Managing Change by Managing Risk - Essay Example

? MANAGING CHANGE BY MANAGING RISK by goes here] Presented to [your goes here] [your goes here] [your university’s name] [due date of the paper] Managing Change by Managing Risk 1. Introduction In today’s world, quality means a lot to every individual. Companies need to deliver their best in order to remain in the market. Only the highest quality products and services are able to catch customers in today's competitive environment. Companies need to improve and excel in all areas, such as, product manufacturing, employee management, and customer services. “Change management is seen as a permanent business function to improve efficiency and keep organizations adaptable to the competitive marketplace” (Meisinger 2008). Changes are inevitable in case of ordinary organizational performance. However, there exist some risks in every company, which need to be managed effectively in order to make the changes successful. In this paper, we will discuss how managers of construction companies can manage organizational change in the companies by managing risks. We will also discuss the role of risk management in managing organizational changes. 2. Organizational Change Before going to discuss how change can be managed by managing risks, let us get a better understanding of what change actually is. Ross (2011) states, “Change Management is about someone who is passionate and technically capable of leading Continuous Improvement in Organisations”. Organizational change is the reformation of a company or remodeling the roles of the employees of a company. Rasing (2010) asserts, “The key to organizational change and development lies in the understanding of people's requirements and work towards it”. It is also a change in overall behaviors of employee for bringing improvement in company’s productivity. 3. External and Internal Forces of Change There are two types of organizational change, which include external and internal forces of change. External and internal forces of change not only result in altering organizational policies concerning various business activities but also influence major functions of management. 3.1 External Forces of Change The external forces of change include competitive business environment, technological development, and political and social environment of an organization. Technological development means keeping the technology up to date for the company in order to remain competitive in the market. Competitive environment forces the companies to retain good quality of the products and services in order to improve customer satisfaction. 3.2 Internal Forces of Change Internal forces of organizational change include such forces, which force the change to occur inside the company. These changes are very significant in order to increase employee satisfaction and employee commitment towards their job responsibilities. The changes include change in the working atmosphere, change in employment rules and regulations, and change regarding employee retention strategies. 4. Risk Management Harrison (n.d.) states, “Change is inherently ambiguous, and those who deal creatively with change will have a high tolerance for uncertainty”. In case of organizational change, we can say that organizational change needs proper management of risks in order to be successful. Francois (n.d.) states, “A change management process is a series of business practices used to control and manage change within a large system or organization”. Risk management is one of those business practices that are needed to implement organizational change. “Much of risk management work is focused on the management of risk in a 'business as usual' and relatively stable environment” (Anderson 2004). Risk management is a process, which is used to identify and measure the risks being faced by a company or a firm. Risk management refers to the concept of keeping the risks under control so that they do not create any kind of dangerous situation for the company. This process of controlling and measuring the severity of risks is termed as risk management process. There exist many risk management processes, which help the companies, come out of the fear of risks and move towards stability and success in the market. Four major components of risk management include workplace safety and health, employee wellness program, workplace and worker security, and disaster recovery planning. 4.1 Risk Management in Construction Companies Akintoye and MacLeod (1997) state, “Risk management is essential to construction activities in minimizing losses and enhancing profitability”. Construction industry faces various types of critical risks, which need to be handled carefully in order to keep the companies away from the hazardous effects of risks. “Risks need to be properly identified, evaluated and addressed” (Sharp 2009). As we know, change needs proper risk management, so when the managers will not be able to evaluate risks to the company at proper time, it will be very difficult for them to bring required changes to the company’s policies or structure. That is the reason why managers of the construction companies focus properly on identifying and assessing the risks, which the companies are likely to face at some point in future, with their operational, financial and, contractual activities. Lyons and Skitmore (2004) state, “Risk identification and risk assessment are the most often used risk management elements ahead of risk response and risk documentation”. An effective and well-organized mechanism is required in order to examine the risks associated with the companies while achieving the balance between identified risks and the operational necessities of the construction companies. Edwards (1995, p. 4) asserts, “Risk analysis is the identification and assessment of the likelihood of hazards”. Some companies try to eradicate the possibility of risks whereas some companies focus on dipping the chances for the occurrence of risks. A well-organized, money-spinning, and reliable risk management system should be implemented in any construction company not only to discover the associated risks but also to take proper measures to reduce the occurrence of all types of risks. 