Providing a detailed analysis of the change management process taken by Truworths Zimbabwe
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Truworths Ltd Zimbabwe is a clothing retail company with over eighty branches in the whole country. It comprises of Topics, Number 1 stores and Truworths Stores. Number 1 stores accommodates the lower market and the other two the higher market. In 1996 Truworths Ltd went through a major change when it computerised its front-end and back-end offices.
The main reason why Truworths decided to go through this technological change was because it realised that it was losing its customers to its competitor as most customers closed their accounts. A research was carried out and it was discovered that customers were not happy with the manual system as they had to wait for hours to be served in the stores. In some cases customers paid more than they owed as some documents got misplaced. The research also noted that its main competitor had computerised its system. Another major concern was from the employees who felt the company was not doing enough for their welfare. Therefore the employees felt no motivation to market the company and no drive to meet the stipulated budgets.
Truworths went through as major revamp both technologically and culturally which I will expound in this report. The computerisation of the stock and sales system resulted in two major effects, the automation effect resulting from reduced labour inputs to carry out a task and the information effect arising from better decision making and greater employee autonomy.
The culture of the company made it very difficult for the change process to occur as there were stumbling blocks both from the management and the staff. The management had to be convinced that the technological change would revamp their market share and it would happen within a certain time frame.
In this report I am going to elaborate on the impact new technology had on the staff, management and even the customers. The change process followed by Truworths was Schein’s model summarised by O’Neill(1990), which was built on the earlier work of Kurt Lewin. Schein’s model features three stages of change : unfreezing, changing and refreezing.
2 Decision making process
The unfreezing stage was characterised by signals of decline in market share, closing down of accounts by customers and rumours that the company was closing down. At this stage the management felt the need for change. To illustrate how the decision was arrived at I have included some of the models which were used to assess the problem at hand.
2.1.1 The Change Equation
The change equation provides a useful way of dealing with coming up with the reasons for a change. It can be expressed as follows:
EC = A*B*D
Where EC is the energy of change, A is the felt dissatisfaction with the present situation, B the level of knowledge of the practical steps forward and D the shared vision.
Adapted from Carnall(1995).
The felt dissatisfaction of the current situation was felt by both the employees and the management. The employees were demoralised by the decrease in their daily sales, the buyers felt they were ordering the latest unique fashions which did not realise significant sales and the management was not happy with dwindling market share.
After close analysis it was discovered that there was a felt dissatisfaction with the current situation because of the increase in stock loss over the years which was only discovered after several months , decline in market share and a shared vision by all stakeholders to computerise the systems so as to effectively satisfy customers. This resulted in a high level of energy to change.
2.1.2 Ishikawa diagram
I have used the Ishikawa diagram to arrive at a few key sources that contributed most significantly to the problem. These sources are the ones which were targeted for improvement in the change process. The main problem that triggered the change process was the decline in market share as shown below.
Source : Adapted from Hannagan T, 1998, Management concepts and practices, London, Pitman
The Ishikawa diagram helped in identifying the drivers of change for the technological change. The main issues which came up from analysis of the Ishikawa diagram were poor management of records, dissatisfaction of the manual system by the customers, customer service inefficiency, obsolete machines and poor incentives for staffs such that they felt the company was not concerned with their welfare.
The company had to find a way to boost its marketing strategy so as to regain its customer share. A plan for looking into the staff welfare also had to be looked into.
2.1.3 Dynamism/complexity of environment
Source: Adapted form Johnson and Scholes, 2002, Exploring Corporate
Strategy, England, Pearson Education Limited
Truworths is a clothing industry which is unstable because of the high rate of change of fashion. Fashion changes on a daily basis and one needs to be highly creative in designing clothes. It is simple in that there are very few elements mainly clothes and shoes. The instability in the environment is also aggravated by the increase in competition of fashion stores. The new era of the so-called “flea-markets” which are open air markets selling all kinds of things including clothes at relatively cheaper prices was a major threat at the time.
2.1.4 PEST Analysis
The PEST framework was used to analyse the environmental factors which could affect the change process. This framework categorises environmental influences into four main types: political, economic, socio-cultural and technological.
Government instability affected the clothing industry as they were not too sure if they could embark on such a big project. They had questions on the viability of the industry in the coming years as the political situation was unpredictable.
The high inflation rates at the time of change caused some resistance to change from the management as they felt that the high capital investment for the project would result in a great loss for the company.
The high exchange rate was a major hindrance as the system had to be bought from South Africa in foreign currency.
The increase in competition in the industry meant that the company had to come up with a business strategy if it was to stay in business.
