Unit 10 – Managing strategic change

10.1 Managing change

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 Unit 10 – Managing strategic change

Learning outcomes
You should be able to understand:
• What causes change within an organisation.
• Why it is important for businesses to change.
• What the barriers to change are and how to overcome
them.
• Why businesses adopt a flexible organisational strategy.
• Why businesses should manage information and
knowledge.

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 Unit 10 – Managing strategic change

Overview of key concepts

• Change is inevitable.
• There are many reasons why change occurs,
some internal and some external to the business.
• The organisation’s structure and flexibility can
affect how change is managed.
• Information and knowledge generated within the
business needs to be managed so that it is
available to everybody who needs it.
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 Unit 10 – Managing strategic change

Causes and pressures for change

The causes of change come in various types:
• Internal change
• External change
• Incremental change (a form of internal
change)
• Disruptive change (a form of external change).

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 Unit 10 – Managing strategic change

Causes of change
Internal External
• Staff • Political
• Culture • Economic
• Leadership • Social
• Poor performance • Technological
• Growth • Environmental
• Legislation
• Competition

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 Unit 10 – Managing strategic change

Causes of change
Incremental change Disruptive change
• Small changes are made. • Managers do not see disruptive
• The small changes change coming therefore can
be a shock.
happening over a period
• Future visions may have to
add up to big change.
change.
• This change tends to be • Underlying shift in the industry
more inclusive – people are sector causes disruptive change
taken along with the change therefore staying the same will
instead of coping with one mean the business will struggle
big change at a time. to succeed – even if they have
been successful in the past.

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 Unit 10 – Managing strategic change

Lewin’s force field analysis

Lewin’s force field analysis is a quick and simple method of
identifying:
• What the cause of the change is (driving forces).
• What will stop the change occurring (restraining forces).

Managers can use the technique to help decide whether

there are enough driving forces to make the change occur
or if the restraining forces will stop the change happening.

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 Unit 10 – Managing strategic change

Lewin’s force field analysis

"
‘An issue is held in balance by the interaction of two opposing sets
of forces – those seeking to promote change (driving forces) and
those attempting to maintain the status quo (restraining forces).’ –
Kurt Lewin

Driving forces Present Restraining forces

(forces promoting (forces maintaining
change) situation status quo)

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 Unit 10 – Managing strategic change

Lewin’s force field analysis

Advantages of using it Disadvantages of using it
• Simple to use • Manager creates their own
• Quick ‘values’
• Can show main reasons for • May miss vital forces for
and against an argument change
• Visual • External factors may be
• Useful tool to aid decisions difficult to quantify

A valuable management tool to use when making decisions – HOWEVER,

it should not be used on its own because managers create the analysis
themselves!

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 Unit 10 – Managing strategic change

Why is change important to business?

• Business should embrace change, because without
change a business may lose its competitive edge and
fail to meet customer needs.
• This is because customer needs change continually –
nobody’s life is static and customers can demand new
types of products and services.
• As discussed in Unit 9.4, digital technology has changed
the behaviour and expectations of both customers and
employees and this should therefore be embraced.

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 Unit 10 – Managing strategic change

Why is change important to business?

• The economy changes businesses – it has a
major external influence on businesses and
their customers and they have to respond to
the changing environment.
• With changed customer needs come growth
opportunities which businesses need to grasp.

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 Unit 10 – Managing strategic change

Barriers to change
Although change is inevitable it is nearly always resisted in
organisations. Kotter and Schlesinger identified four key reasons for it:
1. Parochial self interest – individuals are only concerned with the
implications for themselves.
2. Misunderstanding – communication problems or inadequate
information.
3. Low tolerance to change – a sense of insecurity, especially if there
has been a lot of change already.
4. Different assessment of the situation – there could be
disagreements for the need for change or the advantages or
disadvantages of it.