4.2 Organizational Change and Risks “Organisational change is something many of us will experience in our careers, often more than once” (Deacon 2011). To make such changes productive, companies need to examine various types of risks related to operations, management, and policies. If we talk about risks associated to construction companies, we can say that there are various types of risks associated with the construction industry. The risk management branch of any construction company can never ignore these risks because these risks have the ability to destroy company’s image in the market. Let us discuss some of the most critical risks related to the environment, safety, and structural engineering departments of a construction company. These risks include design assumption risk, fire risk, structural development procedures, and environment uncertainty risks. 4.1.1 Risk of Design One of the major risks that managers of construction companies can never ignore is the risk of design change. Managers need to manage this risk in order to ensure the success of any kind of organizational change. Design risk occurs when a company develops the structural design of a building without getting it approved by the client. The structural design of a building should be agreed upon by the client in order to avoid occurrence of design risk. Let us take an example in which a designer develops the design of a house and sends it to the company for development. Now, in this case, the possibility of design assumption risk increases because the client can raise objection at the final stage of development by saying that the design needs to be altered because it was not what he thought for. In such cases, it becomes very difficult for a company to satisfy the client or alter the building according to the desire of the client. The risk management strategy for such kind of risk can be to arrange a meeting between the client and the company before starting to develop the building. It is because the meeting will be helpful for both the company and the client to agree on the design prepared by the architect. 4.2.2 Structural Development Procedures Risk Another type of risk which managers of construction companies need to examine is structural development procedures risk. It is a very critical risk associated with the construction industry. These are the procedures, which are to be checked continuously during the development stages of a building in order to make sure, whether the building is being constructed according to the standards of the company or it needs some improvements. Managers need to consult sub-contractors first in order to finalize some suitable change regarding development. The risks can occur if any of the procedures is not found up to the standards or guidelines. The procedures, which are checked for quality, include planning and implementation of the selected architectural design, quality of the raw material being provided by the suppliers, quality of the building being developed, implementation of suitable safety measures, and some legal issues related to the structural designs. Risk may occur when these procedures are not implemented correctly and efficiently during the development of a building. 4.2.3 Fire risk Fire risk is related to the safety and security of people working at the construction site. Managers need to inquire employees regarding appropriateness of workplace related systems in plan some change in the systems. There are various risks associated with fire, which include explosion risk, short circuit risk, and many other types of risks. Fire occurs at the construction sites due to negligence shown by the employees during carrying out work related to installation of electricity wires and cables. For example, if an electrician does not repair or join the electric connections of a building in an appropriate manner, fire is likely to occur in that building at some point in future. “Employees may be required to wear safety goggles, gloves, or earplugs in order to ensure safety and thus minimize the chances of injury through company negligence” (Tatum 2010). Fire hazards not only result in causing damage to the buildings but also injure many people working in and around the place of fire. The design, construction, layout and furnishing of buildings play a key role in any fire safety management strategy (Furness & Muckett, 2007, p. 172). It is of the prime responsibilities of the electricians to ensure safe and secure electric works because fire not only causes danger to the lives of the employees but also to the lives of the people living around. Safety of the employees should be one of the top priorities for any company or organization. The management of a company can decrease the element of fire risk by taking appropriate measures. Fire risk management planning involves those safety measures that are taken by the management of any company or organization to reduce the element of fire. These measures are taken to ensure elimination of the risk of fire spread over the internal linings of the