Change Management at Coles - Case Study Example

Change management at Coles Name: Institution: Submitted to: Submitted on: Table of Contents Table of Contents 2 Executive Summary 2 Introduction 4 Company background 4 Problem statement 5 Purpose statement 5 Managing change 6 Kotter’s eight step change model 7 Step 1. Create urgency 7 Step 2. Forming a powerful coalition 8 Step 3. Create a vision for change 9 Step 4. Communicate the Vision 9 Step 5. Remove obstacles 10 Step 6: Create Short-Term Wins 10 Step 7: Build on the Change 10 Step 8: Anchor the Changes in Corporate Culture 11 Communication strategy 11 Conclusion 12 Executive Summary As part and parcel of Wesfarmers, Coles Supermarket is actively seeking to increase its market share and compete with the market leader, Woolworths. Part of this strategy of increasing its share of the Australian retail market is based on increasing the number of outlets across all major urban centres. In December last year, the firm simultaneously opened three new stores in Sydney just in time for the Christmas shopping frenzy. Such a move highlights the changes taking place within the firm as it implements its growth strategy. Such changes are taking place within an industry environment that is rapidly changing. Therefore for the firm to fit in and remain relevant and competitive, it must be constantly changing. However, this change is not random and must be planned meticulously and executed to achieve the desired goals. Therefore, a change strategy must identify the goals, the challenges and articulate the specific steps to achieve the desired goals. For Coles, the goals of the recent expansion are based on hiring new employees, blending them with existing employees, assigning a healthy blend of new and existing employees to the new location and instilling the Coles’ culture and traditions at the outlets to grow the customer base and drive sales. To achieve this, the change initiative is carried out through the Kotter’s eight-step model which emphasises on change of mind-set to accept change, effective communication, addressing challenges and strong leadership. Communication as an organizational strategy is given further attention as it plays a significant role even outside the change model. Introduction Company background Coles Supermarket is the second largest supermarket store in Australia. Through its 741 stores spread out in various locations Australia, the firm has managed to occupy 31.1% of the retail store market second to Woolworth’s 41.1% (Deloitte 2012). Of the 741 stores, 45 of them are labelled BI-LO supermarkets. As of 2013, the firm reported revenues in excess of A$32 billion and employee base of over 100 000 people (Ibid). The brand’s parents company is Wesfarmers with its history dating back to 1914 when the first store branded Coles Variety Store was first opened in Melbourne. Apart from dealing in common grocery and merchandise brands, the firm stocks and sells Coles’ private label brands (Coles, 2014) and also operates 630 Coles Express locations. In the market, Coles positions itself to offer customer satisfaction low prices, a wide variety of goods and stocking Australian goods. The supermarket chain was acquired by Wesfarmers Ltd in 2007. Wesfarmers also runs Coles Express, vintage cellars, First Choice Liquor, Liquorland, Bi-Lo, Bunnings, Officeworks, Target, K-mart, Kmart Tyre and auto service, and other brands in various sectors such as insurance, chemicals, resources and energy (Coles 2014). The firm is headed by a board of directors comprising of 12 members. The Board is headed by an executive chairman and has its headquarters in Western Australia. Day to day affairs are managed by the Group Managing Director, with the current one being Ian McLeod. Problem statement In December 2013, Coles opened three new stores in Sydney NSW at Bondi Westfield, Broadway and Balgowlah. These stores are estimated to call for 200 new employees. As is tradition, majority of the new employees will be form Sydney. However, new employees must be blended in the new outlets as well as being absorbed in the existing outlets to give them necessary on-the-job training and experience. For majority of existing employees, the opening up of new stores implied new opportunities for promotion while for some it brought the risk of being uprooted from their current work stations and posted in the new stores. Given the rising cost of housing in Australia, majority of employees fear the pending employees’ rotation. Other than that, employees are increasing wary of the wave of online shopping which directs poses a threat to their employment. Some employees fear that such expansion strategies in the wave of competition and automation of major services, the move is not sustainable and some stores might have to close down in the near future. To navigate these tricky phase, the firm requires an effective change management strategy to restore and maintain the commitment of employees while at the same time achieving organisational goals. Purpose statement This report will provide an overview of the change management process that Coles Supermarket will encounter and move through. The stages and strategies suggested are backed up by existing and relevant theory of change management borrowed from recent literature. Managing change There are two main ideas on managing change. Change is unique to personal, leadership and environment al conditions. This means that the manner of achieving change in any given organisation varies with the personal skills such as leadership