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LEADERSHIP AND CHANGE
MANAGEMENT (LCM)
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Learning Outcomes
LO5. Critically appraise change theories, tools and
techniques.
Indicative content:
Describe change theories, tools and techniques
Analyse these theories, tools and techniques within given
organisations
Appraise the use of risk management techniques in themanagement of change
Assess the impact of globalisation on change theories,
tools and techniques
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Change: Predicting the future
This telephone has too many shortcomings to be
seriously considered as a means of communication.(Western Union internal memo, 1876)
Airplanes are interesting toys, but of no militaryvalue. (Marshal Foch, 1911)
Who the hell wants to hear actors talk? (HM Warnerof Warner Brothers, 1927)
I think there is a world market for maybe fivecomputers. (Thomas Watson, Chairman IBM, 1943)
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Approaches to change management
Two dominant approaches
The Planned Approach 1940s
The Emergent Approach 1980s.
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The Planned Change
An long established approach
Many theorists, such as Lewin, Kotter etc
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Emergent change
Open-ended process
Adjusting to changing external environment
Bottom-up
Unpredictable
Cannot be pre-planned
Learning process
No universal rules.
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Emergent Change
The recurring story is one of autonomousinitiatives that bubble up internally; continuous
emergent change; steady learning from bothfailure and success; strategy implementationthat is replaced by strategy making; theappearance of innovations that are unplanned,
unforeseen and unexpected; and small actionsthat have surprisingly large consequences.
(Weick, 2000)
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Selection of an Appropriate Model or Tool
Before selecting a particular performance management model,improvement tool or approach, authorities need to be clearwhat they are trying to achieve and why. This will involveasking a series of questions, including:
What are you aiming to change and improve?
What outcome are you looking for?
Does the improvement need to be holistic covering all theorganizations activities or designed for a specific task, service orarea of activity?
What is the key driver for change i.e. inspection or review, changeof staff etc
What is the timescale for the change?
What resources are available?
To what extent do you want to involve staff in the changes?
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Kotter's Eight-Stage Process
Establishing a sense of urgency.
Creating a guiding coalition.
Developing a vision and a strategy. Communicating the change vision.
Empowering employees for broad-based action.
Generating short-term wins.
Consolidating gains and producing more change.
Anchoring new approaches in the culture.
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Balanced Scorecard
A strategic planning and management system to alignbusiness activities to the vision and strategy of theorganization, improve internal and external
communications, and monitor organizationperformance against strategic goals.
Originated by Drs. Robert Kaplan (Harvard BusinessSchool) and David Norton
To give managers and executives a more 'balanced'view of organizational performance.
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Adapted from The Balanced Scorecardby Kaplan & Norton
BALANCED SCORECARD
the four perspectives
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Lewins Three Stages of Planned
Change
Unfreezing
create a need for change
minimise resistance (reduce resisting forces)
Changing implementation of new systems of operation
employees learn new attitudes and behaviours
Refreezing
positive reinforcement of desired outcomes to promoteinternalisation of new behaviours
evaluation to ensure new ways habitualised
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Lewins 3 Stage Model
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Lewin's 3 Stage Model
3 Stage Model: from one static state via a progression shift,to another static state
Stage 1: Unfreeze
Resistance to change
creating the right conditions for change to occur
analysis of the current situation
dialogue and re-educational activities team building and personal development.
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Lewin's 3 Stage Model
Stage 2: Transition
The transitional 'journey' is central
a period of confusion
old ways are challenged, but there is no clearunderstanding of the new ways
Good leadership is important, and coaching,counseling or psychological support may beneeded.
The end goal - 'unfrozen' state and keep themthere.
new structures and processes are put in place
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Lewin's 3 Stage Model
Stage 3: Refreeze
The changes implemented are then 'frozen'
supporting mechanisms such as policies, procedures and
reward systems The end goal - to achieve a 'refreeze',
re-establishing a new place of stability
elevate comfort levels by reconnecting people back into
their safe, familiar environment. Refreezing takes people from a period of low productivity
in the transitional state to a stable and productive state.
