Strategic Change Management Analysis for Avery Dennison B V - Report Example

Strategic Change Management analysis for Avery Dennison B.V.

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Task 1

1.1. Introduction

The Strategic Change Management analysis for this report will be focusing on Avery Dennison B.V. The report uses tools of strategic analysis like SWOT, PESTLE and to assess any change, discuss the stakeholders’ expectations and resistance, and to give suitable strategic plans that the organization will use to improve its competitive advantage in the market with creating growth through innovation, global operations and cost efficiency.

An appropriated change model and method of monitoring will be introduced to implement the change; strategic interventions will be discussed as well.

1.2 Company

Avery Dennison Corporation was founded in California, USA in 1935 by Mr. and Mrs. Ray Stanton Avery. It ranked number 375 on the 2013 Fortune 500 list with total sales of $6.8 billion. The company operates in more than 50 countries and employs 26,000 people worldwide.

Avery is a global manufacturer and distributor of “Retail Branding and Information Solutions” which involves designs, manufactures, and sells various branding and information management products and solutions for apparel and general retail, including heat transfer items, tickets, RFID tags, labels, external embellishments and price management systems (Wikipedia, 2016).

1.3 Factors to drive strategic change

There are some factors in Avery that are currently driving the need for strategic change, the organization is motivated by these “Change Drivers” for achieving new visions and goals.

Firstly, transition of senior management team; a new CEO Mr. Mitchell R. Butier has replaced Mr. Dean A. Scarborough since February 2016. The organizational structures, directions and goals have been changed (Business Wire, 2016).

Secondly, according to the “Notice of 2016 Annual Meeting of Stockholders” (AVY Proxy 2016), the new strategies are shown as below. (Appendix A)

• Grow through innovation and differentiated quality and service, and by investing in select high-potential market segments.
• Expand margins by increasing productivity and accelerating growth in high-return market segments.
• Use a disciplined approach to investing in our business and returning cash to shareholders

Thirdly, “Sustainability” is the rooted and business approach in Avery’s values. It drives the organization to address the environmental and social impacts of all the products under the entire value chain.

Some visions and goals which related to “Sustainability” are pointed out in the “Notice of 2016 Annual Meeting of Stockholders”. (P.6 AVY Proxy 2016 AVY Proxy, Year, p. 6)

Figure 1: Vision and Goals of Avery Dennison

Source: AVY Proxy, 2016

The aim is to improve the sustainability of the products and processes, while helping to create shared value for all the stakeholders.

We operate in an environment being made warmer by greenhouse gas emissions; in which raw materials are becoming scarcer and more expensive; and in which social media have increased expectations for incredible transparency and immediacy. As industry leaders, our two core businesses afford us a unique opportunity to drive the agenda for creating a more sustainable world for all stakeholders." (AVY Proxy 2016)

To carry out an extensive analysis of Avery Dennison Inc., which includes SWOT analysis and PESTLE analysis as a means to assess the key drives of change and observe its impact on the organisation in the short as well as long-run.

SWOT analysis of Avery (Appendix B)

PESTLE analysis of Avery (Appendix C)

1.4 Specific change

Base on the reviewing of AVY Proxy 2016, SWOT and PESTLE analysis, It indicates the needs of cost reduction, having technological developments on different aspects and maintaining operation smoothly and speedily. Hence

“Robot investment in production” will be the appropriated change in the immediate future of China factory. Thirty robot arms are being planned to install in Heat Transfer production site, which can improve the efficiency of production (Lakhani, et al., 2012).

SWOT analysis is one of the most critical analytical tools available at the disposal of organisations since it enables them to critically review their organisations both internally as well as externally and effectively assess their strengths and weaknesses (Cole, 2004). Similarly, PESTLE analysis helps organisations to scan and strategically analyse their business environment, monitor the trends, identify opportunities and prepare for the challenges likely to be faced by them due to the changes likely to impact the organisation (Gill, 2011).

