The Organizational Change Process of Telstra Company - Case Study Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : Managing organizational change In Telstra Tutor : xxxxxxxxxxx @2010 Introduction Organizational change management is one of the fundamental aspects in the operations of any organization that has embarked on the change process. In a situation whereby an organization is in the process of formulating strategies of enhancing a transition from its existing state, to a future intended state, it vital that the change process is effectively managed (Campbell 2007). The aim of this particular report is to analyze the organizational change process of Telstra Company in addition the report will highlight the effectiveness of the completed change strategies implemented by the organization and how the organization has managed the changes. Background of the Company Telstra can categorically be described as the biggest Australian telecommunication company owned by the Australian state and privatized in phases from 1990. The company undertakes both local and international operations such as telephone services, dialup, DSL, wireless and cable internet providers (Telstra Corporation report 1993). During the Late 1992, overseas telecommunication commission, a distinct states body established in the year 1946, was amalgamated with Australian Telecommunication Company into a short-lived AOTA (Australian and Overseas Telecommunication Corporation) under the Telecom and OTC identity. The merger was later on renamed as Telstra Corporation Limited in the year 1993. The company commenced its trading activities under the name of’ Telstra” its trademark known internationally as ‘Telecom Australia’. It traded domestically until a uniform branding was introduced through the whole organization in 1995. Optus being the second largest telecommunication service and a host of minute providers in Australia has been a major competitor of Telstra. The competition was both healthy and at times unhealthy. Unhealthy in the sense that, the competition revolved around offering the same services just as the biggest telecommunication service in Australia, Telstra (Telstra Corporation report 1993). Telstra retained tenure of a fixed line network, as well a data cable network. Any interested company that wished to operate and offer fixed line services was to obtain a certificate of existence from Telstra Company except Optus. It later on emerged that Telstra bid for national broadcast network in the year 2008 had been declined by the Australian state government. This led to a decrease in Telstra share price from $4.12-$3.36 on 16th December 2008. The organization has been faced with numerous set backs including the threat of loosing its competitive advantage over the Australian market. The organization therefore embarked on devising strategies of improving its performance as it originally was. The change process in the organization targeted the main areas of organizational change which includes technology, strategy, people and structure. Analysis of the Environment The organization has been actively involved in trying to device changes that can be incorporated into the organization with the objective to improve its image and performance. Proactive change has been undertaken whereby the organization has formulated strategies that will assist to incorporate major changes in the organization from the development of the organization major activities. Some of the proactive changes undertaken by the organization include; The company inculcated change in its strategies used to enhance growth, development and efficiency within the organization. Telstra Mobile is Australia's chief mobile telephone service supplier, in terms of both contribution and reporting. It began to expand its services by running the Australia's prime GSM and 3G UMTS (recognized as Next G) mobile telephony association in Australia, it also holds 50 % stake in the 3GIS Ltd network infrastructure, joint with Hutchison . Expansions were also made by offering prepaid and post paid telephone services, as from September 2007, Telstra estimated 9.3M mobile users who were subscribed either directly or indirectly with the organization (Campbell 2007). The organization also made a lot of changes in terms of branding; since the organization began different logos have been used to enhance the organizations efficiency. Since 1998, Telstra logo known to majority of the individuals if not all’’ Making life easier’’, was majorly used to promote their product in the market. However, the logo was terminated in the year 2000. The introduced logo in the year 1993 represented a telephone receiver under the logo ‘T’; however, corresponding initiatives were made under the ‘G’ logo in the tear 2006. It then started operating with a new logo 3D. It later on dropped its logo in the tear 2007, going back to the initial logo used in 1993. More recently, it decided on using a simple logo T in advertising its product in the market. The organization has also undertaken innovative change whereby the management has taken the initiative of inculcating changes in terms of innovation to increase the companies’ productivity. Telstra controls and provides internet services such as IP networking, servers, email, and network hosting within a wide range of subsidiaries .Telstra Internet is a worldwide backbone of Telstra Corporation limited, within Australia. The companies also sell direct (business-grade) connections and inter communication links or channels to Satellite connections, SL and Cable Modem under the Big Pond identification name. Telstra obtained and acquired its