Lifestyle changes in the country was one the major drivers of change. Most people in the country seemed to advancing in their lifestyles thereby demanding better from the company in terms of fashion and customer service.
The dynamic changes in fashion for the teenagers demanded for the company to be more innovative and fashionable so as to suit the customers’ needs.
The rapid change in technology and the advent of information systems was the major force which drove the change process.
The cash registers which were being used in the stores had also become obsolete and the manufacturers were no longer maintaining them so one could not even get them fixed when they had a fault. Therefore the old cash registers had to be changed to suit the current technology.
2.1.5 Drivers of change
220.127.116.11 Drivers of Change Model
The drivers change model below was also used during the unfreezing stage of Scheins model to assist in identifying the catalysts driving the needed changes in the organisation in order to design and implement an effective change strategy.
Source: Adapted from Anderson A, 2001, Beyond Change Management:
Advanced Strategies for Today’s Transformational Leaders,
San Francisco, Jossey-Bass/Pfeiffer
Drivers of change
Using the Drivers of Change model above to identify the catalysts of change, the catalysts can be summarised as follows.
The environmental forces which are dynamics of the larger context within which the organisation operates were fully explained using the PEST Analysis which I have already discussed.
The marketplace requirements for success was the major driver of change as customers were demanding better level of customer service, level of quality and high level of efficiency.
To meet these new marketplace and customer requirements demands there was an urgent to form new business strategies which required change in systems and technology to be implemented successfully.
Some major competitors in the clothing industry had computerised their systems such that their level of customer service surpassed that of Truworths and most customers closed their accounts. The new technology was going to assist the company to improve the cost efficiency of their outlets and to improve the level of service offered to its customers. Fully integrated “front to back office” information system could track the movement and profitability of all stock.
The customer service was going to be improved by the automatic re-ordering of depleted stocks and the constant monitoring of the purchasing behaviour of consumers through sales data captured at the point of sale.
The introduction of new technology was also going to lead to a polarisation of the workforce within retailing. This was based on the long standing debate in academic literature about the effects of technological change on the levels of skill among the workforce (Penn, 1995).
Advocates of the deskilling thesis (Braverman, 1974; Martin, 1988) have suggested that technological change produces a general lowering of skill levels. I disagree with this assertion because during the implementation of technological change there was a great need to employ skilled staff who knew how to use computers and running of reports.
Increasing competitive pressures and faced with more knowledgeable and demanding customers, Truworths decided to use this opportunity created by information technology to build competitive advantage by improving the quality of service they provided.
In transformational change, the scope of the organisation changes also requires the culture to change in order for the organisational design to operate smoothly and produce its outcomes. For Truworths the culture of the company was also a driver of change as it had to change to support and drive the organisation’s new design. The way of doing things had to change as the reform took place. Employees had to pay more attention to procedures. Employees also had to feel the urge to change and be willing to learn the new procedures they had to follow.
Another major driver for the change process was the shift of the leaders and employees mindsets. A shift of mindset was required for the organisational leaders to recognise changes in the environmental forces and marketplace requirements, thereby being able to determine the best new strategic business direction or operation of the organisation. This had to be done through education and effective communication with the leaders and employees.
2.1.6 Type of change
The type of change was adaptation as the company was reacting to the new technology in the industry. It can also be expressed as a transitional change as it found new way of doing the same thing. The technological change could be accommodated within the current paradigm. For a company to have employees that are able to adapt and respond to ongoing changes it has to move towards the implementation of a learning organisation.
Organisations need to ensure that employees have the training necessary to function as part of a team, and have acquired the skills they need to carry out all aspects of their jobs. This can be done through in-house trainings. According to Atkinson(1994), for any change initiative to be effective and sustainable it should be simple to understand. People need to not only know where they fit and the role they should play, but their individual importance and role in the change. Therefore there is a great need for of organisational learning if the change is to be a success.
Truworths did not have much hindrance in implementing the change because it came up with a clear report on the role of each staff member in the change process. This was also facilitated through seminars and trainings conducted by an external consultant.
The type of change can also be described as a transitional change whereby the organisation had to move from the old state of the manual system through a transition process to a new state which is one with a computerised system as illustrated by the diagram below.
3 Change management
Following Schein’s model of change the unfreezing stage facilitated in identifying the drivers of change, the problem and how to solve it using a number of change models. The next step was the changing process.
The style of managing change used was through education and communication. Seminars were held with all employees as an awareness campaign for the need to change. The employees were involved in the change process and they had the questions answered in the sessions.
