Telstra Company - Analytical Environment and Proposed Change Strategies - Example

Change Management Report Executive Summary This report offers a brief profile of Telstra, a market leading Australian telecommunication and information company. From the brief, the report analyzes the environment of change at Telstra as one that has already initiated a change process. The report then proceeds to identify the nature of the change already underway at Telstra based on the contemporary change models and theories. Telstra’s change process showed that some novel change strategies should be considered and or adopted to enhance the attainment of the desired change outcomes. Specifically, Telstra needs to initiate better employee communication as part of its change process since without employee support; the process will not be successful. Towards the end, the report discusses the major challenges that the managers at Telstra might face if they initiate the recommended change strategies including demotivated staff who prefer to retain the status quo, misconceptions of the objectives of change, customers unwilling to embrace the new technologies and staff inability to maintain the new levels of product and service delivery standards. The report establishes that these challenges are easily solvable by a good communication strategy and a continued process of change that is inculcated as part of the organisation culture. The paper thus recommends that the senior management at Telstra should initiate an immediate communicative strategy aimed at soliciting for employee support for their ongoing change program. The management should also ensure that the change process is progressive and continuous, growing form the successive attainment of short-term goals such as infrastructure growth. Finally, the paper recommends that Telstra’s change process should be accompanied by constant review and evaluation. Table of Contents Executive Summary 1 Table of Contents 2 List of Tables 3 1.0 Introduction 4 1.1 Background Information 5 1.2 Aims of the Report 7 1.3 Scope of the Report 8 1.4 Theoretical Framework 9 2.0 Analytical Environment of Telstra Company 13 3. 0 Need for Change and the Nature of Change Required 16 4. 0 Proposed Change Strategies 18 5.0 Challenges to the Initiation of Change at Telstra and their Remedial Actions 21 Conclusion and Recommendations 22 References List 24 Lists of Tables Table One - Telstra Profile Summary Table One - The four types of internal pressures and the type of change they trigger. 1.0 Introduction This report seeks to analyze the environment of change, identify the nature and determine need for change at Telstra Company, based on the contemporary change models and theories. Having inspected how Telstra is inclined towards change and adoption of change programs, the report will then proposes some change strategies that if reasonable considered and or adopted, could enhance the attainment of the desired change at the company more efficiently, faster and towards greater benefits. Further, the report discusses the major challenges that the managers at Telstra might face if they initiating recommended change strategies. These challenges are then reviewed with the appropriate measures that might help to counter them and thus manage the change process to success. As the essay will detail, Telstra Company has already initiated some change programs in a bid to grow in its market share (Chau, 2007, pp. 52-52). The report thus evaluates their adopted change strategy for effectiveness so as to recommend any remedial actions that help amplify the success of that course action already underway. Given that Telstra has already initiated their change process, this report will not simply punch holes into their change strategy as if highlighting only the areas it is poorly done. Rather it will provide a comprehensive appraisal of how successfully the change process is being implemented. In as much as is possible, is that the report tries to base all its discussion from a basis of contemporary change theories and models, most importantly those proposed by Dunford Palmer and Akin in their 2008 book, Managing organizational change: a multiple perspectives approach. 1.1 Background Information Telstra Company is Australia's largest telecommunications carrier, providing fixed-line services to over 9 million access lines today within Australia. Telstra is among Australia's telecommunications and information services brands today best known for their full range telecommunication services and information solutions (Telstra, 2010). Telstra serves over 10 million mobile phone subscribers and as Australia’s leading ISP, provides BigPond broadband subscription to over 3 million broadband subscribers (Yahoo Finance, 2010). Telstra's largest market niche is the residential and consumer customers although business and government customers come a close second in their clientele base (Yahoo Finance, 2010). Telstra also provides network services in wholesale packages to communications companies retailing the same (Yahoo Finance, 2010). Telstra’s Sensis telephone directory unit is a specialist subsidiary that specializes in online, print and wireless advertising. Currently, Telstra owns 50% stake of Australia’s major pay-TV operator, FOXTEL (Yahoo Finance, 2010). Internationally, Telstra also owns CSL New World Mobility Group, a Hong Kong mobile operator, TelstraClear Limited, New Zealand’s full service