national backbone of AARNet in the year 1995 and later on changed it to Telstra Internet. Telstra Internet purchases long-haul capacity and worldwide transit from REACH Global Services based in Australia. The organizational has also taken advantage of Technological change to advance its business operations. Some of the visible and dramatic changes made by the Telstra organization during the last two years were introduced purposely for new technology. The common technologies build up by the Telstra organization involved introduction of new technologies and other automation. Telstra embarked upon repair of its IT infrastructure. Central to the IT infrastructure was the establishment of a SOE (standardized operating environment) for all computing activities used by Telstra Corporation limited. There are many traces of development which emerged as a result of development of Telstra data and desktop network (SOE). Some of the benefits derived from the change include delivering superior services to customers, sales engagement and leveraging accounts were developed which brought customers closer than before. This process was mainly carried out to enhance good relationship between customers and the organization. Innovative changes occur where an organization is one of the first users of the idea in the market. Telstra being the first and the largest corporation company is said to have undergone through innovative changes it during its period of existence. This innovations process poses a challenge to both the management and the customers of the organization. For instance Telstra has invented seamless integration through the development of an integration Lab. The lab was established purposefully for acting as a compliment to the deployment of network solutions. The million state of the art laboratory is managed by the Alcatel-Lucent. The aim of the laboratory is to ensure readiness of operational services while making a reduction on the technical and commercial risks that are linked to the solutions for network transformation. The laboratory depends on operational systems and a set of networks that allow joint collaboration of Alcatel-Lucent / Telstra in the provision of network solutions. This particular laboratory will assist in ensuring that Telstra provides innovative services and products with unprecedented reliability and robust. The chief operations officer of the organization further highlighted that the invented laboratory will also support production though through the use of network systems and technologies, that will support the existing operational environment. Telstra has also utilized the organizational change strategy of forming corporate ties with other organizations with an aim of enhancing its competitive advantage and improving its general performance. By choosing to work closely with Alcatel-Lucent, Telstra is already deriving full advantage from Alcatel-Lucent's world-leading solutions - Access Multiplexer, Edge Router, Transport and Softswitch - as well as integration expertise, that are decisive factors in enabling the company to meet its network and business transformation, commercial and operational objectives. And as the winner of Telstra's 2006 Vendor Awards, Alcatel-Lucent has already been acknowledged for its contribution and commitment Telstra’s project. Telstra has also outsourced a significant section of network installation through joint ventures maintenance to private organizations , this includes ABB Communications and STCJV (Siemens Thiess Communications Joint Venture.   People oriented challenge have also been initiated by the organization .Telstra concentrated on people oriented changes, for instances improving employees attitude, behaviors, motivation and employees skill. These factors are important in the growth and development of Telstra Corporation limited. In terms of enhancing the motivation of the workforce, the organization provides a wide range of benefits and rewards available to its employees. For instance the Telstra reward program can be described as an integrated and comprehensive program that offers benefits that are financial and non financial to its staff beyond their normal remuneration packages. The benefits include discounts on services and products, and benefits attained from corporate relationship. Just like any other organization Tetra has been faced with challenges when trying to enhance people related change. For instance there have been several attempts of strikes organized by the Telstra Union. The disputes that basically existed between the workforce and the management of the organization involved the aspect of pay rise which most often causes contention in many organizations. The nature and need for organizational change in Telstra There are a number of reasons why managers incorporate changes in the organization. In Telstra organization the change process was undertaken mainly as a result of what the corporation seeks to achieve at the end of the financial year, this may be in terms of monetary values and the nature of the change. Most changes within the organization have nevertheless caused so many problems form satisfying the organizations and customers need to change and satisfying its employees. The perception used to evaluate Telstra’s need for change mostly depends on the value of profits to be attained at the end of the year. There were times when the proposed changes within Telstra resulted to a massive losses in terms of profits attained. Many firms have directly or indirectly used different strategies in the production and marketing service. The change used by the Telstra was implemented for very many