Change Management – The best way to approach

Implementation of strategy

This article is related to the seminar topic and specialization of Géza Nagy (student), which is focused on change management. This publication reviews end extend two seminar papers - Effective Change Management in Small Businesses during Organization Development; and Strategy of Change Management in Small Businesses during Organization Development – highlighting the implementation of the strategy designed to execute the change management process of organization development.

In Hungary small businesses ("micro businesses: 0 – 9 employees; small businesses: 0 – 49 employees (includes micro); medium businesses: 50 – 249 employees; small and medium enterprises: 0 – 249 employees; large businesses: over 249 employees" by EU definition)[1] sooner or later must face the problem of the need for organizational development. Most of the time they struggle with the problem of disorder, excessive workload, waste of information and the lack of competitive advantages due to the formal problems inside their "organizations". They, as time goes on and their market share is growing, have an instinctive demand for being a real organization with structure, hierarchy, strategy, management, administration, effective and informative communication, human resource management, well defined positions (jobs) with experts.[2]

In my seminar paper - Strategy of Change Management in Small Businesses during Organization Development – the full process of designing a strategy can be read in details.[3] In this article I will recommend a process for implementing that strategy.

Supposing that the owner and the management of the small business have created a strategic plan that is based on proper analyses (e.g. STEEP, SWOT, 7-S, Resource analysis)[4], they can find the best way to execute the strategy and achieve the aimed goal and objectives relatively easily, applying the research data coming from the analyses done before.

STEEP analysis examines the company's macro environment (social, technological, economic, environment/ecological, and political/legal factors). By knowing the different present and future expectations, regulation, and changes of these macro environmental segment, during the tactical execution of the strategic plan, the responsible managers and employees can work out and take the best actions and steps to meet the special requirements coming from those sources. These requirements can be like changed demands from the next generation of the customers, needs for the development of machinery in the industry, an expected increase of orders from the partner businesses due to the growth of the economy, a pressure from the residents nearby to decrease the pollution, or the changes of the regulation of taxation concerning small businesses. It is important to consider that different companies with different sizes, markets, target groups, etc., should focus different parts of the STEEP analysis with different intensity. Smaller groups may taking into consideration much more the social factor, as their customers' demands are very important, while large companies must follow strictly the changes and issues happening within the framework of the political factor (government regulations). Later below we can see an example of a small business that has to analyze both of these factors as this company is in the health market, which is a special case.

SWOT analysis helps to determine the company's inner strengths and weaknesses, and the outer opportunities and threats. The colleagues working on the project of the strategic plan can apply the results of this micro environment research. This analysis shows the possible resources (strengths and opportunities) in and around the company, which can be used to handle the negative sides (weaknesses and threats). These data will give good ideas to the implementers for achieving the objectives. They will be more able to use the strength of the employer brand to handle the weakness of too few trained and experienced leaders in the company. With the opportunity of knowing some good managers, who work for other businesses, but want to change, they can handle the threats of losing good experts due to the lack of managerial control in and on production. The best way to do this process (analysis) is brainstorming. In a micro business it is recommended to involve everybody in the process of the analysis in one place one time. In a bigger company the managers can do it with their team by themselves and later adding all the data into one pool. After brainstorming the team has to rank the information by prioritizing the information from each section. They should focus on the most important items after ranking them because they might not be able to fit everything in the matrix (next subchapter). They need to identify which one is long term and which one is short term and determine what their focus is for short and long term.[5]