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 Unit 10 – Managing strategic change

Barriers to change
There are more than four reasons why employees may be
resist to change:
• Habit – habit is comfortable and secure and can be difficult
to break.
• Economic – employees may perceive the change as affecting
their pay or rewards and therefore may want to keep the
status quo.
• Fear of the unknown – the unknown is uncomfortable and
may lead to anxiety; this is especially true when dealing with
technology.
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 Unit 10 – Managing strategic change

Barriers to change
There can also be organisational barriers to change:
• Existing power structures – if a highly mechanistic
structure is in place is may prove difficult to make
changes.
• Resistance from work groups – employees can
collectively resist the change.
• Failure of previous change initiatives – possibly
because it was managed poorly.
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 Unit 10 – Managing strategic change

Reasons why change fails

• Employees do not understand the need for or
purpose of the change.
• Lack of planning and preparation.
• Poor communication through the organisation.
• Insufficient training.
• Lack of resources.
• Inadequate reward system.

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 Unit 10 – Managing strategic change

Overcoming barriers to change

Kotter and Schlesinger set out six approaches to overcome
resistance to change:
1. Education and communication – inaccurate information or
analysis can cause problems. Educating employees about the
need for change will reduce this.
2. Participation and involvement – involving employees in the
decision making can mean that they understand the reasons for
the change better, thus enabling them to ‘buy in’ to it as well.
3. Facilitation and support – this helps to deal with fear or anxiety
during the transition period of the change.

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 Unit 10 – Managing strategic change

Overcoming barriers to change

4. Negotiation and agreement – where one group may lose out
because of the change then negotiations and agreements to offer
incentives not to resist the change can occur.
5. Manipulation and co-option – when all else fails managers can
bring a person into the change management planning process for
the sake of appearances; they then play a symbolic role in decision
making without threatening it.
6. Explicit or implicit coercion – this is a last resort where speed is
essential. Managers can explicitly or implicitly force employees to
accept the change otherwise sanctions can occur such as firing,
not promoting or transferring jobs.

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 Unit 10 – Managing strategic change

Flexible organisations
To respond to change businesses need to have a
more flexible approach to their organisations. This
includes:
• Restructuring
• Delayering
• Flexible employment contracts
• Organic structures vs. mechanistic
• Knowledge and information management.
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 Unit 10 – Managing strategic change

Restructuring
Definition:
• Fundamental internal change to the
organisational structure or systems of a business.

• May also be as a result of improved efficiency,

mergers, takeovers, buyout or a change in
direction for the organisation. Anywhere where
the structure of the organisation would change.
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 Unit 10 – Managing strategic change

Restructuring
The business that restructures could:
• Dismiss employees
• Eliminate whole departments
• Close retail or factory locations
• Outsource their manufacturing.

Responsibility and duties may be reassigned to

improve performance.
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 Unit 10 – Managing strategic change

Restructuring
Advantages Disadvantages
• Operational costs can be • Can lose highly skilled workers
reduced • Remaining staff may have to be
• Outsourcing can be less retrained which could add to
expensive costs
• Layers of management can be • Insecurity and morale issues for
removed; this can help remaining staff
communication and decision • Employee responsibilities may
making change – especially with new
technology therefore more
• New technologies may enable
training and a temporary fall in
competitive advantage. production may occur.

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 Unit 10 – Managing strategic change

Delayering
Definition:
• The removal of one or more levels of hierarchy
within an organisation.

• This produces a flatter organisational structure

with managers having a much wider span of
control. It removes ‘middle managers’ and
therefore should improve decision making.
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 Unit 10 – Managing strategic change

Delayering
Advantages Disadvantages
• Can re-design jobs so that there is • Not all organisations are suited
greater delegation, empowerment to a flatter organisation. Workers
and motivation on the factory floor may not
• More authority is given lower want more authority
down in the organisation • Motivation and security issues
• Improved communication as with remaining staff
messages pass through fewer • There is a period of disruption as
layers of hierarchy employees learn their new roles
• Departmental rivalry is reduced • Wider span of control can reduce
• Reduced costs and fewer communication within the
managers who tend to be on business.
higher salaries.

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 Unit 10 – Managing strategic change

Flexible working contracts

• Flexible working contracts give employees a choice over the
actual times they are contracted to be at work. This allows
employees to fit work in with their child care arrangements.
• For example, a business would need its core times covered by
all employees – possibly 10 a.m.–4 p.m. The remainder can be
staffed by employees working flexibly.
• The nature of the business will determine the scope of the
flexibility offered to employees.
• Many councils have introduced flexible working contracts and
‘hot desking’ so that there is complete flexibility for employees.

