Succeeding With Change - Essay Example

Succeeding with Change Managing an organization in today’s competitive world has turned to be a difficult task with advancement in technology and globalization. Daft and Lange (2009:96) mentioned that the environment for today’s organizations has become extremely competitive and highly complex. It is further mentioned that business has also become a unified, global filed as trade barriers fall, communication becomes faster and cheaper and consumers tastes in everything. Saka (2003) mentioned that there is evidence to suggest that the universal, prescriptive model of change management is inadequate to describe the diversity of approaches actually used by organizations. In recent years, change in business environment has become a way of life and the pace of control, the need to control cost and increase efficiency coupled with increasing customer expectations has forced the organizations to evolve and regenerate in order to survive in the market. The tradition of working in same business with same people, and same customer base throughout the career has changed (Cook, Macaulay and Coldicott, 2004:1). A major finding in change management research reveals that most organizations do not manage change well and only less than 30% organizations that implement large scale change are successful (Nilakant and Ramnarayan, 2006:21). Aaron and Nelson (2008:5) mentioned that change is constant for today’s organization and are continuously looking for ways to work faster, smatter and better. The hunger to succeed in the competitive world where new companies are entering the market with innovative products and services has made it compulsory and necessary for the existing companies to change in order to match the speed and capability of the new companies much in advance so as to provide stiff and healthy competition to the new business entrants. Change in organization leads to product innovation, service expansion, and expansion of customer base when means that management has to take steps to undergo the ‘process of change’ effectively. The present paper is dealing with the process of change in an Oil & Gas Industry’s contracting strategy wherein the service of placing of contract to own the FPSO has changed to lease the contract to contractor. Management of Change Change is an emotional experience for those involved and people adjust to change in different phases which can bring pain, confusion, uncertainty, guilt and even excitement for those who see personal advantages in the change. It is a two sided coin which involves both people transformation and business strategy innovation However it is pertinent to mention that the importance of reengineering the processes and system overshadows the human resource while change, workforce is an important ingredient which needs to be considered while negotiating change (Cowan, 2005:4). Change is intended to move the organization from its current state to a more desirable state which can be accomplished through radical change or incremental change (Beugelskdijk, Slangen and Herpen, 2002). According to Dr. Sangamitra (n.d) nature of the workforce, technology, economic shocks, competition, social trends and world politics are the factors responsible for change. It is further stated that leadership turnover, crisis, age and size of the organization, etc are few of the conditions that facilitate organizational change. Additionally, Stanleigh (2008) states that mergers and acquisition, innovation, technology, restructuring or reorganizing, declining sales or market share; globalization and sense of urgency are the drivers of change. McHugh (1997) mentioned increased work targets, threats of job loss, organizational change and change in job holders’ responsibilities, shifts in the balance of power and general upheaval that constitute sources of job stress which are mostly the outcomes of organizational efforts to cope with hostile and turbulent operating environments. Change management is a basic skill in which most leaders and managers need to be competent and there are five key principles that need to be kept in mind while managing change. The five principles are (i) different people react differently to change; (ii) everyone had fundamental needs that have to be met; (iii) change often involves loss and people go through the loss curve, (iv) expectations need to be managed realistically and (v) the management have to deal with the fears associated with the change (Change Management, 1995). Dr. Sangamitra (n.d) states that change not involves learning something new but unlearning something that is integrated into an individual’s self / social system. It is further stated that change cannot take place until and unless there is motivation to change and management of change is not necessarily only rational management but also emotional management of people. Nilakant and Ramanarayan (2006:25) mentioned that the term organizational change implies changes in the goals, boundaries or pattern of activities of an organization and as all of them interconnected; changes in any one aspect will lead to change in other two aspects as well. Therefore it is assumed that organizational change involves changing routines in an organization which are embedded in people’s head as mindsets or mental models. Drucker (cited in Paton and McCalman, 2008:7) argues that a winning strategy will require information about events and conditions outside the institution which will enable the business to prepare for new changes and challenges arising from sudden shifts in the world economy and in the nature and content of knowledge itself. Balogun (cited in Paton and McCalman, 2008:7) recognizes the inevitability of organizational restructuring in the face of ever changing competitive, economic and social factors and stresses the need to consider the actual practice of change, the internal environment and the need to align strategic aspirations with practical realities. The organizational change in an oil and gas industry has to consider its large workforce while restructuring or reorganizing its business process. As a Quality Manager for an FPSO project, it is necessary to react to the changes that may occur during the process of change in the contracting strategy. It