ASSIGNMENT

ON STRATEGIC CHANGE MANAGEMENT COURSE CODE: GOTXH04/WFPA GROUP C

SUBMITTED BY YOHANNES DENY E. PRASETIO 1247441

TO THE SCHOOL OF FINANCE AND PROFESSIONAL STUDIES IN

PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF POST GRADUATE DIPLOMA IN MANAGEMENT STUDIES (PGDMS). COURSE LECTURERS UADE ALUKPE DATE: 29/11/2010

Table of Contents
Table of Contents................................................................2 I. Introduction.....................................................................3 II. The Aim and Objectives...................................................3 III. Understand Issues Relating to Strategic Change in STCMC ..........................................................................................4

III.1 The need for strategic change.............................................4 III.2 The Factors that are driving the Need for Strategic Change . 4

IV. Understand the Background to Organisational Change in STCMC................................................................................5

IV.1 Model of Strategic Change..................................................5 IV.1.a Kotters 8-Step Change Model (1995)..........................................6 IV.1.b Individual Change: Behavioural Approach....................................6 IV.1.c Model of Change for Team...........................................................7 IV.1.d Model of Change for Organisation................................................7 IV.2 The relevance for models of change to organisation in the current economy.......................................................................8 IV.3 Strategic Intervention Techniques.......................................8

V. Asses the Stakeholders Involvement in Developing a Strategy for Change............................................................9

V.1 Stakeholders in Developing a Strategy for Change................9 V.2 Strategy for Managing Resistance to Change......................12 VI.1 Selected Models for Change .............................................13 VI.2 Plan to Implement a Model for Change..............................13 VI.3 Appropriate Measures to Monitor Progress........................16

VI. Implement Model for Ensuring Ongoing Change.............13

VII. Conclusion and Recommendation.................................17 REFERENCES.....................................................................19

I. Introduction
We, as a consultant of change management prepared this report for South Thames College incorporating with Merton College (STCMC). We has been commissioned to write a report that considers the theoretical and practical issues of strategic change for STCMC in order to combining both home and international higher education courses. STCMC strategic alliances had formed within the last 18 months. In this period of time they had gained great experiences in providing further education (FE) as well as the higher education (HE) programs. At the beginning of their strategic alliances, STCMC mainly focus to the UK and European students. However, in 2009 STCMC acquired an access into the international HE market. In order to maximize this opportunities, STCMC must be able to adapt with the requirement of international HE market. STCMC experiences in serving the home higher education market was not enough to respond the international HE since there are a lot of requirements to be fulfilled to meet the standardization. Furthermore, STCMC must analyze and evaluate their recent performance and prepare all the elements to face the process of change.

II. The Aim and Objectives

The aim of this report is giving guidance and recommendation about the proper strategic change management for STCMC to maximize their opportunities to capture both the home and international HE market. This report is produced to the Dean of School of International Business. Generally, objectives of this report as followed: Understand issues relating to strategic change in STCMC Understand the background to organizational change in STCMC Assess the stakeholders involvement in developing a strategy for change Demonstrate the implementation of change model for ensuring ongoing change in STCMC

III. Understand Issues Relating to Strategic Change in STCMC III.1 The need for strategic change
In order to create the strategic change planning, first of all STCMC have to be able to analyze the macro environment situation and use it as the fundamental of changes process. We try to analyze this factor by applying PEST analysis. Table.1 PEST ANALYSIS
Changes on education funding policy by the government Increasing tuition fee for domestic students Requirement to be self financing Changes to skills required to lecture / tutor The high exchange rate value of Pounds Sterling Decreasing GDP in 2010 Cost of providing international standard resources i.e. Infrastructures, staff and lecture training and learning resource Decreasing number of job vacancies and increasing cost of living Stable economic condition in the developing countries i.e. China, India, some of middle east, Africa and southeast Asia. UK' worldwide image as a popular destination for higher education Increasing demand of specific qualification of graduation by the employer Changing trends in demand of specific science field Increasing numbers of the UK higher education institutions who are competing in the international market Most of the growth of HE sectors has been driven by overseas student in last five years Changes to standards/equipments as a learning tools required Time to maximize the IT systems as a learning and teaching tools as well as student service Increasing demand of E-learning and home-schooling system

(See table.1)

Political

Economic

Social

Technology

Sources : BBC online news, CIA website, Higher Education Policy Institutes (HEPI) website