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Beckhard and Harris's Three States ModelPresent, Transition and Future States
Very similar to Lewin's modelwith a further clarification thatmangers should expect low productivity in the transition periodand must plan accordingly
CURRENT STATE Clear roles
Known skills
Known styles
Clear relationships
Expected performance
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Beckhard and Harris's Three States Model
TRANSITION STATE
Flux
Experimentation
Uncertainty
Learning lower performance
FUTURE STATE
Uncertain roles
New skills New-styles
Different relationships
Improved performance
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McKinsey 7S Model
Strategy: the direction and scope of the company over the
long-term.
Structure: the basic organisation of the company, its
departments, reporting lines, areas of expertise and
responsibility (and how they inter-relate).
Systems: Formal and informal procedures that govern
everyday activity, covering everything from management
information systems, through to the systems at the point ofcontact with the customer (retail systems, call centre systems,
online systems, etc).
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McKinsey 7S Model
The 4Ss across the bottom of the model are less tangible, more
cultural in nature, and were termed Soft Ss by McKinsey.
Skills: The capabilities and competencies that exist within
the company. What it does best.
Shared values: The values and beliefs of the company.
Ultimately they guide employees towards valued
behaviour.
Staff: The companys people resources and how they aredeveloped, trained and motivated.
Style: The leadership approach of top management and the
companys overall operating approach.
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McKinsey 7S Model
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McKinsey 7S Model
In combination, the 7Ss provide another effective
framework for analysing the organisation and its
activities.
In a marketing-led company they can be used to
explore the extent to which the company is working
coherently towards a distinctive and motivatingplace in the mind of the consumer.
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Managing Risk in the Context of Change
Planning change requires the organisation to
identify potential risks associated with the
intended change and its processes. These risks may
relate to both the internal and externalenvironment.
Identifying and factoring in risk when implementing
change can reduce the likely problems that might
arise as a result of the changes planned.
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Risks that may arise in implementing change
include
Financial risks
Market-related risks
Production and delivery risks
Supplier risks
Other external stakeholder risksthe local
community, the natural environment
Organisational and management risks Staffing riskscapability and capacity
Staffing riskscommitment, morale, retention
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Managing Risk
Having identified possible risks associated with change
that you plan, options include:
a) Know what your risk exposures are and how they
can affect you b) Transfer the risk. Insurance is the most common
technique used to protect against risk c) Seek to avoid
the risk
d) Control the risk
e) Retain the risk
f) Indemnity agreements
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Change and the impact of globalisation
Recognise how globalisation imposes change on
different types of organisations and the types of
change that are likely to occur. Useful reading on
this topic is Atul Vashisthas (2007) paper onChange Amidst Globalization
This identifies the key principles to adopt when
facing the external pressures for change which
globalisation of the world economy may impose.
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Globalisation
Sustainability?
Workforce diversity?
Business ethics?
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Globalisation (Continued)
Sustainability
The regenerative and assimilative capacities ofthe biosphere cannot support even the current
levels of consumption, much less the manifoldincrease required to generalize to higherstandards of living worldwide. Still less can theplanet afford an ever-growing human population
striving to consume more per-capita.(Lines, 2002: 126127)
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Sustainability
encompasses three levels: the individual, the
organizational and the societal. Sustainability at one levelcannot be built on the exploitation of the others. These
levels are intimately related to the organizations keystakeholders: personnel, customers, owners and society.An organization cannot be sustainable by prioritizing thegoals and needs of some stakeholders at the expense of
others Thus sustainability has a value basis in the dueconsiderations and balancing of different stakeholders
legitimate needs and goals.
(Docherty et al, 2002: 12)
Globalisation (Continued)
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Sustainability
encompasses three levels: the individual, the
organizational and the societal. Sustainability at one levelcannot be built on the exploitation of the others. These
levels are intimately related to the organizations keystakeholders: personnel, customers, owners and society.An organization cannot be sustainable by prioritizing thegoals and needs of some stakeholders at the expense of
others Thus sustainability has a value basis in the dueconsiderations and balancing of different stakeholders
legitimate needs and goals.