"Consultants at McKinsey & Company developed the 7-S model in the late 1970s to help managers to address the difficulties of organizational change. The 7-S Model is a framework for analyzing organization and their effectiveness. It looks at the seven key elements that make the organizations successful, or not; strategy; structure; systems; style; skills; staff; and shared values."[6] This model is one of the greatest help in designing and implementing strategy. These 7 elements will give good directions in organization development when we arrive to the practical side of the endeavor. The project manager of the change process of organization development can assign different managers to the 7 different factors. They can be the sub project managers of these sub-project. The manager of the strategy project is the main project manager himself (most of the time in the life of the small companies it is the owner). That manager, who is the most experienced in organization structures will be responsible for creating and implementing the new functions, flows, jobs, job descriptions for the company. The manager, who has systematic thinking and likes to view and solve the situation in patterns and relations can be the project manager of the building of the new production and administration systems, physically and virtually, too. The last 4 parts should be under the HR manager (or the future one), who can assign helping hands under him for each of the 4 parts. The shared values and the style will be part of the new organization culture. There they will have to determine the values and the basic philosophy derived from the owners' ideas and expectations. The style will be the practical execution of the values, meaning behavior, communication, coordination, and cooperation inside and outside. So, they have to work out different codes (communication codes, dress code, etc.). That manager, who affinity for teaching and training can be responsible for the skills. He can work out a development study program that can help to improve competences, which are requested to meet the strategic goals and objectives. Staff can mean the organization, control and motivation of the whole team and every single employee in it. That person, who is able to motivate others and has some knowledge on employer branding can take responsibility for working out and executing a program to enhance employee engagement by more efficient and effective motivational solutions. The significant part about the 7S model is that the represented 7 elements are interconnected to each other and if we change in one area it will require change in the rest of a company in order for the model to function effectively in the organization. This model would be great to use when we need to identify a change to implement in the future for the company.

Resource analysis will provide the data necessary to determine the needed resources (human, tangible, intangible), to check how much is available, and to decide how much is still to be acquired. The data coming from this analysis will help the project managers to plan the allocation of these resources. The projects of the 7S will need different resources: "Human: skills, know-how, capacity for communication and collaboration, motivation. Tangible: financial (cash, securities, borrowing capacity) and physical (plant, equipment, land, mineral reserves). Intangible: technology (patents, copyrights, trade secrets), reputation (brands, relationships) and culture."[7]

The data derived from the macro (STEEP) and micro (SWOT) environment analyses will determine the objectives, projects (7-S) and the execution of them during the planning and the implementation of the strategy. The Resource analysis data will give the information for the best allocation approaches.

As an example we can suppose we have a company that is in the market of the health care of the elderly. This company is a small business that would like to develop into a larger organization. To work out the most effective and efficient structure and systems (structural functions and functional structures), the responsible managers must know the demands and the coming changes in the society (more need for services in the target groups of the business as the society is getting older); technology (wireless equipment that makes services more convenient); economy (due to the growth of the market there will be more easy to get into the company's market by new competitors); environment (the pressure groups will tolerate less the amount of the hazardous waste), and politics (there will be more strict laws concerning health care). The structure and system should be designed by taking the above data into consideration. It must be partly rigid due to the legal and medical regulations, but also flexible to be able to handle the changes of the demands and the many different types of services requested by the target groups. The best way is to determine the functions needed, technical (services) and administrative (managerial and organizational), then create the structure that serves the functions and the systems the most.

The data from the SWOT will also modify the solutions we choose to work out the 7-S projects. If the health care company's strength is the expert medical background of the employed doctors, nurses and orderlies, and it has the opportunity to get the most up-to-date equipment by a European Union financial aid, the organization can cure the threat of the new competitors entering into the market. These SWOT data applying with the STEEP data above to the 'skill' and 'staff' parts of the 7-S model will give the responsible managers a very useful direction. Extending the picture with the data of resource analysis data (enough medical experts and available modern equipment) the project can be executed successfully.

To implement the strategy and execute every steps of every projects determined by the analyzed data of the environments and resources, the management has to communicate professionally with their subordinates.

Communication is the most integral part of every strategy and change process. Without communication or the application of poor information management failure is inevitable. During both the planning and the executing sections open and well-designed communication is a must. The communication between the management and the subordinates must be both efficient and effective. One of the objectives of the organization development should be the enhancement of the information flow through the line of owner – upper management – middle management – employees. Efficiency means making sure the message is getting there as quickly as possible with the minimum of delay. However effectiveness is even more important, as it means that the recipient is getting the message as that and it is in its original form with all the information intended without any distortion. So, it has higher importance to get the message with full information by the recipient, than the time interval in which the message is going through the communication channel. The members of the communication network must be sure of the receipt of their communications in a way that the information remains full and understood, so there will not be a back and forth travelling of the data pieces between them.[8]

