QCAA Business Transformation of a business

An external operating environmental factor that could influence a business manager to initiate change is the business’s customers. A business must continually ensure that its customers’ needs are being met. It also needs to respond quickly, changing the way it operates to satisfy its customers. For example, a business that only provides instore facilities may need to change its operations and provide an online option to meet customer needs and stay competitive.

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Skilled communicator:

• process or ability to exchange information accurately and timely, active listening
• more difficult in a cross-cultural setting due to language barriers
• Harrison will need to work on his communication and adapt to a more open style of communication.

Socially aware:

• an awareness of relationships, thus leading to the ability to understand the needs of team members
• the ability to understand other social and cultural customs leads to the ability to establish trust and long-lasting business relationships
• Harrison needs to be aware of the social norms in Singapore in order to not offend any employees.

Skilled decision-maker:

• knows when to make decisions quickly if required, but also able to balance the risk in decision-making to avoid damage to the business
• needed in a new cross-cultural setting as there is no history of past actions and performance to follow or provide advice
• Harrison is highly skilled in the production process and will be able to make decisions in a timely manner.

Future thinker:

• has a long-term vision of where the business is headed, so incremental planning can take place and the business is pro-active, rather than reactive in its responses
• can see the larger global picture, implement the vision on a global scale
• Quinn needs to develop a long-term vision regarding the direction of Laffitaya so he can be pro-active not reactive.

Self-discipline:

• able to control own emotions and have intelligence in dealing with a crisis or adverse situations
• a self-disciplined leader understands the impact that their actions and decisions may have in a cross-cultural setting, as it helps to provide greater certainty for staff
• Harrison may need to adapt his direct communication style to ensure that he controls his emotions in high pressure situations.

Responsible:

• ability to be independent, accountable, accept authority and be more aware that actions have consequences
• needed in a new cross-cultural setting to understand pre-established ideas, to understand where adaptation or new ideas are required, to demonstrate they can think for themselves, often seeing new perspectives, real purpose and outcomes
• Harrison must have the ability to take control and be answerable in a new cross-cultural setting.

Motivational:

• ability to use psychological forces/motivate people to strive for certain goals rather than simply act on orders
• Quinn needs to be aware in a new cross-cultural setting to provide motivation, direction and support for staff while recognising differences in intrinsic and extrinsic motivations, rewards and punishments in different cultural settings.

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• Autocratic leaders are typically bossy and dictatorship-like style may put new workers offside and cause resentment. Changing to situational leadership, Harrison can be more democratic which could develop positive relationships with employees, recognising their success and adding to their motivation.
• Autocratic style limits creativity and ‘out-of-the-box’ thinking – a highly structured, rigid leadership style might not fit the culture of the global workplace, hence changing the leadership style to suit the situation can help improve creativity and innovation.
• Harrison normally makes all the decisions – this may not be wise when not understanding the culture or new business landscape and does not allow for skilled workers to contribute ideas. Harrison can adapt his style by listening to team members and taking on feedback which can be beneficial for the business.
• Harrison currently uses one-way communication – this may upset new team members and does not foster good teamwork and relationships, and this can limit performance. He can adapt this to an open communication style, encouraging feedback from employees.

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Managerial inertia:

• This may occur due to the pressure from staff being reluctant due to factors such as unfamiliarity, lack of understanding, dislike of disruptions or uncertainty, lack of security, costs or the process of change itself.
• Adapting to technology can be a factor of managerial inertia. Laffitaya may be forced to change the way it operates the business. This could be in the way they communicate, use technology to transfer data or finance, or the way that they conduct their marketing and/or distribution.
• The lack of communication from Laffitaya to management about the benefits and improvements of the merger can cause resistance to the change.

Financial costs:

• This could result in Laffitaya staff fearing job losses due to new technologies, processes or equipment being costly.
• Employees may be concerned they will be made redundant due to outsourcing functions and/or combining jobs with ExNex Outdoors.
• Employees at Laffitaya may have to undergo significant and costly training and development, which they may resist so that the business does not reap the reward of these costs.

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Step 4: Communicate the vision

• Quinn must ensure that employees throughout the workplace understand what is happening by understanding the vision of the business.
• Clear and regular communication is important to deal with fears and concerns about the change.
• Quinn can hold meetings, talk to individuals, give regular updates and seek feedback about how the change is progressing.

Step 5: Remove obstacles

• Planning for change includes anticipating what could go wrong or delay success.
• Quinn will need to identify obstacles blocking change and identify how to remove them.
• Quinn can reward people for making change happen and identify people who are resisting change and try to convince them of its importance.
• Quinn needs to address the staff regarding their concerns, as this obstacle could block the success of the merger.

