CHAPTER-7 MANAGING CHANGE (1)

Chapter 7 – MANAGING CHANGE

Organizing for Success (Case Project Management Strategic Change: Business Process:
base question expected)
Project planning and Nature of change Business process
Strategy implementation phases (planned VS unplanned, redesign and Business
(organizational structure, incremental VS process re-
Network diagram transformational, one- engineering
change, intended and
off event VS continuous
emergent strategy) Gantt chart (fundamental, radical
process)
and dramatic)
Project monitoring and Triggers of change
control (external and internal)

Attitudes towards
change (job related
reasons, personal fears,
and social reasons)

Managing change
(Change management
models, levers of change
and skills of change
management)

Models of change
Management: Lewin’s
force field analysis,
Lewin’s perspective
planned change theory
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Contents

1 Organizing for success

2 Strategic change

3 Managing strategic change

4 Business processes

5 Project Management
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1. Organizing for success

Section overview

◼ Strategy implementation
◼ Organization structure
◼ Entrepreneurial organization
◼ Functional organization structure
◼ Divisional organization structure
◼ Matrix organization structure
◼ Project-based and team-based structures
◼ Span of control

1.1 Strategy Implementation

After strategic position has been completed, the available strategies have been evaluated and preferred
strategies have been selected, the selected strategies must now be implemented. Achieving strategic
objectives requires successful strategy implementation.
Strategy implementation takes the form of day-to-day actions and relationships. Three key aspects of
strategy implementation are:
• organization structure, including the organization of processes and relationships
• managing strategic change
• implementing strategy through a combination of intended strategy and emergent strategy.
1.2 Organizational Structure
Organization structure is an aspect of strategy implementation. Organization structures differ between
entities. The organization structure for an entity should be appropriate for the size of the entity, the nature
of its operations, and what it is trying to achieve. Most important, the organization structure must enable
the entity to develop plans and implement them effectively.
There are several different types of organization structure. Within a single entity, particularly a large entity,
there might be a mixture of different organization structures, with different structures in different parts of
the entity.
Basic organizational structures are as follow:
• entrepreneurial structure
• functional structure
• divisional structure
• matrix structure
• project based/team-based structure
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4 Strategic Change

Section overview

◼ The nature of change

◼ Triggers for change
◼ Achieving planned benefits
◼ Attitudes to change

4.1 The nature of change

Change happens continually within organisations and their markets. Strategic development inevitably
results in some change, which needs careful management. Change is either planned or unplanned.
• Planned change (or proactive change) is deliberate and intended. The entity makes the change
to move from an existing situation (or way of doing things) to a new situation.
• Unplanned change (or reactive change) happens in response to developments, events and new
circumstances that have arisen. The change is not intended in advance.
With planned change, the entity might see an opportunity to develop. Unplanned change is often seen
as a reaction to a threat or an adverse event.
Change is either incremental or transformational.
• Incremental change is a fairly small change. This type of change happens without the need
for a major reorganisation or restructuring of the organisation and its systems and procedures.
The entity should be able to adapt easily to the change.
• Transformational change is a big change. A transformational change requires a major
reorganisation or a restructuring of the organisation and its systems and procedures. The
change has a big impact on the entity, and also on the people working in it.
• Transformational change requires change management skills from the managers who are
responsible for introducing the change (the ‘change managers’).
Change is also either:
• a ‘one-off’ event, so that the entity moves quickly from the old state of affairs to a new state
of affairs, or
• a continuing process of development and change over a long period of time.
4.2 Triggers for change
Triggers for change are the reasons for making a change, or the reasons for the motivation to change.
A trigger for change might come from either outside or inside the entity.
External triggers for change
External triggers for change are caused by changes in the environment. The PESTEL analysis of the
external environment provides a useful framework for analysing external reasons for change.
Political reasons for change
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• Changes in strategy might be caused by an unexpected political crisis – such as a civil war or
major civil unrest – in a country that is either a major source of supply or a major export
market.
Economic reasons for change
• Unexpected developments in the economies of various countries might result in a change of
strategy on foreign sales or expansion into foreign markets.
Social and cultural reasons for change
• Changing public attitudes and opinions might persuade an entity to alter its strategy. For
example, changing public attitudes to food safety following a ‘health scare’ about a food
product might persuade a food manufacturer to change its strategy to the design and
production of its products.
• Changing public attitudes to retirement age might persuade an entity to change its retirement
policy for employees, and its human resource plan.
Technological reasons for change
• The significance of technological development has been mentioned earlier.
Ecological/environmental reasons for change
• Change might be driven by ecological change, such as diminishing supplies of fresh water,
diminishing supplies of energy or factors related to climate change. These changes might
force a company to consider how its businesses will continue to survive in the future, and
what changes will be needed to make the business sustainable.
Legal reasons for change
• New laws on health and safety at work, laws against pollution and laws to protect the
environment might have an impact on strategy and procedures.
Internal triggers for change
Change might be motivated or caused by developments within the organisation.
Change of senior management. When there is a new senior manager, such as a new chief executive
officer or managing director, the new person in charge might want to introduce change because he
has his own ideas about how things should be done
• Acquisitions and mergers. When there is a large acquisition or a merger, major changes will
probably be required to integrate the two separate firms into a single entity.
• Demergers and divestments. Similarly, when an entity is split up into two separate entities
(a demerger) or when a large part of the entity is sold off (a divestment), changes in
organisation, management and systems will be necessary.

