Managing Change: Royal Mail Service - Case Study Example

Managing Change: Royal Mail Service Word Count: 1986 Contents Contents 2 Introduction 3 2.Findings 3 2 Critical evaluation of organizational change for Royal Mail Service 3 2.2.Why was Change Necessary? 5 2.3.Different Approaches to Change 5 2.4.Royal Mail’s response to crisis  6 2.5.Role of Change Agents 6 3.Conclusion 7 4.Recommendation 8 Reference List 9 1. Introduction The Royal Mail Group was one of the largest national enterprises in United Kingdom that employed about 150,000 people. It was recently heard in 2011 that due to the global economic crisis and the weak economic conditions of European nations, the Royal Mail Group was brought to a dismal situation. In the wake of near bankruptcy, the government decided to sell off the company to private entities. The United Kingdom Ministry of Commerce and Postal Department had decided to go in for a privatization of the postal services in UK (Neate, 2013). This assignment is aimed at examining and evaluating the modernization and the transformation process of Royal Mail Group. The paper shall begin with an identification of the reason for privatization of royal Mail and an evaluation of the desired change in the system within the company. Further, it shall also see the extent to which the company responds to the change management process and thereby evaluates the role of change agents in the change management process. Theory shall be linked throughout the report with supporting evidence and discussions. 2. Findings 2.1. Critical evaluation of organizational change for Royal Mail Service According to Hooper, Hutton and Smith, 2008, it was found out that the Royal Mail Universal postal system in UK was finding it extremely difficult to keep up with the present and growing problems of pension deficit, tough union and royal mail relations and financial performance. The only options Royal Mail had stated that the company could either modernize or decline. Such modernization was required in 3 major fields as compiled by Hooper, Hutton and Smith, 2008. As per the postal service bill, the three major areas that could do with some changes were identified as 1. Regulation: The responsibility of future financial assistance to the UPS by way of extending law within the postal market and an access to a new regime for access. 2. Pension: Powers were sought in changing and transferring of schemes and also in establishment of new government schemes. This required establishment of a new division for the Post Office Limited which was empowered to transfer the assets of the scheme from the government (BBC, 2013). 3. Part Partnership: The UPS provision sector was to remain within the public holding while the private sector was to hold the modernization and legislative wings. As per (Hooper, Hutton and Smith, 2008, privatization was a necessity within the universal mail system to bring in some legality and modernization in the postal system for which the government should sell off a majority stake to the private sector (Prizzia, 2001). Such a planned change can be analyzed by the three step process by Kurt Lewin wherein group dynamics, action research and field theory can be applied (Burnes, Katsouros and Jones, 2004). According to Lewin, the three step model for organizational change requires a movement from the fixed state or unfreezing by the process of moving or advanced shift stage to refreezing or the new fixed state (Levasseur, 2001). The signing of the National agreement between CWU (Communications Workers Union) and the Royal Mail in 2010 was observed as the unfreezing state which created the perfect situations to facilitate the change process and elimination of resistance. Automation, industrial relationship and movement towards a better technology were a part of the Moving stage for the UK Royal Mail Services. Refreezing is the final step after proper reinforcement of the moving stage is done. Refreezing for Royal Mail involved the privatization process of the Universal Mail delivery system and selling off of the share to the private owners for royal Mail group. This ensured that the change process again came to a new fixed state of a public-private partnership (Mezias, Grinyer, and Guth, 2001). Part privatization process of the Royal Mail is being opposed by the Union and the Labour ministers with the view that such a move by the company shall undermine the strength of the universal delivery service and threaten the loss of thousands of jobs. The Royal mail staff knew that privatisation would invite stricter terms and conditions, loss of pension funds and serious job losses and were not ready to sell off the company for a small price of £747 million. 2.2. Why was Change Necessary? In order to become competitive, it was most essential that the Royal Mail service became efficient. For this very purpose, it was felt that the company needed to modernize. Apart from the financial crisis, the cause was felt necessary because of 4 other conditions: 1. Universal Postal Service: The change to be brought within this system was independence of tariffs, increase in customer base and increase security within the mails. 