Managing Change in Small Organisations

1.0 Introduction

The phenomenon of resistance to change is the bane of all Algerian bakeries that convey ideas for change. For the same one who proposed the change, the resistances are usually synonymous with hostility, intrigue deadlines, polarization, conflict, and impatience, many problems which are likely to frustrate and undermine the success of his bakery.

Basically, resistance to change is built up from many sources; internal and external. Overcoming resistance to change requires first the identification of those sources. Therefore, the owner of the bakery “El-Bahdja” is looking for an expert or professional advice in the field to help managing change effectively. Hence, as this topic is part of the international business and management studies, the owner asked me to do some research on this matter.

Ultimately, this research is divided into two major chapters, first; the literature part that discusses the main topic theoretically, it starts off by mentioning the general sources that fuels the resistance to change, then it goes on with hofdstede’s point of view on resistance of change based on cultural differences and it concludes by describing the steps of managing change effectively and it concludes with.

The second major chapter is the analysis of the findings from the primary data that have been collected through interviews with owners and employees from the bakery El-Bahdja and owners from other bakeries.

Finally this paper is closed by recommendations for the owner of the bakery El-Bahdja on how to overcome resistance to change and how to manage change.

1.1 Research objective

Many companies in North Africa particularly in Algeria are making loss and could not improve the quality of their business due to the habit of following common procedures and the high consideration of sunk costs invested in the status quo and fear of new ideas. Lack of adequate information fuels rumors and gossip and adds to anxiety generally associated with change. This fear creates resistance to change in the Algerian bakery industry

Therefore, this research focuses on finding the elements that fuel the resistance to change in the Algerian bakeries and specifically the bakery “El Bahdja” that produces and delivers all kind of bread and pastries. The owner of the Algerian Bakery “El-Bahdja” is an old man and has been in the business since 1967. The owner is facing the closing down due to lack of managing change skills in the bakery and the high resistance from the employees to change.

The main objective of this research is to provide the owner of the bakery “El-Bahdja” with guidance to effectively managing change when it is in the process of the implementation.

1.2 Research questions

To provide guidance on how to manage changes for the owner of the bakery “El-Bahdja” it is essential first to find answers to the following research questions.

“Does Algerian culture welcome changes”

“Why most Algerian employers and employees resist changing?”

“What are the external factors that prevent Algerian employers and employees from changing?”

“How do Algerian employers and employees manage change when applying the new ideas?”

1.3 Methodology

This study is based on both primary and secondary data that help in understanding the causes of resistance to change from both the Algerian owners and their employees:

• Secondary data collection: this method studies the previous cases that have already been written about and find the similarities between the cases. This method is very helpful in collection data from different cultures that share the same fact which is fear of new ideas that have direct effect on their traditional way of doing business. Therefore, the resources of the secondary data collection are mainly from books, journals, and internet.

• Primary data: a very crucial data and plays a big role in making final decision. The primary data which is better called direct communication or field research, on other word; facing people and have them interviewed. The objective of this method is to collect factual data that helps in answering the research questions of this study and this after interviewing people from the same field on the main topic.

• Reflection on the research methodology: the methods followed for collecting data are linked together. The secondary data helps understand the theoretical concepts that have been concluded from previous cases and compare them to the new facts. In this method; the 7s model of McKinsey, the theory versus the real world by Jeff Hiatt and Arab identity by Halim Barakat are used as starting point for facing organizational change in Algeria.

The primary data is basically the tangible evidence for decision makers, observing and interviewing people are the major tools to be used in collecting data for this study. Reliability and validity of data are the essential axes of this method. Therefore, the interviews take place specifically with owners of bakeries and their employees in Algeria and in the Netherlands for comparison to see whether culture differences is a matter for resisting changing.

2.1 Why managing change? “Change is believed to happen”

Changes are fact and every person is subject to these changes. People faces changes regularly in their life or in their workplace, part of them deal with these changes successfully and the other part fail to adjust to change. In the life, for instance a family with children; parents believe that children are subject to changes and may change to better or to the opposite that parents plan for them, however these changes would not affect the family as a whole but the person himself.

