32 Strategic Planning and Change Management

1.  LEARNING OUTCOMES

2.  INTRODUCTION

3.  CONCEPT OF CHANGE

4.  CHANGE MANAGEMENT

5.  LEVELS OF CHANGE

6.  THEORIES / MODELS OF CHANGE MANAGEMENT

7.  STRATEGIC CHANGE

8.  TYPES OF STRATEGIC CHANGE

9.  DRIVING FORCES FOR CHANGE

10.  SOURCES OF RESISTANCE TO CHANGE

11.  STRATEGIES TO OVERCOME RESISTANCE TO CHANGE

12.  REASONS FOR FAILURE IN ORGANIZATIONAL CHANGE INITIATIVES

13.  SUMMARY

1. LEARNING OUTCOMES

• After studying this module, you shall be able to
• Understand the concept of Strategic planning
• Understand about the concept of change and Change Management Various theories of understanding the change process

Types of Change and the importance of Strategic Change

• Discuss the various driving forces of change and also sources of resistance to change
• Understand the reasons behind resistance to change
• Learn about strategies to overcome the resistance to change

2.  INTRODUCTION

The essence of management includes the ability to plan. Strategic Planning is one of the principal responsibilities of upper-level management. Once management decides on the Strategic Plan, lower-level managers implement the Strategic Plan through an Operating Plan.

Strategic Planning attempts to answer a very fundamental question: Where do we want to be one year from now, two years from now, three years from now, etc.? Strategic Planning requires that an organization develop a vision of itself – how do we see ourselves in the future? Strategic Planning looks at the big picture from a long-range perspective whereas the Operating Plan represents the specific tactics for carrying out the Strategic Plan year to year.

Strategic Planning is a process whereby an organization makes choices about:

Why do we exist?

What are the major goals of this organization?

What resources do we need for a successful future? Who will be our customers?

Strategic Planning helps management understand the current situation. This in turn allows management to plan for the future. In a world of rapid change, it is becoming imperative for management to think strategically (plan for the future). And since the rate of change seems to be escalating, the importance of strategic planning continues to grow. In fact, the best managed companies tend to engage in continuous strategic planning. Some organizations have intuitive thinkers who almost seem to see into the future. Therefore, strategic planning is a way of preparing for the future by attempting to simulate the future.

Strategic Planning has a tendency to force people to think about the future. This is extremely important since many organizations are inward thinking, focusing too much on the short-term. Strategic planning looks at the long-term which is how organizations survive and thrive. It has been proven that organizations that focus on the long-term through strategic planning outperform organizations that lack long-term planning. Consequently, one of the benefits of strategic planning is long-term performance and growth. Another benefit of strategic planning is communication. Strategic Plans communicate the intentions of management to employees, shareholders, and others.

3. CONCEPT OF CHANGE

Change implies the creation of imbalances in the existing pattern of situation. It requires people to learn to cope up with change by making necessary adjustments. Organizations are also subject to change and so they are also required to manage change to remain profitable and effective.

Organizational change denotes any alteration which occurs in the overall work environment of an organization. It has the following characteristics:

(i) Change results from the pressure of forces which are both outside and inside the organization.

(ii) The whole organization tends to be affected by change in any part of it.

(iii) Change takes place in all parts of the organization, but at varying rates of speed and degrees of significance.

4. CHANGE MANAGEMENT

Change Management is an approach to shifting or transitioning individuals, teams and organizations from current state to a desired future state.

Change Management is an organizational process aimed at helping change stakeholders to accept and embrace changes in their business environment. It has at least three different aspects, including: adapting to change, controlling change, and effecting change. During change management process one needs to

Influence people’s beliefs & behaviours

Manage & Lead the change

Enable individual changes to bring about group change Ensure that everyone joins in

Provide strong & sensitive leadership

Help people through transition

5.  LEVELS OF CHANGE

In the context of organisation, changes may occur at three levels, i.e., individual level, group level and organisational level, as shown in figure below:

These are discussed below:

1. Individual Level Change

Individual level changes may take place due to changes in job assignment, transfer of an employee to a different location or the changes in the maturity level of a person which occurs over a period of time. The general opinion is that change at the individual level will have impact on the group which in turn will influence the whole organisation. Therefore, a manager should never treat the employees in isolation, he must understand that the individual level change will have repercussions beyond the individual.

