Telstra Corporation: Change Management Issues

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Introduction

In the general sense, Change is defined as “to make or become different, give or begin to have a different form;” in other words change can mean dissatisfaction with the old and belief in the new (Harigopal, 2006, pp. 26-27). Dissatisfaction can arise out of perceived deficiency in an existing system, which may be an inherent deficiency gone unnoticed or one perceived in comparative evaluation with a better system.

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Deficiency is also the inability of a system to respond to environmental pressures and technological impacts and therefore, change underlies a qualitatively different way of perceiving, thinking, and behaving and to improve over the past and present. Change is happening everywhere, its speed and complexity are increasing and the future success of many organizations depends on how successful leaders are at leading that change (Anderson and Anderson 2001, p.1).

Change is an everyday occurrence but it is not just any change that catches attention and forces organizational leaders and other stakeholders to take action (Mills, Dye and Mills 2008, p.4). When we think of organizational change we are referring to that level of difference that makes a significant impact on the way people think about their organization. It is a change that affects some aspects of people’s jobs and the way they carry out those jobs.

Therefore, organizational change can be defined as an alteration of a core aspect of an organization’s operations. Core aspects include the structure, technology, culture, leadership, goal, or personnel of an organization and an alteration or change to any or all of these elements can range from the restructuring of a single department through to a complete change in the way production is organized; a change in the thinking of a group or department to a fundamental revamping of the corporate symbolism, the replacement of a CEO or the introduction of a new product or service through to a rethink of the fundamental way of doing business (Mills, Dye, and Mills, 2008, pp 4-9).

Organization change can range from the closing of selected departments through to the expansion of all departments and it is not so much on the scale of change that is important but the extent to which its impact is felt within the organization (Mills, Dye, and Mills, 2008, p. 9).

Managing change

To survive and eventually prosper, an organization must monitor its external environment and align itself with the changes that occur or tend to occur (Harigopal, p. 28). Sometimes change can be rapid that there is no time to adjust before more changes take place. Hence, the ability to plan for, implement and manage change seems to be the core factor that separates successful organizations from unsuccessful ones (Guest, 1962, p. 89).

Past success does not guarantee continued success. Also, it should be noted that organizational change is an act of leadership. The role of a leader should be to define a better future for the organization and then lead the organization to that future (Holland, n.d, p. 51. A leader can lead by involving in three fundamental ways: by leading the organization to be successful to serve its current customers; envisioning a new future for the organization that is better than the current and; leading the transition that goes on intermittently as the organization moves to that new future (Cameron and green, 2004, pp. 121-122).

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Organizations and individuals must understand the change in all its complexity, reorganize or restructure themselves periodically, create new products and services and markets and also, alter the rules of the game compatible with the changing business environment (Harigopal, 2006, p. 29). A healthy organization can link up the past to the present and the future with the present in dealing with change. All organizations are characterized by the bipolarity of continuity, stability, and change (Harigopal, 2006, p. 29).

Change without continuity or stability leads to ambiguity, conflict, inability to cope with the situation, and consequently, the risk of degenerative pathology in both individuals and organizations, and striking balance between the duality is necessary for organizational development. Coping with change is not easy for any organization until is characterized by change consciousness among employees at all levels, focus, speed, and goal elasticity (Harigopal, 2006, p. 29).

Change consciousness is the understanding of the need or necessity for change, the fact that it is not abrupt but a continuous process requiring a retooling of strategy, process, technology, and the people while rethinking the corporation. Focus refers to how good the companies are in producing what they are best at; speed refers to the promptness with which organizations respond to internal and external demands and contingencies at all levels (Harigopal, 2006, p. 29).

Need for change and change forces

It is a recognizable fact that change is an important factor in the success and survival of organizations. For change to be effective organizations need to look at their past. “Those who forget the past are doomed to repeat”, too many change initiatives fail because the change leaders fail to reflect on their organization’s history with change (Russel and Russel 2006, p. 31). Management of change is important in that; several factors trigger a perceived need for change (Mills, Dye, and Mills, 2008, p. 10).

