How organizations manage resistance to change

How organizations manage resistance to change Severe competitive and economic pressures that organizations face today were unthinkable a few decades ago. In order to shed excess costs and to respond more nimbly to customers and competitors, they are being urged to adopt new organizational forms, tightened inter organizational linkages and improved management practices (cf. Miles and Snow 1980, Johnston and Lawrence, 1988). Any change in organization is followed by a kind of resistance from its employees. In this assignment a few methods that can be used to overcome change in the organization are described. Technology developments, social and demographic shifts, competition of changing market and economic issues, tend an organization to implement change in it as well. The rapid and dynamic change in market has increased consumerism. Whether it is an automobile industry or cosmetic industry or IT industry, consumer today has lots of choices these days that they need not have to wait for longer for any product. This changing market scenario imparts a message to managing bodies that the way of work should also change with the changing market. From managerial point of view a change is referred to as change in work pattern, work routine and work culture inside the working atmosphere. Change is normally a reaction to changing commercial, technological, economical, structural and strategic environment in which the company operates (Barbara Senior, Organizational Change). For example; departmentalization, job redesign, implementation of an international division are the examples of structural c hanges whereas work processes, methods and equipments are technological changes. Change should be welcomed as it can produce positive benefits for the individuals, bring opportunities for personal change and development, reduces boredom of work, provides new challenges and an opportunity to participate and shape the outcome. But unfortunately as change is accompanied by resistance, it is very important that the Change Manager anticipate and plan strategies for dealing with resistance not only at the introduction of change but also for monitoring the change over long term (Ronald, G and Smith, J 1995). It is helpful to understand why people resist change, because understanding this allows us to plan strategies to reduce resistance from the beginning. Kotter and Schlesinger identified the basic reasons of resistance to change are communication gap and inadequate information that creates misunderstanding, sense of insecurity, different assessment of situation and disagreement over advantages and disadvantages. Moreover, individuals are more concerned with the implic ations for themselves (Management by Robbins and Coulter). Organizations do not change, individuals do. No matter how large is the project you are taking on, the success of project ultimately lies with each employee doing their work differently multiplied across all of employees impacted by the change (Web 1). Individual barriers to change include- tradition and set ways; loyalty to existing relationships; failure to accept the need for change; insecurity; preference for the existing arrangements; break up of work groups; different person ambitions; fear of power; skills and income; inability to perform as well in the new situation as for example, when quality control methods based on statistical models were introduced into manufacturing units, the quality control department have to learn the new methods. Some may fear that they will be unable to do so and may develop negative attitude towards the change or perform poorly if required to use the new methods. Sometimes change is resisted because of failures in the way it is introduced to the e mployees and the management fails to explain the need for change and its future benefits. Poor employer relations, lack of involvement in process and failure to offer support and training for the introduced change are the other reasons for change resistance (Web 2). Resisting change takes many forms (Web 3) and the more obvious form is of active resistance, objection and refusal to cooperate with the change occurs. Sometimes, resistance appears to be individual and sometimes it is clearly situational. It may be passive in which colleagues agree to a change but are unwilling or unable to implement something new. This subtle form of resistance is dealt with more difficulty. For example, at a staff meeting everyone agrees to follow a new procedure, but after several weeks it is being discovered that the procedure has not been implemented yet. Another example of this kind is the introduction of new computers at the new place but virtually no one is using them for the purpose for which they are intended, since the staff had their own machines. The employee consents to change by agreeing to it but later he only changes to appear cooperative, but in fact he is doing most things the way he was before the change. At the moment the change program is announced, many employees will employ tactics to protect themselves, their turf, and ultimately their place in the organization.  Some will aggressively challenge the necessity for change. This is a time waster and thus prevents critical objectives from being met. Every person who facilitates the change process must work diligently to build consensus. The employee must be assured that every idea is worth considering. If anyone argues, he or she can be asked to explain why he or she feels the way they do and ask for three or four suggestions for making the process work.  