The current global organisational changes threaten to make yesterday’s managers outdated. However, awareness of the changes and how to take advantage of them offer tomorrow’s managers countless opportunities. Even though the nature of managerial function varies across organisations and changes continually, one general thread pervades nearly all managerial activities. Therefore, the behaviours of people and management processes in firms are closely intertwined (Scheffknecht, 2011, p.74). Besides, changes that take place in all organisations are globally recognised phenomena. For organisations to survive in the current competitive market, they are compelled to adapt regularly to meet the changing environmental demands.
The paper offers an overview of what change management entails, and how it is relevant to the current and future leaders in view of United Steel Industrial Company. The second section comprises of Enterprise Resource Planning (ERP) change management as an impetus to organisational growth and innovation. The third section is a critical analysis of managing change with respect to growth (increase in the number of products including BS Grade 40), ideas (moving to automated payroll system), and organisations (increase in the number of employees). The conclusion entails a synthesis of what the learner absorbed from the course that will help in the future management of change.
The Company: The environment for change
United Steel Industrial Company (KWTSTEEL) was founded in 1996 by Kuwaiti entrepreneurs. The next four years saw the company collaborate with VOEST Alpine of Austria. These resulted in the erection of the first rolling mill in Kuwait. The rolling mill occupies a space of 40,000 square meters. It has a yearly volume of 650,000 metric tons of buttressing steel bars. The sizes range between 8mm to 40mm in diameter. From 2003, the company developed the capacity to cater for a significant share of local market demands with these essential products. The production process is totally accomplished to meet renowned international criterions such as ASTM, DIN, BS and SASSO, among other standards demanded by the consumers. In fact, the company recently introduced BS Grade 40.
United Steel Industrial manufacturing typically surpasses its annual goal. Therefore, it exports merchandises to bordering nations that have continually been a part of its trade. In 2007, the company contracted DANIELI & C to build a new factory. The factory is specifically constructed in accordance with the cutting-edge expertise in the area of metal factory apparatus. The selection of great superiority and efficiency facilities describes the technological answer. The move allows the company to reach exceptional efficiency operational outcomes using low labour and definite power usage. Therefore, the plant is highly competitive. The mechanical stipulations of the apparatus utilise DANIELI’s comprehensive knowledge in the design and realisation of steelworks and in particular of the most-up-to-date compact production units. The company, in recent years, used the same approach to technology to enhance its ERP.
As observed above, the company is a pioneer in the steel industry in leading the utilisation of new advanced technologies in Kuwait and the steel industry in general. The manufacturing of BS Grade 40 is an exemplary example in this respect. The existing system is, however, weak in various aspects despite having a high production capacity in the manufacturing area. Some of the problems that are easily identified in the existing system include but not limited to:
- Lack of rich GUI
- The users of the current system require saving information in the form of paper
- The system does not present the details of employees such as phone contacts and identification number
- Sharing of information is hard to share since most of the data is in paper form or hard disks
- There is very little virtual space for saving information. There is a possibility for some information being lost because of mismanagement
- The system does not provide for authentication of data or restrict access to data
- It is difficult to generate a report
- It is time-consuming to access information making the system user-unfriendly
- It is cumbersome to update information
Feasibility Study: Organisational Structure Mind-Set
The initial investigation seeks to explore whether or not the proposed system will be beneficial to the company. The primary aim of the study is to evaluate the technical, operational and economic viability for adding modern modules and fixing the existing system. United Steel Industrial Company uses traditional methods to manage its business. The initiative to introduce change to the company is likely to meet resistance from individuals who are not conversant with using contemporary technology, especially top managers and management assistants. It is hence imperative to implement strategies to manage the change to ensure the success of the initiative.
The current workforce seems unsure about the impact of the proposed ERP on the individual employees and the company in general. It is hence imperative for the human resource function to engage the employers who doubt the positive impact of the change to reassure them that the technology will be beneficial to them. The company offers partial autonomy to the employees. The top management does not engage the employees in decision making.