III.2 The Factors that are driving the Need for Strategic Change
According to the PEST analysis above, clearly shown that there are a lot of challenges faced by the STCMC nowadays but on the other hand, there are also opportunities especially come from the international market. STCMC ability to adapt with the changes happened in the macro environment absolutely required. There are some factors must be considers in order to survive and win the competition on the local education industry as well as the international. Those factors are: The need of expanding the market in order to generate companys profit Decreasing demand for higher education by the local student due to changes

on education funding policies Great opportunities created by the Higher Education International market For the purpose of maximizing the advantages from the home and international HE market, STCMC need to allocate their available resources (human and financial) effectively and efficiently. On the other hand, there are consequences if STCMC could not be able to optimize their resources and put aside the strategic change process, the implications are: Misplace in the local competition as well as international market; Lost their market position and market share as well; Company disability in generating profit will cause a possibility of stagnant growth, bankruptcy and staff redundancy; Lost trust from the stakeholders; Minimum quality of learning facilities will result on the decreasing quality of graduation and finally it will create bad image of institution.

IV. Understand the Background to Organisational Change in STCMC IV.1 Model of Strategic Change
The change model is the management philosophy to achieve the objectives institutional strategy, by assessing progress in institutional financing, technology and cooperation aspects. As the change agent, we recommend the school dean as the change sponsor to evaluate the recent companys performance and prepare the organization to face the change process. Proceeding from the report objectives, we are trying to reach an integrated framework for the implementation of a holistic model for change in the higher education sector to increase effectiveness of measuring and improving performance in STCMC. At the beginning process of change, STCMC should take into account if the conditions for change are favourable, and perhaps most notably the following: 1. Fact awareness about good and bad aspects, and an understanding that each can change the burdens and costs. 2. The deployment of a healthy environment for change based on open and honest consultations between management and staff. 3. Use of creative thinking among staff in implementation of change and direction. There are several models of change were developed by theorist but we focus our recommendation on these three selected models. We believe that these models could cover the change process from individual to organizational level.

IV.1.a Kotters 8-Step Change Model (1995)

According to this theory, the process of changing is not that easy as stated and there is also an intimidation by the scale of the challenge. John Kotter concluded that there are common errors made in the implementation of change, such as underestimating the need for a clear vision and fail to communicate the vision, poor planning and getting short-term advantages, and not provide the anchor of changes in corporate culture (mindtools website, 2010) In response to the above common errors when managing change, Kotter conducts the following eight phases of change: 1. Create Urgency: establishing a sense of urgency around the need for change to build an initial motivation in doing action. For example, develop a scenario what could happen in the future by identifying potential threats. 2. Form a Powerful Coalition: finding the effective leaders who could manage the change team and have source of power to influence people/subordinate. 3. Create a Vision for Change: establishing a clear vision, which is easy to remember and understand by everyone within the organisation. 4. Communicate the Vision: communicating the vision frequently and powerfully, and implant it within everything that you do. 5. Remove Obstacles: checking the barriers of the process continually and changing structures and systems that obstruct the change effort (for example: create a reward program) 6. Create Short-term Wins: developing a short-term achievable target in order to give a taste of victory early in the process and to avoid critics and negative thinkers which might obstruct the progress. 7. Build on the Change: establishing and consolidating a sustainable improvement by reinvigorating the change process. 8. Anchor the Changes in Corporate Culture: Making continuous effort s to ensure that the change is seen in every aspect of organization in day-today work.

IV.1.b Individual Change: Behavioural Approach

Focus of this approach implementation is a strategy to change the individual behaviour by creating rewards and punishment program in order to achieve

organization objectives. According to the Theory X and Y by Mc.Gregor (Cameron & Green; p23-24), there are 2 types of employees working behaviour. Theory X define a condition that employee do not like their job, lack of ambition, avoid responsibilities and they are being motivated by the threat of punishment. Theory Y, on the other hand, employee more enthusiastic doing their job, due to the rewards program offered, they have a high commitment on achievement of organization objectives, and they are being more motivated by recognition and encouragement than tight control or pressure in their job.

IV.1.c Model of Change for Team

For the purpose of combining both home and international HE, STCMC need to form a team who will manage and direct the process of change. In order to manage this team change process, change agent could apply Tuckmans model of team development (Cameron & Green; p78-82) as guidance. 4 stages in Tuckmans model of team change: 1. Forming: Effort to establish organizations changes fundamental i.e change in objectives, structure, leader, member roles, tasks and process relationship. 2. Storming: Discussing and negotiating about conflicts that happened in forming stage 3. Norming: Establish the operational procedure and team framework 4. Performing: Team start to play their roles in performing the process of changes in organization.

IV.1.d Model of Change for Organisation

The final step is change on organization level. STCMC must be able to maximize their strategic partnership performance to fulfil both home and international HE requirement. In order to support that process, change sponsor could utilize Lewins organizational model (Cameron & Green; 110-111) as the framework of managing organizations change.