Some managers and members of the leadership team will avoid change by passively refusing the commitment to the process. Often these leaders will resist the change effort by being unavailable for meetings, denying resources, or withholding feedback. The leadership is a particularly difficult foe, because change efforts often require the use of resources managed by the l eadership, such as time and money. Without these resources change efforts are likely to fail. Accountability with consequences is the primary means for assuring leadership participation. Many employees and organizational leaders search for personal or professional diversions during the change process that will ultimately hinder the effort. A distracted individual can undermine the change effort by not being present physically or mentally when his or her critical input is needed. Not being mindful of change creates an unnecessarily difficult experience for every member of the team. Such carelessness calls to mind the wasted energy expended when one runs against the wind. Change efforts provide an opportunity for every one affected to secure a new place in the organization or make a decision to seek a better fit elsewhere. Ken Hultman argues that while no-one is a perfect change agent, managers have to be impeccable role models for bringing up a successful change. The essential attributes of such a person include the ability to be a clear thinker who is able to get a view about organizational situation and reach at logical conclusions. Hultman suggests few things in creating the right environment for change to occur. Firstly we must do things to establish a positive climate (p172) and secondly we must attempt to create environmental conditions that encourage an interest in improvement. Managers must demonstrate that how changes will improve employees circumstances and that there are opportunities in the change such as enabling colleagues to increase their knowledge and skills leading to genuine achievements and progress They must cultivate a value for collaborative working among staff and colleagues need each other to complete their tasks, it is easier to develop values of co-operation and mutuality. W hatever are the circumstances management must stay calm. At the heart of Hultmanà ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢s analysis is a set of humanistic values along with an assumption that one cannot even hope to influence another colleague without firstly demonstrating that they will have their needs met in some way. It is likely to be counterproductive by getting impatient, exasperated and angry. Being a change manager it is his/her duty to reduce the resistance towards change and towards change and to increase the enthusiasm and level of commitment for the change. While likely to encounter the people who resist change, people who welcome change will also be encountered and by knowing the reasons for their acceptance to change, the communication plan will be better formulated. People will accept change when they see possibility that they will gain something from the change. The gain may be either personal like, money; increased job security; status; self satisfaction; less effort and time and gain in better personal contact or other like it provides new challenges, likeness of the source, reduction in boredom etc. In order to reduce resistance to change, the manager should involve people affected by change, actively seeking their thoughts and reactions to proposed changes. They must develop a proper attitude towards resistance to change and realize that it is neither good nor bad. The best way to minimize resistance to change is to involve those responsible for implementing it and those affected by it. People are more motivated towards successful completion when they feel that they are the valued participants in planning and implementing the change. Also ensure that people from all the levels of organization are involved in planning the change process and they should be listened carefully. In the early stages, manager should not launch into lengthy diatribes justifying the change as people are not interested in that. They want to be heard and have their concerns attended to. They must recognize that it takes time to work through reactions to change. Then people should be engaged in dialogue ab out the change. They should do this only after understanding the specific concerns of others completely. Change must be realistic, achievable and measurable. Communication and education is helpful method to sort out the things when resistance is due to lack of information or inappropriate information and analysis. Though time consuming, this method provides great employee support if persuaded. When cause of resistance is difficulty in adjustment to changes, management support and facilitation do work at times. This is expensive and still unreliable way to overcome the change. Manipulation of some information is necessary some times in order to avoid negative reactions by the employee. The people that easily accept changes and get adapted to changing atmosphere can set an example for others and hence they follow the suit. Therefore, they should be the first target of change program. Three basic steps- planning, implementation, and evaluation of outcomes of both the plan and implementation are involved in the change process. Resistance to change should be dealt ideally with planning and early stages of implementation. For proper planning for change, a manager must consider about how and when the change is needed and the way it should be communicated to the employees for their better support. Managers should pay attention to the focus of change, the amount of change, and the rate of change in order to implement change. Evaluation of outcomes of change is also very important as all the change efforts are result oriented. If change is not monitored, its effectiveness cannot be measured. This can be done by collecting data and comparing the results against original goals. To wind up at the end of an interesting discussion we can conclude that a degree of resistance is normal since change is disruptive and stressful but in general, most people have mixed reactions towards purposed change, so the change agents can be helpful in highlighting the positive aspects in realistic manner. Although most people feel comfortable with minor changes, no one can live and work by yesterdayà ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢s reality. Managers must reduce change in very effective, meaningful and healthy way without hurting the sentiments of the employees. By providing resources to support the changes, allowing enough time and flexibility and with the widespread commitment of people throughout the organization, change efforts will succeed. (2) Hultman, K. (1998), Making Change Irresistible: Overcoming resistance to change in your organisation, Davies-Black Publishing, Palo Alto

