Change Management

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Changing the way a business is run is brought about by desires within the company to fulfil their objectives by the most effective and efficient way possible. Through internal forces for change, Optimal Business Solutions may have the motive to increase their profitability, increase their efficiency in their operations or improve their communication problems within the company. As the company is deciding to centralise and opt for a central office in London instead of their four regional offices, this can cause a dramatic change in the hierarchy of the business and result in an adverse effect on employee morale. However certain external factors may have forced the company to change location and culture as greater competition, legislation and taxes and technological changes all impact the business and without the correct implemented change, OBS will struggle financially and pay the price.

There are many reasons why a company would want to change and cutting costs is the main reason why OBS feel a need for change is necessary. Using Retrenchment, OBS are able to save costs by moving to a more centralised location getting rid of regional offices and ultimately trying to grow and gain a high market share. By reducing the size and scale of the business to begin with, OBS then have the chance to grow into a bigger business over time. OBS have both internal and external forces for change and both promote the need for change, as their outcome is a bigger more successful company if managed correctly.

Internal forces include the desire to increased profit margins and efficiency, as this is the main cause of cash flow problems in the future. Ineffective communications can cause a need for change, as there is no cohesion between managerial staff and employees causing demotivation for employees who are angry as they do not feel part of the group and their opinions for the company are not listened to.

External factors that promote change include the introduction of stronger competition as these companies can attract your customer base and consequently see your demand fall considerably. The introduction if new technology may also force a change in the business especially due to the nature of OBS. The employees may have to be trained to work with the new technology and relocation may have to be considered if the current location does not have the capacity to hold it. Furthermore, the introduction of new legislation and taxes may cause the company to change. During a crucial time in the current elections, a different leader would see companies see changes in the economy that they must adapt to or face going under.

To implement change, OBS can use one of two strategies in order to prepare the company, both managerially and its employees, for change. Using step change can help the company as all the change occurs rapidly so employees are aware of the change that has been made. However this change could come as a shock for the employees as suddenly their usual routine has been disrupted and they may become unsure of where the company is planning to go. The other option is that of incremental change. This gradual change is brought in a lot slowly and gives the employees more time to adapt to the changes throughout the company without the added shock of a substantial change to employee’s roles. Unfortunately this too can cause uncertainty as employees never know when the changes will stop and they are able to understand exactly where the business is heading.

With change there always comes resistance and this must be dealt with in order for the company to progress. Employees resist change for many reasons and it is up to the managerial team to implement strategies to lessen the effect it will have on the business. Habit is the main reason for resistance as people are used to the comfort and security of their job and feel a change would only jeopardize their position within the company. Employees are likely to resist if the change presents economic implications as it may affect their pay and the rewards they receive. Without bonuses and rewards employees may feel demotivated, as any extra effort is unnoticed. Fear of the unknown during a change in the company is always a big factor to consider for employees. The fear and anxiety of possibly loosing your job or a drastic change can result in low productivity and efficiency, as employees do not know where their future lies.

Change is resisted because of the poor way it is managed. If the business does not explain the need for change, consult and negotiate with its employees and build employee relation, resistance will most defiantly occur. Kotter and Schlesinger devised the 6-step approach to prevent, decrease and minimise resistance within a company. According to their model, by educating and communicating with staff, by participation and involving employees in the change, by facilitating and supporting them, by using manipulation tactics in order to force them to change and by threatening employees with a job loss if they do not accept the change, a company can successful manage change. However these tactics are only guidelines and OBS must choose the correct methods that specifically suit their company’s culture in order for change management to be a success.

To conclude, there are many ways in which a company such as OBS can promote and implement change on their staff and by choosing the correct methods they are lessening the impact it has on all four functional areas of the business. Although change is inevitable, using certain methods means employees will understand why change is needed, become involved in the change and ultimately, accept the change. However the right strategies and tactics must be implemented for change to be successful. If it is not, absenteeism and labour turnover may increase drastically and therefore production levels decrease, and if new competitors are on the horizon, their market share and profit margins may be in danger.

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