2. Group Level Change

Many of the organisational changes have their major effects at the group level. The groups can resist change, as for example, the trade unions can strongly resist the changes proposed by the management. Informal groups can pose a major barrier to change because of the inherent strength they contain. Changes at the group level can affect the work flows, job design, social organisation, influence and status systems and communication patterns.

The groups, particularly the informal groups, have a lot of influence on their individual members. As such, by effectively implementing change at the group level, resistance at the individual level can be overcome.

3. Organisational Level Change

The changes at the organisational level may take the following forms:

(i)   Strategic Change: It involves changes in the basic objectives and policies of the organisation. For example, joint venture with another firm, globalisation of operations, divestment of a loss-making unit, etc. have far reaching consequences for the organisation and the individuals and groups working in the organisation.

(ii)   Structural Change: It involves changing the internal structure of the organisation. This change may be in the whole set of relationships, work assignments and authority structure. Change in organisation structure is required because old relationships and interactions no longer remain valid and useful in the changed circumstances.

(iii)   Process Oriented Change: Such changes relate to the technological developments, information processing and automation. They involve replacing or retraining personnel, heavy capital equipment investment and operational changes. All this will affect the organisational culture and as a result the behaviour pattern of the individuals and groups.

(iv)   People Oriented Change: People oriented changes are directed towards performance improvement, group cohesion, dedication and loyalty to the organisation. This calls for closer interaction among the employees and special behavioural training to them.

6. THEORIES / MODELS OF CHANGE MANAGEMENT

1.    Kurt Lewin Model of Change: Lewin described change as a three-stage process (Unfreeze— Change—Refreeze), as illustrated in the figure below.

For Lewin, the process of change entails creating the perception that a change is needed, then moving toward the new, desired level of behaviour and finally, solidifying that new behavior as the norm.

Unfreezing

Before you can cook a meal that has been frozen, you need to defrost or thaw it out. The same can be said of change. Before a change can be implemented, it must go through the initial step of unfreezing. Because many people will naturally resist change, the goal during the unfreezing stage is to create an awareness of how the status quo, or current level of acceptability, is hindering the organization in some way. Old behaviors, ways of thinking, processes, people and organizational structures must all be carefully examined to show employees how necessary a change is for the organization to create or maintain a competitive advantage in the marketplace. Communication is especially important during the unfreezing stage so that employees can become informed about the imminent change, the logic behind it and how it will benefit each employee. The idea is that the more we know about a change and the more we feel it is necessary and urgent, the more motivated we are to accept the change.

Changing

Now that the people are ‘unfrozen’ they can begin to move. Lewin recognized that change is a process where the organization must transition or move into this new state of being. This changing step, also referred to as ‘transitioning’ or ‘moving,’ is marked by the implementation of the change. This is when the change becomes real. It’s also, consequently, the time that most people struggle with the new reality. It is a time marked with uncertainty and fear, making it the hardest step to overcome. During the changing step people begin to learn the new behaviors, processes and ways of thinking. The more prepared they are for this step, the easier it is to complete. For this reason, education, communication, support and time are critical for employees as they become familiar with the change. Throughout this process, employees should be reminded of the reasons for the change and how it will benefit them once fully implemented.