1.5 Reasons of the change

According to SWOT & PESTLE analysis, the turnover of the Heat Transfer production line in China factory is high, it causes backlog of production orders. It is difficulty to hire appropriate technicians since the production technique of heat transfer product is an expertise. It takes time to provide training and coaching for the new joiners by the production line manager or supervisor. It is obvious that the performance of new workers is not always satisfied bases on the figure of high production wastage and unstable quality. The new workers are “money worship”, who fight for better benefit from the management team. The extra requirement cannot be accepted by the organization as always due to the high recruitment costs corporation bear.

(U.S. Securities and Exchange Commission, 2015).

In addition, complicated employment law in China, e.g. employee insurance, labor protection, housing allowance, health and safety rules of employees, China government taxes and any benefits for China employees create obstacle to recruit new candidates continually (China.Org, 2016).

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Furthermore, to have smoother and stable productivity, it is necessary to change the production way from human manually to robot arms automatically. Consistency good quality is the essential condition of heat transfer products, otherwise a serious garment claim would be suffered by Avery. Stable printing quality can be guaranteed by using robot arm and thus achieve the current vision of “zero waste to landfill” and “sustainable world”. Robot arm can be operated 24 hours without restriction under labor law, it can also fulfil the new strategy of “Expand margins by increasing productivity” (Mathiason, 2016).

It is affirmed that robot arms tend to increase the efficiency of productivity which impacts on the organizational performance. “Robot investment in production” is necessary for the strategic change (Mathiason, 2016).

30 robot arms are being planned to be installed in the heat transfer team of China production field for the coming nine months and the cost saving is assumed to have about 40%.

1.6 Resource implications

Any strategic change involves some resource consequences, installing robot arms is a fresh idea and big investment in Avery so a lot of resource implications involved (FrontEra, 2016).

Human Resources

None of the Heat Transfer Team has experience in manipulating robot arm so a full set training and coaching have to be offered to the team, One technician can monitor 15 robot arms once set up the program, it saves a lot of manpower so some current positions will be ceased. The performances of current workers are reviewed and selected by HR and the production manager, the outstanding one will be trained as new technicians while the others will be make redundancy. Meanwhile, HR will need to prepare the package of redundancy base on the China’s labor law and have an effective communication plan to eliminate the disquiet and motivate the morale of all remain employees; it is important to examine rewards structure for employees and develop ways to reward staffs for good performance (Azzone & Palermo, 2011).

Physical Resources

30 robot arms with software programs and professional coaching program are purchased from a technology company. The location, space and sufficient electric power are also need to be concern for installing such additional facility in production site.

Financial Resources

It is a significant investment of the strategic change so the budget amount is required to estimate clearly for resource allocation. Enhancing robot arms includes a variety of budgets: cost of the robot arms and the relevant equipment, cost of training course and coaching services, warranty expense and maintenance costs, additional electricity charges.

On the other hand, there are resource implications even the strategy change is not implemented. The three resources are analyzed as below,

Human Resources

Recruitment of workers needs to be continued due to the high turnover of Heat Transfer department. Since the generic printing machine consumer manpower and material resources, HR and the Production Manager may need to spend more time to select appropriate new employees and coach up existing workers to lower the turnover.

Restructuring of the Heat Transfer Production Team includes changing the manager to have a new leadership style may be considered if the backlog of orders and turnover issue cannot be solved in a short term.

Physical Resources

More generic machines and production lines may need to be added. Space, location and the costs are the considering points.

Financial Resources

Employment and recruitment costs are the main expenses even the change is not implemented since manpower is the majority capital for the production line.

Task 2

2.1 Stakeholder

The stakeholders of the above strategic change are identified by Mendelow’s Matrix as below figure 1.

Figure 2, Mendelow’s Matrix

The Mendelow's Matrix was developed to help the management keep tract of the various changes in the influence of prospective stakeholder groups and be informed about the developments in strategies implemented by organisations as well as to accommodate new stakeholders as and when need be. Secondly, the matrix was proposed to be used for strategic development of the stakeholders (Harris, 2005, p. 24).

2.2 Resistance

It is no doubt that diverse resistance to be appeared on different levels of stakeholders. Robot arms investment is a huge and innovative change in Avery China factory, the shareholders may dis-agree the change and cast opposing vote. It is because they worry about the unbalance of investment and negative result.

