Change Management of British Telecommunications - Case Study Example

International Business Introduction The case study described in this article represents one element f a more comprehensive project relating to the management f change in general, and two specific approaches in particular. The case study The company The case study, which inter alia aimed to investigate the issues just highlighted, was undertaken in the Northern Ireland subsidiary f British Telecommunications plc. This subsidiary, BTNI, is a semi-autonomous unit, largely because f particular conditions prevailing in the Province. To quote the quality support manager: "(BTNI) is run as a stand alone company. We have to fight our own corner and win our own battles". In its own right, BTNI is considered to be a leading edge' organization with regard to the management f quality and change, both in the UK and in international terms. It has won the following awards: the Northern Ireland Quality Award (twice); the Supreme Irish Quality Award; the parent company's overall quality award (four times); and the British Quality Award. With a turnover f around 258 million, it is among the top 10 companies in Northern Ireland, and is viewed as an exemplar by many local organizations. In addition, BTNI is one f the few companies in Ulster to have undertaken both TQM and large-scale BPR. The need for change The need for effective change management dates back to the mid-1980s when the parent company was privatized. Its former monopoly status and Civil Service ethos did little to equip the company to survive and prosper in a market-place which was changing at a rapid rate and becoming increasingly competitive. It quickly became apparent that a new culture, skills and value system were needed--the customer could no longer remain out f sight and out f mind'. Accordingly, this subsidiary, which with around 2600 employees is the smallest f the nine geographical zones' that together cover the whole f the UK, began its formal total quality journey in 1986. Senior management, with involvement from the corporate chief executive office, drew up the company's vision statement and quality policy, and its first cost f quality exercise was undertaken. This revealed that BTNI was overmanned, inefficient and expensive. Benchmarking exercises indicated that BT had approximately 10 times more staff than some f its major competitors. At this point the company could be described as being in crisis'. Its response to this crisis is interesting and informative. Response to crisis. Many writers believe that companies which regard themselves as being in crisis have no option but to re-engineer. It is also argued that the potential risks f BPR make it a last option for businesses, used only for company turnaround. Ryan (1994), for example, states that, in reality, crisis is the necessary trigger to push companies into such radical change. Talwar (1993) takes the opposite view, arguing that high-performing companies are more likely to undertake BPR. This is consistent with Bashein et al. (1994), who consider that re-engineering in a crisis may be inappropriate, as crisis can promote fear and even panic, neither f which is conducive to focused BPR. At BTNI, rather than immediately rushing into re-engineering, senior management developed a complex and long-term change strategy, key elements f which were BS 5750/ISO 9000 accreditation, total quality and, finally, process re-engineering. BTNI's improvement journey. Once the vision statement and quality policy were in place, a Quality Council was established to drive the company's improvement efforts. Figure 1, which maps the company's improvement journey, is revealing. As can be seen, early moves towards TQM in the mid-1980s proved less than successful, when compared with the rate f improvement achieved after BS 5750 accreditation. This was awarded for the company's maintenance operations in 1988/89 and for installation in 1991, followed by ISO 9001 accreditation for all parts f the company in 1993. BTNI's experience is consistent with the point made by Wilkinson and Witcher (1993), who note that TQM often makes surface changes to behaviours, while underlying processes, which maintain suboptimal performance, remain untouched. Some claim that TQM structures do not provide an efficient means f gauging the extent to which an organization delivers value to its customers. Furthermore, writers such as Davenport (1993a), Burdett (1994) and Hall et al. (1993) believe that to redesign an organization which is not in control is a recipe for failure. The company's registration efforts were traumatic for staff, who, confronted with the imperative for change, were required to accept that a Civil Service environment was no longer appropriate; that their work would be checked and monitored by others; and that they would be accountable for their behaviours and performance. However, these efforts marked a major upward shift in the company's attempts to change, as registration to the standard introduced considerable discipline and control into its operations. Nevertheless, further cultural and structural changes were required. With regard to cultural change, this was effected in part through a customer care initiative in 1990, followed by self-assessment using the Malcolm Baldrige National Quality Award model in 1992. In 1993, the company switched to the European Quality Award model f self-assessment. In 1989/90 a major restructuring had also taken place, which involved the removal f a layer f senior management. Thus, behavioural change was reinforced by structural change. The company is subject to a high degree f external regulation to protect consumers' interests. Such regulation forces prices down, even while costs are increasing. Since the company can do little about pricing, it has to reduce costs. One means f doing this was through a series f release' schemes, whereby employees could opt to leave the company voluntarily. However, it is also true that cost reduction was a major motivation for the company to embark upon BPR, coupled with the fact that the company was having to