“VUCA might be a relatively old term; it clearly sets the scene for future organisational challenges. The description of our world as volatile, uncertain, complex and ambiguous might not be perfect, but it is the best I came across and it makes us reflect on what should be done. It describes the challenges we are facing in our private and professional lives. Business models, strategies and organisation models will have to change. As leaders will have to let go even more control, their leadership skills will become even more important.” - Prof. Edouard Gruwez (2017)
‘What is change?’
1. Shifting from one gear to another to reach the destination
2. Involving a thought process (factors such as traffic density, vehicle type, road condition, gas consumption and timing)
3. Adopting a different method for the same end purpose (necessitating circumstances - competition, cost, enhanced productivity, value for customer)
4. Getting rid of age-old conventions; adopting and adapting to present day essentials (necessitating circumstances - obsolescence, stagnancy, losing hold on deliverables)
Change objective/big changes and preparation
The change objective primarily stems from a compelling necessity, and at times, could even be a question of survival. Depending on the nature and complexity of the situation; identifying whether the change is incremental change and/or big, or even temporary, has to come into picture.
Reasons leading to change
1. Demand fluctuation
2. Market pulse
3. Market intelligence
4. Changing customer expectations
5.Consistency and improvements in product quality and services
7. Morale/motivation level
8. Talent management/Reward & recognition
9. Re-skilling & up-skilling
During internal assessment, the gaps identified have to be suitably filled by the top management team based on prioritisation /importance and urgency. And, to achieve such a thing, predictive/preventive strategy/style of management is needed as against forced maintenance post break down.
Deferring the much needed actions is a risky proposition, irrespective of the reason, and they could be: -
1. Financial constraints or internal resistance
2. Postponing/delaying tech upgradation
3. Monopoly leading to complacency
4. Compulsions to go to for real marketing products
The other scenario is when confronted with competition, corporations betray surprise. And, they may not be possessing the required knowledge to channelize their resources immediately or come about with strategies to combat the situation- national/international laws get amended, national/international courts come about with judgements. Consequently, organisations have to change their plans to fall in line and comply with the decisions. E.g. Emission norms, permitted fuel variants for use in vehicles.
Within technology, upsurge of AI/ML and enhanced automation in a variety of fields is compelling companies and people to adapt to newer ways of doing things. The changes particularly affecting industries require the top leadership team to initiate re-training and up-skilling programmes for their employees. The game-changer comes in varied forms and wisdom lies in quick actions. Any business revolves around investment, profits, profitability, reserves, money for expansion/diversification/ modernisation/ employee compensation and welfare. Finance being the pivot, low profitability and/or no profit situation results in losses, and continuous losses may lead to the organisation becoming sick. To put this in perspective, this can happen due to the sum total or part thereof of inactions on change interventions from the leadership team. Or, it can be due to change in the very leadership team leading to interim vacuum and gradual deterioration.
In Quotes “Finance being the pivot, low profitability and/or no profit situation results in losses, and continuous losses may lead to the organisation becoming sick.”
The age of the corporation is another factor, which in some situations, can become a road block. If the corporation is sufficiently old, it is susceptible to develop cracks, obvious or otherwise, other than the non-obvious breeches, but no changes get imparted. Like human beings, corporations also become sick. Sickness in a corporation has far reaching consequences and implications.
Let us have a look at a company’s internal environment. This also plays an equally important part. To illustrate:
1. Change in processes
2. Change in people management
3. Change in hierarchies
4. Entry into new business foray without requisite expertise
Such changes, without adequate preparation, may lead to an unhealthy internal environment, and, if unattended for a longer spell, can become a permanent eyesore. Leadership team need to change over a period of time in organisations for numerous reasons. Now, this change brings with it change in equations with people in the organisation by way of internal changes and change in responsibilities. And, this at times can upset the apple cart and become a cause for large-scale change in polices/procedures, either benefiting the workforce or otherwise. People would have got used to a particular way of working and supervision. Any change to this affects the comfort zone leading to a multitude of problems; some visible, some seamless. The new leadership team wants to establish fast, and, in the bargain, try to bring in too many changes in a very brief period. These, coupled with unknown issues, can at times result in high attrition. Poaching of high talent contributors by competitors or other verticals luring them to their industry has an impact requiring cautious approach to minimise the consequential impact on the business as well as the morale.
Mergers and acquisitions: While mergers and acquisitions are the part and parcel of any business, they are embedded with issues that require forethought and imagination on the part of top leadership team. Mergers and acquisitions are two sides of the same coin when it comes to the impact they have on employees. The concern of employees’ will revolve over title, compensation & perks, industry culture, office and seating, commute, acceptance anxiety by team members. These changes directly have an effect on employee performance and career growth. These are sensitive in nature and require expertise to sort out. Culture and people integration need a special mention here.