Managers need to deal with issues of changing technologies and customer tastes, government regulations, industrial relations issues, competition, cash flow issues and accounting practices, data security, leadership change, and a host of other issues that may either threaten or enhance the survival and growth of the organization. This means that managers and other organizational stakeholders need to be aware of the variety of factors that can affect the way they do business (Denison, 2001, p. 484). They also need to be aware that, how they make sense of those factors is an important determinant of how their organization experiences change.

Organizations exist in environments where the pace of change is dizzying and the need for organizations to respond to the external environment is demanding. In effect, organizations do not have the luxury to change or not, they either change in response to the external driving forces, or their survival is in jeopardy (Proehl, 2001, p. 1). Factors triggering the need for change include the economic forces; that global competition is continuing to accelerate and many corporations will continue to reorganize and downsize so that more individuals will be either unemployed or underemployed (Proehl, 2001, p. 2).

The growing disparity between the social classes with an increase in the lower classes, a shrinking of the middle class, and slight growth only in the upper class are continuing to affect many companies (Proehl, 2001, p. 2); another factor is the regulatory, political and legal changes; many political changes have had a direct influence on the way companies have conducted their operations; technology continues to have a dramatic effect on many companies. With new technologies, there will continue to be changed in the types of services and products available and in how the products and services are made (Proehl, 2001, p. 3).

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The advances in work technology methodology and information processing are continuing to revolutionalize the workplace and these advances are increasingly being expected of all organizations (Proehl, 2001, p. 3); Social-cultural changes, major changes continue to occur in a society that affects customer expectations for services and goods as well as the employee attitudes toward the work (Proehl, p. 4). Rising expectations for collaborative relationships, changing demographics of the workforce and customers and the expectations of quality goods and services are a few of the socio-cultural changes that affect all companies today (Proehl, 2001, p. 4).

That, companies need to continue exploring avenues for improving quality goods and services for the clients and for involving the staff in collaborative decision making; government forces, government intervention in the form of regulations also has led to change. Intervention in form of deregulation, foreign exchange, anti-trust laws, anti-dumping duties, protectionism, intellectual property rights, and suspension agreements (Harigopal, 2006, p. 38).

Types of changes

To change is to move from the present to the future, from the known to unknown states (Harigopal, 2006, p. 43). Organizations, in experiencing the impacts of change, my plan for the change, experience, or change. Therefore, different types of change may occur to an organization, depending on the particular organization (Harigopal, 2006, p. 44). The first type of change is; Happened change: is the change that is rather unpredictable and that takes place naturally due to external factors. It is profound or traumatic for it is out of direct control and produces a future state that is largely unknown.

The second type is; Reactive change: changes that are clearly in response to an event or a series of events and generally, companies do engage in reactive change. These changes are attempted when the demand for a company’s product or service registers an increase or decrease or a problem occurs or develops. The third type is Anticipatory changes: changes carried out in expectation of an event or a series of events whereby, failing to anticipate future events can have destructive consequences for the organizations (Harigopal, 2006, p. 45).

The fourth type is; planned change: also known as the developmental change, which is undertaken to improve upon the current ways of operating. Generally, it is a calculated change, initiated to achieve a certain desirable output or performance and to make the organization more responsive to internal and external demands (Harigopal, 2006, p. 45).

Transformational change: it is a change that involves the entire or greater part of the organization. For example, it could be a change in the shape, size, structure, nature, culture, technology, of the organization (Harigopal, 2006, p. 45). Revolutionary change: it is the abrupt changes in an organizational strategy and design and such changes comprise the 3Es; Envisioning, Energizing, and Enabling (Harigopal, 2006, p. 49). Another type of change is the Recreation change: it involves a significant or drastic change in an organization’s strategy and design or a radical departure from its current practices to achieve a total transformation. It involves tearing down the old structure and rebuilding a new one.