• Reorganisation, downsizing and rationalisation. Change might be necessary because the

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current organisation and systems are no longer appropriate and change is needed. This might
happen when a loss-making entity needs to close down an operating division, or needs to
reduce the size of its total workforce. Current operational systems might need to change
because they are no longer appropriate and have become inefficient or ineffective.
4.3 Achieving planned benefits
Many changes fail to achieve the planned benefits because of the difficulties experienced with
implementing the change. Furthermore, it is extremely difficult to introduce major changes without
causing disruption. Transformational change must therefore be managed carefully. This includes:
• identification of the strategic changes that should be made
• recognising the need to change systems and organisation structures to make the changes work
successfully
• recognising the effect of change on employees: this aspect of change management is often
overlooked, but is probably the most common reason why attempts to make major changes
are unsuccessful
• careful planning and implementation of the change
• making sure that the changes ‘stick’ and remain in place, after they have been made.
There are several strategic models for the management of change. All models for change management
recognise the importance of people and attitudes to change. A number of models are considered in
the next section.
4.4 Attitudes to change
Some employees might welcome change and support the changes. More often, however, employees
fear change and resist change. Attitudes and culture may therefore act as blockages to change. Here
are several reasons for opposing change:
Reasons related to the job
• Employees might believe that the change will put their job at risk, and make them redundant.
• Employees might believe that their existing skills will no longer be required. This is why
employees often resist major technological changes
• Employees might fear that their working conditions will change for the worse.
Personal reasons and fears
• Employees might fear that the change will make them less important to their employer.
• They might believe that the call for a change is a criticism of the way they have been working.
• They might think that after the change, their work will be less interesting. They might be
reluctant to learn new ways of working.
• They might fear the unknown.
Social reasons
• Employees might resist change because they believe it will break up their work group, and
separate them from the people they enjoy working with.
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• They might think that after the change, they will be forced to work on their own more, and
there will be less interaction with colleagues.
• They might dislike the manager who is forcing through the change.
• They might dislike the way that the change is being introduced, without consultation with the
employees affected.
Change and organisation culture
Some entities are more capable of adapting to change than others. The reasons listed above, and the
earlier description of the cultural web, might suggest reasons why resistance to major changes could
be strong. Some entities, however, are better at adapting to change than others, and in some entities,
change might be seen as a ‘good thing’.
The management writer Rosabeth Moss Kanter suggested that there are cultural reasons why an
organisation might be more change-adept than others.
According to Kanter, change-adept organisations have three key attributes:
• The imagination to innovate. This comes from a leadership that seeks new ideas for positive
change.
• The professionalism to perform. The management of the entity are competent at introducing
change. In addition, the workforce has been suitably trained and developed, and has the ability
to support its management in introducing change.
• The openness to collaborate. Change-adept entities share ideas with other entities, such as
suppliers and joint venture partners, and are able to work well with other entities in making
changes.
Kanter argued that change should be accepted by entities as something that is natural, desirable and
welcome. When change occurs as a defensive reaction, in response to a threat, it is not welcomed.
However, it is more appropriate to see change as an opportunity for the successful implementation of
business strategies.
Entities that welcome change are most likely to be the first to innovate and adapt to new technology,
or entities with an ability to create sustainable competitive advantage by creating extra value for its
customers. Kanter argued that entities that are change-adept are ‘fast, agile, intuitive and innovative’
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5. Managing Strategic change

Section overview

◼ Guidelines for change management: change levers and management skills

◼ Lewin: force field analysis
◼ Lewin: unfreeze, change, re-freeze
◼ The change agent
◼ The Gemini 4Rs

5.1 Guidelines for change management: change levers and management skills
A general guideline for managing strategic change is as follows:
• When change is planned, managing the change involves deciding how to get from where we
are to where we want to be, and recognising the changes that are necessary to get there.
• The change process consists of planning the changes, implementing them and then
maintaining the change, so that there is no ‘going back’ to former ways and methods of
operating.
• There are several requirements for successful change. These are often referred to as levers of
change.
Levers of change
The following requirements are needed for successful implementation of change.
• A clear understanding of the need for change, and what will be the desired result of the
change.
• The commitment of the entity’s leaders to the change.
• Effective communication with everyone affected by the change. This should be two-way
communication. Management should listen as well as explain.
• Management should have the required qualities to implement change successfully.
• The organisation structure and relationships within the organisation should be adapted to
meet the requirements of change.
• Reward systems should be amended, so that rewards to managers and other employees are
based on performance targets that are consistent with the requirements of the change.
• Critical success factors and key performance indicators should be revised, so that they are
consistent with the requirements of the change.
• Employees should be given education in the purpose of change and training to meet the
operational requirements of the change.
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Skills for managing change

