Chapter

10

Understanding the
impact and context of
change
Chapter learning objectives

Lead Component
E3: Recommend change (a) Assess impact of strategy
management techniques on organisation
and methodologies (b) Recommend change
management strategies

385
Understanding the impact and context of change

1 Introduction
Internal and external pressures make change inevitable. 'Adapt or die' is the
motto of almost every organisation. Some strive to meet the challenge by
leading those in the marketplace whilst others hide in niches, snapping at the
heels of the major players.
The key questions for all companies are not whether to change or not but
rather:
• What to change?
• What to change to?
• How to change successfully?

2 Triggers for change

External triggers
Environmental pressure for change can be divided into two groups.
• General (indirect action) environmental factors – these can be identified
using the familiar PESTEL framework and
• Task (direct action) factors – these can be assessed using Porter's five
forces model.

386
 Chapter 10

Examples of external triggers

Indirect triggers (PESTEL)

Political Changes in government
New environmental protection policies
Private/public partnerships
Economic Growth or recession
Changes in currency and interest rates
Local labour costs
Regional prosperity/opportunities
Disposable income
Social Attitudes to work and leisure
Environmentalism
Attitudes to health/education
Fashion trends
Changing national/regional culture
Technological Growth in Internet
Public use of IT
Global sourcing/call centres
Innovations
Environmental Visible impact (e.g. plastic in oceans)
Demands from customers
Legal New labour laws
European directives
Direct triggers (Porter's five forces)
Competitive rivalry Powerful rivals may force the firm to have to
adapt to survive, either through innovation, if a
differentiator, or cost cutting if a cost-leader.
Power of customers Powerful customers could trigger a firm to
consider forwards vertical integration.
Power of suppliers Supplier power could encourage a firm to
redesign products in order to reduce the
reliance on specialist components and thus
facilitate multi-sourcing.
Threat of new New entrants may force incumbent firms to
entrants improve quality to maintain market share.
Threat of New technologies may result in substitutes that
substitutes render existing products obsolete. This could
lead to factory closure and reorganisation.

387
Understanding the impact and context of change

Internal triggers
The reasons for change within the organisation could span any functional area
of operation or level of control from strategic to operational.
Philosophy New ownership
New CEO
New initiative/management style
Reorganisation Takeover/merger
Divisional restructuring
Rationalisation/cost reduction
Personnel Promotions/transfers
Rules/procedures
Training/development
Conditions Location change
Outsourcing
Rosters/flexible working
Technology New procedures/systems
Changing information demands
Integration of roles

Problem identification as a precursor to change

The above triggers can be reasons why change is considered or even necessary.
However, further strategic analysis is needed to determine what needs changing.

Illustration 1 – Problem identification as a precursor to change

For example, TGH Textiles is a UK-based clothing manufacturer that has
seen falling profits, declining margins and a loss of market share over the
last two years. The main reason for this decline is increasing competition
from manufacturers in China and India.
The external trigger for change is increased competitive rivalry, but what
needs changing?
The first step would involve analysing the firm's cost base and
determining customer perceptions regarding relative quality. This should
help TGH to see how it's competitive advantage is being eroded.
Suppose poor quality is identified as the underlying problem.
Even then, it is not obvious what needs changing. "Poor quality" could be
an underlying problem of customer perception related to brand or design
flaws, the quality of raw materials, production problems or an underlying
culture where quality is not valued highly enough. Determining the main
cause(s) could involve discussions with customers, competitor analysis,
Porter's value chain analysis, SWOT and/or benchmarking.
Only then will the directors have a clear idea of what needs changing.

388
 Chapter 10

3 Classifying change

Types of organisational change

Change can be classified by the extent (or scope) of the change required, and
the speed with which the change is to be achieved:

Types of change

(Exploring strategic change – Balogun, Hope Hailey)

Note that incremental change is also known as "continuous" change while
"discontinuous change" refers to the big bang above.
• Transformation entails changing an organisation’s culture. It is a
fundamental change that cannot be handled within the existing
organisational paradigm. This is likely to be a top down process and is
normally driven by major external events.
• Realignment does not involve a fundamental reappraisal of the central
assumptions and beliefs.
• Evolution can take a long period of time, but results in a fundamentally
different organisation once completed. It is normally taken in anticipation
of a need for change.
• Revolution is likely to be a forced, reactive transformation using
simultaneous initiatives on many fronts, and often in a relatively short
space of time. It is rapid and likely to affect most, if not all, aspects of what
the business does and how it operates – in other words it represents a
fundamental change to the organisation’s paradigm. It is therefore critical
that this type of change is managed effectively.