Change drivers in United Steel Industrial Company
The steel industry is continuously competitive, considering the role played by steel in the growth of any economy. Many investors realise the potential of investing in the steel industry. Consequently, many companies are continuously set up to venture into the lucrative business. The competition is stiff due to existing and emerging competitors. Innovation hence becomes imperative for companies to have a share of the rapidly expanding market. Technological innovation is not only critical for manufacturing but also for coordinating other areas of the company. People play a central role in implementing technology. Most importantly, the process of implementing change forms the central part of change management because it touches the technology and the people.
Change management overview
Managing change is an individual and organisation’s orderly approach in dealing with revolution. Change management engrosses the skills needed by managers and leaders for competency. The process involves procedures, practices, refreezing values, progress, and unfreezing within the organisation. Refreezing means the establishment of a sense of balance through supporting the stability of new designs in the company. Whereas, unfreezing submits the formation of discrepancy professed between the ultimate and existing state of the institution (Odagiu & Piţurlea 2012). Literature shows that this helps in generating the aspiration for change and lowers employees’ opposition to change.
Although change is important, the organisational members frequently resist it. Resistance occurs given that intended changes need the existing organisational and personal characteristics adjustment. Therefore, it is necessary for communication before the execution of change in an organisation. However, change strategy should involve collective assessment, support, revelation and motivating, contribution, and distribution of the information among the workforce. For change to be effective, employing proper communication strategies is important. Creating and communicating visions as well as considering the management of content and style of communication should be part of the change management strategy (Padar, Pataki & Sebestyen 2011).
The relevance of management of change in leadership
The importance of managing change to leaders occurs under different phases. The United Steel management should be aware of these phases if the ERP initiative is to succeed.
Making a change to last
Change management helps leadership teams maintain change as a continuous process. The process entails repeated training and shaping of new employees around the change. In fact, change management assists leaders to recognise publicly and value top contributors. It will further enable contributions to the on-going change through creating replacement plans. The involvement of the management staff is imperative, considering they are the most affected (Leigh & Walters 1997). The company’s leadership style ought to be altered to embrace the involvement of employees in decision-making.
Leaders can easily get discouraged when employees are not responding to change initiatives. As a matter of fact, leaders tend to separate this process into levels. It is also imperative to motivate the workers to attain their targets. Managing change thus enables leaders to look for inexpensive projects. The ERP project will make United Steel more competitive in the steel industry.
Removal of the obstacles
Change management helps leaders to be in a position to understand the ‘change’ arc. They will be able to recognise the existing natural barriers to change and plan on actions needed to overcome them. Therefore, leaders use change management curve in operation and programs to arrange for the employees’ discrepancy and adaptability (Mantere, Schildt & Sillince 2012). The approach makes it possible to help individuals under pressure to adjust to the implemented changes. Under this view, the users of ERP should be regularly trained to acquaint with the technology.
Vision creation and communication
Change management helps leaders to create and place a vision statement in action. In fact, through change management, leaders can nurture the employees’ behaviour around the organisational mission. Powerful and frequent communications by leaders keep the message in line with the organisational goals and vision. The perspective should be the driving force for United Steel management to achieve organisational goals.
Building a team for change management
Organisations do have strong change leaders who succeed vision for change. The leaders can control and have the capacity to generate and use an authority in the change process. Change management continuously put together the necessity and impetus around the need for revolution. Proper management helps to recognise true leaders, expand learning programs, and assess their potency and faults through change management. Moreover, the management must work on team building and request for emotional commitment informing the change coalition (Marwah 2011).
Creating a sense of urgency
Change management helps leaders to convince those involved that the change is necessary. Once achieved, it becomes a catalyst for change in an organisation. Leaders can effectively make employees understand the change process through such an initiative. The employees will be able to exchange ideas amongst themselves to realise change. All these enable leaders to get ease in motivation, organisation, implementation, and consolidation of change (Mullins 1999).
