Managing

Change
Unit 4
Change Management
Def: The process used to identify and adapt to
changes in the business environment

Businesses these days are ever changing, if they do not

adapt to change they may go out of business.

In order to survive they must be able to adapt to

changes in..
Reasons For Change in a Business

1 2 3 4 5
Technology Employees Consumers Laws Competitors
 1. Technology
Technology such as CAD, CAM and CIM Technology is used to
has increased the speed and quality of implement change in
production. businesses. It has a massive
impact on businesses and
E-commerce and social media enable
firms to promote and sell their goods
how we interact with
and services online. businesses.

Email and video conferencing has

increased the speed of communication
between businesses and their Technology also impacts
stakeholders. HRM and marketing
1. Technology
• New products: Many products exist now that did not 10 years
ago, now they have created whole new industries

• New operating systems: Technology can assist in the

development and design of goods and services through CAD, CID,
CAM & EDI

• Improved communication: Technology has changed the way we

communicate as well as assist working and management e.g.
teleworking, video conferencing
1. Technology
• HRM: Funds can be transferred electronically and jobs can be
advertised and applied for electronically

• Marketing: Businesses can advertise and sell their products

online. They can also conduct market research electronically.

• Stress: Management being accessible 24/7 through smart

phones can cause burnout
 1. Technology: Impact on Business Costs
Increased business costs Reduced business costs
Large capital costs: CAD, CAM Improved quality: Technology
etc are expensive to buy, can increase quality of goods
install, update, maintain etc. produced and reduce costs of
repairs, refunds..
Employee training: staff will Staff redundancies:
need training in new Technology can be more
technology – this will cost the efficient than people, resulting
business in redundancies
 1. Technology: Impact on Business Personnel
• This can help a business recruit and retain high-
Teleworking quality staff who may be unable or unwilling to
spend time commuting to and from work
• Technology has changed the way in which
Staff training employees do their jobs, e.g. most office work is
now computer-based

Staff qualifications • Technology has replaced many low-skilled jobs,

and skills e.g. sewing machinists in clothes factories

• Technology helps employees to perform their

Efficiency duties more efficiently, e.g. the use of
spreadsheets to calculate financial information
 1. Technology: Impact on Business Opportunities
New • Tech advances have led to the development of
new products, e.g. voice recognition - Amazon
products/services Alexa

• Improved technology can increase production

Faster production speed

• The business uses technology such as their

E-commerce website and social media to promote their
products globally

Improved decision- • Tech eg. the Internet gives businesses access to

larger amounts of information. This can help to
making improve decision-making in the business
2. Employees
Greater flexibility in the
Change in workplace.
employees
education and skill
levels has created a More varied financial and
greater need for: non-financial rewards.

Interesting and challenging

work.
3. Consumers

• Changes in consumer tastes

• Demand for a greater

choice of goods and services
Consumer demands change
• A growth in demand for regularly and become more
environmentally friendly complex e.g. vegan diets.
and ethical products.
Businesses must be able to react
quickly to
4. Laws
National and EU laws can impact how businesses
operate e.g. environmental laws and consumer
protection regulations
5. Competitors
Businesses have to monitor changed introduced by
competitors such as:

• Launching new and improved goods and services

• Methods competitors are using to reduce costs
• Growth for competitors through mergers and
acquisitions
 Managing Change
Companies will have to use several strategies such as:

Training and development Communication and

consultation
Training & Changing Teamwork Communic Employee TQM
Changing management Employee empowerment
Developmen manageme ation and empowerment commitment
t ntstyles
styles consultatio
Teamwork n
Commitment to TQM
 Resistance to Change
Managers must be prepared for some resistance to change
from staff, for reasons such as:
Fear of failure Staff may be afraid they can’t handle the changes
in the workplace
Redundancy Employees may be afraid the changes will lead to
redundancies e.g. machinery replacing people
Loss of control: Change of regular routine can make staff feel a
loss of control
 Resistance to Change
Managers must be prepared for some resistance to change
from staff, for reasons such as:
Lack of Staff may feel they should be rewarded for
rewards: accepting changes
Laziness: Some employees don’t want to make the effort
to accept change and learn more
 Overcoming Resistance to Change
Managers should do the following to reduce/remove resistance:
Open Management should be honest about reasons for change and
communication: what will happen if change isn’t implemented
Employee Employees should be encouraged to express opinions about
involvement: changes – they’ll feel involved
Leading by Management should lead by example so staff are more
example: accepting of change
Rewards: Management may reward staff for introducing change e.g.
bonus payment
Training: If businesses introduce change they should be given adequate
training which will make them less resistant
Change from a Controller to a Facilitator
Management Style
In the past In the present
• Lots of McGregor’s Theory X • More McGregor’s Theory Y
managers managers
• Controllers • Facilitators of change
• Management give all the orders • Staff given responsibilities etc.
etc.
Employee Empowerment
Def: Management gives employees a certain amount of
independence and responsibility for decision making in the
business, enabling employees to make decisions on behalf of
the business without needing permission from management.