Nevertheless, in a business changes there are two ways and no third, successfully manage change or failure. In organization whether you are an executive, supervisor, coach, consultant, project team leader or manager of any type where your job is to manage people, you likely have experienced resistance to change from employees. However you may not recognize the role that you can play in preventing that resistance and leading change. Many managers do not make this connection until they have personally experience failure in an important change project (Jeff Hiat, Timothy J. Creasey 2003)

When asking people after this failure what would you do differently if you had the chance to do it again? The common response would be using an effective and planned change management program. The question to be risen here is whether this program is sufficient enough to prevent resistance to change from happening in the first place and deal with people emotions and pursue them to change.

The real barrier to success is a lack of change management and not management program. Some people do not lack of vision or an understanding of the marketplace but they feel simply short when managing the people side of change. In other words, things did not go exactly as planned. The unexpected happened. Not managing the people side of change impacts the success and introduces risk into the business (Jeff Hiat, Timothy J. Creasey 2003)

Change management skills have shown that is not only mitigates these business risks, but also can avoid them entirely. Business leaders have change management skills to not only manage resistance once it appears, but to prevent it from occurring.

2.2 Change and the manager

“Change needs to be portrayed in positive terms, a necessity to ensure long term survival (Robert A Poton, James McCalman, 2008)”

Organizations and their managers must recognize change, in itself, is not necessarily a problem. The problem more often than not is a less than competent management o the change situation (Rob Paton, James McCalman, 2008).

Managers must realize that one cannot separate strategic change management from organizational strategy; both must work in tandem. The importance of the human side of change cannot be underestimated, one must identify and manage the potential sources and causes of potential resistance and ensure that motivators are built into new processes and structures (Forlaron, 2005).

i) Change competency: “Change is part of the business’s philosophy”

“The successful organization is the organization that understand change will occur, expect it and support the change during implementation (Jeff Hiat, 2003)

An organization that faces constant demands to change and uses effective management over and over with each new initiative may experience a fundamental shift in its operations and the behavior of its employees. Sponsors begin to repeat activities that made last change successful. Managers develop skills to support employees through the change. Employees see part of their job as navigating these new changes. Each level in the organization will have internalized its role in change and developed the skills and knowledge necessary to react to constant change. The organization has become ready and able to embrace change; it has developed change competency (Jeff Hiat, Timothy J. Creasey, 2003). However, building change competency is not paved with flowers; it requires a belief that change is now an ever-present feature of organizational life (Burnes, 2004).

Change competency is similar to change management, but there are several key distinction. First, change management is ultimately the use of specific activities like communication, coaching, sponsorship and training; to realize successful outcomes with business changes. Change competency is not a specific activity; it is an organization’s ability to react to change over and over again

Second, while change management can be taught and learned, change competency requires a fundamental shift in culture and values. It must be simply part of day-to-day operations and cannot be simply demonstrated in training or instructional material.

Third, change competency must penetrate every facet and level of the organization. This distinction especially relates to the front-line employee. An organization may have expertise in change management in its sponsors, consultants and change management. However, the front-line employees are the ones whose day-to-day activities are changing.

To build change competency into the organization, you can take the first step by ensuring that solid change management practices are applied consistently for each change initiative. The second step is to begin building the following competencies into your organization (Jeff Hiat, Timothy J. Creasey, 2003)

ii) Change and Human Resource

Technology has played a major role in ensuring that a coherent business approach and managerial performance can be maintained from a reduce resource base. The key success in such moves has been the mobilization of the human resource (Pettigrew and Whipp, 1993).

2.3 Managing resistance once it appears

“Believing in changes to be happening is a key principle to reducing resistance to change”

People are often afraid of new ideas. They may feel threatened by new ideas and fear that they will not be able to cope with a change in working patterns that is demanded of them or that they will not understand how to use a new technology; example of that many older people are afraid of materials that they are not able to handle and may make them calling the technician every moment (Tony proctor 2005).

The fear of new ideas is a natural feeling; people live with this fear and it not a bad manner. Fear of new ideas becomes negative when is surrounded with sources that increase the tension of fear that leads to high level of resistance and consequently aggravation of the failure of any project.