(Docherty et al, 2002: 12)
Globalisation (Continued)
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Sustainability
There is a widespread view that governments mustsolve environmental problems. However, the major
multinationals outstrip many of the worlds nationaleconomies in terms of wealth and power, and theirglobal coverage allows them to escape therequirements of particular governments seeking toplace severe environmental restrictions on them.
They can simply move their operations acrossnational borders. The worlds multinationals are infact more powerful than most national governments.
(Dunphy and Griffiths, 1998: 183)
Globalisation (Continued)
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Workforce diversity
Diversity is dissimilarities differences amongpeople due to age, gender, race, ethnicity,religion, sexual orientation, socioeconomicbackground, and capabilities/disabilities Diversity raises important ethical issues and socialresponsibility issues as well. It is also a critical
issue for organizations, one that if not handledwell can surely bring an organization to its knees,especially in our increasing global environment.
(Jones et al, 2000)
Globalisation (Continued)
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Workforce diversity
contemporary workforce characteristics areradically different from what they were just twentyyears ago. Employees represent every ethnicbackground and color; range from highly educatedto illiterate; vary in age from eighteen to eighty;may appear perfectly healthy or may have
terminal illness; may be single parents or part ofdual-income, divorced, same-sex or traditionalfamilies; and may be physically or mentallychallenged.
(Cummings and Worley, 2001: 429
430)
Globalisation (Continued)
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Workforce diversity
Over the past decade, more than one-third ofpeople entering the US workforce have been
members of racial or ethnic minority groups.Moreover, the proportion of racial and ethnicminorities in the workforce is expected to increaseindefinitely. The situation is similar in some
European countries.(Hitt et al, 2009)
Globalisation (Continued)
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Business ethics Ethics are moral principles or beliefs about what is right or
wrong. These beliefs guide people in their dealings with otherindividuals and groups (stakeholders) and provide a basis fordeciding whether behavior is right and proper.
(Jones et al, 2000: 183)
Managers today are usually quite sensitive to issues of socialresponsibility and ethical behavior because of pressure from
the public, from interest groups, from legal and governmentconcerns, and from media coverage. It is less clear where todraw the line between socially responsible behaviour and thecorporations other concerns, or between the conflictingexpectations of ethical behaviour among different countries.
(Deresky, 2000: 56)
Globalisation (Continued)
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Business ethics The 1990s were a decade of persistently rising markets 10 years
of economic expansion, with investors pouring record amounts intostocks and pocketing double-digit returns year after year. Thedecade was peppered with financial debacles, but these faded
quickly from memory even as they increased in size and complexity.The billion dollar-plus scandals included Robert Citron of OrangeCounty, Nick Leeson of Barings and John Meriwether of Long-TermCapital Management, but the markets merely hiccoughed and thenstarted going up again. When Enron collapsed in late 2001, itshattered some investors' beliefs and took a few other stocks downwith it. Then Global Crossing and WorldCom declared bankruptcy,and dozens of corporate scandals materialised as the leading stockindices lost a quarter of their value. Companies' reported earningswere a fiction and financial reports chock-full of disclosures thatwould shock the average investor if they ever even glanced at them
not that anybody ever did.
(Partnoy, 2003: 1)
Globalisation (Continued)
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Business ethics A pair of Bear Stearns executives were arrested and charged
with fraud yesterday over the collapse of two hedge funds. Inearly-morning raids, the FBI arrested Ralph Cioffi andMatthew Tannin at their homes in New Jersey and New York.
The pair were handcuffed and escorted, grim faced, into courtin front of a battery of television cameras. According to the USgovernment, the duo concocted a web of lies to persuadeinvestors to keep funds in two mortgage-heavy funds thatevaporated in value in June last year, losing more than $1.4bn(710m) of clients' money. Among the biggest victims was
Barclays Bank, which had pumped in $400m. BentonCampbell, a federal prosecutor, said: They lied in the futilehope that the funds would turn around and that their incomeand reputations would remain intact.
(Clark, 2008)
Globalisation (Continued)
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Change Amidst Globalization
Jointly Identify Business Problems & Solutions
Develop a Shared Vision & Communications
Identify Change Leaders
Focus on results
Govern & Monitor Change
(By Atul Vashishtha)
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Additional Reading
Please Read articles in folder Lesson 5