A change initiative vision must be beyond plans projected in five years. The vision needs to highlight and elucidate on the direction that the corporation wants to take. The change initiative’s leaders ought to ensure the development of strategies for accomplishing the vision. Transformational changes in various corporations are reported to fail considerably (Andriele et al. 2012). It occurs founded on the fact that such organisations have change initiative directives and programs without visions and un-accomplishable plans. The Implementation Partner and the HRM function will play a vital role in implementing ERP.
Change management initiatives require the accomplishment of short-term goals. These goals should be accelerated to avoid losing momentum, given that actual change necessitates time. Devoid of short-term wins, groups and individuals are likely to give up. In order to avoid this, organisations must compel change leaders to generate short-term wins. If an organisation change initiative leaders declare victory too soon, it might be catastrophic to the company (Agboola & Salawu 2011). The ERP change initiatives ought to have time to sink into the culture of the corporation. Once achieved, subsequent United Steel employees will find it easy to adapt.
Enterprise Resource Planning
The availability of computers and related technology has altered how organisations conduct business internally and externally. The internal aspect of business includes how a firm manages its human capital. The advent of software that simplifies the work of managers in organising the workforce has had tremendous impacts on many organisations. EPR incorporates internal and external management information across the entire company. The approach embraces finance, manufacturing, marketing, sales, customer service, etc. The system that uses ERP computerises these activities using an incorporated software application. The main objective of an EPR is to enable the movement of information across all the organisation’s departments while managing the link with the outside stakeholders. EPR systems utilise various hardware and network arrangements. These typically employ databases as a storehouse for data and information.
The ERP proposed for KWTSTEEL will entail an incorporated system that will operate in real-time. The system will not rely on scheduled updating. The system will automatically update the data once fed from a source. The central server, managed by the Information Technology department staff, will store the data. The server will hold a common database. The database will support all applications. However, the information will only be accessible by authorised individuals. The strategy will ensure the safeguarding of sensitive company information. Authentication will be done to ensure that the information is not mismanaged or altered unnecessarily.
ERP implementation strategy
The ERP system will offer support for manufacturing resource planning, financial management, supply chain management, human resource management and customer relationship management. Consequently, departments will share relevant information in real-time without the inconvenience of paperwork. The new system will have far-reaching implications for the finance department. The accounting application will include general ledger, payables, cash management, fixed assets, receivables, budget, and consolidation entries. Initially, these entries were done manually, making them difficult to follow, update and report.
The ERP system will simplify the processes making documentation easier. However, the new system may develop anxiety among the accountants as some may not be competent to use new technologies. It will hence require the company to training the existing staff on using the system. Further, it is imperative to reassure the staff about job security to ensure the success of the change to ERP. However, it will reveal incompetent accountants who are not keen on following the proper accounting procedures. Incompetent accounting practices leads to a loss of resources for the company.
The human resource function is an essential department in KWTSTEEL. It is responsible for preparing employees’ payroll — the department documents employee attendance. The ERP will enable the department to prepare financial records of salaries, earnings, gratuities and deductions. The proposed ERP system will simplify the maintenance of these records. The system provides for employees to swipe their staff cards on an automated machine platform placed at the entrance of the company.
The information will be transmitted to a centralised database. The system will record the employees’ staff number, time of reporting and leaving. It will hence computerise whether or not the employee has worked overtime. Consequently, it will generate a payslip indicating the number of normal days and overtime hours the employee has worked.
The ERP may not be well received by the employees, considering that some employees tend to conspire with staff in the human resource department to fleece the company through unwarranted overtime bonuses. Some also get paid for days they did not attend work through similar collusion. Since the employees cannot interfere with the system regardless of the degree of resistance, the management should only be concerned about the staff in the human resource department.
The human resource function is vital for the success of any corporate change. The human resource department must convince itself that the proposed change will yield positive benefits for the human capital of the company as well as the HR staff. The HR staff require unfreezing. Unfreezing involves creating a mentality of the nature of the change required to make the company successful. The needs of the staff should be addressed to ensure they embrace the proposed change to ERP. There is also a need to address how the change will be monitored and the impact on individuals in the department.
