INTRODUCTION TO CHANGE MANAGEMENT
Change management is the crucial part for every organization to make them survive in competitive market. In order to gain efficiency in working, the policies and operational methods should be modified in favor of the company. The biggest challenge while commencing alterations is resistance to change. It is the major task for every leader to manage the resistance to change and motivate employees to accept changes (Cameron and Green, 2012). In the following report, Tesco has been taken as the organization to understand the topic. It is one of the leading UK based retail chain operating worldwide from more than decades. The present challenges facing by Tesco will be presented along with implementation of some theories and models with context to the given case scenario. Type of effective leadership will be described along with suggestion over managing employees over resistance to change.
1. CURRENT CHALLANGES WHICH TESCO IS FACING
After the change of old CEO Phillip Clarke, the new CEO of Tesco Dave Lewis have to take the charge of company. It has been found that the new CEO have to face many challenges to re-take the position of Tesco at its original position. The current challenges which the organization is facing includes internal as well as external conditions that are as follows:
Competitors – Tesco is very unclear about the target market as they are currently facing the dilemma of capturing greater share of the corporate population. They are confused under the situation as their target mass belongs to upmarket offers or the discount schemes (Kotter, 2008). Considering the upmarket condition, Tesco is facing tough competition with companies like Waitrose and Sainsbury while under discount market schemes, Aldi and Lidl have already made a strong base to position them in the market.
Economic conditions – After the economic crisis faced by UK in the recent years, the retail market have slowed down and lost its pace (Goetsch and Davis, 2014). Consumers have reduced buying from retail stores due to heavy recession which became the major challenge to Tesco which the CEO of company have to overcome.
Lacking management strategy – Due to some aggressive and abrupt approaches by the past finance director, the shareholders were quite disappointed with the working of Tesco. Due to such adverse conditions, company is suffering to create an effective management strategy that could satisfy the shareholders (Palma and et.al., 2011). It eventually became a major challenge to the new CEO to overcome this abrupt condition and provide smoothness to the strategy formulation of the company.
One of the major tool to discuss the challenges is PESTLE analysis. It is defined as the sequential framework which is practiced to scan the external macro factors of the environment faced by any organization (De Vries, 2012). The term stands for abbreviations which will be shown with context to Tesco. Considering the PESTLE analysis to identify recent challenges which Tesco have been facing, they are presented as under:
Political factors – Tesco is the international retailing chain which commence business worldwide (Ng and Sears, 2012). The political factors such as taxation, legislative acts and political stability of the country influence the working of company and act as one of the biggest challenge.
Economic factors – Since Tesco is a retailing chain, their key financial operations includes leverage cost, demand, profits and prices. These factors are regulated according to economy of the place which keeps on fluctuating (Wodak, Kwon and Clarke, 2011). Hence it have also became a key challenge for new CEO.
Social factors – The shopping trend of people in modern times have changed. They are moving towards bulk shopping for which retailing chains like Tesco does not provides discount facilities (Hayes, 2010). Hence it became a major challenge to attract consumers in society as well as maintain the profits of company.
Technological factors – With modern technologies and equipment in the market, Tesco have also planned to invest upon the energy efficiency projects considering the long term objectives (Smith, 2011). They are also trying to introduce self service checkout facilities to facilitate customers.
Legislative factors – It is the leading challenge facing by new CEO of Tesco. Under some legislative acts of Food Retailing Commission, a code of practice is followed. It prescribed ban in changing the prices without giving prior notice (Bilton, 2007).
Environmental factors – Tesco have to follow the environmental factors that includes minimizing the wastage and contribution in the surroundings. It has became one of the leading challenge for company to manage environment as well as internal working (PESTLE Analysis for Tesco discusses its Business Environment, 2014).
The another framework for observing the condition of company is SWOT analysis. It is a structured planning method which is practiced to evaluate the strength, weaknesses, opportunities and threats (Pahl-Wostl, 2007). In context to Tesco, it goes as follows:
Strength – The major strength of Tesco are:
- Increased market share in the earlier business duration.
- Availability of Tesco online to facilitate consumers.
- Huge brand value of the company in UK (Ford, Ford and D'Amelio, 2008).