Rosabeth Moss Kanter suggested that a manager in a change-adept entity should have the following
skills.
• Tuning in to the environment. Managers need to be aware of changes in the environment
that will make change by the entity necessary or desirable. Kanter suggested that managers
should create a network of ‘listening posts’ that they should use to monitor environmental
change. She commented: ‘Pay special attention to customer complaints, which are often your
best source of information about an operational weakness or unmet need. Also search out
broader signs of change – a competitor doing something differently or a customer using your
product or service in unexpected ways.’
• Challenging the prevailing organisational wisdom. Change managers should be prepared
to challenge the ’conventional wisdom’ and question accepted views about what is necessary
or the way that things should be done.
• Communicating a compelling aspiration. A change manager should have a clear idea of
what he wants to achieve and should communicate this ‘vision’ to everyone he deals with.
The manager must have personal conviction that the change is necessary. Without this sense
of purpose, he will not be able to ‘sell’ the need for change to others.
• Building coalitions. Managers cannot make change happen through personal effort alone.
They need to win the support and co-operation of all the individuals with the knowledge,
influence or resources to make change happen. Making change happen is therefore a process
of building alliances and support.
• Learning to persevere. Managers should continue with the process of change even though
there are likely to be setbacks and ‘defeats’ on the way.
• Making everyone a hero. The manager should give full credit to everyone who helps to
introduce change successfully, and should make them feel that their efforts are fully
appreciated. If possible, individuals who help to introduce changes successfully should be
rewarded.
Models for managing change
There have been several different suggestions about how transformational change might be managed.
Several of these ‘models’ for change are described in the remainder of this section.
5.2 Lewin: force field analysis
Kurt Lewin was a social psychologist. He developed a theory, which he called force field analysis, to
describe the forces that came into conflict over planned changes. He suggested that there are two
opposing forces:
• the driving forces that support the need for change; and
• the restraining forces that oppose and resist the change.
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Any of the following factors might be a driving force or a restraining force:

• the people involved in the change, and what they want for themselves
• the habits and customs of the individuals
• their attitudes
• the relationships between the people involved
• organisation structures within the entity
• vested interests
• the entity’s policies
• the resources available to make the change
• regulations
• events (happenings).
Lewin argued that each driving force or restraining force has a strength, which might be measured
on a scale of 1 to 5. The strength of the total driving forces and the strength of the total restraining
forces can therefore be measured

Lewin also argued that:

• Change will not occur if the forces resisting the change are stronger than the driving forces
for change.
• Change is only possible when the driving forces for change are stronger than the restraining
forces against change.
A key task of the change manager is therefore to ensure that the strength of the driving forces
is stronger than the strength of the restraining forces. There are two ways that this might be
done:
• Strengthen the driving forces for change
It might seem that the best answer is to strengthen the driving forces for change. However,
Lewin argued that by increasing the driving forces, management run the risk that the
restraining forces against the change will also grow stronger.
• The best approach is therefore to try to reduce the restraining forces against change.
Management should therefore:
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▪ identify the main restraining forces against change and

▪ consider ways of reducing their strength, for example by discussing the issues and
difficulties with the individuals concerned, or by trying to win the support of key
individuals who currently oppose the change.
5.3 Lewin: unfreeze, change, re-freeze
Lewin also suggested an approach to introducing planned transformational change, which is
sometimes called ‘prescriptive planned change theory’.
He suggested that a planned process for change should begin with:
• identifying the cause of the problems, and the reasons why change is needed, and
• identifying the opportunities of making improvements through transformational change.
The change process then needs to go through three stages:
• unfreeze
• movement (change)
• re-freeze.
Unfreeze
The process of ‘unfreezing’ is persuading employees that change is necessary. Individuals will not
want to change anything if they think that the current situation is acceptable. Employees should
therefore be encouraged to recognise what is wrong with the current system or current situation and
management should encourage employees to feel dissatisfaction. Employees should be ‘unfrozen’ out
of their acceptance of the current situation
However, this is not enough. It is also necessary to offer employees an attractive alternative for the
future that can be reached by changing the current situation.
Management must therefore have a clear vision about what changes they want to make, and they
should encourage employees to want these changes to happen.
Management must therefore discuss the problems with the employees affected, and communicate
their ideas.
Unfreezing is therefore the process not only of making employees dissatisfied with the current
situation, but also persuading them about the nature of the changes that should be made
Movement (change)
The changes should then be made.
To introduce change successfully, the support for change must be strong enough to overcome the
opposition. This is consistent with Lewin’s force field analysis.
Management should be given sufficient resources to implement the changes. (Having sufficient
resources to make a change can be a driving force for change.)
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The change managers should try to involve the employees affected and get them to participate in
making the changes. Participation in making changes helps to reduce the resistance to change.
Re-freeze
Lewin argued that even if change is implemented, there is a risk that before long, employees will go
back to their old ways of doing things, and the benefits of the change might be lost.
It is therefore essential that once change has happened, employees should be encouraged to carry on
with the new way of doing things.
One way of doing this might be to reward employees for performance based on the desired behaviour
and results.
The process of getting employees to carry on with the new system is called re- freezing.
5.4 The ‘change agent’
When a transformational change is implemented, there has to be a ‘change agent’ who drives the
change and is responsible for its successful implementation. Often the change agent is an outside
consultant. This individual must have certain skills.
• He must explain the reasons for the change, and provide employees with reliable information.
This will help to reduce the risk of false rumours spreading.
• As far as possible, he should involve the individuals affected, and get them to participate in
making the changes. When individuals are involved in the change process, they are less likely
to resist it.
• He should maintain communications with employees at all time, monitoring the progress of
the change and providing information to others about the progress.
• Where appropriate, he should provide training to the employees affected.
• He should emphasise the benefits of the change to the individuals affected. A consultant is
often used because:
• An outside consultant is perceived to be independent and fair.
• The consultant will have experience in managing the change process.
• The consultant will have experience of many organisations and should be able to advise on
which changes are desirable
• Large-scale changes can easily go wrong. Management will want all the help and
advice available.

