Change Management at Telstra - Case Study Example

Change Management Name: Institute: Table of Contents Change Management 1 Table of Contents 2 1.0 Introduction 3 2.0 Change Management at Telstra 4 3.0 Telstra Outsourcing 5 4.0 Change strategies proposal 7 5.0 Managing Change 9 6.0 Reducing Resistance to Change 11 7.0 Conclusion 13 8.0 References 14 Change Management 1.0 Introduction Scores of organisations experience incessant pressure to change so as to meet their organizational goals in the contemporary competitive market. All industries are undergoing growing change and there subsists pressure for change in the organization as well as workforce reductions. Basically, changes within organization like reducing the levels of staff, using outsourcing or contractors, integrating organizational departments, or changes to responsibilities as well as roles are often not examined and regulated as systematically as process or plant changes. These changes as per Laframboise, Nelson, and Schmaltz (2003, p. 311) can, if poorly envisaged or espoused, have a damaging consequence on safety. Even slight organizational changes can result in noteworthy impacts on the hazards’ management. Continuous or rapid change may as well have a harmful consequence on wellbeing of staff, bearing in mind and inadequately managed organisational change may heighten the workers’ stress experience (Lee & Lee, 2008, p.364). These days, business organisations function in a progressively more unstable setting and are in a constant change status. Organizational change pressure arises from diverse external and internal sources like technological, social, economic, and political factors. Organizational change, as noted by Boohene and Williams (2012, p.135) is intended for becoming accustomed to the environment, performance improvement as well as changes in workers behavioural patterns at the place of work. For the benefit of continued existence, development, and becoming competitive, most organisations have tried to expect and acclimatize to changes by means of strategies, which include organizational redesign. Although change is applied for positive reasons (such as to become accustomed to changing conditions within the environment as well as gaining so resist efforts of change. This negative response as noted in the paper is principally brought about by the fact that change comes with heightened pressure, uncertainty, as well as stress for workers. This paper critically analyses a recent change that took place at Telstra, and a leader could manage that change (or improve your management of the change). 2.0 Change Management at Telstra At Telstra, organizational change was initiated by the company’s leadership thanks to its enormous loss of customer confidence as well as customer service, and to some extent this was needed urgently. Evidently, statistics indicate that Telstra’s long-time phone business had enormously declined, and this led to a revenue decline of $12.32 billion (2.5%) as well as net profit decline to $1.85 billion (3.3%). Additionally, Australia’s customers have begun using mobile phones and wireless broadband rather than the traditional copper network, fixed-line, in addition to landlines (Battersby, 2010). The company leader, David Thodey is undoubtedly experiencing a great pressure to re-establish Telstra’s image concerning its service to current customer as well as achieve back the lost market share. An additional change factor that Telstra had to focus on was the 46 billion dollar signed contract between the Australian government and the company, so David Thodey had to concentrate on the national broadband network as well as cut down the number of managers directly reporting to him. For that reason, infuriated changes in the external environment compelled Telstra to restructure its top management so as to existing in the market or use the change in the external environment to the advantage (Battersby, 2010). Noticeably, every time change take place with regard to organization, like changes in Telstra’s consumer preferences and tastes, technological changes, competition, and government policies changes, countermeasures have to be made so as to act in response to such change forces (Lower, 2011). In this regard, it was Thodey task to monitor change forces in external and internal environment, given that when change forces are monitored, the process of organizational change can be put into practice efficiently as intended. In contrast, if the change forces ensue abruptly or organization’s leadership fails to supervise them, the process of organisational change will have more complexities since it was sudden. When Thodey made known his intent of restructuring Telstra’s senior management team, it disappointed Justin Milne, an executive manager, who was in control of Telstra’s Internet business, particularly mobile and online properties and resulted in his resignation following resignation of Telstra’s consumer group managing director David Moffat. This proves that while performing senior management restructuring, the change agents can come across more resistance from senior managers given that restructuring lead to a decline of ten percent of senior management, which without doubt upset the some executives’ interests (Battersby, 2010). Given that Telstra had to improve its customer service as well as win back confidence of the customers, substantial changes with regard to offering improved customer service was needed from the employees, resulting to resistance. 