389
Understanding the impact and context of change

Illustration 2 – Strategic change

Strategic change is by definition far-reaching. We speak of strategic
change when fundamental alterations are made to the business system or
the organisational system. Adding a lemon-flavoured Coke to the product
portfolio is interesting, maybe important, but not a strategic change, while
branching out into bottled water was a major departure from Coca-Cola’s
traditional business system.

Evolution or revolution?
Another way that evolution can be explained is by conceiving of the
organisation as a learning system. However, within incremental change
there may be a danger of strategic drift, because change is based on the
existing paradigm and routines of the organisation, even when
environmental or competitive pressure might suggest the need for more
fundamental change.
In selecting an approach to strategic change, most managers struggle
with the question of how bold they should be. On the one hand, they
usually realise that to fundamentally transform the organisation, a break
with the past is needed. To achieve strategic renewal it is essential to
turn away from the firm’s heritage and to start with a clean slate. On the
other hand, they also recognise the value of continuity, building on past
experiences, investments and loyalties. To achieve lasting strategic
renewal, people in the organisation will need time to learn, adapt and
grow into a new organisational reality.
The ‘window of opportunity’ for achieving a revolutionary strategic change
can be small for a number of reasons. Some of the most common
triggers are:
• competitive pressure – when a firm is under intense competitive
pressure and its market position starts to erode quickly, a rapid and
dramatic response might be the only approach possible. Especially
when the organisation threatens to slip into a downward spiral
towards insolvency, a bold turnaround can be the only option left to
the firm.
• regulatory pressure – firms can also be put under pressure by the
government or regulatory agencies to push through major changes
within a short period of time. Such externally imposed revolutions
can be witnessed among public sector organisations (e.g. hospitals
and schools) and highly regulated industries (e.g. utilities and
telecommunications), but in other sectors of the economy as well
(e.g. public health regulations). Some larger organisations will,
however, seek to influence and control regulation.
• first mover advantage – a more proactive reason for instigating
revolutionary change, is to be the first firm to introduce a new
product, service or technology and to build up barriers to entry for
late movers.

390
 Chapter 10

Test your understanding 1

Strategic change can be classified as evolution, adaptation,
reconstruction or revolution. The classification depends on both the
scope and speed of the change.
Which ONE of the following combinations of extent and speed of change
would be classified as an evolutionary change?
Extent Speed
A Transformation Big bang
B Realignment Big bang
C Transformation Incremental
D Realignment Incremental

Test your understanding 2

H makes and sells a patented chemical, known as LKL, widely used in
cosmetics. LKL has recently been found to increase the risk of cancer of
users. This has led to a ban on all cosmetics containing LKL.
H has therefore started urgently looking for alternative uses for LKL. It
has identified that LKL can be an effective pesticide and, due to its lack of
contact with humans the increased risk of cancer will not be an issue. H
has therefore started looking for pesticide manufacturers to sell to.
Which ONE of the following types of organisational change is occurring
at H?
A Reconstruction
B Evolution
C Revolution
D Adaptation

391
Understanding the impact and context of change

Test your understanding 3 – (Integration question)

