causes of change
o changes in organisational size
o poor business performance
o new ownership
o transformational leadership - inspires employees to perform beyond expectations
o the market and other external factors (PESTLE)
what is a disruptive change
form of step change that arises from the external environment
e.g. technology
what is step change
is significant and occurs rapidly
- occurs when a business has suffered from strategic drift
- requires coercion to overcome restiants i.e. stakeholders
what is incremental change
change occurs over some time in smaller stages
- arises as a strategy develops
- involves little resistance
- business responds to subtle changes in the external environment
effects of a business changing
- competitiveness
- productivity
- financial performance
- stakeholders
Possible effects of change on competitiveness
- Change as a result of some internal factors e.g. poor performance can be rapid and lead to swift improvements in competitiveness
- Change as a result of external factors is gradual and involves a business selecting a long-term competitive strategy
- +ve effect on business competitiveness brings management and employees together coordinated
Possible effects of change on productivity
- as change is being implemented, productivity is likely to be reduced
- Once changes are embedded, productivity will improve, especially if new technology has been adopted
- During external change, firms may have unstable levels of productivity and must manage capacity utilisation and unit costs
Possible effects of change on financial performance
change can be costly:
- Organizational restructure may involve redundancy payments and recruitment/ training costs
- Market research and product development require investment
- Attracting transformational leadership to key roles will require attractive salaries to be offered
- New strategies are likely to involve capital expenditure
Over time, financial performance will improve as change becomes normal
Possible effects of change on stakeholders
Change can have predictable and less obvious impacts on stakeholders
- Some changes such as seasonal fluctuations or cyclical economic factors can be planned for and their impacts on stakeholders considered in advance
- long-term change is likely to involve a wide range of stakeholders
key factors in change
- Organisational culture
- size of the organisation
- time/ speed of change
- managing resistance to change
resistance to change
- self interest
- different assessment of the situation
- low tolerance for change & inertia
- Misinformation & misunderstanding
overcoming resistance to change
- education & communication
- participation & involvement
- facilitation & support
- manipulation & cooption
- negotiation & bargaining
- explicit & implicit coercion
what is explicit coercion
involved people being told exactly what the implications of resisting change will be
what is implicit coercion
suggest the likely negative consequences for the business of failing to change, without making explicit threats
What is scenario planning
Preparing for problems/unexpected events and minimising the impact of the event by planning how the business will resume its operations
different ways business deals with risk
- reduce probability of risk
- Share risk i.e. insurance
- make scenario plans
- treats risks as an opportunity
what is risk mitigation
identify and assess risks, then prioritise and plan responses to those risks. Two key elements of risk assessment plans are:
- business continuity plans
- succession plans
what is a business continuity plan
sets out how a business will operate following an incident and how it expects to return to normal as soon as possible
stages of a business continuity plan
- Risk assessment - identifying potential risks that disrupt business operations.
- Impact analysis- assessing the impact of these events on the business
- Strategy development - Formulates the approaches to be taken to respond to disruption.
- Plan development- Outlines steps that are taken during a disruption.
- Testing and training - Ensures the plan is effective and stakeholders understand their roles
- Maintenance and review - review and update the plan
what is Succession planning
identifying current employees who have the potential to move into key roles in the future. It ensures the smooth transition of the business to the next generation of leadership
key elements of succession planning
- Identify potential successors - develop a pool of potential candidates
- Develop a plan - to prepare for the transfer of leadership
- Train and mentor - successors need the skills and knowledge to take over the business.
- Communicate with stakeholders - stakeholders are informed of the plan. building trust, ensuring a smooth transition
- Review and update the plan