Cranium Filament Reductions SWOT Analysis

The company that I decided to do a SWOT analysis on is Cranium Filament Reductions which is a hair salon. After reviewing their business plan, I thought that it was very well written and detail-oriented. Below you will find my swot analysis of the hair salon business plan: Strengths: This venture does have experienced, creative leaders and researchers since Susan Sever (the owner) has years of management under her belt. Ms. Sever has done all of her research about the hair salon industry. The industry is easy for anyone to start and end a business which makes for a competitive market. Ms. Sever has realized that customers are looking for quality work and great customer service without paying an arm and a leg; so she has a plan to cater to all of her clients’ needs. She also has a line of products that she will be selling in the salon. In my opinion I think that her market segments are targeted correctly. Her target market includes men, women who cannot afford the expensive upscale salons, and women with children. She has a plan of hiring six experienced hair dressers and an experienced receptionist. Ms. Sever will be offering training to her employees so they can stay up to date on their skills. Weaknesses: There were a couple of weaknesses that I found in the business plan. The weaknesses that I could see were located within the business’ target market segments. Cranium Filament Reductions thinks that young women with children would be a great target for the company. I can understand that their children need their hair done as well but having children in the salon may deter other customers from coming in. Some people use â€Å"salon time† as a way to take time for their selves away from their children so why would they want to deal with other people’s children at a salon. Another weakness is the fact that Ms. Sever is depending on males to make up about seventy to seventy-five percent of their clientele. Depending on the atmosphere at the salon will determine whether or not men show up. If the salon seems to be too â€Å"feminine† then I highly doubt that men will be the majority of their clientele. Opportunities: If Cranium Filament. Reductions actually keeps to their plan about providing high end customer service at a low cost then they will have a strong opportunity to strive. There are people out there that don’t want to pay over $100 for a haircut and some pampering so if they were to find a place that offered everything that they were looking for at a lower rate they would become regular customers. Regular customers would spread the word to their friends and family members and reviews about the salon would be all over town. Having regular customers would give Cranium Filament Reductions the opportunity to become well known around the neighborhood and possibly even the state. If Cranium Filament Reductions can actually make their projected profit for the first year or double the profit, this may provide them with the opportunity to expand the business or the services that they offer. They would be able to buy newer equipment, send their employees for new training, or even expand the product line. Threats: I believe that Cranium Filament Reductions has underestimated the reactions from their competitors. Ms. Sever does realize that the hair salon industry is a highly competitive industry but I don’t think that she understands the lengths that someone will go to make sure your business is not successful. Ms. Sever plans to do a lot of promotional things during the first couple months but that doesn’t mean that another salon won’t start to offer the same promotional items. Cranium will need to stay on their toes to keep their business booming. A change in customer taste does occur rapidly within the hair industry so cranium will need to be up to date with all the new trends and their skills. Competitors may also try to compete with the product line that Cranium offers. Cranium will also need to be on the lookout for new up and coming salons. Everyone thinks that they have a passion for hair so this industry will always be increasing with competitors. Hair Salon Business Plan: http://www.bplans.com/hair_salon_business_plan/appendix_fc.php

The Decision Process Behind Acquiring An Asset Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1404 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? To make a decision about how to acquire an asset is not an easy task. There are many aspects to take into account which can, and will, influence this process, such as: strategic vision, availability of the asset, shareholders interest, etc: but this type of decision always is going to be affected by the financial. For the aim of this analysis, is assumed that the company has the liquidity enough to buy the asset and the aspects referred to other than cost effective analysis are not important for the decision, and that the financial options to acquire the asset are basically purchase the property, borrow found or leasing. Decision process The decision process can be split in two main parts: the investment decision and the financial decision. The former is the analysis if the company needs to use the asset and which is the way to acquire this equipment, even hire or have a economic ownership over it; if the company could not find viable to hire the asset for a short term, is when the second one came to the decision process, the financial decision is an analysis of the way that the companies are able to acquire the equipment, we can usually find: Retained Earnings Increase Capital Long term debits Short term loan Hire-Purchase Leasing Purchase In the real market, the most expensive founds are shareholders resources, they expect that the company give them profits above the market profitability and that the company increase its value, that is the reason why a financial manager have to design the best option with the aim of minimize the use of their money, that is the easy way, but not necessarily is the most cost effective one- Leasing Lease, as a financial tool, has its beginnings in the mid 19th century when Helby v. Matthews managed to recovered