Historically the directors of Zed Bank have resisted change, seeking to
offer a traditional approach to its customers. However, recent problems
within the banking industry and an increasingly competitive market has
forced the Board to consider a number of important initiatives, including:
• enhancing its current services to customers by providing them with
on-line internet and telephone banking services; and
• reducing costs by closing many of its rural and smaller branches
(outlets).
In an attempt to pacify the employee representatives (the Banking Trade
Union) and to reduce expected protests by the communities affected by
branch closure, a senior bank spokesperson has announced that the
changes will be ‘incremental’ in nature. In particular, she has stressed that:
• the change will be implemented over a lengthy time period
• there will be no compulsory redundancies
• banking staff ready to take on new roles and opportunities in the
online operations will be retrained and offered generous relocation
expenses.
H For customers, the bank has promised that automatic cash dispensing
machines will be available in all the localities where branches (outlets)
close. Customers will also be provided with the software needed for
Internet banking and other assistance necessary to give them quick and
easy access to banking services.
The leader of the Banking Trade Union is ‘appalled’ at the initiatives
announced. He has argued that the so-called ‘incremental’ change is in
fact the start of a ‘transformational’ change that will have serious
repercussions, not only for the Union's members but also for many of the
bank's customers.

Required:
Distinguish incremental change from transformational change. Explain
why the bank spokesperson and the trade union leader disagree over
their description of the change.
(15 minutes)

392
 Chapter 10

4 Organisational culture

Definition

Culture is the set of values, guiding beliefs, understandings and ways of

thinking that are shared by the members of an organisation and is taught
to new members as correct. It represents the unwritten, feeling part of the
organisation.

Culture is ‘the way we do things around here’ (Charles Handy).

Culture is a set of ‘taken-for-granted’ assumptions, views of the environment,
behaviours and routines (Schein).

Cultural processes of change

The inherent culture of the organisation is important for two reasons:

Firstly the existing culture can become "embedded" and hence resistant to
change. Overcoming this resistance can be a major challenge.
Secondly the existing culture can limit the types of strategy development and
change that are considered.
• Faced with forces for change, managers will seek to minimise the extent to
which they are faced with ambiguity and uncertainty by defining the
situation in terms of that which is familiar.
• This can explain why some firms adopt incremental strategies and, worse,
why some fail to address the impact of environmental triggers, resulting in
strategic drift (that is, having no sense of strategy).

Illustration 3 – Cultural process of change

Faced with a change trigger such as declining performance, management
are likely to react as follows:
(1) First managers will try to improve the effectiveness and efficiency of
the existing strategy
e.g. through tighter controls.
(2) If this is not effective, then a change in strategy may occur but in
line with existing strategies
e.g. through market development, selling existing products into
markets that are similar to existing ones and managing the process
in the same way as they are used to.
(3) Even when managers know intellectually that more radical change
is needed, they find themselves constrained by existing routines,
assumptions and political processes.

393
Understanding the impact and context of change

The cultural web

The cultural web was devised by Gerry Johnson as part of his work to attempt to
explain why firms often failed to adjust to environmental change as quickly as
they needed to. He concluded that firms developed a way of understanding their
organisation – called a paradigm – and found it difficult to think and act outside
this paradigm if it was particularly strong.

Using the cultural web to map change

The concept of the cultural web is a useful device for mapping out
change but its real worth is in the fact that we can identify which elements
of culture need to change.
Key questions to ask include:
Stories • What stories do people relate within the
organisation and what do they say about the
organisation’s values?
• How pervasive are these beliefs (through the
levels of the organisation)?
• What do current staff tell new staff when they
join?
• Do stories relate to: strengths or weaknesses,
successes or failures, conformity or mavericks?
Who are the heroes and villains?
• What norms do the mavericks deviate from?

394
 Chapter 10

Routines and • What behaviour do routines encourage? Which

rituals would look odd if changed?
• What are the key rituals that staff undertake
regularly? What core beliefs do they reflect?
• What do training programmes emphasise?
• How easy are the rituals/routines to change?
• What do employees expect when they come to
work?
Organisational • Is there a very formal organisational structure?
structures Are there any informal reporting mechanisms?
• How flat/hierarchical are the structures? How
formal/informal are they?
• Do structures encourage collaboration or
competition?
• What type of power structure does the overall
organisational structure support?
Control • What is most closely monitored/controlled in my
systems organisation?
• Is emphasis on reward or punishment? Are
there many/few controls?
• Are all employees aware of the control
mechanisms in place?
• Is the organisation well controlled?
Power • What are the core beliefs of the leadership in my
structures organisation?
• Who has the power to make decisions?
• Is power used effectively and appropriately?
• How is power distributed in the organisation?
• What are the main blockages to change?