reasons. Sometimes the management uses this change in order to be more advantageous than the rest of its competitor, i.e. Optus. As the management is then required to immediately incorporate the new ides in the market. Telstra has tried to implement a lot of changes in the recent years for the basic purpose of maintaining its competitive advantage for instance Telstra productively used a combination of different strategies to maintain and keep up with its market supremacy to fight over the new firms that pose threats to the Company. Telstra found a new strategy of providing lower rates different and specific routes at certain times during the day , as much as its prices, on average, were projected to be higher than its rival's which likely to prevent consumers from switching to a different organization in search of the same services.. Ultimately, Telstra had difficulties in retaining several position of market share otherwise would have missed on a number of important aspects. Efficacy of the Changes Implemented / Changes effectively undertaken Organization Change theories and how well they are ultimately implemented can be assessed as the driving factor for the success in the Telstra corporation limited in enhancing management of its completed change strategies. There are several models and theories that can be used as analytic measures for examining the effectiveness of the changes undertaken by Telstra. The ADKAR is a type of change management model that is basically goal oriented which requires that the management centers their activities on specific business outcomes or results. Originally the model was used as a technique of determining management change activities such as training and communication; however the models later become diversified in its criteria of managing organizational change (Mary 1997).This is a model is specifically formulated or designed to focus more on specific activities that affects the organization. As highlighted by the various changes undertaken by the Telstra organization, the basic focus of the organization was to implement changes that can improve its main activities. The power of utilizing this particular model in change implementation is that it assists an organization solve the root causes of failure of the organization. Telstra was experiencing a reduction of shares in its market; in addition the organization was having difficulty in terms of human resource development issues, were the workforce was dissatisfied with the remuneration package offered by the organization. The ADKAR model highlights that it is essential for the organization to be aware of the need for change, desire to make the required changes, have knowledge of the changes required, have the capability and ability to make the changes and lastly have the will retain the changes it has implemented. For instance the organization tried to implement changes that can assist is solving its declining performance in terms of reduction in share prices for instance through enhancing technological and innovative changes that would assist the organization improve its performance. Telstra also utilized the contingency management theory to enhance its change practice. The theory basically advocates for an effective linkage between the implemented changes and HR strategies. It is essential that during change implementation the organization should not eliminate the key players who are supposed to effect the changes and that is the workforce .Telstra further designed measures of preventing or rather minimizing employee’s resistance to both technological and innovative change. This strategy paved way for the business to succeed in its activities through the following approaches: dealing and handling incidences of misunderstandings, low morale to change, self interest and employee’s discrepancy with reasoning. The organization took the initiative of educating and communicating to employees on the importance of change, secondly, Telstra encouraged more of employee’s active participation on organizational change programs, this was mainly carried out to allow more employees if not all to adapt to the new changes made in the organization. The human resource manager of Telstra Corporation limited enhanced and facilitated more on the managerial support that is associated with supporting employees to handle matters that relate to fear and anxiety that may arise due to the new changes. The process of implementing change effectively should not be forcefully imposed. Telstra managed to outshine other organization since it took the changing approach with a lot of care. Before instituting the changes, the management took the role of educating its employees on the importance of the changes; they did not just impose these changes to employees. Imposing the changes would to some extent result to damaging the organization rather than bringing progress and transition. An organization that tends impose forceful changes on its employees is likely to lower the morale of its employees. Change can be obtained without necessarily imposing them to employees. Whenever a firm implements rule, policies and certain procedure without fully discussing and educating the employees either directly or indirectly, the employees may not show their commitment to the change process. The motivational theory was also applicable in the changes strategies implemented by Telstra. Individuals such as Herzberg and Maslow propagated the motivational theory as a fundamental strategy of improving the performing capabilities of people. The motivation theory is linked to one major parameter, which is the aspect of job satisfaction. The