Change Management Theories in Use in Australian Industries

Introduction

The constant evolution of the modern business environment due to endless innovation in technology and intensified globalization efforts is necessitating modern businesses to adopt the concept of change management in their structures of administration. In essence, change management refers to approaches in management of a firm that prepare and support employees, groups, and the entire organization to make organizational change. It involves practices and strategies of redefining the use of resources, characterizing modes of operation, making budget allocations, and describing new business processes, as well as other efforts designed to change a firm. Organizational change management is generally holistic as it considers the organization as a whole and the specific areas where change is necessary while individual change management embroils efforts of coping with natural physiological and psychological reactions to change in the workforce.

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With the current rate at which civilizations, technology, and creative thought are evolving, organizations approve new change management models in order to thrive in the current business settings. Indeed, managers are now continually judged by their ability to manage change in the organizations they serve. This implies that contemporary business managers must demonstrate their capacity to manage highly dynamic and complex operating environments. With reference to these trends, this paper analyzes recent literature to assess the effectiveness of the current change management theories applied in Australian firms. The main companies under review are the Virgin Australia Airlines (VAA), Coca Cola, and the National Australia Bank (NAB).

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Current Change Management

Kurt Lewin’s Change Management Model

            Perhaps the most commonly applied change management model in VAA, Coca Cola, and NAB is Kurt Lewin’s change management model. The three organizations utilize the model to unfreeze conventional processes, implement desired changes and refreeze the new processes into the organizational culture (Carter, 2008, p.20). The unfreezing process is used to alter the current attitudes toward working practices and prepare the foundation of change (Burnes, 2004, p. 977-1002). Successful unfreezing processes are greatly reliant on effective communication methods since employees require to understand the change in terms of its motivation, necessity, and importance. The motivation for change is particularly important because organizations must empower the people to embrace new ways of thinking and acting, as well as to embrace new values, behaviors and attitudes.

For the case of Coca Cola, the organization communicates to its employees and stakeholders ahead of major change implementations. The beverage company updates its products and packaging techniques constantly as a strategy of retaining its authority in the industry and, thus, is compelled to undergo numerous changes, particularly in its production departments. In all the three companies, the change process is subject to effective communication processes. The change process ends when the firms return a sense of stability in their new operations as well as when the previously intended benefits are attained. Even so, scholars like Levasseur (2001) and Shiru (2013) have cited various limitations of the Kurt Lewis change management model among which include the difficulty to freeze planned change, disregard for radical and transformational changes, reliance on the role of politics and power in the organization, and its nature as a management-driven approach.

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The McKinsey 7S framework

            The McKinsey 7S framework is also discernible in the management styles of the three companies, particularly the VAA. Developed by popular business consultants Tom Peters and Robert H. Waterman Jr., the framework is a strategic vision for groups to include businesses, their units, as well as their teams, based on the premise that the seven core elements of an organization should be aligned and mutually reinforcing. The elements include styles, strategy, style, skills, staff, structure, and shared values (Hayes, 2014, p.137). Thus the model is mainly used in VAA as an organizational analysis tool to evaluate and track changes in the internal environment of the organization. It is specifically utilized to indicate what the firms needs to realign in order to improve performance and maintain alignment in change processes. The model’s implementation dictates the relevant company to assess each of these elements in its organizational context for instance, while assessing the strategy, the firm need to look at its objectives, strategies, competitive approaches, and sustainability.

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VAA’s management has constantly revised its strategy to reposition itself as an attractive and viable option for corporate flyers. Such revision has also coerced the airline to review its systems, staff, skills, structure, and management styles. Markedly, the Australian firm’s need for change stems partly from necessity and partly from opportunity. With the current transformations in globalization, there are new opportunities for offering corporate air travel. Furthermore, the airline’s dependency on leisure travelers places it at a risk of market shocks. The major ways it responds to these motivations is by revamping airplanes, capitalizing on business-class services, including more routes and destinations, and implementing new flyer programs on a regular basis, among others. These activities require the organization to modify its organizational elements in order to harmonize its operations with the new objectives.

One of the significant strengths of the McKinsey 7-S model is its ease of application as an analytical framework. Since it merges both soft and hard elements of the organizational culture, it is sufficiently broad enough to include major characteristics of the firm. Fundamentally, the strengths and weaknesses of the model hinge on each link between the seven elements. Common applications of the model in enterprises have led to the attributes of autonomy and entrepreneurship, higher productivity of the workforce, simple and lean staff, customer-centeredness, a bias for action, and synchrony with other management techniques among others (Kaplan, 2005). Some of its general limitations are that the model does not specify the type of analysis to be carried out and does not specify how to improve each business process such as Finance, processing, and marketing.