395
Understanding the impact and context of change

Symbols • What language and jargon are used in the

organisation?
• How internal or accessible are they?
• What aspects of strategy are highlighted in
publicity?
• What status symbols are there?
• Are there particular symbols that denote the
organisation to the outside world/customers?
Overall • What are the key underlying assumptions that
are the paradigm?
• What is the dominant culture?
• How easy is this to change?

Illustration 4 – The cultural web

Suppose you are acting as a consultant to the technical services
department of a local government authority. You have found that
departments are not very responsive to the needs of users and that
service is inconsistent from one branch to another.
A strategic change workshop with managers resulted in the following
cultural web:

396
 Chapter 10

What is notable about the paradigm is that staff believe they are providing
a "good service", that they have a high professional standing and see
themselves as problem solvers. Unfortunately their problem solving and
professional standards do not appear to be customer focused. The fact
that stories and myths focus on how things "used to be" indicate staff are
out of touch with user needs.
Furthermore, given the degree of local autonomy, an emphasis on status
symbols such as parking spaces and a blame culture, it is hardly
surprising that co-operation and standardisation across branches is poor.
These are the cultural challenges that must be met if effective change is
to be implemented.

Test your understanding 4

D has recently been hired by B Brothers Ltd, a large department store
which is owned and run by the Bond family. The family has owned and
run the store for 75 years and little has changed in the management
approach.
D has been hired in order to make suggestions relating to strategic
changes needed within B Brothers, which has seen falling profitability for
the last five years.
His first suggestion was to eliminate the private dining room that was set
aside for senior managers. D suggested that this room was too expensive
to run and damaged management’s ability to interact with more junior
members of staff.
D’s suggestion was met with significant opposition, with senior
management suggesting that he had ‘failed to understand the culture of B
Brothers’.
Which ONE aspect of B Brothers’ corporate culture would D’s suggestion
have directly impacted upon?
A Power structure
B Control systems
C Symbols
D Stories and myths

397
Understanding the impact and context of change

Test your understanding 5

G Ltd is a training organisation based in country S. G’s mission
statement, which is regularly promoted by management is ‘to enable
students to achieve their long-term goals in the workplace’.
Employees, however, believe that the company’s main aim is to simply
make a profit and this has caused problems with customer service and
student satisfaction at G Ltd.
According to the cultural web model, there appears to be confusion
between managers and students over the organisation’s ________.
Which ONE of the following words correctly fills the gap in the sentence
above?
A Mission
B Paradigm
C Objectives
D Vision

Test your understanding 6 – HBY – (Case style)

HBY is a manufacturer of children’s toys based in country U. It makes
scale models of motor vehicles and trains using traditional methods. This
means there is a heavy reliance on manual labour with a focus on quality.
HBY’s sales have declined since their peak around twenty years ago,
although they have been static for many years. The company is owned
by the founding family (who also occupy most of the senior positions on
HBY’s Board of Directors) and has always returned acceptable profits,
with the family regularly consulting their workers regarding the strategic
decisions made by the board – in spite of the organisation’s rigid,
bureaucratic structure. The many levels of management create a defined
career path for staff, and the directors place a strong emphasis on
individual growth and development.
Recently, the family have decided to sell the company to a large,
multinational toy-maker, WDG, who wishes to add HBY’s well-known
brand name to its portfolio. WDG is a listed company and is under
pressure from its shareholders to increase dividends and profits.
HBY’s employees have been informed of many of WDG’s plans for the
company, including a move to cheaper, more automated production
processes. WDG has not spoken with any staff representatives of HBY to
date and redundancies have not been confirmed, though staff expect
them to be significant.