theory further highlights that job satisfaction is enhanced by factors such as recognition, achievement and personal growth. Telstra utilized strategies of enhancing job satisfaction through the Telstra reward program an integrated and comprehensive program that offers benefits that are financial and non financial to its staff, beyond their normal remuneration packages. With such a strategy the employee motivational level is improved. Herzberg highlighted that if the organization maintains the strategy of motivating its workforce then they defiantly become enriched and the need for employee supervision becomes lesser (Mary 1997). The institutional theory was also well applied within the change management process in Telstra. The theory basically focuses on a more resilient and deeper aspect of the social structure within an organization. The theory puts into consideration the process through which rules, norms, schemas and routines are established within an organizations change process as guidelines to enhance social behavior (Boyd 1990). There are specific rules pertaining Telstra corporation limited company management of change. The human resource manager of Telstra Corporation designed new regulations or rules to highlight how tasks were to be allocated and within the newly formulated Changes. In addition the management tried to enhance enthusiasm within the employees by frequently sharing the vision and goals of the company. Change management principles were also effectively utilized by the organization. All systems within Telstra Corporation limited called upon all the employees to fully agree to several systems within the firm, memos were sent to every employee and individual and group discussions were also held. The Second principle used by Telstra was to ensure that employees have also understood the new trend that is required in the organization, which is change. The other essential aspect is to make the employees understand why the changes were implemented and the proper measures that can be put in place to achieve these objectives at the end of the month or at the year end. Telstra managers worked toward the stipulated goals in all stages of their activities (Thomas & Carl 1990). Factors that Interfered with the change Process Cost of Implementation Besides Telstra being the leading company in most of its services offered, it faced a major challenge in terms of cost. The organization incurred too many cost in the process of instituting this change. However, this did not ultimately affect their activities. In order to establish the benefits obtained from the changes made, using the cost. Telstra measured the cost of instituting this change and the benefits if has obtained or received. Since Telstra has proven to be the best company in terms of the services offered to the its staffs and as well as its customers, it will be therefore right to say that the organization earned a lot of profit than suffering expenses (Telstra Corporation report 1993). Resistance from the employees Change within Telstra may be viewed as a factor put in place to enhance mostly the firm’s productivity. However, this change was received both positively and negatively. There are those employees who understood the need as to why the organization needed to change some of his activities if not all. Some did not understand the need for these changes; as a result, they ended up rejecting or opposing these changes. Employees rejected these changes especially if it had something to do the technological change. Technological change meant use of machine in some specific areas or department for that matter. The use of machines meant that the organization would be requiring less human labor. This replacement of human labor with the machine was harshly rejected. This meant that employees had to lose their jobs. Telstra had a hard task of explaining to the employees on the importance of these changes and trying as much as possible to make them see that, the organization aim is not mainly targeting on the changes but incorporating this changes in order to yield good and better results at the year end. Size of the organization A part from the hindrance mentioned above, Telstra had difficulties in dealing with its size. Since the organizational structure of Telstra was too gigantic, this means that the volume of transactions was also big. Since the organization wanted to incorporate change, there were other sections that required total change on how activities should be done. For instance, where the volume of transition is large, especially on department such as cash department, the organization had to change its manual based approach to a system based approach. This involves use of computers and other feeding devices that is instated purposely to key in large figures that cannot be done manually. Where the size of the organization is too big, the human resource manager will have difficulties in planning process, especially when coordinating activities within the corporation (Telstra Corporation report 2000). Nature of the business The nature and the set of the organization will also determine the change to be undertaken. Telstra corporation limited company nature of the business is very complicated. It starts from the organizational structure to the management structure. As a result of this, maintaining proper books of account has posed a major challenges, sometimes the account prepared (incoming and outgoing transactions) do not tally or agree with the books of accounts prepared and the financial statement prepared does not show a true and fair view, this are; trading profit and loss account of Telstra