3.0 Telstra Outsourcing Recently, Telstra Company outsourced more than 1,500 jobs to Asia under new organisational strategy intended for making the company’s key technology operations in Australia’s more resourceful in preference of out of the country outsourcers. Basically, this strategy was intended for assisting Telstra cut down its information technology expenditure. These jobs were exported to Infosys, an Indian-based Company through contract considering that suppliers to Telstra had also outsourced their work abroad to reduce labour costs. In contemporary competitive world, Telstra had to cut costs in order to present a quality service or product, and as indicated by Cai and Kwek (2013) reduction of labour costs was a better method for reducing Telstra’s production cost. After outsourcing its IT jobs abroad, Telstra as noted by Schneiders (2008) have experienced cost reduction with regard to lower labour costs. This ultimately will lead to reduction in the cost of the services as well as products to Telstra, its customer, and notably the company will turn out to be growingly more competitive (Schneiders, 2008. These changes could have resulted in loss of more than 600 jobs, whose position was moved to Philippines and India; just days after the company recorded a $1.6 billion in profits. Telstra outsourcing goal was intended to change the under pressure print-based media business, which generates the White Pages and Yellow Pages directories, into business best suited for digital market (Cai & Kwek, 2013). Outsourcing has helped Thodey to make quicker and knowledgeable decisions, herald new revenue sources, and has also freed the leader from his routine back office tasks to concentrate on key competencies. However, this resulted in a fierce resistance considering that the outsourcing was not a win-win situation for Telstra’s workers whose lives and jobs were heavily impacted. Thodey had Underestimated the consequence of worker resistance, and this led to a seriously decrease investment returns in the entire project since the remaining workers became less motivated and resulted to less productivity. These days, organizations like Telstra are making use of outsourcing as the tool to efficiently handle that change process, ad this as a result generate fear and uncertainty among workers (Cai & Kwek, 2013). This result in resistance, which ultimately impacts the transition process: Workers fearing to lose their current positions can hold back the transfer of vital knowledge or just turn into being less industrious. Thodey should therefore be alert of the likely pitfalls. 4.0 Change strategies proposal Any organizational often experience resistances and challenges and from workers and even stakeholders, therefore, change managers must be exceedingly cautious while designing the process of change and always make certain the strategies for putting the changes into practice are functional. So as to fruitfully put Telstra change process into action, Kotter’s eight steps model could have assisted Telstra with a thriving realization of the change. Step one involves establishing a sense of urgency by showing the entire workforce a persuasive proof of the opportunities as well as threats. Prior to initiating the change, Telstra should have gathered adequate data to prove the pressing need for change, which should have included its study on net profit decline, loss of customer’s satisfaction and confidence, market share as well as it’s the new-fangled opportunity from the Australian government cooperation. Step two involves creating a powerful coalition for guiding (Farkas, 2013, p. 14). With regard to Telstra, Thodey desired to achieve two goals; that is improving customer’s satisfaction so as regain the market share and fruitfully accomplishing the project the company had signed with Australian government. In this regard, Telstra should have generated two team structures so as to steer the change, first group should have been leadership group for customer satisfaction and the second group should have concentrated on the national broadband network. Step three involves considering that good leadership as well as vision steer successful organizational change. For Telstra case, the key goal in this step should have been was reducing the division of senior management by 10 percent and also restructuring the customer service to avoid negative market attitude. Step four involves communicating the vision since organization must deliver its vision to stakeholders and customers and make them understand that Telstra as a whole is tirelessly working to change customer service for the better and will as well be customer-oriented in the future so as to gain back the customer’s confidence. Furthermore, the company leadership must reinforce and communicate this vision in the organization and make certain all workers are optimistic about this vision as well as the change. Step five involves empowering the of change process (Farkas, 2013, p. 15). In this case, Telstra had already begun cutting down the senior management by 10% and removing the unneeded structures. Still, Telstra should have examined whether there is any structure or system that can obstruct the change process and get rid of if found. Step six involves planning for and creating short-term wins, considering that people always give up when the change fails to bring fruits in a short-term. Therefore, for Telstra employees to continue supporting the change process, the company must plan and achieve a number of short-term gains to prove to the employees the management commitment as well as strengthen their confidence. Step seven involves consolidating enhancements and maintaining the momentum for change, by avoiding declaring victory ahead of time (Farkas, 2013, p. 16). The last step involves institutionalizing the new approach: in this step after completing its change process, Telstra should embed the new senior management structure as well as new customer service principles. 