Understanding the impact of VUCA world
At the outset, it is suffice to say that the impact of the VUCA world towards efforts at change management is and will remain tremendous. The impact may vary in intensity and magnitude from one industry product portfolio to the other. However, such an impact will play a major role in the formulation of business strategies, revisiting them frequently to effect further changes including vision and mission statements. We live in a world of fast change and a plethora of information whether one needs it or not. Again, at any point in time, we never made attempts to recall changes that we went through or without our efforts. Let me start from our household items to larger issues to illustrate the point.
1.B & W TVs to Curved and OLED Screens
2.1-2 TV channels to hundreds (excluding the online sources)
3.Traditional and heavy household appliances replaced by easy to handle appliances
4. From limited choice of 2 cars (Ambassador & Fiat) to multiple choices (with multiple variants from the same manufacturer)
5.Commuting choices from maybe one public transport to multiple choices
6.Desktop computer to laptops to tablets
7.Traditional cameras to high resolution pictures from Mobile phones
8. Mobile phone mania
9. WhatsApp mania
12. Online purchases
13. Home deliveries
14. Digital payments
Availability and thereby the use of technology has reduced human interaction, thereby impacting human relations, life style, and the society at large, and therefore, these are required to be addressed separately. Coming to the larger business issues, technological changes are taking place at a lightning pace. Organisations have to operate with changes at the same speed. Corporate Think Tanks therefore have a huge responsibility. Top leadership teams have to continuously remodel their products and services as per changing customer needs and abrupt change in priorities. The way companies develop and market them by way of providing extra attention to quality and just in time delivery becomes an imperative. Business models, reporting structure, employee profile, learning and development, risk management, man power planning, selection and recruitment and several incidental business interventions have to be watched closely for changes. The concept of a long‑term plan and assured market cannot be taken for granted, and is required to be monitored closely. Thus, think tanks, watchdog committees will have a major role to play. Unpredictability and change will be constant companions in a more pronounced manner to business ventures.
Accompanying difficulties, challenges and communication breakdowns
Work culture is an important part of change management. If the very culture in the organisation is to resist change, every change, big or small, will be difficult to implement. For example, trivial issues such as change in colour of the work clothes/uniform can become a big bone of contention involving several man hours of dialogue with trade union. Others in this category are the canteen services/transport facility. Quality and quantity of food items served in the establishment, re-routing the vehicles for valid reasons can become more easy targets for employees to vent out their grievances/dissatisfaction on issues totally unrelated to canteen/transport services. The reasons could be plenty as to why such a culture is being adopted. The resistance to change culture is attributable to a variety of reasons- lack of proper/timely communication, distorted communication, distrust, frustration, fear, and suspicion. In such an environment, top priority for the leadership team will be to gradually try to change the culture to accept change as an inevitable part of management interventions. It can be a long and tedious task, but without gaining confidence at this juncture, it is extremely dubious to anticipate a positive outcome.
Initiatives for incremental changes
1. Regular periodic meetings with employees in groups
2.Seek feedback, address genuine concerns
3. Ingrain right factual knowledge about what is happening on the business front
4. Explain impending challenges with reasons that may affect business
5. And how their participation in change process is a must
6. Industry specific examples of success and failure, competition, change in customers’ expectations, quality issues, delivery commitments
7. How remaining static without effecting change business would suffer (again with examples of industries which collapsed for similar reasons)
In a situation where industry culture is positive, ready to accept change is easier, but still may not be a total cake walk because human nature in general is such that any deviation from an accepted routine/rigour is first met with resistance and is subsequently accepted by people after witnessing the advantages and necessity.
Market consolidations, mergers and acquisitions and impact on workforce
Today’s business environment has changed manifold. The economy of scale of the past and approach to solving problems, market culture and expectations have undergone a huge change. Technology and technological advancements are happening at a rapid pace – how much is really needed for an even more comfortable living, and how much technology experts want to exhibit their capabilities and expertise is a debatable issue. At the same time, one cannot stand aloof saying, ‘let me look into this later.’ The competitor will simply assume centrestage and the person waiting may be wiped out of business. So, the right change at the right time is the key. Customer options/choices in the market place do not remain the same after a couple of years. And, this impacts certain business segments who want to live in past glory. Social media reports/blogs, either positive or negative, have an impact on business. Trade tariffs, which were restricted to some nations and certain products, are extending to other nations resulting in trade wars.
Ban on exports and imports either for political reasons, or to balance the scale of economy, though not new, is on an increase thus impacting business. For cost consideration and a fair price tag, some businesses resort to market consolidations. Normally, a big player in the field takes over those smaller through outright purchase or merger. The other side to this is a non-profitable business being hived off. Effects on the customers owing to such actions may be felt in terms of product cost to the business unit, or, may be confronted with unexpected challenges, and in turn, may change hands again. During mergers and acquisitions, some of the operations may be combined. The top management gets a chance to reassign or cut redundant workforce, keeping in view applicable laws governing the subject. But more importantly, M & A require a lot of preparation before the final event. Areas for illustration are:
1. Employee integration plan
2. Employee involvement
3. Job titles
4. Compensation and perks adjustments
5. Mobility issues if it involves change in location
Are you comfortable working with dispersed colleagues?
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