2. Prices: Reduction in mails via Royal Mails with the introduction of the email system and increased competition by the second class mail systems was seen as a prime threat to business. The change procedure wanted to increase postal charges to increase revenues. It is however felt that reduction in prices would be deemed as most essential for challenging the electronic media (Rodriguez and Hill, 2005). 3. Pension: The pension deficit component was one of the largest for Royal Mail and it was increasing. However, the company was facing huge deficit to meet such expenses and sought help in paying off such debts. 4. Efficiency: when compared to its competitors, Royal Mail fell 40% less efficient. It had dates delivery offices and mail centres with high inadequacies in automation and still followed the hand delivery route. 2.3. Different Approaches to Change Due to the force experiences in the industry, change management companies feel it mandatory to keep up with the speed and implement changes with consideration of the external environment along with the internal factors (Bayliss, n.d). Grundy has identified 3 major types of change that can be used by Royal Mail which include, Incremental Change, Punctuated Change and Continuous Change (Kritsonis, 2005). The incremental change is a smooth transformation process that follows increments gradually. This needs regular and dramatic adjustments to be made within the organization like staff training activities. Punctuated Equilibrium is a bumpy increase and such changes occur in an erratic manner as abrupt changes in odd periods of time. Royal Mail followed more of a punctuated equilibrium where all changes have happened after a long gap of many years. The change in 2010 was a path breaking initiative (Garcia and Gluesing, 2013). 2.4. Royal Mail’s response to crisis  The Royal’s Mail’s crisis has been seeing a positive change ever since the signing of the Business transformation Agreement took place in 2010. This also indicated that there was truce and harmony established between Royal Mail and its employees and the CWU. Such an agreement is viewed as essential for the business because it is a fair deal for both the company and its customers (Couper, 2006). The main points of the agreement include 39 work hours in a week, job security and about 7% hike in pay for employees. The CWU would be kept involved within all matters of change. Such a deal was seen necessary between the Royal Mail and the employees to allow for an unhindered transformation process. The £2 million modernization would include automation of equipment and machinery. The share price trend after the listing for Royal Mail also showed a positive trend. The prices more than 100 pence change within a month of listing (Crew and Kleindorfer, 2012). This reflects that the privatization for Royal Mail was seen positively by the stakeholders as well. Investor sentiment is important for the company from the viewpoint of the company. It was specially deemed important because despite the huge liability of £4 million, the company was being positively viewed by the investors. The ambiguity on sourcing of such huge amounts to repay the pension deficit still remained. 2.5. Role of Change Agents Change agents are people and organizations which intervene within the change process to focus on both the business realities of its performance and scope and also design the change management process not only to revive the business but also to encourage employee dedication and motivation to ensure smooth flow of the change process. The change agents involve advisors which facilitate the change process by providing consultation within the business for its internal functioning and management. These experts advise the business on operational management and line management issues by way of pure advisory and non interventionist modes (Moriarty and Smith, 2005). The role of regulators as agents of change is of utmost importance because of the need of control and checks during the transformation process. The privatization of Royal mail needed regulators to bring in the legal bindings to protect the interest of the employees and the stakeholders. The financial dealings also need to be overseen by the regulators to ensure that the dealings are free from defraud (McAdam and ONeil, 2002). Regulators are traditional bodies that are involved in the tactical roles of monitoring and formulation of employee policies and rules for safety of employee interests. The regulators manage discontent among the employees by acting as order seekers in the temporary process of change. They help in coming to tactical truce situations with labour unions and labour ministers during the privatization process of Royal Mail (Heitzler, 2009). Thus we can say that the role of change agents has grown to a large extent such that it has become indispensable in the business processes. Each segment of change agent caters to a different set of regulation need of the business and its stakeholders (Crew and Kleindorfer, 2012). 