Weaknesses – The highlighted weaknesses which have been observed are:
- Total dependency on the market of UK.
- Debt reduction due to its huge investment over space for new stores.
- Serial acquisitions that reduces earnings and quality of company (Provan and Kenis, 2008).
Opportunities – The growing opportunities which have been found are:
- Introduction of the non-food retail chain.
- Providing health and beauty product range to the existing customers.
- Focus towards further international growth (Oakland and Tanner, 2007).
Threats – The severe threat that acts as a challenge to the company are:
- Returns from overseas may fall due to competition.
- International expansion could face many external market problems.
- Price war in UK could affect the structure and policies of company adversely.
The ideal way to analyze the challenges along with the method to overcome them includes force field analysis. It helps in identifying the framework for those factors that could influence any particular situation (Cohen and et.al., 2006). It lay special focus towards helping forces or hindering forces. Concerning the force field analysis of Tesco, it is stated below:
The diving forces of company which helps as a helping factors includes:
External factors – The external helping factors for Tesco are sociology-cultural changes which will helps in gaining customer's attraction. It also includes competitive pressure which empower Tesco to draw a strong base while performing expansion.
Internal factors – The research and development creation programs along with innovation are the major strength of Tesco in their business operational activities (Goetsch and Davis, 2014).
The restraining forces which acts as the hindering factors in growth of Tesco involves:
External factors – Fulfilling prior commitments to the shareholders which may not be feasible in the present market conditions. The new spontaneous regulations which could impact the structure and policies of Tesco.
Internal factors – Changing organizational culture could influence the working of Tesco and even could impact the existing policies adversely. The limited technological resources also needs to be upgraded to overcome hindrances of the internal factors (Tesco.com - online shopping; bringing the supermarket to you - Every little helps, 2015).
2. RECOMMENDATIONS TO MANAGE RESISTANCE TO CHANGE
After the change in CEO of Tesco, they have introduced various changes for the efficiency of company. The management team of Tesco is not habitual to practice spontaneous changes hence Dave Lewis have to come out with some new policies to resist the change management at their workplace. Resistance to change is defined as the act of opposing or struggling with the modifications, changes and alterations which are practiced at the workplace (Ng and Sears, 2012). There are few change management models which could be applied for managing resistance to change. They are presented as below:
Lewin's three step change model – The current model is developed by Kurt Lewin in which three phases of change management are presented. Primarily, it includes unfreezing which tends to reduce the forces which are striving to perform change. Secondly, transitions need to be commenced which includes development of new behavior. Finally, freezing is done for the changed technique for the effectiveness of organization.
Kotter and Schlesinger change management approaches – Under this model, six approaches have been derived by author which includes education and communication to the employees. Next is participation and involvement of people in change. Third is facilitation and support to the people in organization. Then comes negotiation and agreement followed by manipulation. Finally, there is the approach of explicit and implicit coercion of the employees.
It is a huge challenge for changing authority to manage such resistance to change. In context of Tesco, few suggestions have been given regarding management of resistance to change along with some evidence extracted out from the given scenario. They are as follows:
Involving parties into change – The best way to manage resistance to change is by involving the other concerning parties into process of change. Allow their opinions and suggestions to be implemented in the methods for modifications. Considering the changes regarding cutting down the prices, the finance department should be allowed to participate to gain majority over applying changes in the organization (Smith, 2011). With participation of such important authorities, managing change could be easy for the company as well as the criticism for change could also be avoided.
Good communication – The requirement for change should be clearly defined among the management team members along with proper justification. The information should be communicated among stakeholders of the company if any change in policies related to them have to be changed (Ford, Ford and D'Amelio, 2008). According to the situation, if company is trying to implement change regarding reducing the margin of product below 5pc and cost cutting, then the information should be floated to all the other members to gain their positive opinions.
Providing flexibility in change – The changes must be practiced in such a manner that they possess flexible nature. It results to positive outcomes for company as well as its clients and other management people. As per the scenario provided for Tesco, there is requirement of revamping the senior management team. It often leads to lots of controversies in the management of company. Hence the designations should be allotted in such a flexible manner that all the senior personnel should be satisfied with the change (Cohen and et.al., 2006). They must be provided with reputed job authorities according to their skills.