Besides, the entire Heat Transfer Production Team may not co-operate with the change; the manager and supervisor may refuse to follow the procedures and not release the workers for the training; the junior workers may not put effort to study the training and refuse to learn the new technique or even misuse the robot arms deliberately, they block the change by spreading rumors and gossip. It is foresee the team emphasizes each one is an expert of heat transfer products, nobody and nothing can be replaced their professional skills, they are not willing to change.

Actually, resistance is an unavoidable obstacle for any change in an organization, it can be classified into four categories,

Ideological, People believe the traditional and habits of the past who cannot jump out the “comfort zone”. The traditional culture, values and beliefs cannot be challenged (Cameron & Green, 2004).

Psychological, People feel discomfort to cope with innovative technology which to be assumed hard to use, time consuming and worthless. They regards they are not able to do due to no experience and knowledge about it (Sims, 2007).

Power driven, People worry about losing of identity and future, the change may threat their power and jobs by team re-structure, values, skills and interests (Reiss, 2012).

Cognitive, People have their own culture and believe the current or generic way is the best. They worry about losing of control (Reiss, 2012).

2.3 Strategies

A number of strategies can be utilized to manage different resistances of the change which include “Listening to Stakeholders”, “Communicate the Vision”, “Deliver Training Programs” and “Stakeholders involvement”.

For the resistance of some shareholders, the president can communicate the vision to them frequently, show them the analyzing reports of investment amount versus performance and the successful cases of other manufacturers using robot in production. It can increase the investing in credibility and eliminate the myopia and worries as a result to convince the shareholders supporting the change.

For the resistance of Heat transfer production team, apart from the general vision communication and listening to stakeholder’s needs by Management Team, the stakeholders can be involved in the planning. It is a good opportunity to show respect on them so as to solve their concerns while their product knowledge can be collected and benefit the change.

2.4 Stakeholder Involvement

Stakeholder involvement is the core strategy of the change since it benefits on both organization and employees. It allows employees to have great satisfaction that they can have opportunity to take more control of their jobs and working environments.

Stage 1 – Forming,

“Robot arms installation Team” is formed by the key stakeholders include the Production Manager, China HR Manager, IT Manager, CS Manager and Purchasing Manager. They might be anxiety and uncertainty at the beginning as the individual role has yet been clarified. They need to determine how the team will be organized and discuss the major milestones, outline team rules and clarify the roles.

Stage 2 – Storming,

The team members may experience stress, conflict and argument during meeting at this stage and cannot compromises the discussing points like which technological supplier to be used, which program to be used, the location of robot arms installation, how many workers to be kept and do redundancy, etc.

Stage 3 – Norming,

A sense of community is established and the team remains focused on the goal. Roles are clear and accepted at this stage, the team members provide constructive feedback with consensus and have stronger commitment towards the goal.

Stage 4 – Performing,

The team has matured and a high degree of autonomy. The leader (HR Manager) leads by delegating; workable ways can be concluded at this stage.

2.5 Pros and cons of different systems used

Stakeholder Analysis is an essential initial process of any strategy change as the impact of changes on them can be determined while Team Development is the best way for the change of production way in Avery. The Heat Transfer Production Team is the most influenced party and the entire team carries negative feeling. It is necessary to solve their emotion so as to avoid any further issue such as poor performance on the product quality and even strike. With other stakeholders as a team, individual contributions and speedy responses can be gained, they are encouraged to think more practical ideas for any improvement which can empower them to have personal growth and self-fulfillment while the change can be continued to run smoothly with the valuable ideas (Freeman, 2010). On the contrary, the team does not involved top management, it takes time to run and compromise any conflict within the team.

2.6 Change management strategy with stakeholders

In addition to the above indicated involvement, the stakeholders especially Production Team should have a two-way open communication plan and be shared the objectives and essential of the change clearly, which can solve the concern of power driven.

On the other hand, training programs of robot arms can be delivered to the team to equip them for the change and alert them to understand the merits of that new technology, which can minimize their concern due to ideological, psychological and cognitive.

Task 3

3.1 Change Models

There are a range of change models whereas Kotter’s Eight Steps and Lewin’s Change Management Model can be considered to utilize on the implementation of change in Avery.