Change more often than not produces suspicions and resistance. To many it implies a move from familiar ways-mastered over long periods of time- to an unknown and threatening environment. In order to deal effectively with resistance to change, people must understand its causes (Jack Rabin, Marcia B. Steinhauer, 1988). Lawrence and Greiner 1970, identify the main sources that feed the resistance of change. Fear of the unknown, lack of information, threats of status, fear of failure, and lack of perceived benefits.

Regarding the first group of sources of resistance, change starts with the perception of its need, so a wrong initial perception is the first barrier to change. This first group is called ‘distorted perception, interpretation barriers and vague strategic priorities’ (Pardo del Val, Manuela & Martínez Fuentes). It includes:

(a) Inability of the company to look into the future with clarity (Barr et al., 1992; Krüger, 1996; Rumelt, 1995);

(b) Denial or refusal to accept any information that is not expected or desired (Barr et al., 1992; Rumelt, 1995; Starbuck et al., 1978);

(c) Perpetuation of ideas, meaning the tendency to go on with the present thoughts although the situation has changed (Barr et al., 1992; Krüger, 1996; Rumelt, 1995; Zeffane, 1996);

(d) Implicit assumptions, which are not discussed due to its implicit character and therefore distort reality (Starbuck, Greve and Hedberg, 1978);

(e) Communication barriers, that leads to information distortion or misinterpretations (Hutt et al., 1995);

(f) Organizational silence, which limits the information flow with individuals who do not express their thoughts, meaning that decisions are made without all the necessary information (Morrison and Milliken, 2000; Nemeth, 1997).

The second main group of sources of resistance deals with a low motivation for change. Five fundamental sources:

(a) Direct costs of change (Rumelt, 1995);

(b) cannibalization costs, that is to say, change that brings success to a product but at the same time brings losses to others, so it requires some sort of sacrifice (Rumelt, 1995);

(c) Cross subsidy comforts, because the need for a change is compensated through the high rents obtained without change with another different factor, so that there is no real motivation for change (Rumelt, 1995);

(d) Past failures, which leave a pessimistic image for future changes (Lorenzo, 2000); and

(e) Different interests among employees and management, or lack of motivation of employees who value change results less than managers value them (Waddell and Sohal, 1998).

The lack of a creative response is the third set of sources of resistance. There are three main reasons that diminish the creativeness in the search for appropriate change strategies:

(a) Fast and complex environmental changes, which do not allow a proper situation analysis (Ansoff, 1990; Rumelt, 1995);

b) Reactive mind-set, resignation, or tendency to believe that obstacles are inevitable (Rumelt, 1995); and

(c) Inadequate strategic vision or lack of clear commitment of top management to changes (Rumelt, 1995; Waddell and Sohal, 1998).

Taking into consideration all those sources of resistance mentioned above can reverse the situation into preventing resistance in the first place.

Cultural web: Cultures differ from each other in their resistance to change. The strongest resistance to change characterizes of high power distance, low individualism, and high uncertainty avoidance. Among these cultures are most Latin American countries, Portugal and Korea, followed by Japan, France, Spain, Greece, Turkey, and Arab countries.

Cultures with low levels of resistance to change are low on power distance, high on individualism, and low on uncertainty avoidance. This category includes the Anglo countries, Nordic countries, and the Netherlands, followed by Singapore, Hong Kong, and South Africa (Harzig and Hofdestede, 1996

2.4 Making sense of change management “7S model of McKinsey”:

The Mckinsey 7S model defines the seven components that encompass an “organization” and that by changing any one of the “S” components there is impact on the other “S” components. This model is such a conceptual aid by acting as good checklist for those setting out to make organizational change, laying out which parts of the system need to adapt, and the effects of these changes in other parts of the system (Mike Green, 2007)

The 7s categories are:

1. Staff – important categories of people within the organization, the mix, the diversity, retention, the development and the maximizing of their potential. This component helps to determine how committed resources to make it all work?
2. Skills – distinctive capabilities, knowledge and experience of key people. The role of this component is to identify how ready and competent are the staff based on where the organization is heading?
3. Systems – processes, IT systems, HR systems, knowledge management systems. In other words, what are the suitable systems to be used to support the transition?
4. Style – management style and culture. How we are getting from here to there?
5. Shared values – guiding principles that make the organization what it is.
6. Strategy – organizational goals and plan, use of resources. Briefly is where are we transitioning to?
7. Structure – the organization chart and how roles, responsibilities and accountabilities are distributed in furtherance of the strategy.

