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ENT1/5: COPING WITH CHANGE

This Unit talks about Change in a business, how a business should cope up with change and what to consider before any change is made and many other aspects related to change

Change

Change gives a completely different from or appearance to an object. Change in an organization is inevitable. It involves transforming an object into a completely different one.

Types of change

DEVELOPMENTAL CHANGE. This occurs when a company makes an improvement on their current business. If a company decides to improve their processes, methods, performance standards, this is referred to as developmental change. Companies are continually processing developmental change in order to stay competitive

Characteristics of developmental change
 The company improves on its processes, methods or performance standards.
 Development appears gradually with little stress.
 Employees acquire new skills in order to manage the developments.
 It does not mean necessary the company changing its goals but to improve on the processes so as to achieve them.

Examples of developmental change
 Improving existing billing and reporting methods
 Updating payroll procedures
 Refocusing marketing strategies and advertising process

TRANSITIONAL CHANGE. This type of change involves replacing existing processes or procedures with something that is completely new to the company. It involves dismantling of the old processes and include, corporate re-organisation, merger, acquisition, creating new products or services and implementing new technology.

NB. Transitional change may not require insignificant shift in culture or behavior but it is more challenging to implement than developmental change. Transitional period this is a period when the old process is being dismantled and the new process is being implemented.

Characteristics of Transitional change
 The old processes are completely replaced with new ones.
 There is a significant shift in the behavior of the employees.
 The company develops new products and services.
 The company destiny or future is unknown.
 Employee’s level of engagement in the new procedures is increased

TRANSFORMATIONAL CHANGE. This type of change occurs after transitional change. It involves making drastic transformation in the business rather than methodologically implementing new process. Transformational change may involve both developmental and transitional change where the businesses recognize that they need to over haul (the act of drawing something) the way they do business.

Example of transformational change
 Implementing major strategic and cultural changes
 Adopting radically different technologies
 Making significant operating changes to meet new supply and demand

Characteristics of transformational change
 Top management is prepared to involve employees in transition.
 There is complete change in the methods of production.
 There is a complete change in the vision, mission and objectives of the company.
 Companies are faced with an expectant competition arising from existing companies.
 Employees look for an ideal situation for placing themselves in a new change i.e. undertaking training.

3. Social change, refers to modification of established relationships in the business by influencing workers to achieve set goals of the business eg empowering workers , introducing team work etc

4. Planned change, refers to change that occurs when leaders/management of the business deliberately plan to bring changes and take action to bring the desired changes.

5. Radical change, refers to the process by which a business regains its competitive advantage after it has lost it
6. Strategic change, refers to change that involves long term planning for the business while adopting a strong external orientation

Remedial change, refers to that change made by a business to address or correct a particular undesirable situation which needs immediate attention

FACTORS THAT BRING ABOUT CHANGE IN THE BUSINESS

1. Efficiency: This is the ability of the business to achieve its objectives within the shortest time possible without losing quality and wasting any other raw materials.

A successful manager would therefore develop business methods that are efficient in utilizing the available resources.
2. Environmental change: With increasing pollution resulting from industrialization and excessive exploitation of natural resources, managers and academicians are now showing great interest in the area of change.

3. Social changes: These are behavioral changes that can be brought about by growth in population which results into change of needs of the community and various development aspects; hence an entrepreneur must make changes that
satisfy the growing needs of the society.

4. Competition: This includes those businesses that sell similar products or give similar services as well and they compete for the same customers, therefore companies must be considered as competitors because the products produced and put on market are similar and target the same customers.

5. Change of technology: Technology is constantly changing the demand of consumers hence businesses need new technological developments to produce new products and services.

6. Change of Desires: Entrepreneurs use their altitudes to control conditions hence opposite mental altitude helps to focus on desired activities and events that result into better use of available resources.

7. Government directives: Sometime governments issue policy statements which cause entrepreneurs to develop enterprises that meet the identified needs of the economy e.g. government of Uganda directing schools and students take all sciences compulsory.

Causes and Types of Change are described more in the video below

FACTORS THAT INFLUENCE DECISION MAKING

 Nature of situation: The situations that require a decision to be taken affect the kind of decision an entrepreneur can make, e.g. breakdown of machines may require quick a decision in order to meet the customer demand.

 Availability of resources: When resources required to implement decision are available the process of decision making is easy and faster as opposed to when the resource required are not available.

 Environmental factors: Environment in which the business is located affects any decision to be made e.g. the decision on whether to manufacture plastic will have to be taken after taking into consideration, the impact it will have on the natural environment and the people of the community.