carrier, Reach Ltd, a global connectivity, international voice, satellite services and information databases provider as well as SouFun Holdings Limited, a Chinese real estate and furnishings online portal (Telstra, 2010). Telstra also owns Norstar Media and Autohome, a Chinese internet business for auto and digital products advertising, China M and Sharp Point, China's online Music and mobile content businesses (Telstra, 2010). Table One: Telstra Profile Summary Item Entry Sector Technology Industry Diversified Communication Services Country Australia Top Competitors Pacnet SingTel Optus Pty Limited Telecom Corporation of New Zealand Limited (nzt) Chairman Catherine B. Livingstone CEO David Thodey Employees 43, 181 Employees 43, 181 Table Adapted and Developed from (Yahoo Finance, 2010) 1.2 Aims of the Report The core aim of the report is to analyze the environment of change, determine whether change strategies are required and identify the nature change required at Telstra Company. The reports aims at using contemporary change models and theories to inspect the change needs at the company and thus propose change program improvement measures that can reasonably be considered and or adopted to enhance the attainment of the desired change at the company. Upon attainment of this aim, the report then considers the probable challenges that the managers at Telstra may face while implementing the suggested change strategies. These challenges are evaluated with their most effective resolution measures, before tenable list of recommendations and a conclusion is given on the same. 1.3 Scope of the Report This report mainly concentrates on the need for change in contemporary organisations with its focus held at a case study of the Telstra Company. To begin with, the paper seeks to report on the conditions of change, its treatment and need at the company before evaluating whether there is a change program in progress, one already completed and or one that is eminently required. In Telstra’s case, the change process is already underway and thus the paper details how it can be improved towards maximal efficiency and attainment (Chau, 2007, pp. 52-52). On the overall, the intent of the paper is to qualify the change environment of Telstra, is need for improvement in its change strategies and how to resolve ant arising challenges in the implementation of such change strategies. 1.4 Theoretical Framework Organisation change management and the approaches employed currently focus on a strategic, planned and large-scale overhaul and transformation. In this perspective, theorists and managers make a common assumption the change is intentional and that its outcomes are achievable through a process of meticulously planned and implemented steps (Palmer, Dunfold & Akin, 2008). Available approaches usually vary when it comes to the number of steps and the type of actions they outline (Palmer, Dunfold & Akin, 2008). Currently, there has been a noted rise in populace of change management approaches, which has caused a debate among proponents of change management and the supporters of organizational development approaches (Burke 2007, pp. 201 -223). Change management is mostly criticized for being a fashion trend, a fad, thus only focusing on management needs rather than the humanistic organizational values (Palmer, Dunfold & Akin, 2008). Organisation development is on the other hand criticized for lacking relevance, more so when it comes to strategic and large-scale transformations (Palmer, Dunfold & Akin, 2008). Besides organisation development approaches, we have two very important change management approaches, namely contingency approaches and processual approaches (Burke 2007, pp. 201 -223). Contingency change management approaches draws from the director image aimed at initiating a process of change that if successful implemented places the organisation at a higher leverage (Burke, 2007, pp. 201 -223). Once the change outcomes are achieved, depending on the context of that change and its scale, it is halted until the next time that the management will feel it necessary to change further (Burke 2007, pp. 201 -223). Depending on the change needed and the receptivity of employees a particular time, the managers find it necessary to adopt assorted change management approaches to fit the contemporary circumstances (Burke 2007, pp. 201 -223). Contingency approaches usually adopt a perspective that there is one ‘best way’ to deal with change exhaustively and get done with it (Palmer, Dunfold & Akin 2008). Interestingly, in this approaches, the change can be adopted coercively or collaboratively (Palmer, Dunfold & Akin 2008). On the other hand, processual approach approaches change as a perpetual and often political process (Palmer, Dunfold & Akin, 2008). In these organisations, change unfolds in a contextual manner and its outcomes result from interplay of different internal and external interests. This perspective to change provides detailed understanding and analysis of change in retrospective and does not get to a time where change itself becomes the agenda perse (Burke 2007, pp. 201 -223). Processual approaches draw from the navigator pressures such that change is viewed as a continuous process unfolding differently as the circumstances of time context and time unfold; a process that must be accepted by the organisation members collaboratively (Palmer, Dunfold & Akin 2008). These approaches constitute a