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 Unit 10 – Managing strategic change

Flexible working contracts

Advantages Disadvantages
• Employees have greater • The administration of the
freedom scheme has significant costs
• Can reduce commuting time • When premises are open
allowing for improved work– longer there may be
life balance for employees
increased overheads –
• Can improve morale and
lighting, heating, etc.
reduce absence and lateness
• Reduction in overtime costs,
• Employees may not work at
late arrivals and long breaks. certain times and this may
not be suitable for the
organisation.

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 Unit 10 – Managing strategic change

Organic structures
• Organic structures are sometimes called open structures.
• They are highly adaptable, flexible forms of organisation
structure.
• They are characterised by:
– Flatness where communications are horizontal.
– Low specialisation where knowledge is used wherever it is
needed.
– Decentralised because there is a high degree of formal and
informal participation in decision making.

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 Unit 10 – Managing strategic change

Mechanistic structures
Mechanistic structures are comparatively simpler to use and
organise but can be hard to change rapidly. They are a more
traditional form of structure but they can be highly inflexible.

They are characterised by:

• Hierarchical and bureaucratic organisational structure.
• Centralised authority with little participation in decision making
for employees.
• Procedures and practices are very important.
• The structure relies on specialised functions.
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 Unit 10 – Managing strategic change

Which is best?
• Which structure a business chooses will depend on the industry that
they are in.
• Organic organisational structures work best in a fluid, unpredictable
business climate, i.e. start-ups with an entrepreneurial style of
management and open door policies.
• Mechanistic organisational structures work best when the business
doesn’t need to adapt too frequently, i.e. traditional car manufacturing
business with a bureaucratic style of management where communication
is through line managers.
• Realistically many businesses will use a mixture of the two – being on a
continuum between the ideal organic and the ideal mechanistic
structure.

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 Unit 10 – Managing strategic change

Knowledge and information management

Following Unit 9.4 you can see that some businesses
produce big data and this needs to be managed. Employees
knowledge of that data is also a valuable asset which should
be managed – especially if they leave the organisation.

Knowledge management is defined as:

• The process of capturing, developing, sharing and
effectively using organisational knowledge.

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 Unit 10 – Managing strategic change

Knowledge management
• Knowledge management ensures that organisational knowledge
is readily available for the right people at the right time. The
knowledge should be able to be assessed continuously and
refined to ensure that it matches the organisational objectives.
• Knowledge management is related to the organisational culture,
structure and how the business shares its knowledge of
processes, procedures and key data.
• If key personnel leave, the organisation should still be able to
function effectively because their shared knowledge of the
organisation would be left behind.

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 Unit 10 – Managing strategic change

Information management
• Information management is how businesses manage the
information which is created by themselves.
• It is part of the big data and enterprise resource planning
from Unit 9.4.
• The use of digital technologies has greatly improved
information management in most businesses – even a small
business can manage its data as a simple spreadsheet.
• Managers should use information to aid their decision
making so having accurate information is key to
organisational success.
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 Unit 10 – Managing strategic change

Discussion or activity
As a business grows, its organisational structure would change
with it.

Discuss how the growth would affect:

• How knowledge and information is shared
• The organisational structure
• The types of change the business might face
• The resistance to change that might occur.
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 Unit 10 – Managing strategic change

Exam-style question
Question
Discuss the value of a manager using Kotter and Schlesinger’s six ways of
overcoming resistance to change when implementing a delayering
situation.

Tip
• ‘Discuss’ – this means coming to some conclusion. First identify the
theory and then explain why it might be advantageous for a manager to
use the theory so that the sensitive issue of delayering can be achieved.
Remember to write in context: this question is about people losing their
jobs, and about getting the remaining employees to do more (possibly
without any more money!). Come to a conclusion and use your own
opinion.
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 Unit 10 – Managing strategic change

Summary
• The theorists to help are:
– Lewin’s force field analysis
– Kotter and Schlesinger’s four reasons for resisting
change
– Kotter and Schlesinger’s six ways to overcome
resistance to change.
• An organisational structure and the flexibility
of its workforce can affect its ability to change.
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