Advice to Quinn about how Laffitaya could build on the change:

• Long term success is dependent on changing the workplace culture. Therefore, providing opportunities for employees at Laffitaya and ExNex Outdoors to learn about the new policies and procedures and leadership restructure.
• Quinn needs to ensure the employees at both Laffitaya and ExNex Outdoors believe in the benefits of the merger and how it will assist the company be successful. If the employees believe in the change, it is more likely to be a success.
• Quinn also needs to continue to review and improve its policies and processes to ensure the change is working.
• Quinn and Harrison need to ensure all policies and procedures and instructions are updated and communicated to all staff clearly.
• Quinn and Harrison also need to seek feedback from employees at both ExNex Outdoors and Laffitaya in order to build on the change and adapt as necessary.
• Quinn and Harrison also need to identify where the new policies are not being followed and manage any new issues that arise due to the changes.

Performance management reviews the overall performance of a business and its human resources requirements to ascertain how goals can be better reached. A possible outcome from the performance management review is redundancy. Redundancy is determined during a performance management review process where a position within an organisation may no longer be required as a result of business transformation.

The final stage in Lewin’s change management model is refreeze. In this stage, the change is solidified and becomes a part of normal business operations. The ‘refreezing’ stage is crucial to ensuring the change is successful. The goal at this stage is to ensure that the people involved implement the change without resistance and that the change is normalised within the business.

A risk for a business if this stage is not implemented is that the previous behaviour could continue, and the change will not happen. For example, the business may need to modify the organisational structure to align with the change and to reinforce the new ways of working. If this is not done, it could jeopardise the change from being adopted.

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Internal factors that drive change:

• management’s desire to introduce change, e.g. costs can be a factor in driving change; if the cost of production is too expensive, outsourcing may be an option to save labour costs
• employees might initiate change to improve working conditions and/or skill development
• introduction of new technology for efficiency and/or cost savings
• staff attitude and work habits may drive change in a global environment.

External factors that drive change:

Political and legal:

• political decisions can have a huge impact on a business by changing laws or regulatory regimes
• changing legislation and the legal requirements of individual countries can drive change in a global business environment

Economic:

• interest rates
• inflation
• unemployment
• economic indicators

Social:

• evolving social norms can drive change as people change expectations and consumption behaviours
• international events and issues may drive change in a global business environment
• use of technology by consumers also drives change as it forces businesses to reconsider their own use of technology and interaction with outside parties
• prevailing social issues might impact on public image or relations

Technological:

• technology is rapidly changing and impacts on the way businesses are able to interact with stakeholders. This could drive change in the way a business distributes products, engages in e-commerce or uses social media to connect with customers

Environmental:

• changing attitudes to climate and environmental impacts might drive change in a global environment; businesses may need to consider their own environmental impact and how that might affect their ability to penetrate new markets.

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Lewin’s Forcefield Analysis model is used by businesses to ascertain how viable a decision or change might be. It takes into account forces that drive change and restrain change, determining whether the change is the preferred option.

Lewin’s Forcefield Analysis model can be implemented through a series of steps:

1. describe the plan or proposal for change
2. identify the forces for change
3. identify forces against change
4. assign scores
5. analyse and apply the change.

The forces driving and restraining change must be appropriate to the type of business and the proposed change: driving change – long-term revenue, market demand, unsustainable costs, competition, customer expectations; restraining change – company culture, time restraints, conversion cost, staff attitude.

A business can use Lewin’s Forcefield Analysis model to prepare people for change by sharing with their stakeholders how the change would impact on them, and the factors that had been taken into account in preparing for the change.

The evaluation of forces should be clear and appropriate; it must be determined whether the proposed change is feasible.

By using Lewin’s Forcefield Analysis model, businesses can be transparent and clear in communicating the impending change and, therefore, properly prepare its people.

Changes in legislation may change business operations. For example, workplace safety laws may change. This would require businesses' current operating policies or processes to be rewritten, or physical changes to the premises to ensure compliance, e.g. PPE or fire safety.

Businesses must also adhere to governing body industry regulations or standards. A business may need to transform human resources to reflect changed professional qualification requirements to be licensed in an industry, e.g. real estate agents.

When transforming a business, it is important that staff engage in retraining by upskilling in line with strategic priorities, such as by acquiring new technological skills or developing new ways of working. Continuous learning programs will support employee development when transforming a business. One example is the career development of employees, which enables them to update their skills and knowledge along with a future focus for career planning.

Kotter’s eight-step change model places emphasis on involvement and acceptance of the change to ensure success. Corporate culture, as a driver of change, can impact on the success of transformation as it refers to the values or beliefs of a business. Forming a powerful coalition of key leaders will ensure that corporate culture is positive throughout the change. This is because corporate culture is driven by the leaders in a business, and it is the leaders that will ensure the change is implemented.

