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Managing Change 3.6
Theme 3
| Question | Answer |
|---|---|
| What is managing change? | The combination of activities involved in planning for, implementing, coordinating and monitoring the process of change |
| Why do businesses need to change? | Change occurs when a business alters its structure, size or strategy to respond to internal or external influences Change may be necessary to help a business meet its aims and objectives |
| How can an objective of growth be achieved? | By organic and inorganic growth |
| What is Organic Growth? | Opening new branches New product development inc. diversification |
| What is Inorganic Growth? | Mergers and takeovers |
| What is Retrenchment? | Retrenchment is a term used to describe when a business decides to significantly cut or scale-back its activities. |
| What are the causes of Retrenchment? | 1.New leadership (usually a new CEO) 2.Excessively-high costs and low profitability (or unsustainable losses) 3.Low ROCE 4.Excessively high gearing (leading to cash flow problems) |
| When might Retrenchment occur? | 1.Reduce output & capacity 2.Job losses / redundancy programmes 3.Product / market withdrawal 4.Disposal of business unit |
| How can Retrenchment be achieved? | 1. Internal contraction - Delayering/Closing down unprofitable elements 2. External contraction - Selling off elements of the business |
| What changes can be made if a business is performing poorly? | Ownership Structure Strategy Processes |
| How can a business end up with new owners? | Takeover Merger Management Buy Out (MBO) Next generation Newly appointed directors Flotation on the Stock Exchange |
| Why may new owners want to make changes? | Own vision or mission Change in corporate objectives Cultural differences Personal leadership style Make a difference – fresh ideas Bringing together 2 companies’ policies and procedures Turn around poor performance Self glorification |
| What is Transformational Leadership? | Style of leadership in which the leader identifies the needed change, creates a vision to guide the change through inspiration, and executes the change with the commitment of the members of the group. |
| What key qualities does a Transformational Leader have? | Passionate, energetic and enthusiastic Inspire others Supports every member in a team to achieve their potential as well as the whole group to achieve a successful outcome |
| What are the four components of Transformational Leadership? | 1.Intellectual simulation - Challenges the norm 2. Individualised consideration - Supportive/encourages all team members 3. Inspirational motivation - Shared passion/clear vision 4.Idealised influence - role model who earns trust/respect |
| How does the Organisational Culture affect change in a business? | It will influence; How willing a business is to respond to change, Leadership style in managing change, Attitudes to risk and Ability to innovate |
| How does the size of the organisation affect change in a business? | The size of the organisation will influence the ability to communicate and manage change, as well as the speed of change. Considerations include: Number of employees Geographical spread Levels of hierarchy Complexity of structure |
| What is Incremental change? | Change that is implemented over time with a number of small changes being made on a regular basis to achieve ongoing improvements |
| What is Disruptive Change? | Change that is rapid and unexpected having a dramatic affect on the way in which an industry or businesses operate |
| Kotter and Schlesinger’s model shows 4 reasons for resistance to change. What are they? | 1.Parochial self interest 2.Prefer the status quo 3.Different assessment 4.Misunderstanding and fear |
| What is Parochial self interest? | Stakeholders fear that change will result in them being personally worse off and therefore want to protect themselves against this |
| What is Different assessment? | Stakeholders believe that the proposed change is not the correct course of action and that they could suggest a better solution |
| What is Misunderstanding and fear? | Stakeholders believe that the motives for change are wrong and they therefore mistrust the decision makers |
| What is Prefer the status quo? | Stakeholders are happy with the way things are and therefore just want to keep it as it is |
| Kotter and Schlesinger’s model shows 6 ways to overcome resistance to change. What are they? | 1. Education and Communication 2. Participation and Involvement 3. Facilitation and Support 4. Negotiation and agreement 5. Manipulation and Co-option 6. Explicit and Implicit coercion |
| How can Education and Communication help with resistance to change? | Providing stakeholders with all of the necessary information to help them understand the reason for change, how it will be implemented and the proposed outcome |
| How does Participation and Involvement help with resistance to change? | Providing a sense of ownership to stakeholders so they feel part of the whole change process |
| In what way does facilitation and Support help with employees that are resistant to change? | Providing the necessary skills and resources to help stakeholders feel more confident with the change process |
| How can negotiation and Agreement help overcome resistance to change? | Increase two-way communication by bargaining with stakeholders and if necessary making compromises to the change process |
| What is Manipulation and Co-option? | Use of project champions who may receive incentives and are tasked with winning around others |
| How can Explicit and Implicit Coercion help a business with employees resistant to change? | Pushing change through despite resistance. This may be a last resort |
| What is Scenario Planning? | The process of identifying uncertainties that may affect the future of the business and putting in place procedures to deal with these events if they occur |
| What does Risk Assessment involve? | 1.Identifying any potential scenarios 2.Categorising them by severity 3.Assigning a probability 4.Planning response |
| What risks do businesses need to plan for? | Natural Disasters, IT Systems Failure, Loss of Key Staff |
| Why is Loss of Key Staff a risk? | Loss of expertise Damage to brand if the person is seen as key to the brand integrity Knowledge going to competitors |
| What is Risk Migration? | Risk mitigation is the actions taken by business to minimise or eliminate risk through a process of: Identifying, Assessing and Prioritising |
| How does Risk Migration help a Business? | This helps minimise disruption allowing the business to enjoy business continuity |
| What is Business Continuity? | Having a plan to deal with difficult situations, so your organisation can continue to function with as little disruption as possible. This can be done through; Succession and Contingency planning |
| What is Contingency Planning? | The process by which organisations try to prepare for unexpected and potentially disastrous events |
| What is succession Planning? | Planning for the loss of a leader or key member of personnel |
| What is Crisis Management? | The manner in which an organisation responds to an unexpected and potentially disastrous event |
| State two benefits of Contingency Planning | 1. Sense of security 2. Limits damage 3. Speeds up recovery process 4. Informs staff training 5. Aids crisis management |
| State three problems of Contingency Planning | 1. Costly and time consuming 2. Opportunity cost 3.Needs reviewing 4.Lack of predictability |
Created by:
durquhart1
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