Change Management

Final Assignment

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Change Management Plan

Arulmani Balasubramanian MBA Hult, London Campus

Executive Summary
This report recommends a change management plan for the change in organisations structure executed in an Indian Subsidiary of an American MNC Software Product Company. The Indian Subsidiary was changed from a development organisation (cost center) to a service organisation (revenue center). This report has four parts, Introduction, Analysis, Change Management Plan and Conclusions The Introduction provides background of the Organisational Change and lessons learnt from the change execution. The Analysis elaborates the change management theories that could have been used, and

recommends an approach for the change execution. The Change Management Plan details the activities, timeline, and key personnel for the recommended approach.

Since I was part of the Indian subsidiary, the names of the individual and company have been kept anonymous.

Contents
Introduction .............................................................................................. 4 Planning for the change ......................................................................... 4 Execution of the Change ........................................................................ 4 Lessons Learnt ..................................................................................... 5 Analysis .................................................................................................... 6 The Approach....................................................................................... 6 Change Management Plan ........................................................................... 8 Scope & Purpose .................................................................................. 8 Kotters Eight step model Framework ................................................... 8 Mckinseys 7S Model ........................................................................... 10 Change Management Team (CMT) ........................................................ 12 Conclusions ............................................................................................. 13 References .............................................................................................. 14 Appendix 1 .............................................................................................. 15 Appendix II ............................................................................................. 16

Introduction
The credit crunch in 2008 led to decrease in sales of software products, forcing the American MNC company to look for other revenue avenues. This led to the companys focus towards the service market of its software products. The top managements vision was to maximise the service revenue of its software products, within the least possible time and cost, by creating a new service team.

Planning for the change

The top management identified the development centre in India for creating the new service team. As it was a low cost center and had experiences of handling many of its software products, the cost and time for change would be the minimum. A small team was created in US and Europe, to make the change management plan. The team was instructed to completely transform the existing development center in India to a Service center. The small team from Europe and US changed the existing organisation structure and identified new teams for every employee of the development center.

Execution of the Change

Upon finalising the new organisation structure, the small team along with top management had a conference call with the local management of the Indian subsidiary. In the conference call, the local management was directed to execute the organisational change. The local management then decided to send an email to all the employees of the Indian subsidiary informing them about the organisational change. Every employee was directed to contact his/her reporting manager to their new positions. After 2 days, the local management informed the top management about the completion of the organisational change.

Lessons Learnt
In the ground level, it took around 6 months for the employees of the Indian subsidiary to acknowledge the new structure, position and job expectations. The acceptance of the change was very low even after a year, since there was lack of clarity from HR policies to decision making responsibility. In short term, Indian subsidiary reached 50% utilisation of resources within first 4 months but after a year, the Indian subsidiary had issues in delivering better quality service due to no effective internal process. Since after an initial phase, lot of senior resources left the organisation and customer demand were unpredictable. Below are the some of the gaps identified from the above approach to change management 1. Vision and strategy of top management was not shared with the employees. 2. The local management was not involved in the planning stage. 3. The small team in Europe and US made the changes without skill set mapping of the employees. 4. HRs role was minimal 5. Training requirements to develop skill as per new job expectations was not done. 6. Buy in and motivation of the employees were not done 7. Local management did not change implementation 8. Cultural impact was not considered during the planning process have a communication plan to execute the

Analysis
Are there any change models and theories which could have been applied, to ensure that the gaps are covered and execution of above change was more successful? This section is a detail the approach to apply some of the change management models and theories to the above organisational change. The goal of the approach is reduce the performance dip during implementation of organisational change

Figure 01 Change curve (Sbaglia, R. (2012)

The Approach
To identify the applicable models for the organisational change, it is essential to identify the metaphor of the organisation. From the various metaphors explained in Gareth Morgans work (Cameron, E., Green, M. 2009) on organizational metaphors, this organisation resembles both like a political system (since American MNC consists of 40 organisations which were acquired) and like an organism since changes are made in response to an

external change). Hence from the various models explained by Cameron, E., Green, M. (2009), the Nadler and Tushmans congruence model and the Kotters eight steps model (Kotter, J P. 2007) are more applicable since the organisation is political system and organism metaphor. But Nadlers and Tushmans congruence model is a good tool to organise the change process rather than a template for implementing the organisation change and it focuses on the problem rather than the solution (Cameron, E., Green, M. 2009). Hence Mckinseys 7S model is considered as an alternative for Nadlers and Tushmans congruence model (Cameron, E., Green, M. 2009) Apart for the Kotters Eight Step model, the framework of Project Management Body of Knowledge (PMBOK), created by the Project Management Institute (PMI) was also considered (SoftExpert Software for Performance Excellence, 2012). But since in many organisations, the organisation change can be more complex than a project and to ensure the framework is more generic, the Kotters Eight Step model was choose. Hence the approach to the organisational change is to have Kotters Eight step model as the overall framework and use Mckinseys 7S model in the planning process.
Figure 02: PMBOK Knowledge Areas and Respective PM Processes (SoftExpert Software for Performance Excellence 2012)

Change Management Plan

This change management plan identifies the scope of the organisation change, key players, the process and the framework to be followed for execution of organisation change for the Indian subsidiary of an American MNC company. The Kotters Eight step model is used as the framework for this plan.

