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Change Management

Change Management The world in which business operates is changing at a rapid pace. Developments in technology, communications and competition have forced businesses to update their work practices and become globally competitive. Pressures for change in business can arise internally, that is from staff or management observing current processes, or from external pressures like changes to government policies. There are several pressures currently affecting large organizations in Australia, they are changing markets, technological innovation, Total Quality Management, changes to the nature of industrial relations (where wages and working conditions can be negotiated with staff), flatter organisational structures, HR perspective and environmental issues. These pressures for change must be recognised by management and to effectively manage change, an organization's leaders must enact a change management process. Effective change management is a three-step process. Psychologist Kurt Lewin identified the first step as ‘Unfreezing the present situation’. The term unfreezing refers to the way in which management must prepare for the change and overcome any resistance that they may face. Resistance to change is human nature, as people are generally reluctant to move from a current, comfortable situation, but this resistance can be overcome using a variety of methods. These methods include communication, participation, support, negotiation, manipulation and threats, ranging from the least severe (communication), to the most severe (threats). The most effective strategy to unfreezing the present situation is to minimise resistance, through the use of open communication channels and participation with employees, without resorting to severe actions. Once resistance has been overcome and the organization is ready for the change, the next step is ‘Moving to the new state’. This step is the actual implementation of the change itself. New policies are communicated and procedures are re-evaluated. Once the change is implemented, management must work to ‘Refreeze in the new situation’. This final step is of upmost importance because it will ensure that staff does not drift off into old habits and revert to the old procedures. Management must work to offer support to staff and monitor the new situation and ensure that the process of change was an effective one. The issue of change has struck all businesses worldwide with the growing rate of globalisation. Globalisation is the erosion of national borders, decline of the power of national governments and the rise of organizations that operate across national borders. Globalisation is generally characterised by less restricted world trade (in the form of reduced tariffs and fewer trade barriers) and the rapid movement of money around the globe (commonly in the form of electronic commerce). Globalisation has been underway for a few decades now, but the 1980’s saw the biggest set of changes in Australia’s history. Australia is a country where agriculture forms over 60% of export earnings in a world where agriculture accounts for only 14% of world trade. Countries were becoming more self-sufficient and Australia was left behind. In the 1980’s, Australia lowered tariffs and exports soared. As a result of less restricted trade, managers of companies are now facing direct competition from local as well as international companies. Managers are forced to increase the quality of their products and be able to compete with their international counterparts. This is known as world’s best practise. A manager must also learn to deal with certain issues relating to globalisation. Management must consider contact with other cultures, information technology systems required for efficient global commerce, competence in the mechanics of international commerce, managing people of a different culture, international recruitment and international social responsibility. To manage globalisation effectively managers need to become ‘International Managers’ taking into account global perspective and global strategies. For managers of large organizations, globalisation can involve competing more directly against the rest of the world, having more personal contact with other cultures or even working in a foreign country. The latter can pose many logistical and communication problems for managers, so an effective strategy must incorporate open communication channels. There are various ways to measure the success of the management of globalisation, however the use of Key Performance Indicators (KPI’s) is most effective. KPI’s measure the business performance in a specific area. In a globalisation aspect, the number of sales to overseas countries would directly relate to the businesses performance in an overseas market. Managers may look at how sales figures, and ultimately profit, have increased or even decreased since international competitiveness was present. On the other hand, managers who have actively penetrated overseas markets may look at their market share in other countries to determine whether international campaigns have been effective. Globalisation can have both positive and negative effects on the internal environment of business. External changes can include increased sales, productivity, market share and profit, but internal changes can have a much greater effect on the day-to-day running of the business and an unprepared manager is vulnerable to the negative effects of globalisation. A frequent area of change in the internal environment is the management (corporate) structure. A company expanding overseas requires more staff, and as such, more managers. It is a common occurrence for organizations to adopt a functional or divisional model with a very large horizontal structure. Divisions may be divided geographically, as departments in each country or continent. The management style is generally changed when an organization begins to deal with foreign customers. In an effort to appear polite, managers must be aware of local cultures and traditions when working with foreign employees. It may be necessary to use a different style when dealing with employees from other countries where the participative/consultative style is not appropriate. Bibliography:

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