“The Mckinsey 7S model provides an effective framework for analyzing an organization and its activities that determine whether an organization is strong enough to adjust to any changes.

Furthermore, this model helps in avoiding some of the sources that feed resistance to change in the first place”

2.5 Five steps for effective change process (Thomas and Christopher, 2008)

Step 1:Motivating change: “Moving from the known to the unknown”

Organizational change involves moving from the known to the unknown. The future is uncertain and may adversely affect people’s competencies, worth, and coping abilities. Organization members generally do not support change unless compelling reasons convince them to do so. A key issue in planning for action is how to motivate commitment to organizational change. This requires attention to two related tasks: creating readiness for change and overcoming resistance to change.

• Creating Readiness for change: people’s readiness for change depends on creating a felt need for change. This involves making people so dissatisfied with the status quo that they are motivated to try new work processes, technologies, or ways of behaving. Generally people and organization need to experience deep levels of hurt before they will seriously undertake meaningful change. The following three methods can help generate sufficient dissatisfaction to produce change:
• Sensitize organizations to pressures for change. Modern organizations face unprecedented environmental pressures to change themselves, including heavy foreign competition, rapidly changing technology, and the draw of global markets. Internal pressures to change include new leadership, poor product quality, high production costs, and excessive employee absenteeism and turnover.

Organizations can make themselves more sensitive to pressures for change by encouraging leadership to surround themselves with devil’s advocate; for instance by cultivating external networks that comprise people or organizations with different perspectives and views; by visiting other organizations to gain exposure to new ideas and methods.

• Reveal discrepancies between current and desired states. Significant discrepancies between actual and ideal states can motivate organization members to initiate corrective changes, particularly when members are committed to achieving those ideas. A major diagnosis is to provide members with feedback about current organizational functioning so that the information can be compared with goals or desired future states.
• Convey credible positive expectations for the change. When organization members expect success, they are likely to develop greater commitment to the change process and to direct more energy into the constructive behaviors needed to implement it. The key success to achieving these positive effects if to communicate realistic, positive expectations about the organizational changes*.

Research suggests that information about why the change is occurring, how it will benefit the organization, and how people will be involved in the design and implementation of the change was most helpful.*

• Overcoming Resistance to change: At the organization level, resistance to change can come from three sources. Technical resistance comes from the habit of following common procedures and the consideration of sunk costs invested in the status quo. Political resistance can arise when organizational changes threaten powerful stakeholders, such as top executive or staff personnel, or call into question the past decisions of leaders. Finally, culture resistance takes the form of systems and procedures that reinforce the status quo, promoting conformity to existing values, norms, and assumptions about how things should operate.
• Empathy and support. A first step in overcoming resistance is learning how people are experiencing change. This strategy identifies people who are having trouble accepting the changes, the nature of their resistance, and possible ways to overcome it.
• Communication. People resist change when they are uncertain about its consequences. Lack of adequate information fuels rumors and gossip and adds to anxiety generally associated with change. Effective communication about changes and their likely results can reduce this speculation and allay unfounded fears.
• Participation and innovation. Involvement in planning the change increases the likelihood that members’ interests and needs will be accounted for during the intervention. Consequently, participants will be committed to implementing the changes. They also can identify pitfalls and barriers to implementations.

STEP 2: CREATING A VISION

The second activity in leading and managing change involves creating a vision of what members want the organization to look like or become. Generally, a vision describes the core values and purpose that guide the organization as well as an envisioned future toward which change is directed. It provides a valued direction for designing, implementing, and assessing organizational changes. The vision also can energize commitment to change by providing members with a common goal and a compelling rationale for why change is necessary and worth the effort.