398
 Chapter 10

WDG has announced that it will be replacing several levels of HBY’s

managers with a single tier of their own senior staff, who will have
oversight over all of HBY’s employees and remaining managers.
Whereas staff at HBY have historically been left to get on with their work,
unless there were specific problems, WDG’s Board have stated that they
will be more hands-on, helping train staff on the ‘new, improved
manufacturing processes being introduced by WDG’.
WDG has also suggested that the company’s pay structure will be
altered. Previously, staff were awarded a bonus based on a range of
indicators, including sales and customer complaints. WDG wishes to pay
staff on a piecework basis and is planning to cut back on the regular
social gatherings that HBY has historically provided for its workers.
Finally, WDG has indicated that it no longer wishes to pursue the quality
accreditation that HBY has attained for the last ten years, as the ‘costs
outweigh the benefits’.
The staff of HBY have expressed their concern to the current owners.
Staff are unionised and they have stated their intention to strike over the
proposals. A number of HBY’s senior managers have stated that WDG
‘clearly fails to understand the culture of HBY and should not be allowed
to destroy the organisation that HBY’s staff have worked so hard to build.’

Required:
Draft a report to the management of WDG, which identifies the various
aspects of the existing culture of HBY, using an appropriate model to
structure your report.
You should also use your report to explain the reasons for HBY’s staff
resisting the proposed takeover by WDG.
(25 minutes)

399
Understanding the impact and context of change

5 McKinsey 7S Model
Like the cultural web, McKinsey’s 7S model looks at corporate culture and the
various components that it is made up of. McKinsey saw culture as seven
interconnected elements, each beginning with the letter S.

Three of these factors are referred to as ‘hard’ (tangible and easy to quantify):
• Structure – this looks at the way the organisation is structured and who
reports to whom.
• Strategy – relates to the ways in which the organisation plans to gain a
competitive advantage or achieve other objectives.
• Systems – these are the daily activities and procedures followed by staff.
The remaining four factors are ‘soft’ (less easily quantified and more subjective):
• Skills – the skills, abilities and competences of the organisation’s
employees.
• Style – the style of leadership adopted within the organisation.
• Staff – the people that make up the organisation.
• Shared values – the core values of the organisation (i.e. the paradigm).
The model suggests that all seven elements have to be aligned with each in
order for the organisation to operate effectively.

400
 Chapter 10

In the context of change, McKinsey’s 7S model can be used to look at the

factors that could be affected by the change process, as well helping improve
the organisation’s understanding of the wider effect of change. If one of the S
factors changes, it will have a knock-on effect on other S factors.
For instance, if the organisation introduces a new automated assembly process,
this would be a change to the company’s systems. However, this would also
likely impact elsewhere in the organisation. Staff may find they lack appropriate
skills, leading to uncertainty and resistance. It may lead to a reduction in the
number of workers, affecting the staff and structure of the organisation. If staff
require fewer skills to undertake their roles, the style of management within the
business may be affected. Even a small change can therefore have wide-
ranging impacts on the organisation.

Test your understanding 7

Which THREE of the following are elements within McKinsey’s 7S model
of corporate culture?
A Symbols
B Stories and myths
C Structure
D Support
E Skills
F Styles

Test your understanding 8

Which ONE of the following factors of the McKinsey 7S model is classified
as a ‘soft’ element?
A Structure
B Strategy
C Staff
D Systems

401
Understanding the impact and context of change

6 Resistance to change
Resistance to change is the action taken by individuals and groups when they
perceive that a change that is occurring is a threat to them.

Resistance is ‘any attitude or behaviour that reflects a person’s

unwillingness to make or support a desired change’

Resistance may take many forms, including active or passive, overt or covert,
individual or organised, aggressive or timid. For each source of resistance,
management need to provide an appropriate response, e.g.:

Source of resistance Possible response

• The need for security and the • Provide information and
familiar encouragement, invite
involvement
• Having the opinion that no
change is needed • Clarify the purpose of the change
and how it will be made
• Trying to protect vested interests
• Demonstrate the problem or the
opportunity that makes changes
desirable

402
 Chapter 10

Reasons for resisting change (Kotter and Schlesinger)

According to Kotter and Schlesinger (1979) there are four reasons that
explain why certain people resist change.
• Parochial self-interest (some people are concerned with the
implication of the change for themselves and how it may affect their
own interests, rather than considering the effects for the success of
the business).
• Misunderstanding (communication problems; inadequate
information).
• Low tolerance to change (certain people are very keen on security
and stability in their work).
• Different assessments of the situation (some employees may
disagree on the reasons for the change and on the advantages and
disadvantages of the change process).