Seminars were held by an external consultant articulating the objectives and expected outcomes of the new technology. The seminars dwelt on the weaknesses of the manual system, strengths of the new system and implications of the change. Employees were allowed to write down their concerns which they wrote on cards and were unanimously addressed in the sessions. This allowed staff to be more open on their views.
During this changing stage of Schein’s model the employees began to learn about the new procedures and the new system. Management was concerned with the effectiveness and accuracy of the system to produce reports therefore the new system ran parallel with the manual procedures. Comparison reports were produced over a period of six months and the management was finally convinced that it is a good system.
The concerns which were highlighted by the staff contributed in either facilitating or hindering the change process. From the extensive consultations with the staff and management I came up with the Force-field diagram which shows the resisting and driving forces to the change.
Managing change also included transforming the mindset of both the management and the employee. The topic of mindset in organisation has been around for several years now first populised by Joel Barker’s “paradigm” videos and furthered by Peter Senge’s explanation of the mental model(1990). Mindset is the primary causal factor of behaviour, decisions and most importantly, results.
3.1 Factors that acted to facilitate or block the proposed change
3.1.1 Force- field Analysis
The Force-field diagram articulates the driving and resisting forces to the new technology. The main resistance to change was the high initial capital investment. This stirred the boardroom tables as the management critically weighed the need for change to the cost. The issue of data security and integrity was also a major concern. The management needed some reassurance that the data would be securely stored and backups can be kept of all daily sales.
Generally the driving forces outweighed the resisting forces therefore the change was implemented.
Source: Adapted from Hannagan T, 1998, Management Concepts and Practices,
The main driving forces for change were to improve customer service efficiency, be able to produce up-to-date reports on stocks/sales, the drive in technological change in the industry, changing customer needs and attainment and retainment of competitive advantage. The resisting forces which the company had to overcome were fear of change , fear of losing jobs by staff, the high initial capital investment and the threat of data security and privacy.
3.1.2 Culture Web
Culture web before the change
Tuworths exhibits a defender culture as envisaged by its emphasis on price and service to defend current business. It also exhibits a strong culture characterised by a clear approach to the corporate environment and values shared by people who make up the organisation.
“Just as patterns of behaviour in groups can block or enhance change, so too can the wider patterns of behaviour, values and beliefs prevalent in the organisation overall” (Hall,1977)
Most of the stories in the company before the change were mostly negative as it was going through some downfall. There were rumours that the company was closing down because of poor management which was not the really the case. The employees also had a part to play in its downfall because of their undesirable attitude towards customers. The employees were also felt that the company did not care for its welfare and was only concerned with getting profits which they did not even share with its employees.
The tedious end of day procedures, weekly stock-takes and manual filing of daily sales had a very negative impact on the customers. These routines were time-consuming and labour intensive and this frustrated the employees. The only ritual which was good for the employees was the Christmas parties. From the routines there was nothing for the customers for example promotions.
The power structure was fragmented between board of directors, managing director and the old boys network. However the board of directors were the most powerful, they had to be convinced of the change.
The power structure also comprised of the old boys network, the group of high level managers who had been serving the company for a number of years and felt that they had the final say in the company’s decisions.
In Truworths there were very few inventory and sales control. This contributed highly to the increase in stock loss over the years which would only be discovered after the employee has left the company. Since the finance director did not have much power, there were no strict budgets to be followed. No targets were set for the stores to meet.
Organisational structure is hierarchical and functional. Each department had its own distinct function which made it very efficient as employees job descriptions were clearly defined. This structure is very effective as each department has one unique goal which they have to meet.
The assumptions which constitute the paradigm reflect the board of directors’ perception that the company is the leading retail clothing company which is customer-focused. The company strives to provide the latest and unique fashions for its customers. It also felt that it should be identifies as one that is committed to its staff and cares about its staffs’ welfare. The stories I mentioned above were indeed pulling against this paradigm as most of its employees thought otherwise.
Culture web after the change
The culture was remarkably transformed by the change process. The stories transformed to success stories, heroes and heroins and remarkable gain in market share. The heroes included some of the employees who were directly involved in the change process.
The employees had to go through a learning process as there were changes in the daily procedures. They had to go undergo training of the new system as well as the daily procedures which are now less cumbersome. The management introduced long service awards as well as performance appraisals as an incentive for the employees to put more effort in their work.
Inventory and sales system controls were put into place and strict budgets set. The new system is password controlled such that a specific employee is answerable to any loopholes if found in the daily transactions.
An added symbol after the change was the company’s listing on the stock exchange. This boosted its popularity and attracted a lot of customers.