Scope & Purpose

The purpose of this change management plan is to ensure minimum dip in the performance level of the Indian subsidiary during the organisational change. The scope of this plan is from the acknowledgement of need of change due to external changes (in this case the 2008 crisis) to the post implementation plan for the Indian subsidiary.

Kotters Eight step model Framework

The below tables details the Eight steps of Kotters model, their significance, recommended activities, responsibilities and the duration for the organisational change
Table 01 Kotters Eight-Stage Process for Creating Major Change (Hemmes, C. 2009)

Stage

Significance
Help others see the need for change and the importance of acting immediately Identify and discuss crises, potential crises or major opportunities

Remarks & Recommended Activities

In this case, the change was external due to the 2008 financial crisis. Even though the Top management was late to react to the crisis, there was urgency within the Top management to act at the earliest.

Responsibility
Top Management team

Time period
Less than a week

Stage 1:
Establishin g a Sense of Urgency

Stage 2: Creating the Guiding Coalition (Change Manageme nt Team (CMT)

Make sure there is a powerful group guiding the change, one with leadership skills, bias for action, credibility, communication skills and authority and analytical skills Assemble a group powerful enough to lead & influence the

Instead of creating the small team only with Europe and US, the top management should include the local management. A credible leader should be projected as the sponsor of the whole organisation change project. There should be a buy in with the local management which would then be cascaded into the employees of the Indian

Top Management team

1 week

change Getting the group to work together like a team

subsidiary. The team should also have an HR representative. Due to the urgency to act, the CMT may not have the time to develop as a high performing team. Hence the top management should ensure that right people are picked. Start with a SWOT analysis of the Indian subsidiary to understand the bigger picture. Develop strategies for achieving the vision using the Mckinsey 7S model (detailed in the latter part). Strategy includes communication plan, Organisation needs, workforce planning and Key Performance Indices (KPI) to measure the effect of change. Communication plan and also identify the risk involved in the whole process. (detailed in the latter part) Communication includes HR policies, defined roles for individuals, training plan and organisation structure Remove obstacles, encourage risk taking and non-traditional ideas, activities, and actions. So the responsible personnel can execute their role as identified by CMT. CMT

Stage 3: Developing a Vision and Strategy

Clarify how the future will be different from the past, and how you will make the future a reality Creating a vision to help direct the change effort

Stage 4: Communic ating the Change Vision

Make sure as many others as possible understand and accept the vision and the strategy

CMT

4 weeks CMT

Stage 5: Empowerin g BroadBased Action

Enabling others to act on the vision by getting rid of obstacles, encourage risk taking Altering systems or structures that undermine the change vision

Stage 6: Generating Short-Term Wins

Stage 7: Consolidati ng Gains and Producing

Planning for and generating short term wins / improvements in performance Recognising and rewarding those people who make wins possible Press harder and faster after the first success Consolidate improvements and

Create milestones in the timeline to ensure measurable short term wins. Bring out consistent HR polices for recognition and rewards. Develop people who can sustain the new vision CMT should execute the succession process

CMT

CMT and local management

1 week

More Change Stage 8: Anchoring New Approache s in the Culture

sustain the momentum for change Articulate the connections between new behaviours and organisational success

Institutionalise the new approaches and ensure induction / orientation programs reflect the new way of working. CMT should be dissolved and the local management should start flowing

CMT & Local management

1 week

The total duration for the organisation change to be executed is less than 8 weeks.

Mckinseys 7S Model
The planning for the change management is recommended to be done using the Mckinseys 7S model.
Figure 03 Mckinsey 7S model (Papers4You.Com, 2009)

The seven S categories for this organisational change are:

Table 02 Mckinsey 7S model (Cameron, E., Green, M. 2009)

Category Staff

Description Important categories of people

Activities Mapping existing team with required team composition

CMT role Change manager, HR manager, respective local manager and

Skills

Distinctive capabilities of key people;

Systems

Routine processes

Style Shared values

Management style and culture Guiding principles

Strategy

Organizational goals and plan, use of resources Organization chart.