Test your understanding 9

Which THREE of the following would usually be classed as social factors
leading to resistance to change?
A Fear of unemployment
B Dislike of person leading change
C Lack of consultation regarding the change
D Changes to current social environment
E Implied criticism of current methods
F Fear of demotion or reduced pay
G Work becoming less interesting

403
Understanding the impact and context of change

Test your understanding 10

J runs a small business manufacturing personalised stationery (such as
envelopes and paper). She has recently decided to automate parts of this
process, meaning that all four of her current staff members will see their
overtime pay reduced (though there will be no effect on their basic pay).
The main activities of each staff member will not change significantly as a
result of the introduction of automation.
J feels that the current overtime payments are unsupportable and that the
business will be unable to grow unless the new system is introduced.
Local competitors are already currently using this automated process.
Although J has communicated the situation to the staff and they are all
fully aware of the problems faced by the business, they have complained
bitterly to J about the proposal and have suggested that they will refuse
to use the new automated system.
According to Kotter and Schlesinger, which ONE of the following is the
primary reason for resistance among J’s employees?
A Differing assessments of the situation
B Parochial self-interest
C Misunderstanding
D Low tolerance to change

404
 Chapter 10

7 Summary

405
Understanding the impact and context of change

Test your understanding answers

Test your understanding 1

The correct answer is C

By definition.

Test your understanding 2

The correct answer is A

Change is classified with reference to two factors – extent and speed of
the change.
The change in H is clearly rapid, as all the traditional products used for its
chemical have been banned. It is urgently looking for alternatives to
prevent a total collapse of the company.
The scope of change seems small (a realignment). H will still be
producing LKL – it will simply be selling it to a different type of
organisation. While this may require some changes (such as marketing
and customer management), H is still fundamentally producing and
selling LKL.

Test your understanding 3 – (Integration question)

Incremental change means step-by-step changes over time, in small
steps. When incremental change occurs within an organisation, it is
possible for the organisation to adapt to the change without having to
alter its culture or structures significantly. Employees are able to adapt to
the gradual changes, and are not unsettled by them.
In contrast, transformational change is a sweeping change that has
immediate and widespread effects. The effect of transformational change
is usually to alter the structure and culture of the organisation, often with
major staff redundancies and the recruitment of new staff with new skills.
The spokesperson for the bank has argued that the change will be
incremental. Since the change will take place over a long period of time,
staff will have time to adapt to the new structure. There will be no
compulsory redundancies and staff will be re-trained in new skills.
Although some branches will close, others will remain open, and
customers will be offered additional facilities through on-line banking.

406
 Chapter 10

The trade union leader believes that the change will be much more
dramatic. He might believe that many employees will leave the bank
because they are unable to adapt to the new service, or because they are
unwilling to re-locate from the branches that are closed down. The bank
might push through the branch closure programme more quickly than it
has currently proposed, and staff redundancies could be made
compulsory if there are not enough individuals willing to take voluntary
redundancy.
Essentially, the two individuals take differing viewpoints because they are
looking at change differently. The spokesperson for the bank wants to
persuade employees to accept the change, and even welcome it. The
trade union representative wants to warn employees about the potential
consequences, and has therefore stressed the risks.

Test your understanding 4

The correct answer is C

The private dining room is a symbol of the authority and position of the
senior managers. Trying to remove this is likely to cause resistance as
senior managers will see D’s suggestion as a way of reducing their status
within the organisation.
The proposed change does not directly affect the senior manger’s
authority or position within the business, suggesting that it will not affect
the power structure of B Brothers.
The removal of the private dining room is also unlikely to impact the way
that the organisation controls its staff (there is no change to the way that
staff are rewarded or punished) and there is no evidence that it will alter
the stories and myths – i.e. what staff members believe and say about
the organisation.

Test your understanding 5

The correct answer is B

The paradigm is the overall aim and purpose of the organisation. This is
clearly confused at G Ltd, leading to problems with customer
management.
There is no confusion over the mission itself. This has been published,
meaning that staff are aware of the current mission statement. They
simply do not agree that it represents the actual purpose of the
organisation.