3 steps in Lewins model of organization change: 1. Unfreeze: Organizations preparation to accept change process, which

involves the current status quo before the creation of new operational procedure. 2. Change: Organizations members initiate to resolve the uncertainty which created in unfreeze stage, start to believe and taking action in ways that support the new direction. 3. Refreeze: The ultimate process when organization shows the sense of stability and makes use of changes incorporated into everyday business.

IV.2 The relevance for models of change to organisation in the current economy
As we all know that credit crunch disaster in the USA have brought negative effects to the worlds economic stability. It could not be denied that there is a great influence to the UKs economic condition as well, not only manufacturing but also affect the declining performance in service sectors. In order to survive in this situation, every company must be able to make a quick respond to adapt with the changes. STCMC, as one of the UKs education providers must prepare themselves to taking action to gain more advantages created by the current economic condition. Although there are some challenges in the domestic market that caused by changes in government policy on education funding, STCMC must be able to keep their performance by maximizing their opportunities in international market. As the consequences, the requirement of organizational changes must be fulfilled to meet the international market needs. In order to improve their performance, STCMC must have a sustainable change process, which must be matched between the available resources and the needs of change. According to the recent condition of STCMC, there are some aspects that must be expanded to meet the international market requirement, such as the quality of lectures and student services, the content of official website, and Information Technology in relation to the needs of learning equipments (internet bandwidth, ejournal, e-book). The efficient fund allocation in composing a staff training, developing the learning infrastructures and updating the website content could be the best program to improve their performance and jump into the international education market competition.

IV.3 Strategic Intervention Techniques

The complexity of strategic change management requires a strong commitment and responsibilities from every element in organization. There are a lot of challenging things and learning process will occurs during the implementation. In order to control

the dynamic working atmosphere, senior manager as the change sponsor must be able to provide a proper intervention program. In this context change sponsor have to be able to introduce and manage change to ensure the organisational objectives are met. Furthermore, they have to make a proper strategy to ensure that they gain the commitment of the staff, both during and after implementation of change process. The also have to maintain the reaction of resistance by the staff and keep the operational activities continues as usual. According to John Heron (1975), the theory called six facilitative interventions and they are divided into two main categories: 1. Authoritative Interventions: the change sponsor takes an assertive role, taking responsibility for and on behalf of the staff. a. Prescriptive Intervention: giving advice and direction to the staff b. Informative Intervention: providing an instruction to the staff in order to give them more knowledge and information. c. Confronting intervention: providing a direct feedback to the staff in order to give more challenges on their behaviour and attitudes. 2. Facilitative Intervention: the change sponsor creates a condition to facilitate staff to become independent and take more responsibility for themselves. a. Cathartic Intervention: giving staff the sense of empathizes to help them in expressing and conquering powerful thoughts or emotion. b. Catalytic Intervention: providing staff some questions to help them in reflecting, discovering and learning. c. Supportive Intervention: giving praises and values to the staff to increase their confidence. In relation to STCMC case, for the first period of change process, change sponsor must be able to provide an informative intervention by giving them an instruction that is contains more knowledge and information about the new procedures. For the reason of managing the reaction of change, change sponsor have to be able to create a supportive intervention by developing a reward program. The target of this program is to motivate the staff and increase their confidence when implementing the change process. As a result, the strategic change process will run smoothly and achieve its objectives.

V. Asses the Stakeholders Involvement in Developing a Strategy for Change V.1 Stakeholders in Developing a Strategy for Change
Stakeholder analysis is an approach that is used to identify and investigate the

activities or attitude formed by a group or individual who can affect or is affected by the achievement of the organization objectives. According to Lynch (1997, p810), stakeholders are the individuals and groups who have an interest in the organisation, and, therefore, may wish to influence aspects of its mission, objectives and strategies. Comprehensive list of typical stakeholders: (Lynch, 1997) Internal stakeholders: Management, employees, and shareholders External stakeholders: Banking institutions, customers, suppliers, and government. In relation to the strategic change process in the STCMC, the involvement of stakeholders absolutely needed in order to gain more support not only in financial but also increasing performance of employees and customers loyalty. In order to involve the stakeholders in the planning of change, there are some issues must be considered by the change team to meet the stakeholder need, such as: The shareholder need for safety in investment, Resistance of change from the management, staff, and students level, Cultural differences regarding to the international student enrolments, Available resources to meet the need of strategic change process, Cooperation quality among the group of suppliers, Corporate Social Responsibility program