 The expected benefits from a decision: For any decision to be made and implemented benefits are assessed i.e. once more benefits, are expected, quick decision is taken than that lose.

 The cost involved: There are ambitions that require heavy investment before any benefit is realized in such a situation, a decision is delayed.

 Time pressure: When the decision to be taken requires time little time, it is undertaken faster than when the situation is relaxed, a slow and careful pace is undertaken.

CRITICAL FACTORS TO BE CONSIDERED IN PLANNING FOR CHANGE IN SMALL BUSINESSES.

1. Capital: Capital becoming very expensive to obtain overtime by many small
businesses.

2. Raw materials: This is becoming increasingly expensive and difficult to obtain due to difficulties in transport and misuse of the available raw materials among others; therefore, small firms resort to holding large quantities of raw materials.

3. Labour: Labour is abundant to small firms but skills in business management is lacking; hence many firms opting to use capital then labour.

4. Technology: every firm is a having a future in technology, however, it is becoming expensive; this is due to changes in taste of customers.

5. Markets: markets are based on products which customers demand. Hence there is need to change enterprise`s markets as competition grows stiff.

6. Government regulations of business activity: Due to the increasing demand for economic development and self-sustenance, officials are struggling to keep the country in the economic process.

7. Behavior of entrepreneurs, with the changing demand for goods and services entrepreneurs are struggling to offer quality goods and services with emphasize of professionalism.

8. Life styles, consumers` life style is changing towards quality at less cost as many copy the western way of living, forcing entrepreneurs to go western than local.

9. Nature of Management. Entrepreneurs will have to exhibit greater professionism and foresight if they are to guide the small sector through the period of economic scarcity which is now in the underway.

Importance of change

 It helps the enterprise to adopt new technology; this increases the ability of the enterprise to increase productivity and growth.
 It helps the organization to respond to customer’s needs, as satisfied customers
are able to bring in more income and at the same time it contributes to the growth of an enterprise.
 It helps employees to get new skills and knowledge i.e. for change to occur employees must adopt it by learning new skills and exploiting new opportunities to exercise creativity in the new way.
 It determines the direction of the organization. That is to say with increasing demand for products and services; it mean that a company must consider expansion that might involve addition of new staff and new facilities.
 It is used to change the status quo i.e. change is used to develop new ideas and innovations that directly impact and benefit the enterprise.
 Change helps the organization to achieve production of new goods and services e.g. the transformational change which leads to complete dismantle of the old processes which are inefficient and replaced with efficient modern method of production.
 Change is used as a tool to out compete other business e.g. change in the product line, change in the marketing strategies, change in customer care etc.

Disadvantages of change in a business
 It may sometimes result into unemployment of some workers when they are replaced by few machines adopted by the business.
 It may result into over reliance on computers, information technology and information support systems which sometimes break down. This may cause disruption of business activities.
 It may cause inconveniences to both workers and the business due to relocation of industries and workers. This may cause resentments from both workers and the community around.
 It leads to increased complexity of the methods of production. This may become expensive to the business due to increased costs of buying the technology, maintaining it and training the workers to use it.
 It may reduce the market share of the business when the change is caused by entry of a new competitor into the market area of the business or movement of the target population to other areas, which in turn reduces the profits of the business.
 It may result into pollution of the environment due to industrialization and the exploitation of resources like trees minerals etc
 It may result into wastage of resources. For example, change in technology may force business to purchase new technology that they may not really be needed.

REASONS WHY PEOPLE RESIST CHANGE
It is not common to find that change is totally accepted by everyone. This is partly due to the following
 Change benefits some people while it hurts others. That is why people resist it especially when change is seen as damaging in some way.
 Change sometimes is very expensive i.e. many changes require financial investment in the short run or it may be in the best interest of the few.
 Not being consulted. If people are not allowed to be part of the change there is less resistance.
 Some people resist change because they feel they are not capable of handling it, this may be the result of the general lack of self-confidence.
 Some people resist change because they feel they are not secure, e.g. when a small business seems to be running smoothly, any change may represent a threat of insecurity.
 Some people take pride of being stubborn and independent; hence they resist change no matter how convincing evidence is in favor of it.
 Some individuals resist change because they were not consulted before; hence they look at it as being undermining their efforts.
 It is because some people may lose their status in an organization, e.g. a change that involves merging department may be resisted because some people lose their status as being heads of departments.
 Some people resist change because they fear taking on new responsibilities, therefore they resist it to satisfy their personal interest