Structure

Derive a Training plan and estimate the cost of training (refer Appendix II) Review HR systems and other support systems Communication plan, Risk assessment Converting a cost center to revenue center Bring out the vision for the new organisation and detail the workforce plan By understanding the strategy, develop the best structure for sustained performance

related manager Change manager, HR manager, respective local manager and related manager HR manager and shared services managers CMT CMT

CMT

CMT

By executing the above activities for the 7S model, planning for change management would be holistic, thereby increasing the success of the organisation change. To further simplify the output from the 7S model, all the required outputs can be categories into Organisational Needs, Communication Plan and Workforce Planning. This would facilitate better assignment roles and responsibilities for execution. ORGANISATIONAL NEEDS Structure Management Systems Policies Procedures Protocols Software Assets Resources COMMUNICATION PLAN Employee Meetings Newsletters Communication Peer Support Team Staff integration meetings and workshops WORKFORCE PLANNING Capacity Audit Clearly identified roles and responsibilities Position Descriptions Skills and Knowledge Register of current staff Register of required skills and knowledge Plans for addition or reduction of staff Recruitment and retention strategies Salaries, wages, and benefits benchmarks and review processes

Change Management Team (CMT)

Creating the change management team is the step which defines the success of the organisation change. The Change management team should consists of 1. Change Manager 2. Local Management 3. Related Managers 4. HR Manager 5. Shared Services Manager The Change manager is the face of the whole organisation change. A credible leader whose main role is to ensure buy in from all stakeholders. For this organisational change, it is recommended that the Change manger is the head of the Indian subsidiary as this would also help is creating an ownership of the organisational change among the local management. The Local Management are the managers in the India subsidiary who understand the capabilities of their team and can provide inputs on the mapping of the individual according to the new organisation structure. Related managers are the stakeholders across the organisation geographies. For this organisational change, the related managers are the team in US and Europe. HR Manager should be part of the CMT to ensure that the policies and procedures for the new organisations are in accordance to overall organisations HR policies. Shared Service manager is part of the CMT to ensure that the new organisations process and systems are in accordance with the existing systems.

Conclusions
The proposed framework and process will ensure clear communication of the change; understanding the concerns of the employees; getting a buy in and motivating each employee for a successful organisational change and thereby would resolve the gaps identified (in the introduction section). Even though the detailed change management plan is specific to the

organisational change discussed, the proposed framework and process are kept generic to ensure applicability for change management in other organisations. It should be considered that the proposed framework and process can be applied to organisation with political system and organism metaphor only. For organisations with other metaphors, it is recommended to analyse all other applicable models before considering the proposed framework and processes.

References
Cameron, E., Green, M. (2009). Making Sense of Change Management: A Complete Guide to the Models Tools and Techniques of Organizational Change (2nd ed). London: Kogan Page Hemmes, C. (2009). Kotter Bridges Checklist. Available: http://www.adelaide.edu.au/hr/strategic/kotter_bridges_chcklist.doc. Last accessed 02nd July 2012. Kotter, J P. (2007). Leading Change Why Transformation Efforts Fail. Harvard Business Review. Jan 2007, p96 - 103. Papers4You.Com . (2009). What is McKinsey 7S Model?. Available: http://www.coursework4you.co.uk/essays-and-dissertations/mckinsey-7sframework.php. Last accessed 02nd July 2012. Sbaglia, R. (2012). A Level Playing Field. Available: http://www.globaleducationconference.com/profiles/blogs/a-level-playing-field. Last accessed 02nd July 2012. SoftExpert Software for Performance Excellence. (2012). PMBOK Guide to the Project Management Body of Knowledge. Available: http://www.softexpert.com/regulation-pmbok.php. Last accessed 02nd July 2012.

Appendix 1
Short History of the Organisation
(replicated from the pre assignment submitted)

Merger and Acquisitions are very common in the software product industry. Due to the dynamic changes in the technology field, companies opt for inorganic growth to ensure sustainable growth. An American software company became a big player through acquisitions of smaller companies thereby creating forty organisations within it. Each organisation owned a software product and had its own business units. To bring in commonality across the company, all the organisations were merged together and made into three verticals, Development center, Service center and Sales. The development centers were cost centers (i.e resource allocation depends on R&D budget) and Service centers and Sales were revenue centers (i.e. resource allocation depends on revenue generated). The Indian subsidiary, which was created as a low cost development center during the late 90s, had the experience of being acquired twice before it became part of the American MNC in early 2000s. Soon after the acquisition, the American MNC started to move more development work to the Indian subsidiary to take advantage of the low cost. This increased the employee strength of Indian subsidiary to more than 500 members.

Appendix II
Training Cost - Sample Analysis Total no of employees in Indian Subsidiary No of Training hours required for an employee Total hours of Training Cost of employee per hour Opportunity cost of Training Average Cost of Training per employee Cost of Training Hence Budget required for Training = 500 employees = 40 hrs = 500 x 40 = 20,000 hrs = $ 50 (low cost center) = 20,000 x 50 = $1,000,000 = $ 15 (low cost center) = 15 x 500 = $ 7,500 = $7,500