Change management is the process of monitoring and implementing strategies within a business to assist in change. Leadership within this involves encouraging and motivating employees to work towards business objectives within a transformation. This is crucial as by leading employees to embrace transformation it can ensure the transformation is implemented more successfully overall. Leadership in change management can include providing employees with a shared vision and communicating this clearly. In doing this all members of a business are more likely to understand the benefits and reasons for a change as well as better understand their role in implementing the transformation. Having clear goals and visions for how and why a transformation is occurring can mean employees will get involved, better allowing objectives to be met throughout the transformation.

Big W is a chain of Australian discount stores owned by the Woolworths group. In 2019, Big W CEO Brad Banducci announced that he was going to close 30 stores across Australia from 2019 to 2021 to be ‘more profitable’.

One driving force for this change was the manager, Brad Banducci. Having a vested interest in the profitability of the company, the manager promoted the change as the change (store closure) involved personal interest for him; the success of the company and inflated net profit figures.

One restraining force was financial considerations. There was a $270 million exit fee to be payed to landlords for the 30 store closures across Australia. This factor actively resisted and hindered the change. Brad Banducci would have had to consider this restraining force and the possible detriment it could cause to the company, however, it seems as though since the change within Big W was successfully implemented, Banducci believed there to be more benefit in closing the 30 stores to improve profitability, exceeding the weight of this restraining force.

Another restraining force was employees. During the store closures, employees feared redundancy and were therefore anxious and fearful. Banducci was able to reduce this restraining force’s influence on the change by assuring all employees within the 30 stores that they would be redeployed to other areas of the Big W or wider Woolworths group.

A macro external environmental factor that influenced change at the vet clinic is the legal environment. The legal environment relates to the laws that state how a business must operate. Stimulus 11 refers to the lobbying influence of welfare groups and veterinary associations in achieving legislative change, which resulted in updates to legislation. These updates mandate that vet nurses must have necessary training to perform complementary therapies. Therefore, the business needs to change to abide by the new laws.

Answers could include:

• staff downsizing for cost reductions in global operations
• transition from physical stores to online stores worldwide
• introduction of new products in global markets
• establishing strategic alliances with overseas businesses
• adaption of staff attitudes and work habits in changing global environments
• extent of a business's financial resources
• international expansion of domestic businesses.

Answers could include:

• Forcefield Analysis is a tool that can be used in change management to help employees understand the need for a change
• the model can be used to organise thinking where a brainstorming template is used to record the forces that support change and the forces that create any resistance to the change
• once the forces are identified, they are then given a rating, which could be out of 5 or 10, according to their importance. The lower the rating, the least impact a force has on the proposed change, the higher the rating, the greater the impact
• the change would look viable if the forces for change score higher than the forces which may create resistance to the change
• management may have to attempt to find ways to reduce the forces which resist change if these forces are rated more highly; similarly, they may have to develop plans to exploit the forces for change if these rate more highly.

One difference between these two forms of termination is that retirement is voluntary whereas redundancy is involuntary. This is evident as those who retire choose to terminate their employment to leave the workforce entirely, whilst those who are made redundant do not usually choose to be redundant. Instead, it occurs due to insufficient work or the fact that their position no longer exists.

One driving force that supported the change at Doggy Dugout is competitors. As the business is operating in a highly competitive market, likely with many businesses that are bigger than them, this supported the owner's plan to sell the business to a larger company. This would make it possible for the business to improve its market share and gain a competitive advantage over other businesses in the industry. This driving force would have promoted the sale of the business to a bigger company in an attempt to improve the various KPIs that are measures of success for this business.

One advantage of using high risk strategies is that it has the short term positive outcome of immediate compliance. Typically, threatening or manipulating employees by either implying negative consequences or sharing selective information encourages employees to comply quickly. This saves time and may be beneficial in critical situations where a business requires employees to quickly overcome resistance and support change.

However, one disadvantage is that high risk strategies can destroy the manager–employee relationship. Employees may feel betrayed when they are threatened or manipulated and no longer trust the management. This can damage corporate culture and even create more resistance to change as employees no longer feel connected to the business in a positive way.

Change management is a system of ideas that effectively supports the concept of change in an organisation. Two common change management theories are Kotter’s and Lewin’s.

Lewin’s change management is not as effective as Kotter’s because it is too simple and does not provide detail with each step of the model.

Kotter’s change management theory is more effective, presenting a practical eight-step approach to successfully understanding and leading change. It provides detailed steps on how to implement the model and action the change. Additionally, Kotter’s theory focuses on the importance of overcoming resistance to change and thereby eliminating the resistance to facilitate effective transformation.