buildings, to ensure the building stability if fire occurs, to ensure the sufficient resistance to the fire by walls and roof of the building, and to ensure safety of the employees. Fire risk management planning involves a variety of critical factors like flammable materials at the workplace, the structure of the building, and process fire precautions. Perry (2003, p. 159) suggests in his book that there are three key fire starters; fuel, oxygen, and ignition, if one or more of these components are eliminated, fire will not start or continue. The management of a construction company can decrease the occurrence of fire by taking practical measures such as installation of reliable and guaranteed wires and cables and putting in place effective fire control mechanisms. Fire risk management staff takes appropriate steps to guarantee building stability in case of fire, to ensure employees’ safety, and to ensure customer satisfaction with the company. 4.2.4 Risk of Environment Uncertainty Shen and Tam (2002) state, “The control of environmental impacts from construction has become a major issue to the public”. Uncertainty of the environment is another risk related to the construction industry. Environmental risk management is one of the major tasks for the contractors because environment related risks can not only lead to unforeseen delays but also they can result in loss of material needed for construction. Slivka (2010) states, “To succeed in today's world, the first step taken by contractors is to incorporate environmental risk management into every facet of their business operations”. Environment uncertainty related issues and problems include unexpected rains, loss of raw material, delays in the project’s deadline, and earthquakes. Unexpected climate changes and earthquakes are those problems, which can create very serious problems for the construction companies. “Many organizations adopt ITIL (information technology infrastructure library) for communicating and identifying environmental changes” (Bergamo 2009). 5. Employee Involvement in Managing Change “Evaluation and realignment is key to any change management strategy” (Faucheux 2011). Delays in evaluation can create risks which can lead to poor performance of the construction companies in the market. “It is important for every individual to understand his/her role in making the changes happen” (Nobilis 2011). If a group of employees does not show will for change, change cannot happen properly. In such cases, risks occur, which not only make the companies operate inefficiently but also destroy the image of the company in the market. Risks also lead towards the poor performance of employees because if they are not confident about their safety, their attention will be diverted from their job responsibilities, which will make the employees inefficient and less productive. The first step in the process of change management is to engage all employees in the change process (Nobilis 2011). In case of construction companies, employees from all departments need to be involved in the process of change to eliminate all chances of risks. Inability of the risk management department of a company to respond properly to any kind of expected risk stops the company from achieving its goals and objectives. Flanagan and Norman (1993, p. 45) assert, “Attention to risk is essential to ensure good performance”. It is the responsibility of the risk management departments to perform risk management activities regularly. The risk management staff should not only be able to discover all kinds of possible risks that a company may face but also it should be able to take useful measures to eliminate the occurrence of risks. 6. Change Management and Risk Management Practices “The entire change management process is comprised of three items: requesting the change, evaluation of time and cost to make the change, and implementing the changes” (Francois n.d.). Managers need to be skilled in supervising the change process. A change manager needs to have good communication skills, the capacity for the technical solution to meet business requirements, computer services background, and the ability to reduce the gaps that may exist between different business requirements (Francois n.d.). If we talk about the risk management practices, we can say that these practices play a key role in making the change successful and productive for the company. The risk management practices, which can be established by the construction companies, include taking steps to eliminate the occurrence of identified risks and cutting off the negativity of all sorts of risks. The negativity of the risks can be cut off by analyzing the possible negative outcomes of the identified risks and then making efforts to reduce the negative effects of those risks. The occurrence of identified risks can be eliminated by analyzing the impact of risks not only on the company but also on the employees and then adopting effective strategies to reduce or eliminate the occurrence of risks. 7. Risk Evaluation “Managing risk in fast-moving, ever-growing companies is challenging” (Leithhead 1999). Although it is difficult, it can be done with the help of skilled change managers. Wrona (2010) asserts, “Companies that do perform a risk management process on a fairly typical multi-month project (no longer than 12 months) will identify and manage possibly five to ten easily recognized project risks”. Risk evaluation is also extremely important in order to minimize the occurrence of risks. The two widely used methods of risk evaluation include subjective and objective methods. Many people from different departments are involved in the process of risk management who oversee different phases of the project risk management. Inability to take proper measures on any foreseen risk leads to poor performance regarding successful achievement of goals and objectives set by the company. Those companies, which give importance to risk management planning and perform the risk management processes regularly during different phases of the projects, successfully identify and manage various possible project related risks. 