Refreezing

Lewin called the final stage of his change model freezing, but many refer to it as refreezing to symbolize the act of reinforcing, stabilizing and solidifying the new state after the change. The changes made to organizational processes, goals, structure, offerings or people are accepted and refrozen as the new norm or status quo. Lewin found the refreezing step to be especially important to ensure that people do not revert back to their old ways of thinking or doing prior to the implementation of the change. Efforts must be made to guarantee the change is not lost; rather, it needs to be cemented into the organization’s culture and maintained as the acceptable way of thinking or doing. Positive rewards and acknowledgment of individualized efforts are often used to reinforce the new state because it is believed that positively reinforced behavior will likely be repeated.

2.  Kotter’s Change Model: Kotter described change as an eight-step model as illustrated in the figure below.

a. Increase Urgency: Helping others see the need for change & the importance of acting quickly.

b. Build Guiding Teams: Ensuring there is a powerful group, with the appropriate leadership skills, credibility & authority to guide the change process.

c. Get the Vision Right: Creating a picture of the future & how it will be different from the past.

d. Communication for Buy-In: Ensuring everyone understands & accepts the vision.

e. Enable Action: Removing the barriers to making change successful.

f. Create Short-Term Wins: Create clear, visible success stories early in the process.

g. Don’t Let Up: Recognise more change opportunities following the ‘quick wins’ to take full advantage of the momentum for change.

h. Make It Stick: Ensure the new ways of behaving are recognised & rewarded to embed the change into the organisational culture.

3. Kubler-Ross Model: All change involves loss at some level and the “Five stages” model, as described by Kubler-Ross, has been used to understand people’s reactions to change for many decades. The five stages have been depicted in the figure below.

Kubler-Ross said the stages can last for different periods of time and will replace each other or exist side by side at times.

The reactions of people in each of the five stages are discussed below:

a. Shock or Denial

Denial is usually a temporary defense that gives us time to absorb news of change before moving on to other stages. It is the initial stage of numbness and shock. We don’t want to believe that the change is happening.

If we can pretend that the change is not happening, if we keep it at a distance, then maybe it will all go away.

b. Anger

When we realise that the change is real and will affect us, our denial usually turns to anger. Now we get angry and look to blame someone or something else for making this happen to us. For example, during tough economic times it’s often the economy that is blamed; it’s the government, or top management’s fault for not planning properly.

c. Bargaining

This is a natural reaction of those who are dying. It’s an attempt to postpone what is inevitable. We often see the same sort of behaviour happening when people are facing change. We start bargaining in order to put off the change or find a way out of the situation. In a work situation someone might work harder and put in lots of overtime to prove that they are invaluable in order to avoid retrenchment.

d. Depression

When we realize that bargaining is not going to work the reality of the change sets in. At this point we become aware of the losses associated with the change and what we have to leave behind. This has the potential to move people towards a sad state, feeling down and depressed with low energy. The depression stage is often noticeable in other ways in the workplace. People dealing with change at work may reach a point of feeling demotivated and uncertain about their future. There is an increase in absenteeism at this time as people use sick leave and take ‘mental health’ days.

e. Acceptance

As people realize that fighting the change is not going to make it go away they move into a stage of acceptance. It is not a happy space, but rather a resigned attitude towards the change, and a sense that they must get on with it. This can be a creative space as it forces people to explore and look for new possibilities.

7. STRATEGIC CHANGE

Strategic Change is a planned change which is necessitated by the changes in the external environment of business. The top management makes strategies of change to cope up with the following forces in the external environment:

(i)   Technology: Technology is the major external force which calls for change. The adoption of new technology such as computers, telecommunication systems and flexible manufacturing operations, has profound impact on the organizations that adopt them.

(ii)   Marketing Conditions: Marketing conditions are no more static. They are in the process of rapid change as the needs, desires and expectations of the customers change rapidly and frequently. Moreover, there is tough competition in the market as the market is flooded with new products and innovations every day. New methods of advertising are used to influence the customers. Today the concept of consumerism has gained considerable importance and thus, the consumers are treated as the kings.