do more with less. Intuition versus methodology. One f the BPR debates initiated largely by both Hammer (1990) and Champy (1993), and developed by authors such as Klein (1994) and Davenport and Stoddard (1994), concerns the use f an intuitive approach, versus a methodological approach, to change and re-engineering. The case f BTNI is also noteworthy in this context. The WMS redesign project was inherited from the parent company, which required implementation across all f its nine zones, with each working to a centrally defined vision. Since BTNI was the last zone to re-engineer, it did have the benefit f a methodology that had evolved elsewhere in the corporation. However, because f its unique structure and circumstances, BTNI also had to customize the redesign to suit its particular situation. Furthermore, the system itself and its implementation had to be flexible. With WMS, BT was attempting to imitate human beings and what they do. Under the old system the distribution officer would allocate tours' (collections f four or five jobs loosely prioritized for that day) to engineers, which they would then go and complete. In doing this he drew upon his intimate knowledge f the staff, their skills, the area, various trouble spots and even road traffic patterns. The new system, therefore, had to encapsulate this intimate knowledge; it also had to have the capability to serve the needs f a largely rural and geographically dispersed population. Strategies had to be designed to support the system and its ongoing development. Such strategies were often in place before being formally authorized. Using change management skills and techniques acquired largely as a result f TQM experience, the implementation team had to take risks in pursuit f excellence. The complexity and dramatic nature f the change dictated that process employees were involved from the outset. This included inviting and facilitating everyone involved in the existing process to outline what they currently did and how they could do it better. Teams were then set up, each looking at four or five new process ideas. Cross-fertilization f ideas and increased communication made one-time impossible ideas appear feasible. Managers felt able to eradicate barriers to change and bring new ideas to the fore. Again, all f this was facilitated by the company's prior TQM activity. To some extent, then, customization and the need for a flexible system did permit an element f innovative, if not breakthrough, thinking, which Hammer and Champy fear can be stifled by the use f a methodology. Clean versus dirty slate approaches. Another theoretical debate concerns the implementation f BPR and the relative merits f the clean slate' versus the dirty slate' approaches. In theory, the clean slate' approach allows a new process to be modelled without contamination from the status quo. Thus, it facilitates inductive or discontinuous thinking (Davenport & Stoddard, 1994; Hall et al., 1993). The clean slate' approach requires the separation f those responsible for scrutinizing processes from those charged with identifying the role f IT. Such separation, which necessitates good communication, helps to prevent the creative thrust f BPR being biased or hindered by current system limitations, processes, people or activities. The dirty slate' approach as highlighted by Davenport and Stoddard (1994) is rather more pragmatic. They state that "designs could take into account the opportunities for enabling the new process (new technology, skills, organisational structures) as well as the constraints that disable it" (p. 123). In BTNI many radical changes, such as its electronic customer services system (CSS), had already taken place before the commencement f the WMS project; moreover, aspects f WMS were embedded in existing software. This patchwork quilt' or project by project re-engineering, whereby each step permits a review and reassessment f the techniques used in the one before, does have support in the literature. However, others argue that this is not true invention, because the existing state f the organization has an impact on the new process design. For example, Davenport (1993a,b) notes that if an organization chooses not to change many f its existing systems, the possibilities for process innovation may be restricted. On the other hand, Davenport and Stoddard (1994) acknowledge that the dirty slate' approach, although more difficult in design, is also more realistic, financially viable and easier to implement. At BT it was considered that the obliteration f existing processes as advocated by Hammer (1990) was not only impractical, but potentially disastrous because f the possible threat to invisible assets such as reputation and customer confidence. Furthermore, the longterm change strategy adopted by BT and BTNI involves one element or change building upon another, in line with environmental flux. For example, the implementation f CSS highlighted the opportunity for the change afforded by WMS within the same broad process. By adopting the dirty slate' approach, BT had a clear idea f all the significant enablers and constraints before the implementation f WMS (Willcocks, 1994). Thus, IT specialists were not separated from the main team in order to preserve clean slate' implementation, but rather were integrated into the overall project team. The dirty slate' approach was regarded as a means f reducing both risk and time given the complexity f the organization. Outcomes. The WMS project has changed significantly the way in which work is allocated to, and carried out by, engineers in the field, who are now multiskilled. Using company vans, they leave and return to their own homes each day, the engineers giving the company 15 minutes (f their time) in the morning and again in the evening as travel time. Jobs are downloaded directly from the system. In this way the need for technician centres, staff and car parking has been reduced significantly, while the working day has been lengthened, resulting in greater productivity. Engineers connect to WMS via a field terminal and the telephone network. BTNI works