is necessary to that 7 R’s of change management which include the questions like who raised the change, what is the reason for change, return required from the change, risks involved, resources required, person responsible and relationship between this change and other change. Answering these questions are necessary so that the balance of risk and benefit to the live service is understood and expected business benefits are possible through change (Blokdijk, 2008:30). Quality manager, as part of his duties, has to assess the vendors and sub contractors for both offshore and onshore supply. The Oil and Gas Industry restructured its business process by change in contracting strategy wherein FPSO will be offered on lease to the contractors with an option to repurchase it after six years instead of placing a contract for FPSO. Previously, a contractor was engaged to look after the engineering, procurement and construction of FPSO. It is the responsibility of Quality Manager to analyze the effects of change in contracting strategy and how to apply change in view of keeping the quality and services to the client and customer intact. Types of change Thompson (1993:701) specified four basic types of change that effect organizations which include technological change effecting production processes; product or service change effecting the output of business; administrative changes resulting in change to structure, policies, budgets, reward systems and change in people effecting the attitudes, expectations and behaviors. Anderson (2010:53) mentioned three models of organizational change which include developmental change wherein new state is a prescribed enhancement of the old state; transitional change which requires management of the transition process to dismantle the old state while putting in place the new state and transformational change wherein market requirements force fundamental changes in strategy, operations and worldview. The transformational change requires fundamental shift in mindset, organizing principles, behavior and culture as well as organizational changes. According to Dr. Sangamithra (n.d) moving to new state means developing new attitudes and behavior, scanning the environment for information especially relative one’s particular problem and refreezing the change. The change in oil and gas industry that has occurred in contracting strategy is relevant to the transformational change wherein new state is formed with contractors being given the responsibility to manage the FPSO for a period of six years. The change in contracting strategy may entitle the contractor to engineer, procure and construct the FPSO and the new contracting strategy allows the contractor to take the FPSO on lease for at least six years. It is assumed that technical changes will take place during the period of lease as it is often difficult to isolate the influence of technical change from that of other factors such as product market competition, recession or company restructuring. Clark (1993:214) mentions that the relation between technical and organizational change was not always a deterministic kind and further states that those people who have responsibility for or wish to influence personal issues under conditions of advanced technical change need to acquire a detailed appreciation of the particular technology and task when considering the choice of the most appropriate organizational arrangements. Dr. Sangamithra (n.d) explains eight step process of change which includes initiation, motivation, diagnosis, information collection, deliberation, action proposal, implementation and stabilization. Harigopal (2006:98) elaborated the importance of managing change while stating that organizations cannot survive doing the same things that they have been doing in the past. Organizations may have to reset themselves on a different set of basic assumptions and business opportunities that relate to customer focus, competitive intelligence, innovativeness, technological advancements and new products/ services or markets. It is further stated that designing a new state is possible if the organization is clear in its mission, vision, purpose and direction and should identify its current strength, weakness, opportunities and strengths while identifying change and determining the pace of change. The change process carried out by the management of Oil and Gas Industry is similar to the characteristics of transformational change as it leads to the change in the fundamental principle, change in the mindset with complete new structure where the FPSO is handed over to the contractor as part of contracting strategy to manage, engineer, procure and construct it. However the change process will have to address several other issues ranging from workforce to environment of that particular FPSO that will be affected due to change. Source: Wenderoth, (2009:3) Change Management Model Execution of Change An effective change manager is a combination of strategist, process consultant, diagnostician and humanist. The manager executing change should appreciate the people side of change, understands the implications of change to production and management systems, knows how to take in, sort through and frame information in a way that creates a foundation for change strategy; build an appropriate strategy that integrates the people and the process side of change management and can operationalise the broad strategy into specific tactics (Cowan, 2005:4). Kotter (1996:4) stated that major change efforts have helped some organizations adapt significantly to shifting conditions, improving the competitive standing of others and positioned better future. However there are some downsides of change, most common reasons of which are due to complacency, leaders not in favor of change, underestimating the power of vision, under-communicating the vision by a power factor of 10, permitting obstacles to block the new vision, failing to create short term wins, celebrating the success of change very early and neglecting to anchor changes firmly in the corporate culture. According to Stanleigh (2008) most of the change efforts in an organization fail because when change occurs; employees move through the phases of denial, resistance, exploration and commitment