Critical Success Factors of ERP
Whereas ERP is an innovative way of bringing change to an organisation, its success does not solely depend on the software and the hardware. The most critical part of ERP is implementation. Generally, many people assume that acquiring ERP software and the relevant hardware accompanied by network solutions is adequate to implement ERP. Such an approach is similar to acquiring a personal computer and the accompanying software. Without the knowledge of installing the software, how to configure it to meet the needs, and how to use it to deliver on strategic goals is tantamount to the lack of such technology entirely. The same case applies to ERP at the corporate level. There are diverse conspicuous software companies across the world that possess the acquaintance of the ERP software and hardware.
The companies also possess the needs of knowledge of different organisations such as KWTSTEEL. These are the Implementation Partners (IP). They assist companies in identifying the emerging needs and enhancements which can be met through ERP solutions. They understand the requirements of the organisation upon comprehensive study and discussions. Consequently, they configure the ERP software to fit the specific needs of the company. For instance, United Steel requires a set of configuration different from that of the banking industry. IP plays a significant role as it helps the implementing company meet change management needs. They participate in communicating with employees about the benefits of the proposed change in the company. The approach helps reduce employee resistance to change.
In this view, the technology that comes with ERP, the process of implementation and the People affected play a central role in the success of ERP. Technology is the maturity of ERP software, accompanying hardware, network capability and appropriateness to the company. Modern technology can meet all the requirements of the steel industry, particularly United Steel. The company timely requires modern technology in the name of ERP to compete in the increasingly competitive steel industry. The implementation process involves change management, which is the core subject of this paper. Managing change in view of ERP is challenging for United Steel, considering the company work environment and its strong organisational culture.
Managing Organisation Cultural Environment at United Steel
Organisational culture, the general social and cultural environments appear to interlock in that people enter organisations from surrounding societies and bring their culture and social life with them. Therefore, the changing social and cultural environment influences corporate culture and is a big challenge to managers endeavouring to change corporate culture. Managers must be responsive to those changes that take place in the surrounding societies as they affect all aspects of the corporate culture. Most corporate managers, however, have little knowledge about those changes (Mohanty & Rath 2012).
United Steel workforce diversity is a big challenge to managers initiating the ERP initiative. While United Steel is legally and socially committed, it must include employees from different environments. The managers should be sensitive to the diversity issue but should not overemphasise the issue. The demographic composition of workers has changed considerably, meaning that managers must address this cause when fostering or changing organisational culture. Some workers come from backgrounds that are not exposed to changing times arising from modern technology.
Changing and managing the global cultural environment
Apart from the changes in regulations, diversity and consumer behaviours, the global economic factors have experienced significant economic changes. Thus, they influence the organisation culture greatly. For United Steel, the focus is to create a culture that might improve competitive advantages and eventually, the profitability in a threatening economic environment (Battilana & Casciaro 2012). The managers ought to realise that United Steel will in the foreseeable future become an international company; hence the ERP should reflect the same.
First, as noted earlier, cultural differences influence corporate culture in different countries. Management functions directed towards maintaining and improving corporate culture become more complex as firms activities expand internationally. Second, understanding global cultural differences is a challenge for most managers who appreciate the changing global environment. There are issues related to understanding corporate behaviour in diverse global settings. Organisational corporate culture becomes especially complicated at the global level since desires, attitudes and values of employees differ across countries. Third, global learning that has helped organisations abroad to become strongly positioned in the global market is a challenge to most managers (Battilana & Casciaro 2012). Managers require creating an organisational corporate culture that might allow the firm to rotate employees to other foreign operations to learn the opportunities and problems that lie overseas and locally.
Organisational culture impact on change management
One element of organisational culture that firms have focused on is innovation. Almost every organisation creates a culture that might make the employees more creative. The most significant driver to innovation in information technology (IT) and its integration in business operations. In as much as IT is important to organisational activities, it poses a major challenge to today’s change management managers (Ettlie 2012). Organisational learning can only occur if the employees are able to manage knowledge and information to obtain a better understanding of the need to change.