Indicators of resistance to change in an organisation
 Low workforce efficiency
 Grievances about pay
 Aggression against management
 Restriction of output
 Increased absenteeism
 Expression of feelings of failure
 Low level of aspiration
 Expression of feeling of frustration

SOME STRATEGIES FOR REDUCING RESISTANCE TO CHANGES IN BUSINESS

 Adopting effective communication system so that any change to be made by the business is properly communicated to the workers. It should be made clear that changes are not going to affect their interests.
 Involving the majority of workers in deciding to make the changes. The business should invite the opinions of and suggestions of the workers before the changes are finally made so as to make them feel that they part of the changes.
 Carrying out changes that are necessary for the business. The business owner needs to carry out changes that are inevitable. This will reduce the possibility of resistance from workers.
 Planning how to make the changes. The entrepreneur should make pre-determined plan with clear objectives for making changes. This move will reduce resistance from workers.
 Conducting research on the most appropriate way of introducing new changes. This helps the owner to discover early ways of minimising resistance from workers.
 Building support networks.
 Using managerial authority and status
 Offering assistance to those involved
 Offering extra incentives
 Encouraging and supporting those involved.

Strategies to overcoming resistance change at the work place are more explained in the video below

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NOTE
Expecting resistance to change and planning it from the start of your management programme will allow you to effectively manage objections. Not dealing proactively is one pit-fall but there are many other common mistakes

TECHNIQUES FOR COPING WITH CHANGE

By knowing the reasons for resisting change, we can better understand what attitudes can counteract this resistance and help entrepreneurs cope with change more effectively and in a positive manner or way.

The following for basic decision making process can be applied to coping with change
Understanding the situation. This involves understanding what the driving and restraining forces are whether they will be increasing or decreasing and how that is going to affect the business in the short and long term.

Defining the problem. The problem might be defined as a need to take some kind of action now that will have one of the effects below
 Prevent the new market area from eventually destroying the business
 reduce the negative impact of the market area as much as possible .

Finding alternatives. Here you need to make research to see that you identify other alternatives that may be substituted with the identified ones.

Final selection/ selecting plan. Once all the alternatives have been spelled out and the impact, and the potential of each has been analyzed, it is time to select the best action that best fits your goals and objectives, limitation and continue.

Techniques / ways to foster change in business

Below are some of the tips for managing the complex and difficult change process in business.
 Rewarding success. Simple acknowledgement or thanks for what someone has done well may make a lot of difference in the attitude of employees regarding change.

 Giving explanation. There should be formal or informal meetings in which leaders can explain why the change is taking place, the potential impacts of the change and the goals related to the change. Such explanations, when done in an open forum, give the impression that all members of the group are valued equally, which creates a sense of unity. This sense of unity may help the group turn toward the change of a common purpose.

 Training. Providing adequate training lets individuals meet the challenges the change requires and eliminates the excuse that the change cannot be implemented for lack of knowledge or preparedness.

 Encouraging feedback on progress. People may be more likely to accept change if they have a chance to tell leaders their thoughts and concerns. Feedback also gives administrators a chance to monitor progress and determine whether action plans related to the change are working properly.

 Managing resistance. This involves preparing yourself for anything anyone might do in order to stop the change. For example, you might set up a policies and procedures manual that clearly states what the consequences of not following the changes are. Another resistance management option is to place strong leaders who are accepting of changes as project managers.

 Assessing readiness. These measure how prepared employees and administrators are to handle modifications. These assessments may include evaluations of inventory or other resources, but they may also include interviews with employees and administrators in analyze what is needed to accommodate the change.

FUTURE / EXPECTED CHANGES IN SMALL BUSINESS

 Capital may be more difficult and expensive to obtain and might become un available to many businesses.
 Raw materials will become increasingly costly and difficult to obtain and smaller firms will have to switch to other substitutes.
 Abundant labour will be substituted for source capital in business operations.
 Technology will become more important to small business in the future but capital and energy constraints may hinder the flow of new technology.
 Markets based on products that consume large amounts of costly resources will decline while those which conserve resources will develop.
 Government regulations are likely to increase as elected official struggle to keep the country prosperous.
 Entrepreneurs will have to exhibit greater professionalism and fore sight if they are to guide the small business sector through a period of economic and scarcity.

Assignment

ENT1/5: COPING WITH CHANGE ASSIGNMENT

ASSIGNMENT : ENT1/5: COPING WITH CHANGE ASSIGNMENT MARKS : 10  DURATION : 5 days

 

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