Managers can use different methods to encourage

empowerment in the workplace.
 Employee Empowerment
• Ensure employees have the skills to make
Investment in training decisions on behalf of the business.

• Offer rewards to encourage employees to take on

Rewards more responsibility.

• Create a culture of trust where management

Trusting employees believes in staff abilities and skills.

• Management must be able to monitor

Control mechanism empowered staff to ensure mistakes are identified
and corrected quickly.
 Employee Empowerment
Benefits Risks
Decision making: staff can make Employee training: if not trained
decisions and work faster and staff could make mistakes
better
Employee motivation: staff are Managerial control: loss of control
more productive as they feel could cause resistance and IR
involved
Management time: less Lower motivation: some staff wont
management supervision needed want the responsibility and stress
Better customer service: staff Less managerial supervision: some
encouraged to solve issues quickly staff may make poor decisions
Employee Empowerment

Mikuko Securities:
In an exam: lost €194m when an
Know the ways of employee sold 610,000
empowering employees, shares at 1yen each instead
and the benefits and of 1 share at 610,000yen
drawback (lack of supervision)
Employee Participation
Def: the encouragement of staff, by management, to actively take part
in the running and improving of the business

Management can encourage employee participation in the following

ways:
 Employee Participation
• Employees in businesses with at least 1,000 staff across
Employee Europe have the right to set up a works council.
Works • Employees elect representatives for the works council and this
Councils gives staff a direct line of communication with senior
management.

• These are employees who have been elected by colleagues to

Worker sit on the board of directors of a business.
Directors • They participate in decision-making at a senior level in the
firm.

Employee • Employees can buy shares at a reduced price or may receive

Share shares as part of their reward package.
Purchase Plan • Employees become owners in the business and can vote at
the AGM.
(ESPP)
Importance of Employee Participation
• Increased motivation: staff feel values, respected and
trusted. They’re more productive and motivated.

• Improved industrial relations: issues such as pay and

conditions can be dealt with quickly, improving I.R.

• Improved decision making: Management make better

decisions when they include staff suggestions
 Really
Teamwork common exam
Q!

Def of a team: a group of people working together to achieve a

common goal
Teams go through four phases
 Teamwork
Stage 1—Forming
• Team comes together for the first time. They try build
relationships, there may be a lack of trust. They outline their
common goal e.g. complete project

Stage 2—Storming
• Members have different opinions and personality clashes so
there may be conflict here. The team leader must try manage
conflicts
 Teamwork
Stage 3—Norming
• Team members develop ground rules (about behaviour, work
standards etc) and build greater trust. Rules help them function
effectively (NORMALLY) as a team

Stage 4 – Performing
• Team focus on achieving the goal. They trust each other and
work hard, quickly and effectively.
Teamwork: Benefits
Greater employee motivation

Improved communication skills

Better decision-making

Faster task completion

Total Quality Management (TQM)
Def: A commitment by management and employees to continuously
promote and encourage quality in all aspects of a firm’s operations. All
employees work together to create high-quality goods and services fr
consumers

To be successful when adapting to change, many firms focus on TQM

Total Quality Management (TQM): Principles
Focus on • The business conducts market research to identify
consumers consumer needs
• Every person in the firm aims to constantly improve
Continuous
the quality of the goods and services provided by
improvement the firm
• Employees make decisions on behalf of the
Employee
business to ensure that customers always get the
empowerment best-quality goods and services
• The business focuses on incorporating quality in all
Quality assurance stages of the design process

• Employees work in teams to find ways to improve

Teamwork quality in the firm, e.g. quality circles
 Totally Quality Management (TQM):
Benefits Risks

Improved Quality: Everyone’s focused Slow process: TQM development can

on quality so will increase standards be slow
Lower Costs: high quality = less Staff pressure: constant pressure to
defects, waste, complaints etc. improve can stress staff
Employee Motivation: good High costs: expensive to train staff,
motivation = good productivity improve machinery etc.
Increased Sales: good reputaion will Staff resistance: if staff resist it’s hard
attract more customers to implement TQM
 Key Terms

• change management • teamwork

• controller manager • total quality management (TQM)
• facilitator manager • quality assurance
• employee empowerment • computer-aided design (CAD)
• employee participation • computer-aided manufacturing (CAM)
• employee works council • computer-integrated manufacturing
• employee share purchase plan (CIM)
(ESPP) • teleworking
• worker directors • e-commerce
Past Exam Questions
Ordinary Level:

2018: Outline 2 benefits of teamwork in a business (15 marks)

2007: Using examples, describe 3 ways in which technology has

changed the role of management (15 marks)
Past Exam Questions
Higher Level:

2016 : Analyse the impact of new technology on business costs and on

business opportunities. Provide examples to support your answers (20
marks)

2008: People are at the heart of success. Desribe 2 strategies that a

business organisation can use to manage change. Use examples to
support your answer (20 marks)