on a just-in-time principle, whereby work is allocated just before the job goes into jeopardy. This means that the system estimates the duration f the job, travel time and adds a window f 20 minutes during which the job will reach the engineer. The service is then delivered and the engineer comes back to WMS with a completion. The system provides a second 20-minute window to allow for problems. If necessary, Control can telephone the engineer and send assistance. Should a job take longer than anticipated, the next appointment, which had been soft pinned' to the engineer by WMS, will automatically be allocated to another engineer in the area. Engineer timesheets are also updated automatically, with accurate performance levels available in minutes. Good and bad performances are easily identified, and field managers can coach engineers on the job, using more accurate and varied performance information. Management structures and roles have also changed, with many managers working from home like the engineers. Performance-related pay for managers is now calculated on a yearly not a monthly basis, and is paid for team, rather than individual, performance. Despite the changes outlined, it is accepted at BTNI that full payback from WMS may take many years to accrue, and probably not until more engineers and other areas f the business come on to the system. The aim is that, ultimately, every engineer in the company will have their work allocated via WMS. However, both management and staff firmly believe that BTNI's strategic capabilities have been (and will be) broadened as a result f BPR. For example, the possibility for radically different alliances and work systems has been created. It could be that in the future, engineering work is contracted out--perhaps to former BT engineers who have become self-employed contractors using BT equipment leased to them. The complementary use f TQM and BPR Many writers such as Wilkinson and Witcher (1993) have argued that TQM tends to be introduced within existing structures and not as a vehicle to transform them. Although those interviewed believed that TQM could only take BTNI so far before more radical change was required, there was also a firm belief that the control and discipline f BS 5750/ISO 9000 and the cultural change emanating from total quality, created the foundation which made, and continues to make, more radical change possible. Many necessary preliminaries to BPR were, in fact, effected as part f the TQM initiative, examples being process documentation, process ownership, benchmarking and teamworking. BS 5750 brought with it a 30-book quality system, in which each manager's job is described in detail. This means that in the event f radical change, managers may easily be switched from one position to another, since the files show what is to be carried out on a daily, weekly, monthly, 6-monthly and yearly basis within each position. Processes are also continually monitored to ensure that TQM is achieving its goals. Furthermore, at BTNI TQM methodologies are being used to address some f the problems that have accompanied BPR. For example, homeworking has had serious implications for the social dimension f work--primarily regarding interpersonal communication and interaction. Engineers no longer have the 'luxury' f meeting up with colleagues in the morning, f communicating personally with the distribution officer, or f going to the Technical Engineers Centre for lunch. However, quality improvement teams (QITs) have been set up to investigate the social aspect f change, and to suggest means f facilitating communication and interaction. Management perceive this as critical, particularly as WMS is still developing, because the danger remains that it may lose credibility with process employees. Although it is acknowledged that as approaches to change management TQM and BPR are different conceptually, at BTNI both are perceived as means f supplying improvement and, as such, may be used in an integrated manner. Accordingly, both incremental and radical projects are driven and controlled by a Quality Council in each division, a reflection f the company's determination that TQM and BPR will coexist and complement each other. When radical change is required, a considerable amount f planning is necessary to ensure that embedded total quality systems and procedures are modified as appropriate. It is important that such systems and procedures (including ISO 9000) evolve constantly to support BPR. The Quality Council ensures this consistency f purpose. It is interesting, too, that at BTNI potential opportunities for the application f BPR are often uncovered through the work f QITs and cost f poor-quality exercises. Furthermore, those interviewed at BTNI believe that the discipline and practices f total quality help sustain a new process state after re-engineering. Conclusion The WMS project undertaken at BTNI required huge investment and considerable cultural and political change. However, the integration f BPR with TQM served to make radical change much less daunting than it otherwise might have been (see Grant & Armistead, 1996; Davenport, 1993b; Guimaraes, 1994; Zairi & Sinclair, 1994). Moreover, the pattern f incremental improvement interrupted by phases f more dramatic innovation is now generally accepted at BTNI--indeed, managers and workers currently believe that another wave f radical change is imminent. WMS may be described as 'partial re-engineering', but partial in the sense that it was built upon and extended earlier large-scale changes, such as the CSS. Complementary use f TQM and BPR has proved possible because both are underpinned by a vision and long-term strategic plan, comprising many elements. The vision is to play a leading part in establishing the parent organization as the most successful telecommunications group in the world. The strategic plan is to create a company which has the capacity to exist in a permanent state f change, achieving business excellence through improvement and innovation. Works Cited ARMISTEAD, C. & GRANT, T. 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