5.0 Managing Change From Telstra organization change point of view, it is apparent that, participation by itself cannot be adequate in managing change and for that reason all the other factors must be considered every time change is foreseen. The leadership in Telstra should have taken steps to create as well as maintain a communication levels that brings about trust in management as well as lessen the degree of change resistance. In this case, the establishment of free and open communication channels would make allowances for the diffusion of information as well as the return of important response (Boohene & Williams, 2012, p. 138). Furthermore, Telstra management should have cautiously considered some of its actions like outsourcing jobs to Arab countries could lead in resistant towards the wished-for change plan, since these actions could well be viewed in the truth that the plan for change is wide of the mark from the first stage, or is faulty one way or another. Still, Telstra leader should have not presumed that it had crafted the ideal change plan simply for the reason that there was no evident resistance to the change plan. Moreover, to efficiently become accustomed to change, Telstra as Australian recognized organization have an off-putting task in front of them in diverse procedural as well as operational areas. Organizational processes should be redesigned and redefined and tailored to certain cultural and geographical settings (Head & Sorensen, 2006). In this regard, the workers should have been retrained to get hold of the desired knowledge and skills for the change. The very culture of Telstra had to be appropriately reshaped so as to sustain the latest processes introduced. In this regard, the company leader should have redefined the organizational structures, appraisal measurements, reward systems, as well as roles need. Furthermore, Telstra management procedures and leadership styles failed to change and adjust, and also methods of association with suppliers, customers, as well as other stakeholders were not refined; thus, resulting to change resistance. Basically, advances in technology and capabilities have to be introduced when change occurs. According to Laframboise, Nelson, and Schmaltz (2003, p. 309), the successful adjustment to change needs is the knowledge concerning how to change and restructure from the legacies and complexities of the past and crating novel change design. Based on the intense resistance towards Telstra’s outsourcing plan, it is recommended that it could be sensible or more suitable for change leaders to select a participative change approach. Power strategies or authoritarianism cannot enforce compliance, but evoke resistance. Dictatorial leadership style cannot solve issues brought about by change, but systematic change is simply kindly associated with positive outcome analyses as well as outcomes in cynicism when integrated with excellent organizational strategies. Organizations without doubt disagree in their problems and contexts, and need a context specific approach to handle worker’s resistance to change in the organization. Permitting workers to take part in the process of change would have been a vital component to the Telstra’s change success. Making use of the worker participation strategy not only improves cooperative the organization leadership values them. In this case, Telstra leaders must create a supporters’ coalition for future change plan by recognizing opinion leaders as well as persuading them to back the change at every organizational level. According to Boohene and Williams (2012, p. 141), this will make the change implementation process successful and easier, given that the process of decision making and participation; will allow workforce to take rights of the change process. In addition, discipline and reward must be employed as tools to realize the organizational change bearing in mind that these two key tools: disciplinary and reward systems, are significantly vital in the change processes. 6.0 Reducing Resistance to Change Resistance to change as above mentioned can be reduced by the reward systems, since these systems are utilised to produce and balance change by valuing certain values, behaviours and outputs. Basically, reward systems like special incentives, looking for new conquerors, salaries’ increment, in addition to bonuses award, could have been a valuable method of hinting Telstra’s leadership commitment to change. According to Head and Sorensen (2006), motivation during the process of change is based on rewarding the suitable behaviours. Still, disciplinary approaches can be used to reduce resistance to change; for instance, through coercive measures like threatening workers with promotions, jobs losses or by transferring or firing them may be utilised, particularly by authoritarian leaders to triumph over change resistance after the leadership has offered clear communication of the importance of organizational change and workers have been involved. Nevertheless, this approach