In order to create an appropriate strategic change planning, the change sponsor has to be able to produce a change agenda that involving stakeholders participation. By participating them in this process, they will understand about how this change process going to implement and what is the importance of their strategic decision to this process. Next, we categorized the change agenda by mapping the priority of stakeholder based on the level of power and interest (mindtools website, 2010): (see figure.1) 1. Shareholders: Provide them a change proposal with the complete information about the growth prospect prediction, profit sharing program, and companys financial performance 2. Invite them to the management meeting and involve them in set up the change vision and implementation strategy Management: Evaluate the recent performance of company and its strategic partnership Analyze companys resources (assets, human, financial and information)

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Create a clear vision and a framework of strategic change process that is proper to companys resources. This activity includes the change team forming.

3.

Employees: Create a workshop to communicate the aim and the objectives of strategic change process Involve them in making the strategy to achieve the change objectives. This activity includes the discussion about change process procedure, problem solving and incentives program for the specific achievement and managing the resistances

4.

Customers (students): Create a survey among present students about their level of satisfaction. It could be the best critical point for STCMC in doing improvement

5.

Government: Support the government program in increasing the quality of education from the small scope of (council) to the national level. Contribute in generating a national income Communicate the change process equipments to the supplier groups and give them detail explanation about companys growth prospect prediction. The aim of this activity is to convincing that company has vision to growing together with the group of suppliers. According to the chosen organisational change model for STCMC, Lewins model.

6.

Suppliers:

This involvement of stakeholders group is taking in place in the unfreezing stage. They will involve in the first STCMC management meeting to develop the change process planning. The purpose of this involvement is to accommodate the ideas that come from the stakeholders especially the group of shareholders. Furthermore, by involving them in the planning process, they will gain more information regarding to the importance of strategic change process to organisational development as well as stakeholders interests.

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Figure 1: Stakeholders Mapping

V.2 Strategy for Managing Resistance to Change

In the process of implementing change, there might a variety of reactions come from the member of organization. The reaction of unwillingness might cause resistances to the change process. Change sponsor must be able to manage this kind of reaction and keep the process run on the track. According to Kotter and Schlesinger (1979), there are four reasons that certain people resisting change: Parochial self-interest: individual sense of anxious cause by having bad perception about change implication. Misunderstanding: communication gap when delivering the information of change. Low tolerance of change: individual comfort zone make they are keen on feeling secure in their work. Different assessments of the situation: members disagreement about the change and the impact of this change process. In order deal with those reactions, Kotter and Schleinger (1979) create the following six change approaches to manage the resistances: 1. Education and Communication: Pre-announcement to inform and educate members about the change effort. This activity helps members to see the change efforts logically and reduce incorrect rumours about the effects of change. 2. Participation and Involvement: Clear explanation about change objectives and procedures could reduce the level of resistance because members have a proper understanding about their role in the change process. 3. Facilitation and Support: Strategic intervention techniques play their role in this

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approach. Managerial supports helps employees to deal with their fear and anxiety during a transition period by giving special training and counselling. 4. Negotiation and Agreement: Offer an incentives program to members not to resist change. For people who are still resist the change, they can be offered incentives to leave the company through early buyouts or retirement. 5. Manipulation and Co-optation: Create a manipulation technique, which involves members, who are resisting the change, to participate in change management planning group. The aim of this technique is to maximize their role rather than their substantive contribution and give them a symbolic role in decision-making, without threatening the change effort. 6. Explicit and Implicit Coercion: Change sponsor force the members to accept the change by making a strong statement that explain the bad effects of not responding the change (stagnant performance, bankruptcy, redundancy).

VI. Implement Model for Ensuring Ongoing Change VI.1 Selected Models for Change
Based on the previous literature review, we bring some theories in relation to support the strategic change planning process in STCMC. We conclude that there are some aspects need to be considered in order to succeed the change process such as the available resources, capacity of development and corporate culture. In order to develop the strategic change planning process, we recommend change sponsor some activities, which are based on the four explained theories. Lewins (1951) theory simplifies the organizational change process into three major stages which are Unfreeze, Change and Refreeze. In addition, Kotters (1995) theory completing those major stages with some specific activities such as creating a change atmosphere, forming a change team, creating and communicating the vision, removing obstacles, creating short-term goals, change improvement, and maintaining the change in the corporate culture. However, those four theories just give a general description about activities in strategic change management. In order to develop and implement those theories, we recommend a step by step concept that we based on following organizational development change model (Senior.B, 2002). (see figure.2)