Kotter’s Eight Step Model (Cameron & Green, 2004, p. 101):

Step 1: Establish a sense of urgency: This step entails an initiative by the management to identify and discuss the need for change, on the basis of an evaluation of the existing trends and competitive strategies adopted by the rivals, and using this knowledge to emphasise the need for change.

Step 2: Form a powerful guiding coalition: This step requires the management to create a group of qualified personnel responsible for initiating and supervising the process of change management within the organisation.

Step 3: Create a vision: In this step the management is required to develop a clear vision to be pursued and form strategies to achieve the same.

Step 4: Communicate the vision: Once the vision is created the next step entails communicating the newly developed vision to the employees and emphasise the need, relevance and significance for the same. The management must ensure that the strategies to be used to achieve the vision, are clearly communicated to those responsible for implementing the same.

Step 5: Empower others to act on the vision: Empowering others in this context refers to the assignment of appropriate authority to the personnel responsible for supervising and implementing the change process. In the absence of required authority, tools, and resources the change management process can be hindered resulting in immense losses for the organisation.

Step 6: Plan for and create short-term wins: Along with long-term goals and vision, the managers must also develop short-term achievable goals. Also, those responsible for implementing the same must be rewarded appropriately for their efforts and success on achieving these short-term goals.

Step 7: Consolidate improvements and produce still more change: The new goals and strategies must constantly be reviewed and supported through required resources.

Step 8: Institutionalise new approaches: This step entails ensuring that all employees working on the change management projects are clearly communicated the need and relevance of the process in order to ensure greater success.

This model is effective for “Organizational change” and “Transformational change” as these types of change involve wider stakeholder and need to be processed step by step (Burke, 2008).

Lewin’s Change Management Model, contains three core parts, “Unfreeze”, “Change” and “Refreeze”. (Appendix E)

This model was developed by a prominent organisational theorist, Kurt Lewin. This model is founded on the force-field analysis whereby it is proposed that the behaviour of individuals is a product of two contrasting forces working in opposite directions. Where one force pushes toward preserving the status quo the other opposing force pulls away toward the desired change. Thus, when these two forces come together and are equal there is no change in the current system /behaviour of the individuals concerned (Sims, 2002, p. 348).

Task 3b)

3.2 Apply Kotter’s Eight Steps model for the change

Kotter’s Eight Steps model can be applied on the “Robot investment change” in Avery. Steps are demonstrated as below,

• Increase urgency,

Sharing the new strategies of “Notice of 2016 Annual Meeting of Stockholders” (Appendix A), SWOT and PESTL analysis (Appendix B and C) to different stakeholders via Town hall meeting by CEO to all stakeholders in quarter 4 of 2016, the business crises and essential of changing are discussed. It sparks the initial motivation of the change.

• Build the Guiding Team,

The Guiding Team named “Robot arms installation Team” is formed by the five stakeholders with Tuckman’s Forming Storming Norming Performing model. (Tuckman, 1965) in the early of December, 2016. Details have been indicated clearly on the above section 2.4 “Stakeholder Involvement”. The team is to balance the pros and cons of the discussed topics and compromise the best solution within the team by negotiation in weekly meetings.

• Get the Right Vision,

AVY Proxy 2016 (Appendix A) points out the new vision in 2016 is to “Make every brand more inspiring and the world more intelligent”, this direction requires innovative solution and high technological skill for producing products.

• Communicate for buy-in,

Apart from the town hall meeting, separated or individual meetings can be hold for different levels of stakeholders by CEO and the Guiding Team in the mid of December, 2016 so as to communicate the new vision to everyone. As the above sections 2.3 and 2.4, it describes the importance of “Listening to Stakeholders”, “Communicate the Vision”, “Deliver Training Programs” and “Stakeholders involvement”, most of the concern and anxiety can be solved.

• Empower Action

This step is the solution of solving resistance with communication so this step can be combined to proceed with the step 4. To lower the worries of the Heat Transfer teammates and other stakeholders due to the reasons of Ideological, Psychological, Power driven and Cognitive, (as above sections 2.2); Thank You Award can be used to recognize the good performance employees who participated the change project aggressively in January and March of 2017. Secondly, weekly team meetings are being hold within Heat Transfer Team during the entire changing period so that any unstable emotion and concern can be shared and identified, the Manger can then report the situation to the Guiding Team by the bi-weekly meetings. Management Team can then be alerted .