skills and organisational environment which includes organisational structure, HR policies, goals and growth strategy in what is called a change path (Brisson-Banks, 2009). Consequently, there is no standard method to proceed with change process in a defined and predictable way. The blend of organisational conditions and its leadership results in a unique change process. Nonetheless, theorists have developed change tools to guide organisations in change processes. Graetz et al. (2006) defines a change tool as a general recipe or formula for managing change in organisations. All though these tools are presented as one size fits all formula, it’s not the case as there need for customization. There are numerous change management tools including the Kotter’s eight step model, Lewin’s Change Model and the Kanter, Stein and Jick’s Ten Commandments model. All these tools have their strengths and weaknesses and each is best suited to a specific organisation. The Lewin’s change model involves three stages of unfreeze, change and refreeze. In the current situation facing Coles, the three stages are perceivably too generalized and thus not enough to capture the desired change path taken by Coles. Kotter’s eight step change model This model was developed by Kotter in his book ‘Leading Change.’ The eight steps involved in the tool are incremental as shown below. Their depiction as a stair implies it is okay for a firm to take retake step in case obstacles are encountered. Figure 1 Kotter’s model Step 1. Create urgency This is the first stage which calls for rallying support to initiate change. The need to create a sense of urgency is based on the belief that the status quo is more desirable than change, as such. Change is likely to be resisted unless it is deemed necessary or urgent. Rallying for support involves seeking the support of the people. Samson and Daft (2012) says that change is not about changing the businesses processes but is rather is changing the mindset of the people. Whelan-Berry and Somerville (2010) also writes that majority if not all the change in organizations occurs at the individual level. Kotter (1996) however, lays emphasis on the need for communicating to the people honestly so that they can understand the urgency. In the case of Coles supermarket, a honest talk among the top managers on the industry trends and their accessibility in the market coupled with the growth strategic coupled to the need to open up new stores in strategic locations. This way the people will understand the urgency in the change and fuel it. This requires very strong leadership skills by leaders to compose a compelling case to convince at least 75% according to Kotter of the stakeholders or employees about the need to make the change. This stage should be also utilized to address the fears that come along with change. In the case of Coles, an honest look at the position of the firm in the industry vis a vis competition should give a clear direction. Any fears of lay-offs due to automation or shrinking market share due to competition from online retailers should be addressed. Action research or surveys on the pending change might be used to collect information on views from employees (Appelbaum et al., 2012). This way, employees can express their deeper fears and emotions without fear for repercussions. The feedback obtained can be acted upon by the organization and address the issues raised (Lusch & Lewis, 2008). Such feedback can also highlight any deficiencies in knowledge or the need for additional training of employees to drive change (Whelan-Berry & Somerville 2010). Step 2. Forming a powerful coalition This involves formation of a team of individuals experienced in change management to lead and oversee the change process. They must also display strong leadership qualities and also able to rally followers behind their cause. The team should not necessarily follow a hierarchical format but should have all departments represented well to ensure free flow of information. The team, as the driving force of change should possess high leadership and communication skills. Detert et al. (2000) note that effective communication of organizational goals and vision rally people around the vision and achieve commitment and loyalty. The team should also allocate resources to the change initiative using both formal and informal mechanisms which potentially drive change (Whelan-Berry & Somerville, 2010) Step 3. Create a vision for change The change process should have a definite vision that is different from the organizational vision but linked to it. In so doing, the tem managing change at Coles in managing the opening up of new stores should formulate the vision for the change process within a given time. For instance the team should develop a vision speech that can be summarised in a few minutes. The speech should be popularised within the organization and linked to the larger organization strategy. This will reaffirm employees on the importance of the change process. Detert et al. (2000) talks of making employees take ownership of the change process and renew their commitment to the firm. Step 4. Communicate the Vision The team leading the change process should communicate the vision frequently (Kotter, 1996). This is one key reason why it is important to have all departments represented in the team to facilitate free and timely flow of information regarding the change process (Lusch & Lewis 2008). With such representatives being responsible for better understanding of the need for change and particulars, the