set of procedural actions that are perpetually maintained by the organisation to ensure that every member of the organisation adopts desirable change if and when the situation warrants (Palmer, Dunfold & Akin 2008). Contingency approaches are today the less common change management approaches mainly because their achieving of the one ‘best way’ is difficult and not always possible in varying circumstances. They require greater and more involving decision making as well as analysis before managers can embark on the prescriptive change management models (Burke 2007, pp. 201 -223). Again, these approaches are fully dependent on managers to succeed unlike the processual approaches, which are maintained by the entire organisation membership. The reliance on managers for the contingency approaches sometimes gives rise to situations in which junior employees and support staff question the credibility and intention of the senior management commissioning the change process (Palmer, Dunfold & Akin 2008). Organisation change mostly results from the pressure to change. This pressure might originate from the external or internal environment of the organisation. In external pressures, probable themes include the pressure to adopt contemporary fashion, a mandated change, geopolitical change such as that imposed by expansion, change imposed by market share decline or subsiding of profitability, change pressurised by hyper competition in the marketplace and finally change that is imposed by deteriorating reputation and credibility (Palmer, Dunfold & Akin 2008). In internal pressures, organisations may be coerced to change be several reasons such as the need for growth in profitability or market share, need for collaboration and integration, need to establish organisation identity or need to refocus and become more efficient (Palmer, Dunfold & Akin 2008). While external pressures originate from the environment, internal pressures originate from management politics and power motivations. This report concentrates on the internal pressures that solicit for and mitigate change occurrences in organisations. Table Two: The four types of internal pressures and the type of change they trigger. Type of Pressure What Causes the Change Outcomes of the Change Director Pressures This pressure triggers change due to strategic demands placed on the managers to deliberately focus and direct the organisation towards a particular future. These pressures are controllable by the managers and are a way of directing an organization’s response to a change requirement. Strategic realignment in the market through products and services change, rebranding, systematic growth and new market ventures all aimed at guaranteeing future profitability and growth Navigator Pressures This too is a strategic need to change but in this case, as a response to assorted internal and external pressures. The managers may be faced with situations whose redress lies only in change, such as deteriorating market position, profitability etc. This are pressures to address a situation that has arisen, to remedy a problem or respond to a challenge. Given that these pressures arise out of a concern, their most outstanding achievement if adopted is resolution of the pressing situation such as disaster management, goodwill and reputation maintenance etc. Coach Pressures These perpetual pressures always keep managers on the toes. These change motivations constantly require the managers to develop and shape their organization’s capabilities as part of daily activities. This is an endeavour to better the performance of the organisation perpetually where any attainment is proceeded by greater demand for improvement. An ever-increasing challenge to better the organisations, this strategic pressures demand continued growth and development whether or not the organisation is doing well or bad. Like the coach effect, the pressures are inspired by the ‘better your best’ mantra. Nurturer These pressures are triggered by the need to adapt to the market and to grow in it. Change here is triggered by the need to develop the organisation’s adaptive capacity to such phenomena as changing market conditions These changes help organisations to remain relevant to the market and market needs. Such change initiatives help organisations maintain their clientele despite changing circumstances. Table adapted and developed from Palmer, Dunfold & Akin (2008) 2. 0 Analytical Environment of Telstra Company Telstra Company has already commenced a change initiative meant to consolidate and grow their market share within and without the Australia context (Chau, 2007, pp. 52-52). Telstra has been in need of corporate change for a long time now, especially if they were to venture into new market portfolios, open new revenue streams and consolidate their market share in the domestic market (Chau 2007, pp. 52-52). In particular, Telstra had experienced a growing surge of line losses, grew a redundant headcount and lost grounds in customer service front (Chau 2007, pp. 52-52). Telstra initiated a change program in 2006 branding it as a transformation process towards growth. This process of change was initiated with the launch of their latest G Mobile broadband network (3GSM 850 MHz), that year in October. Once launched, the network was fully installed in the entire expanse of the Australian continent within a record 10 months (Chau 2007, pp. 52-52). This provided 98% coverage for the