Research suggests that compelling visions are composed of two parts: (1) a relatively stable core ideology that describes the organization’s core values and purpose, and (2) an envisioned future with bold goals and a vivid description of the desired future state that reflects the specific change under consideration

Step 3: DEVELOPING POLITICAL SUPPORT

Managing the political dynamics of change includes the following activities:

• Assessing Change Agent Power. Greiner and Schein 1988, indentified three key sources of personal power in organizations (in addition to one’s formal position); knowledge, personality, and others’ support. Knowledge bases of power include having expertise that is valued by others and controlling important information. For example, leaders in organizational units undergoing change can call on their informal networks for resources and support, and encourage subordinates to exercise power in support of the change.
• Identifying Key Stakeholders. This can start with simple question. ”who stands to gain or to lose from the changes? Once stakeholders are identified, creating a map of their influence may be useful. Consequently, provides change agents with information about which people groups need to be influenced to accept and support the changes.
• Influencing Stakeholders. There are three major strategies for using power to influence others in organization development;

First strategy is playing straight; this strategy involves determining of particular stakeholders and presenting information about how the changes can benefit them. The success of this strategy relies heavily on the change agent’s knowledge base. He or she must have the expertise and information to persuade stakeholders that the changes are a logical way to meet their needs.

The second strategy is using social network; in this strategy change agents attempt to use their social relationships to gain support for changes. This social networking might include, for example, meeting with other powerful groups and forming alliances to support specific changes. This strategy also might include using informal contacts to discover key roadblocks to change and to gain access to major decision makers who need to sanction the changes.

The third strategy is going around the formal system; the change agent’s charisma, reputations, or professional credibility lend legitimacy to going around the system and can reduce the likelihood of negative reprisals. For example, managers with reputations as winners often can bend the rules to implement organizational changes. However, this power strategy is relatively easy to abuse. Therefore; the OD practitioners should consider carefully the ethical issues and possible unintended consequences of circumventing formal policies and practices.

Step 4: MANAGING THE TRANSITION

Implementing organizational change involves moving from the existing organization state to the desired future state. There are three major activities and structure to facilitate organizational transition: activity planning, commitment planning, and change-management structures.

Activity Planning

This involves making a road map for change, citing specific activities and events that must occur if the transition is to be successful. Activity planning should clearly identify, temporally orient, and integrate discrete change tasks and should link these tasks to the organization’s change goals and priorities.

Commitment planning

this activity involves identifying key people and groups whose commitment is needed for change to occur and formulating a strategy for gaining their support.

Change-Management Structures

Because organizational transitions tend to be ambiguous and to need direction, special structures for managing the change process need to be created. These management structures should include people who have the power to mobilize resources to promote change, the respect of the existing leadership and change advocates, and the interpersonal and political skills to guide the change process.

Step 5: SUSTAINING MOMENTUM

Once organization changes are under way, explicit attention must be directed to sustaining energy and commitment for implementing them. A strong tendency exists always among organization members to return to old behaviors and well-known processes unless they receive sustained support and reinforcement for carrying the changes through to completion.

The following five activities can help to sustain momentum for carrying change through to completion:

• Providing resources for change. Additional financial and human resources are required for implementing organization change, particularly if the organization continues day-to-day operations while trying to change itself. Extra sources are always helpful to provide a buffer as performance drops during the transition period.
• Building a support system for change agents. Organization change can be difficult and filled with tension, not only for participants but for change agents as well. A support system typically consists of a network of people with whom the change agent has close personal relationships – people who can give emotional support, serve as sounding board for ideas and problems, and challenge untested assumptions.
• Developing new competencies and skills, reinforcing new behaviors, and staying the course. In organizations people generally do things that bring them rewards. Consequently, one of the most effective ways to sustain momentum for change is to reinforce the kinds of behaviors needed to implement the changes through for instance informal recognition, encouragement, and praise.
• Staying the course. If the organization changes again too quickly or abandons the changes before it is fully implemented, the desired results may never materialize. There are two primary reasons that managers do not keep a steady focus on change implementation. First, many managers fail to anticipate the decline in performance, productivity, or satisfaction as change is implemented. Organization members need time to practice, develop, and learn new behaviors; they do not abandon old ways of doing things and adopt a new set of behaviors overnight.

Second, many managers do not keep focused on a change because they want to implement the next big idea that comes along. Successful organizational change requires persistent leadership that does not waver unnecessarily.

References

Books and articles

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Greiner, L E and Schein, V E. (1988), “Power and Organization Development: Mobilizing power to change”, Reading, MA: Addison Wesley

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Mike Green. (2007), “Change management masterclass: a step by step guide to successful change”.

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Websites: http://www.explorehr.org/articles/Orga