5.5 The Gemini 4Rs

Another model for introducing transformational change was promoted by Gemini Consultants.
This is known as the 4Rs model.
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The elements of the model are as follows.

Re-frame Create the desire for change.
Create a vision of what the entity is trying to achieve.
Create a measurement system to set targets for change and measure
performance.
Re-structure Examine the organisation structure, and create an economic model showing how
value is created by the entity, and therefore where resources should be used.
Re-design the processes so that they work better to create more value.

Revitalise This is the entity’s commitment to the future. Find new products and new markets that
fit well with the entity’s environment.
Invent new businesses.
Change the rules of competition by making use of new technology.

Renew Develop individuals within the organisation. Make sure that employees have the skills
that are needed and that they support the change process.
Create a reward system to motivate individuals to seek change. Develop individual
learning and creativity within the entity.
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6. Business Processes

Section overview

◼ What is a business process?

◼ Process redesign as an aspect of strategy in action
◼ Technological change and process change
◼ The business process redesign patterns
◼ Methodology of business process redesign
◼ Business process re-engineering (BPR)

6.1 What is a business process?

A business process is a set of linked tasks or activities performed by individuals, groups, departments
or other organisational units within a business entity. A business process:
• consumes inputs/resources
• adds value, and
• produces an output that has value to either an ‘internal customer’ within the entity or to an
external customer.
High-level business processes (and many lower-level processes) involve activities by more than one
department or more than one business function.
Business processes make up the value chain of an entity. The operations of most business entities can
be defined as a small number of processes, typically somewhere between 6 and 12. Typical high-level
processes might include:
• product development
• distribution
• manufacturing
• order processing
• customer service
• procurement.
High-level processes can be divided into a number of sub-processes, perhaps about 30–40 in number.
It may also be useful to sub-divide the sub-processes into sub-sub-processes. Processes at a ‘lower
level’ contribute to the value chain by producing output which becomes the input to another process.
For example, in a manufacturing company, there are processes of procurement and managing
inventory, and these add value to the manufacturing process (which uses the output from the
procurement and warehouse management processes).
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6.2 Process redesign as an aspect of strategy in action

Processes might be changed or introduced as a result of implementing planned or emergent strategies.

New processes might be needed for new work

• Existing processes might be improved. The purpose of improving processes is to make them
more efficient or make them add more value. It is useful to think of process redesign adding
value in the value chain.

Process change exists at various levels:

• Automation – This means making existing operations more efficient by automating work or
computerising work previously done by hand. For example, using a computer system to
calculate wages and producing payslips. Computer systems usually play a large part in
automation. Automation might also be improved by replacing an ‘old’ computer system with
a ‘new’ one.

• Rationalisation – This involves streamlining standard operating procedures, so that

procedures become more efficient. For example, using electronic data interchange to place
orders with suppliers.

• Business process redesign or design – This is the major redesign of business processes. It
might combine radical changes in processes to cut waste, and eliminating repetitive paper-
intensive tasks in order to improve costs, quality and service. The aim is to make major
changes to a process in order to achieve improvement in critical measures of performance
such as cost, quality, service and speed. An example of major change is allowing suppliers
access to your inventory records so that the suppliers become responsible for your inventory
management and decide when items should be repurchased and resupplied. (Note that the
term ‘business process re- engineering’ has fallen out of favour, being replaced by ‘business
process redesign’.).
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6.3 Technological change and process change

Technological change, particularly new IT systems and methods of communication and processing,
often contribute to business process redesign. Here are some examples:
Disruptive technology (IT
Old methods and developments that led to New methods and
assumptions process redesign) options

Sales representatives spend E-mails and attachments can Sales representatives do not
most of their time away from be sent by mobile phone to need an office of their own.
the office, visiting customers. and from laptop computers. They can receive and send
information anywhere.
However, they need offices
where they can receive,
store and deliver
information
Information can only be in Shared databases, group People can share data and
one place at a time and can ware and networks. work collaboratively.
only be used by one person at
a time.
Businesses need high levels EPOS, extranets, Just-in-time purchasing and
of inventory to produce a electronic data inventory management. High
reliable service to customers interchange. inventory levels are no
that avoids ‘stock-outs’. longer needed.

Only a limited range of Ordering and product Customers can ‘design’ their
standard products can be specification over the own products, and these can
made available internet. Automated be manufactured
economically (at a cost that manufacturing techniques. economically.
is low enough to provide a
profit).
Only managers have the Decisions support Decision-making is a part
information, skills and systems, expert of the job of many
judgement to make decisions. systems, shared employees, not just
information and managers.
networks.
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6.4 The Business process redesign patterns

Business process redesign can be classified into a number of patterns. The basic process redesign
patterns are described in the table below.
Pattern Driver Description
Re- engineering Major This is a radical redesign of the process that
reorganisation is involves re-designing the process from scratch. This
needed. New will take much time and effort and is a high risk/high
technology is to be return pattern.
introduced.
Simplification Remove unnecessary This is redesign that simplifies the processes, for
activities and example by removing unnecessary activities.
duplication. Simplification involves asking if each step in a
process is needed and what it achieves. This pattern
can achieve relatively modest improvements, but is
relatively low risk.