Organisations are increasingly operating in uncertain, decentralised, and networked environments where the adoption of creative ideas has become essential to organisational change. Indeed, organisational cultures institutionally shape the way firms choose to use technology and add innovatively new ideas. When the organisational culture is supportive, the probability of innovating and adopting new ideas is substantially higher (Nasim & Shusim 2011). Unfortunately, most organisations do not have a supportive culture that can enhance the willingness of employees to innovate and adopt new technologies. However, earlier changes in United Steel are indicative that the employees are flexible to change and easily accept changes that improve their performance.
Change Management as a Stimulus to Organisational Innovation
Any process through which inventions or ideas can be translated into valuable commodities that demand payments is what is called innovation. An idea that is innovative ought to satisfy the specific demands and should be replicated at economical costs. Besides, innovation entails the premeditated application of initiatives, imagination, and info to derive differently or enhanced worth from economic resources (Garcia & Rocha 2012).
Innovation is of great importance to organisations. It influences the organisational culture, which in turn affects directly or indirectly the organisational improvement in relation to external rivalry, the dimension of the firm, technical variables, and managerial assets. First, an organisation with well-built innovative cultural ethics such as United Steel may be stalled while other creativity aspects may help in enhancing the production performance. In cases where employees make morals and norms that emphasise on openness to newly crafted ideas and innovation, the next activities and practices will augment the productive capacity of individual innovativeness (Garcia & Rocha 2012).
In such companies, the efficiency of modernisation might be affected by optimistic group value plans that direct and inspire people towards innovation. Innovation also facilitates the progress of cultural adoption among organisational employees. The adoption is only possible if proper change management strategies are put in place. Organisations, where changes are resisted by employees, tend to be behind in terms of innovation. The implementation of ERP will open doors for employees to be more innovative as the program caters for every department through system configurations.
The degree of innovation depends on different variables such as power allotment, participating judgment, people and vocation progress, as well as support and joint venture. Therefore, the available assets and information are mutually influenced across different areas and levels of the organisation through innovation. Participation and sincerity in the decision-making process is an area that might be enhanced by organisation innovation. Thus, change management is a decisive factor for organisation growth in terms of innovation.
Change management strategies that facilitate innovation enable employees to help and support one another in developing thoughts and getting things done. Change management may help create an innovative culture that stipulates individuals’ involvement in informal education or training programs that would enhance capacity expansion (Garcia & Rocha 2012). Thus, to increase the level of individuals’ dedication and involvement to innovate, act freely, and come up with fresh ideas, proper change management culture must compel the workforce to participate in the decision-making process. KWTSTEEL management encourages employees to formwork teams. To reinforce the strategy, the company organises team bonding activities, including departmental retreats to different locations.
Some change management strategies tend to discourage the generation of fresh ideas and fail to motivate employees to take risks. In order to overcome this, the prevailing change management culture in United Steel must increase sincerity and reduce panic through enhancing group effort and support. The effort can be fostered by facilitating teamwork and communication to nurture and give confidence to innovative dreams (Garcia & Rocha 2012).
In change management, there are management practices and appraisals that should always be considered. Every organisation has its own corporate culture. In the case of United Steel, the human resource function will play a fundamental in ensuring that the employees embrace ERP system with the least resistance. The management should hence involve the human resource department staff in planning the proposed change. The strategy will make it easier for the rest of the administration staff to embrace the change. Once achieved, a trickle-down effect will take place in which the rest of the employees will readily accept the adoption of an ERP system in the company.
United Steel should train and develop their employees on how to use the ERP system for maximum benefits through training and development programs. It should enhance both the horizontal and vertical channel communication across the entire company. It should develop teamwork and flexible structures across all functions. That is, the company requires implementing flattened structures to allow the organisational change that will ease change management.
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