Australian citizens. Once this was done, Telstra next launched a national wide IP - MPLS core network featuring over 77 times more capacity as compared to the core network existing previously (Chau 2007, pp. 52-52). This installation was finished on early last year, and Telstra had by June already migrated all their clientele internet-based traffic, Frame relay, ATM and VPN enterprise traffic into the larger capacity core network (Chau 2007, pp. 52-52). Another notable transformation, this one dubbed the root and branch change program, Telstra launched a completely new consumer customer’s management system (Chau 2007, pp. 52-52). This is a comprehensive ecosystem that embeds market based management options into the way the company deals with their customers (Chau 2007, pp. 52-52). The system also allows the company to effectively segment their market for marketing and customer service efficiency such that their presence is felt and acknowledged more in the marketplace (Chau 2007, pp. 52-52). This system transformation was then completed in 2008 with a novel system meant to build mobility and data capabilities for business enterprises (Chau 2007, pp. 52-52). The new system initiated the premier operational support for business information infrastructures (Chau 2007, pp. 52-52). In 2009, Telstra launched their new mega softswitches that finally replaced their classic softswiching infrastructure (Chau 2007, pp. 52-52). The company could then decommission their legacy systems towards achieving better efficiency levels in service delivery (Chau 2007, pp. 52-52). This is a comparable situation as was evident in Gateway, America’s fourth largest PC maker in 1998. Gateway was faced by a fierce competitive market in which Dell was increasingly overshadowing (Palmer, Dunfold & Akin 2008). To overcome the challenges and outpace this overly challenging rival, Gateway’s CEO had to come up with a change strategy that altered what had hitherto been gateway’s culture. What he came up with was a complete overhaul of the organisation structure coupled by an ingestion of 10 senior managers from outside the company (Palmer, Dunfold & Akin 2008). By the time the change programs were successfully completed, Gateway had changed its name, its products, its alliances, its business strategy, its strategic management vision and its policies (Palmer, Dunfold & Akin 2008). The success that the company experienced was enough to put dell on the receiving end of the need for change by 2007. This once deteriorating company had become the overshadowing rival to its competitors (Palmer, Dunfold & Akin 2008). That is how change can be instrumental to organisations, if not indispensible and fundamental. In Telstra’s case, the change process has seen the company’s TV and broadband services pick in Australia with a growth rate that the company had not experienced in a long time (Chau 2007, pp. 52-52). In 2007, Telstra won the award of the Best Telco Transformation in Australia ahead of its peers Telecom Malaysia and BSNL (Chau 2007, pp. 52-52). The company generated a revenue base of Aus $ 11.6 billion in 2007 accumulating to a net profit of Aus $ 1.7 billion. This was generated from a clientele base of over 7.8 million residential and business customers, 2.2 million wholesale customers and 8.9 mobile customers (Chau 2007, pp. 52-52). With the ongoing transformation, Telstra’s current core areas of operations include local, national and international broadband connection (long distance), mobile telephony services, new media solutions, pay-TV and enterprise services (Chau 2007, pp. 52-52). 3. 0 Need for Change and the Nature of Change Required Given the financial performance of Telstra in the Australian market in the 2 years leading to the change program commencement, it is clear that the company was not in problems that demanded a major restructuring. In 2005 for instance, the company had a revenue base of Aus $ 7.6 billion and a net profit of Aus $ 0.8 billion. Their market share was not threatened and there was a noted marginal growth rate. Nonetheless, the industry in which the company is in, the type of products and services offered are highly volatile. Just as in the case exemplified in the introduction on Gateways need for change, Telstra needed to position itself strategically to ensure that it remained relevant to the market trends and needs. In Telstra’s case, the most applicable change theory is that of strategic pressure as detailed by Palmer, Dunfold & Akin (2008). There was need to boost growth in the Australian market and to consolidate itself within the Australian market. Its future performance especially in Mobile and broadband services were pegged on the need to be strategically placed. The company needed to envision the future demands of the core services and products it offered and to position itself in such a way that it could better exploit future opportunities. Their coverage was still decimal in the continent and most of their services were powered by largely problematic and inefficient platforms. The management thus perceptively deciphered the need for growth and strategic positioning. That means that the type of pressures triggering change in Telstra was strategic. Director internal pressers triggered a change process due to strategic demands. The managers had to deliberately focus and direct the organisation towards a particular future goal, that of growth in the Australian market. These