company limited, the cash flow statement, balance sheet and statement of reconciliation for both the bank and the cash. Since Telstra is a limited company, its accounts needs to be audited by an independent auditor at the end of each financial period, depending mostly on the day when the business commenced its activities. Where the firm’s nature is complicated, the auditor will have difficulties in understanding the set up of the organization. As a result of this, he/ she will be unable to give his opinion at the end of his analysis because of the technicality of the organization activities (Telstra Corporation report 2000). Competition Telstra being the leading company in Australia in offering telecommunication services faced a major competition from the second leading telecommunication service in Australia by the named Optus. The competitions were both healthy and unhealthy. Healthy competition is that which enables and portrays benefit to the organization and the customers at large. Whereas, unhealthy competition occurs where both the organization aims have shifted, shifted in the manner that they are all striving hard to remain in the market but not necessarily making profit. This has affects the Telstra since its main objectives is to make profit while for its competitors is a total different case (Thomas & Carl 1990). The step taken was not mainly to accelerate and enhance new strategies but also control and manage platforms inside the company’s world class operation was specifically established for the growth and development. This strategy has enabled the organization to deliver skillful solutions and services which was to go hand in hand with the customers’ demands. However, in the process of advocating for change, Telstra Corporation faced a major challenge, both locally and internationally. Aspects poorly performed in the change process Organizational change is basically surrounded by the central implementers who are the employees. In despite of the many initiatives undertake by Telstra in terms of involving the employee in the change process through educating and training them concerning the changes made on the organization. However there were still the aspects of resistance to change due to lack of effective strategies by the management for the incorporating the changes among the workforce. For instance if new services were incorporated in the organization during the change process, the implication is that the work load for the employees will definitely rise and this demands of an increase in remuneration. Telstra did not effectively deal with this aspect as result the Telstra’s workers Union opted to organize a strike. Adebanjo ( 1996) highlights that in order to enhance effective change within an organization it is essential to take note of the fact that all the areas of organizational change areas or aspects which include strategy, technology , people and structure , are actually related, therefore if one area experiences changes it has to affect the other areas. Telstra did not put emphasis on this aspect as much and thus conflict arose from one area which is the employee segment. How successful the change was The change has been successful since it enabled the company to emerge as the leading firm not in their activities but their services as well. Employees were able to understand the master behind the success of the organization. Telstra acted as a role model for other companies, several companies started incorporating new change in their organization. Within a period of not less than a year Telstra was able to earn a lot of profit as compared to other years of existence. Incorporating realistic and achievable change increased the Telstra profit by a great and bigger percentage and in addition enhanced its competitive advantage in the telecommunication sector in despite of the still existing stiff competition ( Telstra Corporation report, 2000). Recommendations Telstra strategies for enhancing organizational change were effective in terms of improving its performance in the market and also maintaining its competitive advantage. In addition the people oriented type of change was also well handled, however in case increased responsibilities arise , whereby the employee have to put in more effort and use more time to work, it is essential for the organization to repackage employees salaries in order to avoid strikes which may eventually affect the entire change process. Conclusion Change management principles were effectively utilized by the Telstra organization. The contemporary business environment requires that organizations undergo frequent changes if they intend to remain competitive, therefore all stakeholders of the organization are supposed to be actively involved in the change process; in order to come up with a system whereby change is can easily be incorporated and managed. Bibliography Adebanjo, D, 1996, “Corporate Restructuring: Managing the Change Problem from Within." Leadership and Organization Development Journal Boyd, B, 1990, "Corporate Linkages and Organizational Environment: A Test of the Resource Campbell, D, 2007, International Telecommunications Law, Lulu.com, Australia. Fleming, K, .Thomson, K,. 1997, Telstra Corporation Limited: Deutsche Morgan Grenfell, New York City. Mary, R, 1997, “Managing Change." Manage. New York,Sage Telstra Corporation, 1993, Code of conduct: for the staff of Telstra Corporation Limited, Telstra. Telstra Corporation report, 2000, Constitution of Telstra Corporation Limited: a company limited, Telstra Corporation Ltd. Thomas S & Carl P.1990, Management: Function and Strategy. Homewood, IL: Irwin, 1990 Read More