Value-added Eliminate activities Value-added analysis focuses on adding value in the

analysis that do not add process and removing activities that do not add value.
value. This involves asking how each activity adds value to
the product or service.
What does it do for the customer? Does it
transform the product or service? This pattern usually
achieves modest improvements.
Gaps and Information or Gaps and disconnects analyses a process with a view to
disconnects materials are not identifying parts of the process where there are gaps in
passed correctly the activities or where there are inefficiencies or
between breakdowns in the transfer of output from one
departments. department or function to another.
This involves looking at each interface between
processes and analysing what needs to pass and what
needs to happen. This pattern usually achieves
modest improvements.
Process diagrams (see later) should help in
identifying potential gaps and disconnects.

6.5 Methodology of business process redesign

The approach to business process redesign advocated by Harmon and others is as follows.
There must be a clear strategic goal for the process and for the process redesign. This goal must be
identified and understood. For example the goal of a process might be to meet the needs of customers
and the goal of the redesign might then be to meet customer needs better. The goal of a process might
be to complete a set of tasks efficiently, and the goal of the redesign might be to reduce costs and/or
improve efficiency.
The focus for process redesign should be on the value chain rather than on functional (departmental)
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activities. Processes are often multifunctional. For example, process redesign might focus on
processing customer orders, rather than on the functions of the warehousing and delivery department.
The value chain should be analysed into lower-level processes, and lower-level processes further
analysed etc., down to the level of individual activities.
A measure must be established for the outputs of the process. This measure is for comparison with
the objectives of the process or process redesign. For example if the objective of the customer order
handling process is speed of completion, the process output measure should be the time taken to
process orders.
The methodology of business process redesign includes the use of process diagrams, also called
process maps. Process maps are used to create a ‘model’ or description of the process:
• ‘is’ diagrams or ‘is’ maps show the current process (= the process that ‘is’ now)
• ‘could’ diagrams or ’could’ maps should a possible new way of performing the process (= a
process that ‘could’ be used)
• ‘should’ diagrams or ‘should’ maps show the process redesign that has been selected (= the
process as it ‘should’ be).
The purpose of ‘is’ diagrams is to provide an easy-to-understand description of the process that exists
at the moment, and they can be used to analyse weaknesses and inefficiencies in the current process
that should be removed by the process redesign.
Business process redesign is not simply a matter of changing activities. It might involve human
reorganisation and IT systems changes.
6.6 Business process re-engineering (BPR)
The term ‘business process re-engineering’ was first mentioned in an article by Michael Hammer in
the Harvard Business Review in 1990. Hammer and Champy went on to define business process re-
engineering as ‘the fundamental rethinking and radical redesign of business processes to achieve
dramatic improvements in critical, contemporary measures of performance, such as cost, quality,
service and speed.
There are three important elements in their definition:
• Fundamental. The redesign of a process should be fundamental, and old assumptions about
the way things are done must be questioned.
• Radical. The redesign of the process results in a completely different way of doing things.
• Dramatic. The improvements resulting from process change are not small. They are
dramatic, in terms of lower cost, better quality, better service or improved speed.
The BPR approach is based on the view that value for a customer is created by the total process, not
by individual operational functions that contribute to the overall process. To make improvements in
operations, the appropriate approach is to look for ways of improving the entire process and not to
focus on individual functional areas or individual parts of the process separately. By considering
changes to the entire process, BPR can result in a radical business process redesign.
The main principles of BPR have been described (by Hammer 1990) as follows:
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• There must be a complete re-think of business processes in a cross- functional manner. The
work should be organised around the natural flow of information, or materials or customers
(in other words, around the natural flow of the transformed inputs). The work should be
organised around the outcomes from the process, not around the tasks that go into it.
• The objective should be to achieve dramatic improvements in performance through a radical
re-design of the process.
• Where possible, the number of links in the chain of activities should be reduced. ‘Internal
customers’ within a process should be required to act as their own suppliers, rather than
depending on someone else to do the work for them. If an internal customer can be its own
internal supplier, this will simplify and speed up the process.
For example, the routine maintenance of equipment might be carried out by a specialist team of
maintenance engineers. These maintenance engineers would be an internal supplier to the equipment
users, the internal customers. A suggestion for re-engineering the equipment maintenance process
might be for the equipment users to carry out their own maintenance work, at times to suit their own
convenience. The internal customer would become its own supplier.
• The decision points for controlling the process should be located where the work is done.
There should not be a division or separation between the people who do the work and the
people who manage and control it.
• In a BPR process, there should be a review of critical success factors for the organisation and
a re-engineering of the critical processes so as to achieve targets for the CSFs and improve
customer satisfaction.