• Create Short-term Wins,

To smoother the change, it is recommended to re-structure Heat Transfer Team before early of March, 2017. It is allowed teammates to decide the individual future no matter staying or leaving the organization, teammates can report the willing to Heat Transfer Manger or HR Manager directly in January, 2017 with award.

Kaizen is recommended to be utilized in this step as the Five S framework consists of “tidiness”, “orderliness”, “cleanliness”, “standardized clean-up” and “discipline”, which can be acted as the guidelines for re-organization of the team with continues improvement during the entire stage of robot arms installation. The teammates will be required to tidy up the order record and working environment within two weeks, the workflows can be standardized in the future, it is more convenient to monitor the team.

• Don’t’ let up, be persevere

Management Team and the Guiding Team are required to monitor and review the progress and results of the change, then set up new goals (from team re-structure, choosing appropriate supplier, training and coaching till maintaining the smoother production) of each step when achieved.

• Make change stick,

Robot arms installation is a great change project in Avery, this successful case and all key stakeholders can be recognized to all staffs no matter new and old. It is to ensure the contributions of all members and the change culture can be incorporated to other production teams and all staffs.

3.3. Measures for monitoring progress

Setting up milestones with deadlines (see appendix E) is the appropriate method to monitor the progress,. By comparing the planned schedules of milestones and the actual progress or budgetary requirements, the actual performance of the change including appropriateness of goals, solutions and management methods, and accuracy of resource cost estimates can be measured. Hence Management Team can take immediate and appropriate action like re-allocation of Guiding Team, re-estimating overall costs and re-defining goals or even seeking new solutions. Monitoring the change management process is imperative to ensure successful accomplishment of the desired organisational goals. The performance monitoring process hence, allows the change managers to not only supervise the planning, management and implementation of the change management process, but also enables them to monitor and evaluate the performance of the employees and analyse the progress from time to time (Hayes, 2014).

Task 3c

3.4. Strategic interventions

Strategic management intervention is a mechanism to correct aberrations and deviation during a change, the aim is to retain overall control of the change project among each stage. “Team building” and “changes to HR processes” are recommended in the change project.

Team Building, per the above section 2.4, a guiding team is formed by five stakeholders which can have consensus and hence to avoid conflict, disagreements and unwillingness to compromise. The teammates keep communicating and understanding with each other so as to balance the preference and solve the conflicts. However, a small team may not represent all levels or cannot maintain a positive direction, as a result, the teammates of Guiding Team can be changed quarterly from different levels of stakeholders so as to keep fresh ideas for the entire change.

Team building refers to the application of a process built on cooperation, whereby individuals come together to address and resolve issues faced by an organisation. The process of problem resolution helps the members of the team to work in close cooperation with one another, develop skills such as leadership and inter-dependency, allowing them to come together for a common cause and achieve the desired organisational objectives effectively. Team building offers a range of benefits such as it enables and encourages organisational learning, allowing the employees to constantly learn and be in tune with the latest trends and preferences affecting market demand (Baker, 2007).

The HR processes play a key role in enabling organisations to effortlessly transition to the new system post the implementation of a change management project. According to Armstrong (2006) organisations which manage to effectively integrate their change management process with the human resource management policies are more likely to achieve the desired strategic change. This includes providing needed training to the employees to transition to the newly implemented systems and adapt to the changed organisational policies, improve employee relations and provide technical guidance to help them resolve any operational issues faced by them. The HR processes are known to act as a stabilising force in the change management process and are inevitable for facilitating change (Armstrong, 2006).

Conclusion

Change is constant and all organisations regardless of the industry in which they function are likely to confronted with issues compelling them to adopt and implement a change management process in order to sustain their competitive positioning in the industry. The effective management of change is crucial to ensure the long-term growth and development of organisations. This can be achieved through a range of processes and strategies adopted by the top management. This report helped in highlighting the various critical issues associated with the process of change management and evaluate the manner in which the application of such processes enables the management to achieve their desired goals and objectives.