and it is not possible for an employee to immediately move from denial phase to the commitment phase. Management fails to recognize this and may end up dealing with employees that may be burned out, scared or frustrated. The mistakes that lead to crisis situations affecting the change are non involvement of employees, managing change only at the executive level, forcing people to adapt change, not honoring the past and not giving staff to adapt to change. These mistakes result in dire consequences wherein new strategies are not implemented efficiently, acquisitions don’t achieve expected synergies, reengineering takes too long and costs too much, downsizing doesn’t get costs under control and quality programs don’t deliver desired results. Nilakant and Ramnarayan (2006:190) agree with Kotter’s (1996) reasons for failure in change that deal with appreciating change and mobilizing support in their model of change management while the last reason relates to creating capability for change. According to Kotter, there are three prerequisites to effective execution of change, relating to empowerment, motivation and consolidation. In order to overcome the negativities while implementing change it is essential to involve people in the change process by giving information, produce a communication strategy ensuring that information is disseminated efficiently and comprehensively to everyone, give people choices to make and time to express their views and support their decision making, etc.(Change Management, 1995). Managerial interventions and changes are relatively easy to execute compared to sequential and complex changes. Change leaders need to sustain focus and energy throughout the organization during the execution phase and managers need to build behavioral climate that emphasizes hope and optimism (Nilakant and Ramnarayan, 2006:239). Similarly Stanleigh (2008) provides steps to move from crisis to control by accepting the change is a process, moving forward step by step, assess potential risks and generate motivation, form a guiding powerful coalition, institutionalize the new approaches, etc. It is necessary that management of oil and gas industry understands the change process and is vary about the complications involved in it so that the contractors are not pressurized to provide results instantaneously as the contracting strategy is a transformational process of change. It is important for the management to communicate the message to the employees so that workforce at FPSO get aware about the strategy and have time to give their feedback and raise any apprehensions considering the change. Succeeding with Change Change management is the central function of Project Management. Change always affects the capability to deliver projects and increases expenses and operation timeframes. It can be defined as the control mechanism is an area of practice which actually refers to creating changes in an organized and systematic matter (Blokdijk, 2008:35). Organizations use strategy to deal with changing environments which includes both the actions taken or the content of strategy. The making of strategy involves conceptual as well as analytical exercises. Thompson (1993:20) discussed three models of strategy viz. linear, adaptive and interpretive strategy which are distinct in their approaches towards change. Effective organizations must be able to manage change with managers and employees supportive rather than resistant. Managers must be aware of their environment assessing trends and deciding in advance that practices that should be done about perceived opportunities and threats. Implementation of change in any organization requires a perceived need for change originating from the strategic leader or managers throughout the company; the necessary resources which involves aspects of skills as well as physical resources, and the ways in which managers use power to influence the allocation and utilization of resources and commitment where the culture of the organization will influence the extent to which managers are responsive and innovative. Kotter (1996:19) stated that globalization has motivated the organizations to implement change in their business so as to avoid hazards and capitalize on opportunities through reengineering, restructuring and quality programs. In order to assess the credibility of change in oil and gas industry, through contracting strategy, it is necessary to evaluate and assess the performance and work culture of the contractor and analyze the information pertaining to reengineering processes carried out during the period of contract, level of procurement and construction so that it will be helpful in understanding the benefits or risks associated with contracting strategy. Analysis of strategy will help the management to review the change management policy and strategy so that the reason why contracting strategy was initiated is accomplished and goals of the industry are achieved. Conclusion Change is inevitable in all forms, not only in business. As businesses live on the other factors that are changing, it has become necessary for the businesses to change their strategy to succeed and compete in the market providing better products and services to their customers/clients. Businesses should consider the factors like employees, management, product quality, technology, environment and other social factors while preparing the plan for change. It is suggested that the organizations communicate its message of change to its people so as to inform them and give them time to react to the plan so that necessary modalities could be discusses regarding the change. After implementation of change, organizations should analyze the aftermath of the process so as to understand the risks and benefits that have occurred due to the change process. Similarly quality manager should undertake evaluation of the contractor so that asses the performance, customer satisfaction, reengineering works, procurement strategies, and work culture compared with the past which will be helpful in ascertaining whether the change was beneficial or not. Change could be successful if all the 7 Rs are answered by preparing the plan to execute change in the organization. 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