1. Project planning: phases and tasks

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Section overview

◼ Splitting a project into phases

◼ Breakdown of work into lower-level tasks
◼ Dependencies between lower-level tasks

1.1. Splitting a project into phases

Project is defined as a one-time endeavor undertaken by an organization to develop a product or service or

to generate a result, that has definite beginning and ending time.
In order to plan and schedule the work for the project, it is necessary to identify all the tasks that have to be
completed.
A first step in the identification of tasks is to identify the main stages of the project. Each stage should have
an identifiable beginning and an identifiable end (a ‘milestone’.
Example of a typical IT project:
Stage Starting point Completion point (milestone)
Project planning Project initiation document/ Project quality plan
terms of reference
System analysis Project quality plan Detailed system specification
and design
Programming Detailed system specification Completion of system testing

Database design Detailed system specification Database design specifications and

construction of database
Implementation Completed system tests and Handover of system to the
database construction user/customer

1.2. Breakdown of work into lower level tasks

When the project has been divided into stages, each with its own identifiable beginning and end (milestone
for achievement), the next step is to break down each stage into more detailed tasks, or ‘lower level tasks.
For example, the systems analysis and design phase might include, as lower- level tasks:
• Systems analysis and the production of an outline system specification
• Design of system input
• Design of system output
• Design requirements for individual programs (processing requirements)
• File design.
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This process of breaking down a project into stages and lower level tasks results in creation of Work
Breakdown Structure (WBS)
Definition: Work breakdown structure (WBS)
A work breakdown structure (WBS) is a tool or technique for breaking the total work on a project into
smaller and smaller parts, such as:
◼ the main stages of a project stages
◼ the lower-level tasks within each stage, and
◼ work packages, which are items of work within each lower-level task. Work for each small
part of the project can then be allocated to an individual or team. This helps managers to plan
the work for the project and allocate each item of work to individual members of the project
team.

Example: Prince 2
In the UK, a WBS system in common use for project planning is Prince 2. Prince stands for ‘Projects
in Controlled Environments’. It was first developed in 1989 by the UK government.
Prince 2 provides ‘product breakdown structure’ (PBS) for a project development. The project, which
is seen as consisting of a number of ‘products’, is broken down from the top-down into smaller and
smaller work packages. This enables the project activities to be identified within the context of work
packages. Work packages are allocated to individuals and teams. The project manager can then monitor
the completion of each work package to control the project deliverables (including cost, time and
quality).

A typical WBS looks like:

IT project

Project System analysis Database

Programming Implementation
planning and design design

1.3. Dependencies between lower-level tasks

Many tasks in a project are inter-dependent. This means that some tasks cannot be started until other tasks
have been completed. For example, program software cannot be written until the system has been specified.
Programs cannot be tested until they have been written. A system cannot be implemented by the user until
the files in the old system have been converted into files for the new system.

Some tasks can be carried out at the same time, in parallel with each other. For example, programming and
database design may occur side-by-side. New equipment for the IT system can be procured whilst the
system is being programmed and tested.
CHAPTER-7 MANAGING CHANGE (22)

It is common to use planning tools or techniques to prepare this schedule. The most common planning tools
are:

• Network analysis

• GANTT charts
CHAPTER-7 MANAGING CHANGE (23)

2. Network analysis

Section overview

◼ Introduction
◼ Constructing a CPA chart

2.1. Introduction
Definition: A network is a schedule of the work for a project, showing all the tasks that have to be
completed, the inter-dependencies between them and the time-scale for completing them. A network is
shown as a diagram or chart.
Network analysis (also called critical path analysis - CPA) is a technique that is widely used to plan the
timing and scheduling of a project, by drawing the project network and identifying the activities on the
critical path and the total duration of the critical path. Identifying these time-critical activities will help
management to allocate resources to those activities where serious delays to the entire project might
otherwise occur.
In order to prepare a network chart, or critical path analysis (CPA) chart, the following information is
required:
• The individual tasks to be completed
• The estimated time to complete each task
• The inter-dependencies between tasks: in other words, which activities must be completed before
another activity can begin?
2.2. Constructing a CPA chart
The critical path: The critical path consists of the sequence of activities that must begin at the earliest
possible time (and so must be completed at the earliest possible time) so that the project as a whole will be
completed in the minimum possible time.
These activities go through events where the earliest and the latest event times are the same.
Float: The amount of time by which an activity can be delayed without delaying the whole project
CHAPTER-7 MANAGING CHANGE (24)

Example: Network analysis

Preceding Expected time to

Activity activity complete (weeks)
A - 5
B - 3
C A 4
D B 9
E C, D 3

Required
(a) Draw a CPA chart for the above project
(b) Identify the activities on the critical path and their combined duration
(c) Calculate the amount of float for non-critical activities

Answer
(a)

(b) The critical path consists of activities B, D and E. The minimum completion time for the project
is 15 weeks (3 + 9 + 3).
(c) There is a combined float of 3 weeks on activities A and C (12 – 0 – 5 – 4).
CHAPTER-7 MANAGING CHANGE (25)

3. GANTT charts

Section overview

◼ The nature of a Gantt chart

◼ Advantages and limitations of Gantt charts

3.1. The nature of GANTT charts

Definitions: A Gantt chart is a horizontal bar chart. Each activity is shown as a bar, and the length of the
bar represents the duration of an activity (as shown in the chart below). They are usually drawn with each
activity starting at its earliest starting time and ending at its earliest finishing time. Float time is shown as a
dotted line.
CHAPTER-7 MANAGING CHANGE (26)