Change Strategy

For a Company, to initiate change, certain strategies can be followed. Kotter’s eight-step strategic approach is quite comprehensive and captures in detail the sequence for managing change. The eight steps of the approach are: “Establish a sense of urgency, Create the guiding coalition, Develop a vision and strategy, Communicate the change vision, Empower employees for broad-based action, Generate short-term wins, Consolidate gains and produce more change and Anchor new approaches in the culture” (Senior and Swailes, 2010).

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Case-study- Telstra Corporation Limited (TLS)

Telstra Corporation Limited (TLS) is Australia’s present telecommunication carrier and one of the country’s largest listed companies. The company possesses strong brand recognition and, provides a broad range of telecommunications and information services. The company was formed through the merger of Telecom Australia and the overseas Telecommunication Corp (OTC) IN 1992 (Madden, 2003, p. 301).

In 1997, one-third of the company was privatized and floated, thereby, ending the government’s full ownership of the company (Madden, 2003, p. 301). In June 1999, the TLS sale Bill was passed in the Senate, which allowed the sale of a further 16.6 percent. The company offers approximately 200 network services and products to customers; including Internet services, pay-TV, and multimedia (Madden, 2003, p. 301).

The company has international operations in countries of; China, New Zealand, and Hong Kong. TLS is largely in a dominant position operating in an increasingly competitive market and it benefits from having a broad base of high-value customers and with its huge economies of scale, it delivers its products cost-effectively. Telstra began rolling out an extensive cable network to service households and provide a platform for new offerings including online interactive services. The new cable network together with its public switch and digital network is viewed as one of the most advanced networks in the world (Madden, 2003, p. 301).

In 1992, Telstra had 76969 employees and reported an after-tax operating profit of 313.5 million Australian dollars. By 1999, Telstra had reduced the number of employees to 52840 and increased after-tax operating profit to AUD 3486 million (Madden, 2003, p. 301). Despite increased competition, Telstra has remained competitive, retaining approximately 70 percent of the Australian retail market share for basic voice services. However, its share continues to decline sharply in certain markets, for example, Telstra’s share of the retail data and long-distance voice markets recently fell below 40 percent (Madden, 2003, p. 301).

Strategic human resource in Telstra

In the late 1990S, the employee relations(ER) function in Telstra actively participated in business planning and organizational renewal activity (Madden, 2003, p. 312). ER developed processes and programs to align HR and business strategy to address future staff issues. This can be termed as the ‘business partner’ or ‘change agent’ role (Madden, 2003, p. 312). For the most part, the CEO has been the main driver of the change programs, ER played a key role in developing and implementing organizational design changes such as delayering and downsizing. ER in Telstra was seen as hard-nosed.

The reputation has been accentuated by its role in stipulating cuts in staff numbers in the lines of business. ER has also led key management programs aimed at increasing the leadership potential of its managers, including Key Management Behaviors (leadership, customer focus, and building trust); Organizational Principles (leadership responsibility and discretion, authority and accountability); Leadership Continuity (high potential managers) and Succession Planning (Madden, 2003, p. 313). ER also implemented a ‘Managing for Performance’ program, to attach performance measures and objectives to business unit activity.

It represented a new management mindset that aimed to move Telstra away from operating as a government-owned bureaucracy to a modern well-managed business Management by performance entails that organizational activity must be accounted for and aligned with organizational objectives and be assessable against a set of predefined performance measures (Madden, 2003, p. 312). The ER group also played a role in extending individual contracts.

Enterprise bargaining in Telstra

Between 1993-94, the company initiated an agreement that was known as “Agreement for Business Improvement and Future Growth” and the contents of the agreement were: Recognize new competitive context with possible job losses, efficiency initiatives to be handled by Business Units, the agreement to provide the basis for cooperation to achieve customer service, business performance and employee aspirations for pay and continuing employment and an 8 percent pay rise plus gain share payment of up to $1,500 (Fairbrother, 2002, p. 60).