Deliver timely training programs – While practicing changes in the organization, the rules, regulations and operational methods gets transformed. Hence the people affected by change in the company should be provided with proper training programs to make them feel comfortable to adopt the modifications. With respect to change in developing online operations of Tesco, the concerning people should be given proper training and development session to adapt these changes. Since the prescribed change relates to technical matters, hence training over such programs are very essential (Kotter, 2008). Hence to manage the resistance over particular change, proper and timely training programs shall be conducted by the order of CEO.
Continuous focus over positive outcome – The another major factor that could be helpful in managing resistance to change is constant focus and emphasis over positive results. The negative factors out from the change should be eliminated to maximum level by designing new policies. Changes like re-positioning the out-of-town supermarkets should be practiced with efficient policies to get the desired results and greater market share as well (Managing Resistance to Change, 2015).
The following suggestions to manage resistance to change are important as they will allow the members of company to integrate their personal objective with the changes made for betterment of Tesco. It will align team members to participate and present their ideas. Simultaneously, the proportion for negativity like opposing changes and fighting against the development of new policies and regulations also tends to reduce (Palma and et.al., 2011). It eventually leads to better results arising out of practicing change management at Tesco by its CEO Dave Lewis.
3. CRITICALLY DISCUSSING THE APPROPRIATE LEADERSHIP STYLE
In order to bind the people with organizational policies, operations and working, leader has to play a very important role. He is the sole authority who guide the people towards attainment of company's goal. There are different ways to guide team members which depends upon the type of leadership style possessed by leader according to various situations. In critical manner there are basically two types of leadership styles which are practiced by the superior person while guiding people (Wodak, Kwon and Clarke, 2011). They are democratic and autocratic mode of leading.
Considering the scenario in Tesco, leader of the company which is CEO Dave Lewis have to follow change management. He is proposing several changes for the organizational efficiency. In order to manage resistance to change, the best mode of leadership is democratic style. This method states that the leader offer guidance to the other concerning team members and allows their decisions to be implemented in company. If the superior made an approach to carry all the members altogether to drive towards change, then company could observe better outcomes (Hayes, 2010). By the consent of all the members ranging from top level to lower level of management, the changes could be managed in more efficient and smooth manner. Comparing with the other method which is autocratic leadership style, the superior authority creates regulations among the management and give orders to follow them strictly. Leader of the company is the sole decision maker and no other authority is allowed to provide their opinion without the approval of leader.
If CEO of Tesco follows democratic style of leadership, then he could manage people of the organization to agree upon the changes that needs to be implemented. By inviting decisions of all the members, the management of resistance to change by leader becomes easy and feasible. All the participants take initiative to commence change. As a result, company could observe better outputs with efficiency in working (Bilton, 2007). Critically observing the other leadership style, if CEO of the company becomes strict and autocratic, he could not drive the managing people towards change. If all the team members of Tesco are not satisfied with the change, then they may surrender themselves from company which will results to reduction in the workforce which might proved to be a costly affair. Also the leader will not be able to get variety of ideas that could handle the changes in more beneficial manner. Such adverse conditions could never generate desired output and company have to face trouble in conducting their future operational activities. Simultaneously the management of resistance to change becomes difficult for the leader to handle all alone (Provan and Kenis, 2008).
Hence from the detailed discussion over both styles of leadership to be practiced by CEO of Tesco, it is recommended to follow democratic leadership style and move the team members along with the changes. It will encourage employee's participation to manage the resistance to change and provide desired results from the implementation of changes to be practiced by Tesco.
From the following report, it has been concluded that changes are very important in the life of business. Considering the present situation of Tesco presented in the given case, the value of change has been determined. Description over resistance to change has been given along with the methods to overcome those resistance by the implication of few techniques. Different models have been presented to identify the challenges faced by Tesco both from internal as well as external environment. Recommendations have been given regarding management of resistance to change to influence employees for adapting those changes and contribute their efforts in the efficiency of working. Most importantly, the type of leadership styles have been critically discussed to recommend CEO Dave Lewis to practice in the organization regarding practice of change management.
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