Example:
Preceding Expected time to Number of men
Activity activity complete (weeks) required
A - 6 2
B A 7 6
C A 8 1
D B 3 5
E C 7 3
F D, E 5 4
Required:
(a) Draw a Gantt chart for the project showing the critical path and the minimum completion time
(b) Calculate the amount of float time on non-critical activities.
(c) Calculate the number of men required each week for the project, assuming that all critical and
non-critical activities start at the earliest possible time.
Answer
CHAPTER-7 MANAGING CHANGE (27)

3.2. Advantages and limitations of GANTT chart

Advantages Limitations

Easy to construct Do not show interrelationship between tasks

Easy to interpret Cannot calculate CPA

Give useful overview of the whole project, both Limited in use for project planning and control
completion times and employee numbers
CHAPTER-7 MANAGING CHANGE (28)

4. Project monitoring and control

Section overview

◼ Introduction
◼ Quality, time and cost
◼ Monitoring completion times: slippage
◼ Amending a CPA chart
◼ Project management software
◼ Managing the team
◼ Role of the accountant

4.1 Introduction
The project manager has the primary responsibility for monitoring and control of projects during their
development stage. However, the project manager is accountable to the project steering committee, or the
project sponsor or the system user (the customer).
The project steering committee might appoint a Project Assurance team, to carry out an independent
monitoring role. This team would discuss progress at regular intervals with the project manager. It should
also satisfy itself that each milestone for the project has been successfully reached.

4.2 Quality, time and cost

The main aspects of a project that should be monitored and controlled are quality, completion times and
cost.
• The quality of the work carried out for the project development can be monitored by comparing
actual achievements against the requirements that are set out in the project quality plan.
• The completion time for the project can be monitored by comparing the planned completion times
for the critical path activities with the actual completion times.
• Costs can be monitored by comparing actual expenditure with budgeted expenditure, on a regular
basis (for example, in monthly budgetary control reports).

4.3 Monitoring completion times: slippage

A CPA chart can be used by the project manager to:
• Check whether the time-critical activities are being completed on schedule
• Recognise by how much non-critical activities can be delayed without risking the completion time
for the project as a whole
CHAPTER-7 MANAGING CHANGE (29)

• Recognise when the completion time for an activity has over-run the schedule (and there is
‘slippage’ in the timetable for completion) and analyse what the consequences of the slippage will
be for the completion time for the entire project
• Allocate extra resources to time-critical activities if there is a risk of delay, or if the expected
slippage is unacceptable.
4.4 Amending a CPA chart
A CPA chart is a management tool to assist project managers with the control over the project completion
time. If the chart gets out of date, because critical dates are missed, or because new estimates are prepared
for the expected time to complete individual activities, the CPA chart can be updated and re-drawn.
It is important to remember that the CPA chart should have practical value. If it ceases to provide realistic
information, it is no longer of any value to a project manager.

4.5 Project management software

Project managers may use off-the-shelf project management software to help them to plan, monitor and
control a project. The software enables project managers to use project management techniques with the
assistance of a PC or laptop computer.
Example: Project management software
An example of project management software is Microsoft Project.

Features of project management software

Typically, project management software helps project managers to:
• Create a list of tasks for the project and their expected duration
• Construct a CPA chart or a Gantt chart
• Assign resources to each task
• Prepare a budget for the project
• Track the progress of tasks (and update the CPA chart from time to time)
• Record and monitor actual costs
• Manage the documents for the project
• Prepare progress reports
Software helps the project managers to amend plans more quickly, and prepare revised CPA charts and
Gantt charts, and revised budgets.
It also helps managers to prepare better and more comprehensive project documentation.
The main functions/benefits of project management software The main functions of project management
software can be summarised as follows:
• To produce and edit CPA charts or Gantt charts easily. The project manager simply has to enter the
activities, their interdependencies and their expected duration. The software will then construct the
CHAPTER-7 MANAGING CHANGE (30)

CPA chart or Gantt chart automatically. Charts can also be amended when project activities are
changed. They can also be updated to the current position at any time during the project, for
example when there has been slippage, so that the project manager can establish the current
expected completion time for the project.
• To provide an accounting function for the project, by helping the project manager to prepare a
budget, record actual expenditure and monitor actual costs against the budget.
• To plan and monitor the use of resources on the project, particularly the number of staff working
on the project. The project manager can enter the staff requirements for each activity, and the
software will produce a detailed estimate of staff numbers required each day or week of the project.
Where the resources required exceeds the resources available, the project manager can then use the
software to look for ways of reducing staff requirements at peak times without affecting the overall
project completion time, by
▪ delaying the start of non-critical activities, or
▪ reducing the number of staff assigned to non-critical activities, and allowing these activities to take
a longer time to complete.

4.6 Managing the team

As well as the technical team management responsibilities described above the team manager is also
responsible for managing the team members.
Responsibilities may include some or all of the below:
• Selecting personnel and building the team;
• Delegating roles and responsibilities;
• Motivating team members;
• Communicating information amongst the team;
• Rewarding the team;
• Disciplining team members.