Between the years 1994-95, the company established the Telstra Corporation Enterprise Agreement; that introduced the Participative Approach (PA), also the agreement was committed to retaining position as the predominant carrier, committed to making Telstra the best place to work and also it suggested a 4.5 percent pay rise. Between the years 1995-97, the Telstra Corporation Enterprise Agreement, which was to reaffirm the PA, also recognized the need for performance improvements and improved flexibility and it proposed an 11 percent pay rise (Fairbrother, 2002, p. 60).

From 1998-2000, the company initiated an agreement which introduced several workforces based on functional areas of work receiving market-based rates of pay and removing demarcations particularly in the lines and technical areas, jobs in the workforces were to be graded by a Telstra Job Evaluation and Classification System and paid agreed company rate., there were also moves to increase flexibility with changes to the structure of work, increase hours for some sections, and remove limitations on part-time work. From 2000-2002, the company agreed to a minimum salary of 8 percent over 2 years, four separate agreements each covering a business unit, reconfiguration of some workforces, differential pay rates in some workforces for new and existing employees (Fairbrother, 2002, p. 60).

Analysis

Reorganizations are deemed to be highly complex; however, they help to decide on the performance of the company in the market, that is, whether it is successful or not (Egner, 2009, p.4). The trade-off between the hard and soft factors that tend to define the complexity of reorganization and its effect on the company can be best explained through the use of the Mc Kinsey Seven S Model.

This model was originally designed to provide a broader view of effective business organizations. The model incorporates different perspectives and mediates an overview of the relationship and dependencies of organizational factors (Egner, 2009, p. 7). This all-embracing approach enables the Seven S Model to be used for: the evaluation of the practicability and likeliness of success of strategic plans; the identification of business weakness and; a checklist for the identification and analysis of a company’s most important dimensions (Egner, p.7). In a company, instead of considering strategy definition as a task of the management and the organization, multiple interrelated factors have to be taken into account, to guarantee a successful strategy realization (Egner, 2009, p.7).

The impact of the Seven S Model is defined by the strategy that accompanies the seven defined company factors, each of which describes crucial elements that make up a successful company altogether in the company’s context. The framework includes seven variables that are treated as interdependent. These variables can be divided into four soft and three hard factors and are a must for any approach to organizational design. The hard factors, also known as “the cold triangle” describe the concept of business success that differentiates the company from its competitors and are internally used as a red line for decisions (Egner, p. 7). Consequently, the soft factors support the business’s success and represent the internal management concept.

The Mc Kinsey Seven S model

The model has Seven S which include: Strategy, Structure, System, Staff, Style, Skills, and Shared values. All these play an important role in defining the organization and it is therefore important that the management should be in a position to organize these parts to ensure effectiveness in operations. The essence of the Mc Kinsey 7S model is that, a firm is the comprehensive sum of its parts, and that the internal dynamics of an organization determine that organization’s ability to compete, the premise being that both the strategy and structure of the organization determine management’s effectiveness (Plant 2000, p.73).

However, there is no rule or linear relationship among the structure, strategy, and organizational form, since; all organizations are different (Plant, 2000, p. 73). The Mc Kinsley 7S model attempts to create an awareness of the factors that, when utilized together, will assist in the formation of an organization that is greater than the sum of its parts (Plant, 2000, p. 73). Strategy (overall corporate); can be defined as the determination of a course of action to be followed to achieve the desired goal, position, or vision.

Structure; in an organization, the structure is the interrelationship of processes and human capital to fulfill the company’s strategic objectives. System; is the company’s information systems and the infrastructure. The Staff; forms the human resource component of the company, necessary to steer the company’s vision and objectives. Style; the company’s style is a synthesis of the leadership philosophy of executive management, the internal corporate culture generated, and the orientation an organization adopts to its markets, customers and competitors. Skill; refers to the unique and distinctive characteristics associated with the company’s human capital.

Shared Values; this is the concept that a company utilizes to drive toward a common goal through common objectives and a common value set (Plant, 2000, p. 73). All these parts of the model should be effectively managed to ensure that the model serves its role in the organization.