The power structures were changed in that the new marketing director and the finance director now have power in the decision-making process of the company. This puts a strong emphasis on budget controls as well as the important department of marketing of the company. The formation of the staff association committee also added value to the company as it reinforces its paradigm that it is committed to staff welfare.
3.1.3 Organisational structure
The organisation structure of Truworths is a functional structure which allows for development of particular kinds of expertise e.g. marketing. Hence integration of IT into this structure was very easy.
The new organisational structure includes the new marketing director. This was a good move as there was a need for the revitalisation of the company’s market. The IT department was put under the Finance director. The new structure is shown below.
3.1.4 Resistance to change
According to Kotter, Schlesinger and Sather (1986), there are four common reasons for resistance to change from individuals. These are:
2. a lack of trust coupled with misunderstanding
3. different viewpoints or assessments of the benefits of change
4. a low tolerance for change
They are based on history, on emotions, and fact. Self interest refers to the sense of loss that individual’s feel they will encounter in future state of change and the actions they will take to avoid this happening. This was mainly experienced by the managing director who felt that the new system would result in the IT department as well as the finance director knowing more of the company’s information than him.He felt he was losing his power in the company to juniors.
A lack of trust coupled with misunderstanding was felt by the employees as the intentions of the proposed change were wrongly interpreted by some. Many managers assume that everyone in the organisation sees the problem and their proposed solution in the same way.
A low tolerance for change means that some individuals who are less able than others to adapt to change and to new circumstances are likely to resist proposals of future changes irrespective of whether the change is likely to benefit them or not. As Drucker (1981) notes, the capacity for individual to handle change is limited. This was also experienced by some employees in the company especially the staff who worked in the stores. Most of them did not have confidence in themselves that they would be able to learn the new system therefore resisted the change.
The resistance to change was well handled through seminars and meetings held with the resisting employees. The employees were asked to suggest on how to make the change effort better. They were also enrolled into helping provide an effective solution. This helped combat the resistance as the employees felt that they were an important part of the process.
4 Decision evaluation
To evaluate the change process , I have used the stakeholder mapping to strategically classify the stakeholders in terms of their power or interest in the organisations strategy as shown below.
Source: Adapted from A Mendelow, Proceedings of the Second International systems, Cambridge,MA,1991
The main stakeholders for the organisation are the customers, staff, board of directors and management. The customers have the highest power since without them the company is dead. These customers must be kept satisfied. The change process was mainly driven by the demand from the customers for better service.
The key players in the organisation are the employees and the board of directors. These people have high interest and high power in the strategy formulation of the company. Even though the board of Directors initially did not want to go ahead with the technological change , the fact that the “customer is king” forced them to go through the change. The board of directors felt that it is just a mere worst of money. The increase in market share, listing on stock exchange and the over-flowing customer database are good enough signs to show that it was indeed a successful change.
Therefore the final outcome was good in that the customers are happy and the board of directors are ,enjoying the fruits of the change process. The addition of a marketing director facilitated the quick recovery even though during the process it did not realise any dividends until some months after the implementation was done..
The transition from manual system to the automated system was indeed crucial in that it was aimed at improving the efficiency of the company especially for the customers. The transition process took place in a period of 6 months. During this period the marketing director had a big job on his hands as he tried to revitalise the company back into the market.
Resistance to change was well handled as the management held seminars to inform the employees for the need to change. Education and communication helped in the change process as it employees became aware of the need to change and felt that they were part of the team.
The successful results of the change process are evidence enough that the change process was handled quite well as the company made a good analysis of the situation before agreeing to the change.
There are a number of problems which the company encountered during the change process resulting form some weaknesses the process had.
The main problem is that when the company initially started the process it did not overtly link the change strategy to business strategy. This caused employees to resist change they otherwise would have supported. It catalyses employee’s distrust in leaders and makes employees feel victimised by change. In making the decision to pursue the new system, the senior management chose it for one reason because they believed that it is required to produce specific needed business result which was a sound business decision.
But it did not seem that way with the employee. To them it felt like one more “favour of the month” change effort that will simply make their “real” work more difficult to accomplish.
The mistake which they made was not to involve the employees in the initial discussions of the change process. Employees too need to wrestle with the factors that generated the decision to pursue the change. They need similar information as the executives and time to internalise it. They must overtly see the connection between what the business strategy calls for and what the change will produce otherwise the change activities seem like a waste of time and counter-productive.
Another important point is that risk analysis should be performed on every project before it is undertaken. Technical, social and environmental risks should be addressed and contingency developed if necessary