(iii)   Social Changes: Social and cultural environment also suggest some changes that the organizations have to adjust for. There are a lot of social changes due to spread of education, knowledge and a lot of government efforts. Social equality, e.g., equal opportunities to women, equal pay for equal work, has posed new challenges for the management. The management has to follow certain social norms in shaping its employment, marketing and other policies.

(iv)   Political Forces: Political environment within and outside the country have an important impact on business especially the transnational corporations. The interference of the government in business has increased tremendously in most of the countries. The corporate sector is regulated by a lot of laws and regulations. The organizations do not have any control over the political and legal forces, but they have to adapt to meet the pressure of these forces.

In our country, the new economic, policy has liberalised the economy to a large extent. Many of the regulatory laws have been amended to reduce the interference of the Government in business.

An organization is also affected by the world politics. Some of the changes in the world politics which have affected business all over the world are e.g., the reunification of Germany, Iraq’s invasion of Kuwait and the break of Soviet Union.

8. TYPES OF STRATEGIC CHANGE

There are mainly four types of strategic change

1.  Adaptation: Change can be accommodated with the existing culture and can occur incrementally.

2.  Reconstruction: It refers to a rapid change but without fundamentally changing the culture.

3.  Revolution: It refers to fundamental changes in both strategy and culture.

4.   Evolution: In this type of change, cultural change is required but this can be accomplished over time.

9.  DRIVING FORCES FOR CHANGE

1.  Internal Forces

New Technology

Changing Work Values

Creating a new knowledge Product Obsolescence

Alternative Work Schedules

2.  Environmental Forces

Competition

 Changes in Consumer Demand Resource Availability

 Social and Political Change International Change

10.  SOURCES OF RESISTANCE TO CHANGE

1.  Individual Factors

Habits: Habits and programmed responses give rise to resistance because new methods need to be learnt to deal with the unexpected.

Security: People who have a high need of security are likely to resist change because it threatens their feelings of safety.

Economic Factors: The economic factors like changes in the job or work routine can give rise to concerns about payment patterns which are linked to productivity.

Fear of the Unknown: Proposed changes which confront people tend to generate fear and anxiety, e.g., introducing new technology or working practices creates uncertainty.

Selective information processing: Most individuals process information selectively and that too only which matches their perception.

Ignorance: It refers to a failure to understand the situation or the problem.

Mistrust: Sometimes motives for change are considered suspicious.

Disbelief: It is a feeling that the way forward will not work.

Power Cut: It refers to a fear that sources of influence and control will be eroded.

2.  Organizational Factors

Structural Inertia: Some organisational structures have inbuilt mechanism for resisting change. Consider, for instance, a typically bureaucratic structure, wherein jobs are narrowly defined, lines of authority are clearly spelt out and the flow of information is stressed from top to bottom. In such an organisation structure, new ideas rarely travel down the hierarchy because these are screened out. Innovations are not suitable for such an organisation.

Limited Focus of Change: Since organizations are large systems, a change introduced in one section will have only a limited success. Activities in the other sections may nullify the change benefits.

Group Inertia: Conformance to group norms may act as a constraint to individuals who may want to introduce and implement change.

Threat to Established Power Relationship: When people at the top consider change as a potential threat to their position and influence, they resist it. Change may disrupt the power relationships and produce new power equilibrium. This new equilibrium may reduce the power and prestige of some of the senior executives. Therefore, they would oppose the change.

Threat to Established Resources Allocation: Some organisations resist change due to scarcity of resources. Greater the scarcity of resources, greater is likely to be the resistance to change. An organisation may not like to incorporate change because it requires huge investment.

11. STRATEGIES TO OVERCOME RESISTANCE TO CHANGE

Since it is natural for human beings to resist change, the main problem in introducing and implementing change is to overcome resistance to change. Efforts for overcoming resistance to change can be made both at the individual level and the group level. The main techniques that can be used to overcome resistance to change are given below:

1.  Education and Communication: One of the best ways to overcome resistance to change is to educate people about the change effort beforehand. Up-front communication and education helps employees see the logic in the change effort. This reduces unfounded and incorrect rumours concerning the effects of change in the organization.