Telstra Corporation Limited (TLS)

The Telstra model of reorganization was largely influenced by corporatization and therefore it adopted the Mc Kinsey model (Fairbrother, 2002, p. 61). The new model was based on the principals that: Telecom must be a market-driven, customer-based enterprise, Telecom’s customer groups have different needs and the organization must be structured to cater to these needs, the principles of responsibility and accountability must be decentralized to the lowest level in the organization to provide better service quality and responsiveness to customers (Fairbrother, 2002, p. 61).

Telstra, therefore, adopted a three-part structure which consisted of: A Corporate Centre providing policy advice to the Managing Director and monitoring the business’ performance, Operating Divisions servicing specific customer bases, and Shared Resource Units providing support to the Operating Divisions and the Corporate Centre (Fairbrother, 2002, p. 61).

The effect of this reorganization was in effect to divide the company into a core/ non-core structure, with the core around the corporate center and operating divisions and the non-core comprising areas that could be contracted out. The effect of shifting the organization boundaries was to reveal where the costs lay in the business with a view to rationalization (Fairbrother, 2002, p. 61).

Conclusion

The dual and inextricably linked processes of deregulation and privatization have had a profound effect on Telstra’s industrial relations (Fairbrother, 2002, p. 76). The introduction of competition into the previously monopolistic telecommunication market has caused Telstra to lose market share and face financial pressures and under these circumstances, the management has used the actual and imputed threat of competition and the loss of market share as a lever to reorganize work and labor (Fairbrother, 2002, p. 76).

The company argues that the pressures introduced by deregulation, especially on revenue necessitated the need for cost reductions and service improvement. Also, the company through the EBAs has sought to introduce numeric, temporal, and functional flexibility, reduce long-term wages costs and marginalize union influence, these provoked the union and have forced the company to adopt a partnership and assertive approach (Fairbrother, 2002, p. 76).

Change is necessary and the ability to accept it positively is important. Globalization and other external environments will continue to exert pressure on many organizations, whether small or big, that will, in turn, necessitate change. To avoid frustrations and setbacks, organizations should establish change strategies in advance. The strategies should be more participatory and accommodative with aim of positive impact on the organization.

Planned change is mandatory companies for to survive. Change should not be feared, but with a positive attitude, it should be seen as an important aspect in the company to realize the objectives and goals of the Company.’ Organizations do not evolve but are more likely to change via strategic reorientations that demand significantly different patterns of operations’ (Burke, 2002, p. 65).

Reference List

Anderson, D. and Ackerman-Anderson, L.S., 2001. Beyond change management: advanced strategies for today’s transformational leaders, Vol 4. CA, John Wiley, and Sons.

Burke, W.W., 2002. Organization change: theory and practice. CA, SAGE.

Cameron, E. and Green, M., 2004. Making sense of change management: a complete guide to the models, tools & techniques of organizational change. London, Kogan Page Publishers.

Denison, D. R., 2001. Managing organizational change in transition economies. NJ, Routledge.

Egner, T., 2009. McKinsey Seven S Model. Norderstedt, GRIN Verlag.

Fairbrother, P., 2002. Privatization, globalization, and labor: studies from Australia. Annandale, Federation Press.

Guest, R. H., 1962. Organizational change: the effect of successful leadership. Dorsey Press.

Harigopal, K., 2006. Management of organizational change: leveraging transformation. Ed 2. CA, SAGE.

Madden. G, 2003. World telecommunications markets, Vol. 3. MA, Edward Elgar Publishing.

Holland, W.E., N.d. Change Is the Rule: Practical Actions for Change on Target, on Time, On Budget. Win Hope Press, Holland & Davis.

Mills, J.H., Dye, K, and Mills, J.H., 2008. Understanding Organizational Change. NY, Taylor & Francis.

Plant, R.T., 2000. Ecommerce: formulation of strategy. NJ, Prentice Hall PTR.

Proehl, R. A., 2001. Organizational change in the human serviceVol. 43. CA, SAGE.

Russell, J, and Russell. L., 2006. Change Basics. MA, American Society for Training and Development.

Senior, B., and Swailes, S., 2010. Organizational Change. Edition 4. Ontario, Pearson Education Canada.

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