Kotter’s Model

Another manifest change management theory in VAA, Coca Cola, and NAB is the Kotter’s model. This model is characterized by eight steps namely, creation of a sense of urgency, development of a coalition, formation of a strategic vision, inclusion of everyone in the organization, removal of barriers and reduction of friction, generation of short-term wins, sustenance of acceleration, and ‘coagulation ‘of the changes (Appelbaum at al., 2012). Firstly, the organization creates a sense of urgency to provide the initial traction and motivate teams to embrace change. The presence of groups in the organizational environment simplifies this process as members of the organization are likely to discuss and see the need for the changes. Next, the organization should build a coalition in which it needs to gather stakeholders and leaders in order to convince them about the necessity of the relevant change (Mento and Dirndorfer, 2002). The process of forming the coalition should however not only include key stakeholders but also people with various experience levels, skill sets, and other traits. All employees need to feel represented in the process of change and thus are also crucial in the promotion of desired change. The formation of the coalition should be succeeded by the formation of a strategic vision that enables the organization to define changes and desired outcomes. Consequently, the change management team then proceeds by communicating and including everyone in the idea of change, removing the barriers that may inhibit the change process, creating short-term objectives, perpetuating the change process, and finally reinforcing the change.

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The Kotter’s model is particularly evident in the case of NAB’s change management. When the bank decided to venture into smart stores, which intrinsically paperless bank branches where customers enjoy self-service privileges, it created a series of implementation processes to acquaint all its stakeholders on the oncoming change of operations. The decision would especially impact the employees in a significant fashion. As a response to these potential effects, the management team at NAB utilized the McKinsey 7-S model to evaluate the need and impact of the proposed change and then followed a process such as the one proposed by Kotter’s model to put the change into operation. The Kotter’s model is effective in that the first few stages force can force the organization to set a foundation for success by convincing all the concerned parties why the change is necessary. This is crucial as it gives the team the motivation to enact the recommended change, with enough participants working on deploying it in a manner that transforms it into standard practice (Kotter and Schlesinger, 1989). Even so, the model has been criticized because of its top-down approach. Because of its concentration on key stakeholders, an organization can run the risk of alienating the employees in the decision-making process.

Nudge Theory

            The analysis of VAA, Coca Cola, and NAB change management approaches reveals that the three companies do not only implement solid change management models but also dynamic mindsets and tactics like “nudging”. Though the technique is mainly considered a theory, the Nudge model is used in framing the desired change in an effective manner. The concept is commonly used in behavioral science, economics, and political theory to propose positive reinforcement to attempt to achieve non-coerced compliance to inspire the incentives, motives, and decision-making of individuals and groups (Wilk, 1999). The underlying basis is that nudging is more effective than direct instruction and enforcement (Richburg-Hayes, Anzelone, and Dechausay, 2017). Thus, the three organizations consider nudging a more effective approach than enforcement of change in the traditional sense. Though some modern organizations like VAA run their operations through instructions, their management teams are familiar with the benefits of the nudging tactic. Hence, instead of communicating what their employees should or should not do, they assist their entire workforces to adopt new practices by themselves. The major skill of nudging lies in the way of presenting the nudges.

            The core aspects of nudges include open-endedness, subtleness, indirectness, education, facts and evidence, options, and open to debate. Nevertheless, the nudge theory is quite vague owing to its irrelevance as a standalone model. Indeed, VAA, Coca-Cola, and NAB, combine it with other structured models. Patently, the success of nudging is based on the ability to clearly define the anticipated changes, the consideration of the changes from the employee’s view, the use of evidence to show the best choices, regard for feedback, limitation of obstacles, and accomplishment of short-term wins. The theory’s major strength is that it helps the workforce to realize the significance of the issue at hand as well as to choose the best solution. By offering employees with choices, the organization promotes stronger bonds which can result to a higher degree of loyalty and a lower workforce turnover rate. Additionally, the theory covers the gaps that are present in other management models. It expressly delves into the inclusion of employees in the change process. Nevertheless, it fails to provide a solid model with the capability to analyze, manage, deploy, and maintain change (French, 2011).

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Conclusion

            In conclusion, the Virgin Australia Airlines (VAA), Coca Cola, and the National Australia Bank (NAB) combine various theories of change management and so do other companies operating in Australia. The application of different theories is justified by the existence of many factors and complexities in the modern organization, among which the workforce is a major consideration. Evidently, the modern business environment is more multifaceted because of globalization, advancement of technology, and the use of new practices. Thus, effective change management must include key theories to create practices and strategies of redefining the use of resources, characterizing modes of operation, making budget allocations, and describing new business processes, as well as other efforts designed to change a firm. The companies featured in this paper utilize Kurt Lewis theory of change, the McKinsey 7S model, Kotter’s model, and the Nudge theory.

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