8. Need of a Risk Management Plan Change managers need to develop a proper risk management plan in order to manage risks that may occur at any stage of change implementation. In the risk management process, the first step is to develop a risk management proposal. The basic purpose of the risk management proposal is to develop an effective plan in order to deal with various risks associated with the structural engineering department of the construction companies. Sheldon (2010) states, “Crisis can strike at any time, which is why it is important for organizations to have risk management plans in place”. The activities included in a risk management plan include identification of the risk, analysis of the risk, risk prioritization, risk treatment, risk review, and risk tracking. First, the risks associated with the structural engineering department are identified in order to reduce the negativity of those risks. Riesenburg (2009) states, “The key to the successful implementation of any commercial strategic plan, including the Dubai Strategic Plan 2015, is risk identification and risk management”. After identification, the risks are analyzed in order to know the likelihood and severity of the risks. In the third step, the risks are ranked and prioritized according to their levels of severity. After prioritization, the risks are treated using the most suitable risk management activity. Those activities include mitigating the risk, accepting the risk, avoiding the risk, or transferring the risk. At the stage of risk review, the project manager reviews the risk management plan in order to remove flaws from the strategy, if any. The project manager revisits the risk management activities and the plan is updated according to the situation. 9. Conclusion Summing it up, changes are inevitable in every company or organization whether it belongs top construction industry or some other industry. Managers need to consider several issues related to different business activities before planning to bring some change to the organizational policies. Risk management also plays a key role in change management. Some of the risks related to construction companies include design assumption risk, structural development procedures, fire risk, and environment uncertainty risks. Companies manage all types of risks carefully in order to make the changes productive and successful. References Akintoye, A & Macleod, M 1997, ‘Risk analysis and management in construction’, International Journal of Project Management, vol. 15, no. 1, pp.31-38. Anderson, M 2004, Managing Change Risks, viewed 29 December, 2011, . Bergamo, S 2009, Managing Change is Managing Risk, viewed 29 December, 2011, Deacon, M 2011, What Is Change Management?, viewed 29 December, 2011, . Edwards, L 1995, Practical Risk Management in the Construction Industry, Thomas Telford Publications, London. Faucheux, M 2011, Using Change Management Strategies, viewed 29 December, 2011, . Flanagan, R & Norman, G 1993, Risk Management and Construction, Blackwell Publishing, Oxford. Francois, C n.d., What Is the Change Management Process?, viewed 29 December, 2011, . Francois, C n.d., What Is Change Management?, viewed 29 December, 2011, . Furness, A & Muckett, M 2007, Introduction to Fire Safety Management. Butterworth-Heinemann, Burlington. Harrison, M n.d., Home Privacy Policy Sitemap Contribute to The Change Blog Write for The Change Blog Audible Free Trial: Download a High-Quality Audio Book for Free Download a FREE AUDIO BOOK Today! Want to turn ‘dead time’ (time spent commuting, doing chores, etc.) into ‘learning time’? Starting a Blog: A Complete Guide to Setting Up Your First Blog Archives 7 Essential Skills for Managing Change, viewed 29 December, 2011, . Leithhead, B 1999, Managing Change and Size Risks, viewed 29 December, 2011, . Lyons, T & Skitmore, M 2004, ‘Project risk management in the Queensland engineering construction industry: a survey’, International Journal of Project Management, vol. 22, no. 1, pp.51-61. Meisinger, S 2008, Change management and HR's role, viewed 29 December, 2011, . Nobilis, L 2011, Sustainable Change Management, viewed 29 December, 2011, . Perry, P 2003, Fire Safety Questions and Answers: A Practical Approach, Thomas Telford Publishing, London. Rasing, M 2010, Organizational Change and Development, viewed 29 December, 2011, . Riesenburg, L 2009, Is Dubai ready for PPPs?, viewed 29 December, 2011, . Ross, G 2011, Change Management, Getting Started, viewed 29 December, 2011, . Sharp, D 2009, Managing Business Case Risks, viewed 29 December, 2011, . Sheldon, M 2010, Crisis Situations Require Careful Risk Management Planning, viewed 29 December, 2011, . Shen, L & Tam, V 2002, ‘Implementation of environmental management in the Hong Kong construction industry’, International Journal of Project Management, vol. 20, no. 7, pp.535-543. Slivka, J 2010, Development of Environmental Risk Profiles for Construction Firms, viewed 29 December, 2011, . Tatum, M 2010, What is Risk Management?, viewed 29 December, 2011, Wrona, V 2010, Your Risk Management Process: A Practical and Effective Approach, viewed 29 December, 2011, . Read More