property could be leased to a third party. But only in the early 19s when it was legally and financially acceptable to the market, but was only in 1960 when its use was crowded in the world thanks to the benefits it provided to small and medium enterprises. (Bierman, 1982) Definition: [ A lease is a contract between a lessor and lessee for the hire of a specific asset selected from a manufacturer or vendor of such assets by the lessee. The lessor retains ownership of the asset. The lessee has possession and use of the asset on payment of specific rentals over period. (Equipment Leasing Association, 1976, pp 1-2) Types of Leasing Financial leasing: IAS defined it as the lessor transfers to the lessee substantially all the risk and rewards incident to ownership of an asset. Title may eventually be transferred in this kind of leasing the lessor is able to recover the capital cost of the asset, maintenance and a return of the investment. Operative Leasing: any other leasing different to financial leasing. (Clark,1985) Advantages of Leasing To the lessee: Leasing provides up to 100% of the cost of the equipment Leasing do not affect the debtÂÂ ´s capacity A leasing provides a better cash flow in the actual year to invest in other uses A lease is not cancellable, which means that the parties have certain of their payments It is a good shield against changes in macro economical factors such as inflation As the asset is not property of the lessee, this one do not have to worry about accounting and administrative procedures such as depreciation, tax, etc Leasing is tax deductible because it is part of the operational costs To the lessor: Reduction of risk in case of a lessee default, because is easy to repossess the asset Financial practice when the owner of the assets not only has the property of the equipment plus profits due to the use of his assets Save time. Leasing is a financial model which can be decided, executed in short time. Disadvantages To the lessee: Property of the assets and loss the residual value at the end of the contract To the lessor: A ffect the debtÂÂ ´s capacity Maintenance risk Non-pay or bankruptcy (Clark, 1978) Time Value of Money If we want to compare between different real options of investments, the value of the money in the time is the only way to do it; every project have a period where it is going to take place, and we can not assume that the value of the cash flows in the beginning of this have the same value that the ones that we are going to receive in future periods. Is in that moment when the discounted cash flows methods help us to bring all this futures incomes or/and outcomes to a point in the time when we are going to analyze them. (Gotze, 2008) One of the most accepted discounted cash flows methods is the Net Present Value (NPV), Gotze, Northcott and Schuster, in their book Investment Appraisal pp 54 defined it as the net monetary gain (or loss) from a project computed by discounted all present and futures cash flows related to the project, T M Clark, in his book Leasin g, pp 194, says it is the method of discount futures cash flows back to the start date of a project using a determinate discount rate. At the end of the day, this methods are simple to discount the futures cash flows using a discount rate to the year cero to compare in real values and to be able to make a accurate decision, in mathematical worlds we can say that NPV is: Where: t = time index T = The year of the last cash flow CIF = Income in the year t COF = Outcome in the year t I = discount rate (Gotze, 2008) ANALYSIS In this analysis we are going to use a company which expansionÂÂ ´s plan includes acquire a property; and the options includes: to buy with 100% equity, to borrow 70% of banks or leasing. The chart and the figures are shown in the table above together with the PV of the futures cash flows and the VPN calculation Actual Situation: Chart: Present Value Calculations of each of the futures cash flow NPV calculated by addition o f present values: NPV calculated by addition of present values and NPV concept: And figures calculated with annualities In the first part of the analysis, is used the present values of the future cash flows and discounted by a cost of capital of 10% to the beginning of the year cero and then summarized in order to calculate the NPV of the project: for the first option the value is -$5.374.528, for the second option is -$3.768.067.54, and the last one is -$3.573.508.51. As we can see, this project under this cost of capital is not viable in any of the tree options, but if we have to choose one, because the project is relevant to the company strategical goals and because they are mutually exclusive we should choose the less negative NPV. In the second part of the figure, I calculated the NPV of the future cash flows to the end of the year 1 and compare the values in this time, and the answer is the same that the previous point, which means that the best option for the comp any, is to acquire a lease instead of purchase the property. For the second figures, I used a figure called annuality in two of three options, which is present when the future cash flows are the same value but in different stages of the project, the result, as it has to be, is the same that we concluded in the previous analysis. As we can see in the figures, it does not matter if you calculate the net present value (NPV) using the formula or the sum of the Present Values, even annualities show that the best option is leasing, but we have to understand that this kind of model decision is not influenced by the strategical objectives of the company: for example, what if the company is interested in increase its fixed assets in the balance sheets? In this case the best option could be the second one, or if the company in the previous case but moreover does not like get loans with financial institutes? Then the best option should be the purchase with 100% equity, but like in this c ase, as we do not have any kind of limitation, the less NPV determines the best option, and became in a good strategy for the company. Don’t waste time! Our writers will create an original "The Decision Process Behind Acquiring An Asset Finance Essay" essay for you Create order