407
Understanding the impact and context of change

Test your understanding 6 – HBY – (Case style)

Report
To: The Board of Directors, WDG
From: A. Consultant
Date: 18/08/XX
Subject: Cultural issues and resistance at HBY

Introduction
This report will examine the impact of WDG’s proposals relating to the
takeover of HBY. Specifically, it will look at how these proposals will
affect the culture of HBY post-acquisition.
According to Handy, culture is defined as ‘the way we do things round
here’.
When analysing an organisation’s corporate culture, the most logical
model to use is the Cultural Web. This suggests that the culture of an
organisation can be broken down into six different aspects. Any attempt
to significantly change the culture of the organisation, as WDG is
attempting to do with HBY, is likely to lead to significant resistance.
Symbols
This looks at the symbols or symbolic actions that typify the organisation.
Within HBY, the symbols include the regular social gatherings supplied
by the company. This indicates that staff wellbeing and happiness is
valued by the company. Cutbacks to this area are likely to cause
resistance as staff will feel that WDG is indicating that they are no longer
as valued as they once were.

Power structure
This examines who is in charge (or who has the power) within the
organisation.
HBY currently appears to have several levels of management, with the
original founding family having ultimate control over the organisation.
WDG intends to replace many of these managers with a single layer of
their own management.
This is likely to upset many of HBY’s employees as it will not only lead to
redundancies, but it will also change the reporting system that they are
currently used to.

Organisational structure
The current management structure of HBY appears to be bureaucratic,
with a number of levels of management. WDG is planning to replace this
with a single level of its own management, flattening the structure.

408
 Chapter 10

This may lead to resistance as it may reduce the chances for internal
promotion for HBY’s existing staff. There will be fewer management
positions, many of which will be filled by WDG’s staff for the foreseeable
future.

Control systems
Controls appear to be few and far between under the traditional approach
taken by HBY. Staff were largely expected to get on with their own jobs,
with management only getting involved if there was a problem.
The new management systems proposed by WDG involve a much more
hands-on approach, with employees being trained in the new systems by
WDG managers. This is likely to cause resistance as staff will feel that
they are no longer trusted by their management to get on with their work
in an effective manner.
The shift from a bonus based on a range of indicators, which focused on
quality, to pay which is piecework, and therefore only based on the level
of productivity, also indicates a shift in what the business expects from its
employees. This is likely to cause confusion amongst workers who are
used to a quality focus.

Routines and rituals

Linked to control systems, WDG are suggesting that the existing methods
used by HBY’s workers for many years are inferior to the ‘new, improved’
WDG methods.
Employees may therefore feel that there is an implied criticism of their
existing working methods by WDG, increasing resistance.
The fact that WDG has no interest in pursuing the quality accreditation
that HBY have historically obtained also indicates that it places little value
on the work currently being done by HBY and this, in turn, will increase
resistance.

Stories and myths

The staff of HBY feels that, due to the participative style of the existing
management, they have ‘helped to build’ the company and that they are a
major reason for its historic success.
Whether this is the case or not, WDG’s desire to implement the changes
without any staff consultation is a departure from the management style
that staff of HBY are used to and is likely to upset them.

Paradigm
Overall, HBY’s approach has been a participative one, with defined roles
and a strong focus on quality. WDG seems to want to shift this towards a
focus on output and profitability. This fundamental move in culture is,
understandably, a difficult one for the staff of HBY to accept.

409
Understanding the impact and context of change

Test your understanding 7

The correct answers are: C, E and F

Note that A and B are factors from the cultural web model.

Test your understanding 8

The correct answer is C

Soft factors are those that are less easy to analyse and evaluate.

Test your understanding 9

The correct answers are B, C and D

A and F are job factors, E and G are personal factors.

Test your understanding 10

The correct answer is B

J’s employees are motivated by their own self-interest, rather than the
ongoing success of the business.
J’s staff are fully aware of the situation that the business is in – including
the fact that J’s rivals have adopted similar automated systems. There is
no evidence that they have failed to understand how much of a threat this
may be to J’s operations. This suggests that options A and C are
incorrect.
It is unclear whether J’s staff have faced changes in their working
practices in the past, so there is no evidence to support a low tolerance of
change. It is therefore unlikely to be the primary reason for resistance.

410