must be utilised carefully given that, this approach may generate antagonism among workers and as a result, and the change could be disrupted. Correspondingly, communicating the need for the change to workers by providing the needed information concerning the grounds for the change can be the initial influential stride in gaining back trustworthiness. Therefore, Telstra leadership should have fostered communication in an opened setting, so as to make certain that the bottom-top approach, where workers can share their needs, frustrations and concerns exclusive of retribution fear, but not the usual top-bottom approach. In addition, Telstra leadership should have made sure the existed change knowledge, and offer unambiguous or clear as well as proper information to make certain that workers comprehend the change and its impact. To make sure that workers can access quality information with regard to organizational change, Telstra leadership should have explained to workers and stakeholders why the change was needed, so as to generate change readiness from the workers. Organization leadership should for that reason, enlighten workforce about the benefits and shortcomings of not taking part in the change process. According to Boohene and Williams (2012, p. 139), when change is occurring, organization leadership must show signs of short-term wins, which will develop reassurance among workers. There is as well the need for Telstra’s leadership to recreate trust and confidence in the workers as a long-standing effort. Resistance cannot exist if the leadership have developed an environment for constructive condemnation and must be ready to amend the change program if necessary; so as to generate clear and transparent understanding of the motivations, benefits and need behind change. Change agents must support collaboration, and should in any way possible avoid the use of coercion and power (Smith, 2005, p. 409). Considering the current issues in Telstra with regard to outsourcing, the company leaders must develop quality relationships between the leadership and workers and also create opportunities for employee development to establish how they may be empowered meaningfully. As a final point, Telstra leaders have to integrate several change models such as force-field analysis theory or Kotter's 8-Step Change Model so as to avoid any future resistance to change. Other approaches that can be used include communication, education, involvement and participation, empowerment and support, and negotiation as well as agreement. 7.0 Conclusion Conclusively, it has been argued that any organization must go through a particular level of change due to external and internal changing setting. Usually organizational change cannot be carried out smoothly as expected, since a number of employees will strongly oppose to change and endeavour hard to slow down the process of change. For that reason, it is extremely imperative for change managers to select and design an efficient and useful way to successfully put into practice the change process. In this regard, Kotter’s eight steps model offers systematic approach that could have been referred by Telstra leadership during the change process. Certainly there are other valuable approaches, so organizations have to search for best and appropriate approach for the company during the change process. In the case of Telstra, so as to advance its customer service as well as regain the confidence of the customers, Telstra should have espoused Kotter’s organizational change model since it offers a number of ways that managers can utilise to overcome the change resistances as well as challenges. 8.0 References Battersby, L. (2010, September 4). Change is the only constant for Telstra. Retrieved from The Age: http://www.theage.com.au/business/change-is-the-only-constant-for-telstra-20100903-14ujv.html Boohene, R., & Williams, A. A. (2012). Resistance to Organisational Change: A Case Study of Oti Yeboah Complex Limited. International Business and Management, 4(1), 135-145. Cai, P., & Kwek, G. (2013, February 22). Outsourcing will deliver better service: Telstra. Retrieved from The Sydney Morning Herald: http://www.smh.com.au/business/outsourcing-will-deliver-better-service--telstra-20130221-2euby.html Farkas, M. G. (2013). Building and sustaining a culture of assessment: best practices for change leadership. Reference Services Review, 41(1), 13-31. Head, T. C., & Sorensen, P. F. (2006). Global Organization Development: Managing Unprecedented Change. Charlotte, North Carolina: Information Age Publishing. Laframboise, D., Nelson, R. L., & Schmaltz, J. (2003). Managing resistance to change in workplace accommodation projects. Journal of Facilities Management, 1(4), 306 - 321. Lee, H., & Lee, J.-H. (2008). Time to Change, Time for Change. Time as a catalyst for organizational change. Time & Society, 17(2-3), 363-384. Lower, G. (2011, July 6). Telstra management changes designed to put 'customers first'. Retrieved from The Australian: http://www.theaustralian.com.au/business/companies/telstra-management-changes-designed-to-put-customers-first/story-fn91v9q3-1226088717958?nk=8c83ab736b9af34193d5b537eabdee74 Schneiders, B. (2008, October 4). Telstra call centre jobs to be axed in overseas deal. Retrieved from The Age: http://www.theage.com.au/national/telstra-call-centre-jobs-to-be-axed-in-overseas-deal-20081003-4tkn.html Smith, I. (2005). Achieving readiness for organisational change. Library Management, 26(6/7), 408 - 412 . Read More