organizational understand of the process will be improved. The communication should be frequent and continuous to keep the idea of change fresh in the mind of the people. Step 5. Remove obstacles This step involves removing obstacles to change. Kotter (1996) notes that resistant to change by individuals is the greatest impediment to change in organizations. This is because the status quo in most cases provides a sense of comfort in terms of known strategies and routines. To achieve change, the comfort of status quo must be removed. The management of Coles might consider laying off some of the individuals resisting change but any move to bring in exert outsiders to drive change should be resisted as it would create more resistance (Gobble, 2013). Step 6: Create Short-Term Wins This step involves identifying the benefits that the organization and individuals can achieve with the change Kotter (1996). For employees who already feel a sense of ownership of the whole process, the stage is rather easy. For instance, there should be communication on the actual opportunities for promotion that the new stores create for the employees. This would also be one way to reward employees who support and promote change. Step 7: Build on the Change Building on change means reflecting on the short term successes achieved and working on the strengths noted (Kotter 1996). In the case of Coles, achievements made in communicating with the employees about the impending change should be noted. For instance, if employees respond best to situational meetings, then the change management team shall strengthen such forms of communication. The training of new employees in cases of employee turnover should be adopted as a continuous process. Step 8: Anchor the Changes in Corporate Culture A culture of change should be cultivated in organizations to ensure change is continuous (Kotter 1996). In the case of Coles, this current expansion is not the first neither the last. Hence, the firm should incorporate change management processes in its organizational culture in anticipation future expansion strategies. Employees should be taught and trained on the importance of advancement and continuous improvement on various processes (Graetz, et al. 2006). For instance, the fear of being relocated to new workplaces can be addressed by incorporating regular employee rotational programs across all the departments and all the stores. When such change is realized successfully, organizations gain from increased employee loyalty and commitment. Communication strategy Effective communication is a hallmark of leadership skills. Effective communication not only informs in times, but motivates employees and allows feedback (Gilley et al., 2009). Leaders at Coles must be able to communicate and facilitate communication within the organization both vertically and horizontally. Luscher and Lewis (2008) observe that while it is the top managers who plan for change and design projects, it is the mid-level managers and supervisor who operationalize the change by aligning their units. Communication is therefore important to align the mindset of the people to the desired one and align the top management views of change to that of the lower level employees. Armenakis and Harris (2002) talk of using various communication strategies. In the case of Coles, the change message should be personalised to that individual employees can understand what is in for them. Where their personal interests feel threatened, change is likely to be resisted. External sources can also be used to communicate such as through training and industry conferences. When employees learn that the need to change is not arbitrary but necessary due to industry dynamics, they feel more comfortable about change. Conclusion Change intervention, though largely not desired by many, holds numerous advantages to organizations that successfully implement it. Change for Coles of Supermarkets is evident in its expansion strategy. The firm has expanded over the years including merging and being acquired in 2007. For a firm that can survive such changes, it is clear that Coles can survive the current situation and has acquired a culture of change. While the Kotter’s model identified the specific stages that a firm has to go through, it is clear that communication strategy overrides the whole process. Free flow of information from all levels and in all direction creates harmony, facilitates knowledge flow and innovation and also engraves the organisation’s culture. References Appelbaum, S., Habashy, S. & Shafiq, H. (2012). Back to the future: revisiting Kotter’s 1996 change model. Journal of Management Development Vol. 31 No. 8, 2012 pp. 764-782 Armenakis, A. & Harris, S. (2002). Crafting a change message to create transformational readiness. Journal of Organizational Change Management, 15(2) 169-183 Coles Supermarket (2014). Coles. Retrieved online on 15th Feb 2014 from http://www.coles.com.au/ Deloitte (2012). Analysis of the grocery industry. Retrieved online on 15th Feb 2014 from https://www.coles.com.au/Portals/0/content/pdf/Shareholders/Grocery%20Industry%20Report.pdf Detert, J., Schroeder, R., Maurile, J. (2000). A framework for linking culture and improvement initiatives in organizations. Academy of management review 25(4)850-863. Graetz, F., M. Rimmer, A. Lawrence, and A. Smith. 2006. Managing Organisational Change. 2nd ed. Australia: Wiley & Sons. Gobble, M. (2013). Creating Change. Research-Technology Management 56(5), 62-66. 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