3. Conclusion The universal postal service is the backbone of the postal system for UK. The company is an important representation of the strength of the public sector domain within the nation and a privatisation move within this has also faced several issues and a long drawn process (Parker, 2003). Hence, the success of such a privatisation becomes extremely important to retain the social and economic glue of the company. It is of utmost priority that despite all changes, the business of 28 million households should not go down. However, without the modernization attempt, it is evident from the above analysis that the business for Royal Mail would have declined and take away a huge amount of taxpayer’s money with it. The job security might be an issue but a major issue in the weak economic condition is the loss of pension funds and this needed to be saved through the privatization process (Hawkins, 2008). 4. Recommendation With a view to main and sustain the level of universal postal services, it is advised that price increase in postal charges is avoided. This is essential because the email or the electronic mail system is giving stiff competition to the direct mail system. Additionally the email system is virtually free, highly convenient and readily available everywhere. This has considerably reduced the market for traditional mails. In this case, if the postal charges are increased, people would want to resort to email as much as possible and refrain from using postal services for such high prices. Instead if a low price formula is obtained and implemented, then the postal service might look inviting and cause a rise in sales (De Donder, 2006). The recent economic scenario is recovering from the dull stage and the future looks promising. The advent of private sector shall induce competitiveness in business by increasing efficiency (Coram and Burnes, 2001). Such views must be presented and share with the Unions and the labour groups who seem to be opposing the change. With the rise in efficiency and greater scope for business prospects, the job security will not be affected as much as anticipated. It is important the rebellious groups see this view in order to ensure a smooth transformation process (Hooper, 2010). Lastly, pension fund deficit can be maintained and matched by the advent of private sector more quickly. However, high regulation is desired within such changes in order to ensure the smooth movement towards privatisation (Adams and Whelan, 2009). Hence it is necessary to allow for privatisation of the postal system to induce profitability in business and seek quick revival. Reference List Adams, C. A. and Whelan, G., 2009. Conceptualising future change in corporate sustainability reporting. Accounting, Auditing & Accountability Journal, 22(1), pp.118 – 143. Bayliss, K., n.d. Privatisation of Royal Mail: We need to reconsider if this is really our best available option. [online] Available at: < http://blogs.lse.ac.uk/politicsandpolicy/archives/34988> [Accessed 25 February 2014]. BBC., 2013. Q&A: Royal Mail privatisation. [online] Available at: < http://www.bbc.co.uk/news/business-23253370/> [Accessed 25 February 2014]. Burnes, B., Katsouros, M. and Jones, T., 2004. Privatisation and the European Union: The case of the Public Power Corporation of Greece. International Journal of Public Sector Management, 17 (1), pp.65 – 80. Coram, R. and Burnes, B., 2001. Managing organisational change in the public sector: lessons from the privatisation of the Property Services Agency. International Journal of Public Sector Management, 14(2), pp. 205-20. Couper, F., 2006. Mutuality: Invaluable lessons from a classic model. Strategic Direction, 22 (2), pp.6 – 8. Crew, M. A. and Kleindorfer, P. R., 2012. Multi Modal Competition and the Future of Mail. London: Edward Elgar Publishing. De Donder, P., 2006. Access pricing in the postal sector: theory and simulations. Review of Industrial Oganisation, 28, pp. 307–326. Garcia, D. and Gluesing, J. C., 2013. Qualitative research methods in international organizational change research. Journal of Organizational Change Management, 26 (2), pp.423 – 444. Hawkins, N., 2008. Privatization – Reviving the Momentum. [pdf] Adam Smith Research Trust. Available at: [Accessed 25 February 2014]. Heitzler, S., 2009. Traditional regulatory approaches and the postal service market. Competition and Regulation in Network Industries, 10(1), pp. 77–105. Hooper, R., 2010. An Update of the 2008 Independent Review of the Postal Services Sector. [pdf] Crown Copyrights. Available at: < https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31808/10-1143-saving-royal-mail-universal-postal-service.pdf> [Accessed 25 February 2014]. Hooper, R., Hutton, D. and Smith, I. R. 2008. Modernise or decline – Policies to maintain the universal postal service in the United Kingdom. An independent review of the UK postal service sector, Cm 7529. Kritsonis, A., 2005. Comparison of Change Theories. International journal of scholarly academic intellectual diversity, 8(1). Levasseur, R. E. 2001. People Skills: Change Management Tools—Lewins Change Model. Interfaces, 31(4), pp. 71-73 McAdam, R. and ONeil, L., 2002. Evaluating best value through clustered benchmarking in UK local government: building control services. 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