Any change management project would consists of identifying the changes, determining where and what changes should be made, conducting analyses, then implementing the plan, and at the end examining for positive or negative effects. If we continue to apply to above small medical company's example, we can describe the order of phases in any change process. The owner can have the idea to purchase and apply better and more up-to-date diagnostic and rehabilitation equipment that can produce more accurate diagnoses and faster healing periods. This change is coming from the doctors, nurses and orderlies working in the company. The best way to avoid the risk of wasting financial and human resources and energies with a misguided decision and project, the owner should conduct analyses (STEEP, SWOT, and 7-S). He has to see if there is any technological background in the market to get equipment that is available financially and physically, and which can produce the required difference in accuracy and time period to make the service better than those of the competitors. They have to check if the target group can and will pay more for the better services (not to lose profit). The owner then should arrange a brainstorming session with all the employees interested in the change. They must find the main points prioritized that will apply the strengths (knowledge level, experience) to use to opportunities (better equipment available in the market) to handle the weaknesses (too long recovery time and not so accurate diagnoses) to prevent the threats (loss of patients, the growth of the competitors). Then the management can plan the strategy of the change process by the 7-S Model. They can involve as many employees as possible by assigning them to the different S factors, as we discussed above. There should be coordination (regular meetings) and communication among the project managers and the employees, using the formal and informal networks in the company. This way the acquiring and the implementing of the new equipment can be done by different project team with the coordination between them. Then another project manager will be responsible for the training (theory and practical) of the staff who will use the machines. The PR and marketing staff or the agency working for the business should be informed long before the start of the implementation to work out a communication strategy and campaign toward the target group and the their opinion leaders. Then the head of services will supervise the application of the new machinery very closely during the probation period to monitor the results. Later the owner should evaluate the positive and negative effects concerning the change (finance, PR, production, effectiveness, efficiency, human resource, market, competitors, etc.). This last part of the process will be covered in more details in the next article.

As a summary we can assert that the examination of the macro and micro environment, the characteristics of the organization and its resources will support greatly the implementation of any strategy and the execution of the tactical solutions to achieve the strategic goals. With detailed knowledge of the demands and the changes of the market and the surrounding world, the owners and the management of any business can plan very effective and efficient strategies, which will help them to compete over any competitors, if those plans executed through projects derived from the valuable research data. Supposing that the responsible managers communicate professionally, they are efficient and even more effective in their information management, the small business inevitably is going to be a large one.

TABLE OF ACRONYMS

EU European Union 
HR  Human Resource
7-S  Strategy; Structure; Systems; Style; Skills; Staff; and Shared values
STEEP

 Social, Technological, Economical, Environmental, Political

SWOT 

Strengths, Weaknesses, Opportunities, Threats


BIBLIOGRAPHY AND WEB RESOURCES

[1] Middlesex University. Definitions. Microbusiness Research Portal: Middlesex University, 2015.Date of citation: 12.2.2018. www.microbusiness.ac.uk/definitions/ 

[2] Nagy, Géza. Effective Change Management in Small Businesses during Organization Development. LIGS University, 2018, p. 6.

[3] Nagy, Géza. Effective Strategy in Change Management in Small Businesses during Organization Development. LIGS University, 2019

[4] Nagy, Géza. Effective Strategy in Change Management in Small Businesses during Organization Development. LIGS University, 2019, pp. 14-19.

[5] Nagy, Géza. Effective Strategy in Change Management in Small Businesses during Organization Development. LIGS University, 2019, p. 15.

[6] Passenheim, Olaf, Prof. Dr. Change Management. Prof. Dr. Olaf Passenheim & bookboon.com, 2014. ISBN 978-87-7681-705-3. p. 17

[7] Ritson, Neil. Strategic Management. Neil Ritson & bookboon.com, 2017. ISBN 978-87-403-0506-7. p. 42.

[8] Nagy, Géza. Effective Strategy in Change Management in Small Businesses during Organization Development. LIGS University, 2019, pp. 27-28.