pressures were controllable by the managers as a way of directing the organization’s response to a change requirement. Strategic realignment in the market through products and services change, rebranding, systematic growth and new market ventures had been initiated with the aim of guaranteeing future profitability and growth. Secondly, Telstra had a strategic need to change as a response to navigator internal pressures (need for growth) and external pressures (need to remain competitive). The managers were thus faced with situations whose redress lay only in change. The challenge was to improve their market position, better their service delivery and remain competitive. Thirdly and perhaps more importantly, Telstra experienced the coach pressures to change where the managers were motivated to constantly develop and shape their organization’s capabilities as part of daily activities. The change initiative was thus an endeavour to better the performance of the organisation through continued self-improvement. Since inception, Telstra has always exhibited an ever-increasing challenge to better its services; products market position, delivery and customer care. These strategic pressures demands continued growth and development whether or not the organisation is doing well or bad. Like the coach effect, the pressures were inspired by the ‘better your best’ mantra, in an industry where technologies change so fast and with the changes, the market directions change as fast. 4. 0 Proposed Change Strategies In all instances, a successful change program must be strategic (i.e. such that it envisions on what it wants to achieve in future and then implements mechanism to attain the vision), intentional and in implementation, large scale (Quinn, Spreitzer and Brown 2000, pp. 147-164). Change implementation must be systematically planned for and implemented based on steps that are prescribed by the model of change employed (Quinn, Spreitzer and Brown 2000, pp. 147-164). Another important thing to note is that for a change program to be successful, the management and employees of that organisation must have a strong belief that the change is possible to achieve, that the approach used to adopt and implement that change program is ideal and that the change will result to benefits (Quinn, Spreitzer and Brown 2000, pp. 147-164). The current change process at Telstra must spring from this important backdrop. Telstra thus needs to make the change process part of their organisation culture, imbibing motivation of all employees towards attainment of the determined change objectives. In Telstra’s case, the most effective way they can amplify the change process that is already underway is by making it a processual implementation. They need to implement strategic initiatives that progressively help the organisation to keep abreast with technological advancement and market needs. This cannot be an instantaneous achievement such that after the Broadband connectivity reaches 100% of Australians the change stops. What works miracles in the industry will tomorrow be outdated. Telstra must initiate a perpetual process of growth using change management theories such as the Coach Change management theories. In implementing a change program, one of the most applicable strategies is one developed by Kotter (Armenakis and Bedeian 1999, pp. 293-315). Kotter developed an eight-step model including, establishing the need for urgent change and ensuring that the organisation has an influential change group entrusted with the responsibility to guide a change process (Armenakis and Bedeian 1999, pp. 293-315). Fourthly, the organisation develops a vision, then communicates that vision to all the publics in contact with the organisation before empowering the employees to implement that vision (Armenakis and Bedeian 1999, pp. 293-315). Kotter then suggests that the organisation has to ensure the short term goals are achieved and finally that it consolidates its gains to a point that the change is embedded in the organisation culture (Armenakis and Bedeian 1999, pp. 293-315). What is lacking in Telstra’s case is a clear communication strategy to communicate the vision of change within and without the company. As Chau (2007, pp. 52-52) concurs, the biggest challenge to achieving the change process at Telstra is attaining effective communication with their employees. This means that the employees do not support and facilitate the change process as the management would wish done. Palmer, Dunfold & Akin (2008) suggest a possible solution to this scenario with their theoretical strategies for communicating change. In these strategies, the most applicable in Telstra’s case is that of the Coach strategy, which focuses the change program on first and foremost, ensuring that every employee in the organisation shares the values of that change (Palmer, Dunfold & Akin, 2008). Not only should employees understand the change clearly, but they should also view it as beneficial and necessary (Armenakis and Bedeian, 1999, pp. 293-315). This will help initiate proper actions among the employees to propel the change programs towards effective implementation and maintenance (Armenakis and Bedeian 1999, pp. 293-315). The management of Telstra should in this case adopt an internal initiative that aims at getting all employees to share in the values of the change process, to own the change program and to accept it as beneficial and or necessary (Palmer, Dunfold & Akin, 2008). This can easily be done through cultivation of positive emotions. The way that the change program is communicated to employees determines how receptive they are (Palmer, Dunfold & Akin 2008). At Telstra, employees and the management should engage in positive dialogue and exploration interactions about the change program so that the need for change and its benefits may be shared across the board. Such direct interactions will ensure that the change communication process is not subject to distortion, ambiguity and message overload (Palmer, Dunfold & Akin 2008). Again, direct interactions will create avenues for feedback on which the management can act accordingly (Palmer, Dunfold & Akin 2008). Challenges to the Initiation of Change at Telstra and their Remedial Actions Telstra is bound to face some challenges in the implementation of the above recommended change strategies. These challenges are bound to be both internal and external. Such challenges include demotivated staff who prefer to retain the status quo, misconceptions of the objectives of change, and customers unwilling to embrace the new technologies (Armenakis and Bedeian 1999, pp. 293-315). Notably, most of these challenges will revolve around communication ineffectiveness. Implementing an effective communication strategy as detailed above can go a long way in solving this problem (Palmer, Dunfold & Akin 2008). The employees will easily support the change program if they emotionally feel safe and non-threatened. As such, Telstra managers need to use threat reduction strategies and perspective taking strategies of communicating change such that they reassure their employees of the need and benefits of the change program (Armenakis and Bedeian 1999, pp. 293-315). Secondly, maintaining and even improving their service delivery will require that there is a sound, ever-vigilant quality control system that is flexible enough to oversee the changing quality standards (Armenakis and Bedeian 1999, pp. 293-315). This cannot be an instantaneous achievement such that after the Broadband connectivity reaches 100% of Australians the change stops. What works today in this industry will be outdated tomorrow. Telstra must initiate a perpetual process of growth using change management theories such as the Coach Change Management theories to ensure that the employees too support and maintain the perpetual change process of quality improvement (Palmer, Dunfold & Akin 2008). Conclusion and Recommendations This report began with giving a brief profile of Telstra, a market leading Australian telecommunication and information company. The brief helped analyze the environment of change at Telstra as one that has already initiated a change process. The report then proceeded to identify the nature of the change already underway at Telstra based on the contemporary change models and theories. Telstra’s inclination towards change and the manner in which adoption of change programs is taking place, showed that some novel change strategies should be considered and or adopted to enhance the attainment of the desired change at the company more efficiently, faster and towards greater benefits. Specifically, Telstra needs to initiate better employee communication as part of its change process since without employee support; the process will not be successful. Towards the end, the report discussed the major challenges that the managers at Telstra might face if they initiate the recommended change strategies. These challenges included are demotivated staff who prefer to retain the status quo, misconceptions of the objectives of change, customers unwilling to embrace the new technologies and staff inability to maintain the new levels of product and service delivery standards. Most of these problems were seen to be easily solvable by a good communication strategy and a continued process of change that is inculcated as part of the organisation culture. The paper thus recommends that the senior management at Telstra should initiate an immediate communicative strategy aimed at soliciting for employee support for their ongoing change program. The management should also ensure that the change process is progressive and continuous, growing form the successive attainment of short-term goals such as infrastructure growth. Finally, any change process must always be accompanied by constant review and evaluation so that any omissions and errors in the program are remedied in time and adequately (Palmer, Dunfold & Akin 2008). Such should be the practice at Telstra, as the change process continues. Reference List Armenakis, Achilles and Bedeian, Arthur, 1999, Organizational Change: A Review of Theory and Research in the 1990s, Journal of Management, Vol. 25 (3), pp. 293-315. Burke, Warner, 2007, Organization Change: Theory and Practice, London, Sage Publications, pp. 201 -223. Chau, Fiona, 2007, Transformation Down Under, Telecom Asia, Vol. 18 (6), pp. 52-52. Available From Palmer, I, Dunford, R & Akin, G 2008, Managing organizational change: a multiple perspectives approach, 2nd edn, McGraw-Hill Irwin, New York. Quinn, R. E, Spreitzer, G. M and Brown, M. V 2000, Changing others through changing Ourselves, Journal of Management Inquiry, Vol. 9 (2), pp. 147-164. Telstra, 2010, “About Telstra” Telstra, Accessed on 17th May 2010, from Yahoo, 2010, “Telstra Corporation Limited Company Profile” Yahoo Finance, Accessed on 17th May 2010, from Read More