2.  Participation and Involvement: The management should discuss the change with the subordinates because people who have an opportunity to participate in planning for change will have some feeling of commanding their own destiny and not of being pushed around like so many pawns on a chessboard. Participation will give the people involved a feeling of importance. They are likely to be more committed to the change if they are convinced about the rationale of change. On the other hand, a change imposed from above is likely to make people feel that their knowledge and skills are being ignored.

3.  Build Support & Commitment: Easing the change process and providing support for those caught up in it is another way managers can deal with resistance to change. These include listening, providing guidance, allowing time off after a difficult period, and offering facilitative and emotional support. Facilitative support means removing physical barriers in implementing change by providing appropriate training, tools, materials, etc. Emotional support is provided by showing personal concerns to the subordinates during periods of stress and strains.

4.  Negotiation and Agreement: Negotiation with those resisting the change and offering them incentives may be a useful technique for overcoming resistance. Examples are union agreements, promotion of nominees of the union, increased economic benefits to employees, etc. It may become relatively easy to avoid major resistance through negotiation.

5.  Manipulation and Cooptation: Sometimes, managers covertly steer individuals or groups away from resistance to change. They may manipulate workers by releasing information selectively or by consciously structuring the sequence of events. Or they may co-opt an individual, perhaps a key person within a group, by giving him or her, a desirable role in designing or carrying out the change process. Aside from the doubtful ethics of such techniques, they may also backfire.

6.  Coercion: Managers may force people to go along with a change by explicit or implicit threats involving loss of jobs, lack of promotion and the like. Managers may dismiss or transfer employees who stand in the way of change. As with manipulation and co-option, such methods, though not uncommon, are risky and make it more difficult to gain support for future change efforts.

12. REASONS FOR FAILURE IN ORGANIZATIONAL CHANGE INITIATIVES

Dr. John Kotter has proven that 70% of all the major change initiatives in organizations fail. The major reasons for such failures are

Failure to establish sense of urgency

Failure to effectively communicate vision

Failure to anchor change to the organizational culture No Accountability

Lack of Clear Ownership

Tools unable to support processes

People not skilled to support processes

13. SUMMARY

• Strategic Planning is a dynamic process, which is receptive to change.
• Organizational change denotes any alteration which occurs in the overall work environment of an organization
• Change Management is an approach to shifting or transitioning individuals, teams and organizations from current state to a desired future state.
• The major theories of change management include Kurt Lewin Model of Change; Kotter’s Change Model and Kubler-Ross Model.
• Various types of change include Strategic Change; Structural Change; Process – Oriented Change and People Oriented Change
• The sources of resistance to change include Ignorance; Mistrust; Disbelief and Power Cut We also discussed about various strategies that can be used to overcome resistance to change

REFERENCES

• Pearce,J. Robinson, R. (2015). Strategic Management :Planning for Domestic & Global Competition, 13ht Edition. McGraw Hills International Edition (McGraw Hills Publishers Ltd.)
• Sharma, Radha, R. (2008). Change Management: Concept and Application,2nd Edition, New Delhi, Tata McGraw Hills Publishing Company Limited
• Hayes, J. (2010). Theory and Practice of Change Management, 1st Edition. England: Palgrave Macmillan (MacMillan Publishers Limited).
• Gates, L. P. (2010). Strategic Planning with Critical Success Factors and Future Scenarios: An Integrated Strategic Planning Framework http://www.sei.cmu.edu/reports/10tr037.pdf
• Employee Resistance to Organizational Change ©2002 by Albert F. Bolognese http://www.newfoundations.com/OrgTheory/Bolognese721.html
• Basic Context for Organizational Change by Carter McNamara, PhD
• – http://www.mapnp.org/library/mgmnt/orgchnge.htm