchester or Beijing and have no fear of disappointment since you know exactly what you’ll get.
  • Control. Production concerns usage of the certain set of resources and a simple, prearranged chain of tasks. It makes the process of performance evaluation easier: just compare actual inputs with standard ones.

This is just a representation of traditional scientific management, developed by Henry Ford and Frederick Taylor. McDonaldization is a perpetuation of old ideas that have become obsolete in some business sectors. Though, the latest discussions about management accounting are about how shortening of the product life cycles, increasing product customization and growth of service element deprecates the standard cost concept.

Moreover, there are claims, that the traditional approach (based on static optimization) to performance evaluation using comparing actual and standard costs tends to evade certain thrusts of contemporary ideas like total quality management, value engineering and continuous improvement. The McDonald’s business model counters this theory.

US sociologist George Ritzer in 1993 published a book called The McDonaldization of Society, in which he used this term as derogatory and identifying the following negative aspects:

In 1939 brothers Maurice and Richard McDonald, who had tried (and failed) to open a retail store up to that moment, saw that the only business that was permanently profitable during the economic depression in the USA were hot dog stands. So, they’ve decided to open a roadside eatery selling fast food. It brought 40000$ of profit in the first year of operation.

Brothers undertook a comprehensive study of the business to find why it was doing so good and what could be done to boost their benefits. They decided to restructure their enterprise and to make a number of changes:

  • No more waiters. Customers had to come to the counter to make an order (“putting the customer to work”).

  • The number of items on the menu was reduced from 25 to 9.

  • Tableware was replaced with cardboard containers and cups, promoting takeaway sales.

One of the MacDonald’s suppliers was so fascinated with their eatery that he suggested to take over the franchise of its operation. This person, Ray Kroc, created the business model and went on to drive its extension from seven cafes in 1955 to more than 30,000 all over the world today.

The main feature of the McDonald’s business model is the distribution of generic products to market in large amounts. This has a number of aspects, which may be systematized under the next captions:

  • Productivity. Production of such items is usually cost not much, products delivered fast and they are efficient in their consumption of resources.

  • Calculability. The activity pays a lot of attention to assessments such as weight, size, waiting time and price. These are easy to handle and franchise.

  • Predictability. Customers can assuredly purchase any product from anywhere in the world without having a second thought. You can buy a Big Mac in Manchester or Beijing and have no fear of disappointment since you know exactly what you’ll get.

  • Control. Production concerns usage of the certain set of resources and a simple, prearranged chain of tasks. It makes the process of performance evaluation easier: just compare actual inputs with standard ones.

This is just a representation of traditional scientific management, developed by Henry Ford and Frederick Taylor. McDonaldization is a perpetuation of old ideas that have become obsolete in some business sectors. Though, the latest discussions about management accounting are about how shortening of the product life cycles, increasing product customization and growth of service element deprecates the standard cost concept.

Moreover, there are claims, that the traditional approach (based on static optimization) to performance evaluation using comparing actual and standard costs tends to evade certain thrusts of contemporary ideas like total quality management, value engineering and continuous improvement. The McDonald’s business model counters this theory.

US sociologist George Ritzer in 1993 published a book called The McDonaldization of Society, in which he used this term as derogatory and identifying the following negative aspects:

The fast food assured by McDonald’s isn’t actually that fast. Customers often have to stand in long queues to get their order and then they have to find an empty seat where they can eat. Though quantity and quality of the product may be predictable, the second one is never more than just fine. The use of disposable wrapping and cups externalises costs by forcing the community to pay for the collection and clearance of dumped packaging.

According to self-service policy, customers have to serve themselves and are frequently compelled to clear their own tables. They may also have to deal with food and packaging leftovers, which is also a part of exteriorization of expenses.

The standardisation and division of job give to the workers very little of challenge and responsibility. Communication with unskilled and low-paid employees does not improve the customer experience.

An abundant amount of McDonaldization’s features have pervaded different areas of the business. For example, Internet banking requires customers to do the bulk of work themselves. You can use the computer to access and operate your account and get cash at ATM. It could be enough until some problems or special requirements occur. Then you phone the bank only to be left on hold, listening to a repeating loop of music and a computerised voice periodically assuring you that “your call is valuable to us”.

McDonaldization can be a satisfactory business strategy for some industries, but there are pieces of evidence that the intensive introduction of associated management ideas into other sectors may be inappropriate.

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