4.7 Role of the accountant

The numeracy and business skills of accountants are highly valued in project management. Project
managers need to:
• Understand the economics of different options and decisions:
• Be able to forecast costs and profit;
• Generate accurate network analyses and Gantt charts;
• Use spreadsheets effectively;
• Consider the impact of external factors as well as internal factors relevant to the project.
CHAPTER-7 MANAGING CHANGE (31)

Accountants bring a wealth of business experience to projects and can be highly effective as either project
managers or as advisors to project managers.
CHAPTER-7 STRATEGY IMPLEMENTATION (32)

Past papers Grid

CFAP CFAP (BMS) Module E (BM)

(SPM)
Attempt W- S- W- S- W- W- S- W- S- W- S- W- S- W- S- W- S- W- S- W- S-
22 22 21 21 20 19 19 18 18 17 17 16 16 15 15 14 14 13 13 12 12
Topic
Ch. 7
Change management and models of change Q4a Q4iv Q9 Q7a
a
Business Process redesign and re-
engineering
Project management Q7 Q7
CHAPTER-7 STRATEGY IMPLEMENTATION (33)

PRACTICE QUESTIONS
QUESTION NO. 1
Smooth Network Service (SNS), a medium sized network service provider has organizational structure of five
levels with a span of control of three. Mr. Tahir Ali is the CEO and reports to the board of directors. He is
responsible for company’s overall affairs and makes most of the major decisions himself. The role of managers is
mainly restricted to close supervision of operational staff engaged in the day to day operations of the entity.
Mr. Tahir Ali is concerned over weakening performance of the entity. He has identified the following issues:
(i) Growing number of customer complaints about delayed response to their network issues.
(ii) The packages offered by the company seem outdated in terms of customer demands and market trends.
(iii) One of the potential clients has opted for competitor’s services as SNS could not timely respond to the
client’s pricing query.
Required:

(a) Identify and discuss the type of organizational structure prevalent in SNS, based on the existing span of
control. (03)
(b) Recommend the structural changes that SNS may need to adopt along with appropriate justification. (07)
(Summer 2018, Q 4)
QUESTION NO. 2
Study the different situations and the information given below and select the most appropriate option. Each multiple
choice question carries ONE mark.
An organisation in which individuals influence decisions on the basis of their knowledge and skills rather than
their positions in the organisation is called:
(a) organic organisation
(b) linear organisation
(c) mechanistic organisation
(d) missionary organisation
(Summer 2017, Q7(iv))
QUESTION NO. 3
Study the following scenarios:
A major corporate restructuring exercise has been carried out in the organisation, which would have far-reaching
impact on the objectives of the organisation and the individuals working in it.
(Winter 2016, Q4(iv))
Match each of the above scenarios with any one of the following concepts/principles.
(i) environmental footprint (ii) change management
(iii) transformational change (iv) organic growth
(v) activists (vi) clusters
(vii) career progression (viii) ethical manufacturing
(ix) Delphi method (x) sustainable reorganisation
(xi) conflict (xii) queuing theory
(xiii) horizontal growth (xiv) pragmatist
CHAPTER-7 STRATEGY IMPLEMENTATION (34)

ANSWERS TO PRACTICE QUESTIONS

ANSWER TO Q NO. 1
ICAP EXAMINER COMMENTS

This question was based on a scenario which described the organisation structure of an organisation which contained
five levels and the span of control was three. It consisted of two parts and both were linked to the same scenario.
The overall performance was quite poor as only 16% of the candidates secured passing marks. Part-wise comments
are given below:

(a) In this part the candidates were required to identify and discuss the type of organization structure prevalent
in the organisation. The responses of the students could broadly be categorized into three groups i.e. those
who correctly identified that the structure was Tall Narrow, those who either mentioned the term Tall or
Narrow and those who identified other types of organisation structures.

(b) This part required the candidates to recommend structural changes based on their analysis in part (a) where
they had discussed the organisation structure in the context of span of control. Many students did not
appreciate this aspect and started discussing matters other than span of control such as creation of
departments, appointment of personnel, etc. which were not relevant. Some students even discussed matters
such as mentoring and team building which was totally irrelevant. Many students were able to recommend
correctly that the organisation should reduce the number of levels and increase the span of control but were
unable to provide what benefits would accrue by doing so.
ANSWER BY ICAP
(a) The organizational structure of SNS is ‘tall-narrow’ as there are many layers of management from top down
to operational level where each management level has small number of subordinates directly reporting to
them. There is close supervision of work as span of control is narrow and slow vertical communication as
shape of the organization structure is tall.

(b) SNS may adopt ‘wide-flat’ organization structure to overcome the existing issues as it would bring
following benefits:

• The few layers of management from top down to operational levels would facilitate rapid vertical
communication and decision making as information would travel quickly.
• The wide span of control would result in the greater delegation of responsibilities to subordinates.
The subordinates would have greater participation in decision making by having more access to
top management and thereby improved motivation and creativity.
• The elimination of the excess layers of management would result in greater cost savings as well
as retention of the best talent staff.
• It would allow the CEO and managers to engage in more important activities that add value
including development of new packages to meet customer demands and market trends.
• There would be less emphasis on formal roles and individuals would be willing to carry out other
tasks as per business needs.
CHAPTER-7 STRATEGY IMPLEMENTATION (35)

ANSWER TO Q NO. 2
ICAP EXAMINER COMMENTS

Most poorly attempted part and all the incorrect answers were mentioned.

ANSWER BY ICAP
Organic organisation

ANSWER TO Q NO. 3
ICAP EXAMINER COMMENTS
In this question seven brief scenarios and the candidates were required to match these with appropriate
concepts/principles which were also mentioned in the question. The performance was good.

ANSWER BY ICAP

Transformational change