VI.2 Plan to Implement a Model for Change

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Figure 2: Organisational Development Generally, those five activities in this flow chart going through the Lewins process. Step 1a, 1b and 2 become the part of Unfreezing stage. Next to step 3 and 4, they describe the action in change stage and finally, the assessing and reinforcing change give a meaning of Refreezing stage. Stage 1a: Diagnose current situation Build awareness of changes within the organization (management, employees, students, and shareholders) to respond the changes happened in the external environment Performance evaluation in each organization as well as strategic partnership (STCMC) for example; quality of graduation, lecturers, facilities, and services Analyze the available resources such as assets, financial and human resources Evaluate the current organisational structure and culture as well Make a scenario about the importance of strategic change process and create a proper change atmosphere

Stage 1b: Develop a vision of change Create a meeting with management and involving stakeholders to discuss about

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the strategic change planning Combine the organisations strengths and weaknesses with threats and opportunities Generate a clear change vision and objectives that is easy to understand and fit to the companys development capacity Develop an appropriate strategy in order to achieve the change objectives: changes in organisational structure, culture and climate Improve the organisations performance by doing benchmarking program Stage 2: Gain commitment to the vision Create a workshop to communicate the strategic change planning. The purposes of this program are: To accommodate staff ideas, opinions regarding to the change process To convince staff of the need to change: explains the importance of change process to organisational and individual development To empower staff in set up the change procedures To find win-win solutions in facing the conflict in change planning process: create an incentive program to reduce the level of resistance Stage 3: Develop an action plan Build an independent team who will focus on managing the transition process from the current status to desired future situation. Make a list of change activities (based on the change priorities) and select a person in charge for each of it Create an appropriate job structure and distribution within the team Develop a contingency planning to adapt with the unexpected result Stage 4: Implement the change Individual level Conduct a specific training for lecturers and staff to improve teaching skills and increase the quality of services Empowering staff in the change process by giving them an instruction relating to the new procedures and subsequently support them with mentoring and counselling program Managing the problems and resistances that arise during the implementation process Improve the quality of student enrolment requirements to keep the institution performance and quality Team level

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 Produce a short-term and long-term framework with a specific target and time bound Propose a proper budget to the management to implement the change process Conduct an annual meeting to evaluate progress and discuss the barriers during the process Produce a performance evaluation for each change project and report it to management Organisational level Split the organisation structure between home HE and International HE. The aim of this activity is to improve their performance by providing a different and focus business strategy Bring the change team into the organisation structure to clarify the flow of reporting of change process Increase the acceleration of constructing process in the new building of Wandsworth campus as well as the facilities for international students (Learning Resource Centre for HE students) Develop the information technology system within the organisation network, learning support system (e-learning, e-journal), and STCMC official website as the local and international promotion tools Stage 5: Assess and Reinforce the Change

Create a KPI (Key Performance Indicator) list to evaluate the change process
performance for every element; individual, team and organizational. These KPI are use to measure the level of target achievement and analyse the strengths and weaknesses in the change process

Continuous improvement from management and change sponsor in order to keep

the change process run on the track and implant it as a corporate culture. Mentoring, coaching, counselling and incentive programme could be the best method to support this activity

VI.3 Appropriate Measures to Monitor Progress

The independent team of change together with change sponsor have responsibility to maintain and monitor the process of change in STCMC. They have to ensure that all activities are done properly as per change agenda. There is a series of activity to measure the performance of change process, they are:

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 Process-based evaluation: according to the process time-table, team leader could

evaluate the individual, team, and organisation change performance. They have to be able to harmonize every single process to achieve the effectiveness (timebound) and efficiency (available budget). If there is a problem occurs during the process, they should make the problem solved first before start the new activity. Progress reviews: team leader together with change sponsor and their members held a meeting to discuss the progress. Process achievements and obstacles become a main topic in this meeting. Team leader must be able to accommodate members needs and create a win-win solution for any kind of problem. Regular reports: this progress meeting would produce regular report for change sponsor. Subsequently, change sponsor would pass this report to the management and shareholders for the purpose of updating the change process.

VII. Conclusion and Recommendation

In our conclusion, the fact about unpleasant implications caused by the present global economic crisis could not be denied. It has brought serious threats and challenges for every country in the world, United Kingdom without an exception. Moreover, changes happened in the UK education funding policy persist an adaptation process by every education provider within this country. STCMC, as one of the member of UK education provider has to be able to create some changes and adapt to deal with this situation. In addition, STCMC must be able to maximise their experiences and its strategic partnership to take advantage of home HE opportunities as well as the international HE market. Last but not least, we make some recommendations to the Dean of School of International Business as the change sponsor for STCMC in doing the strategic change process, they are: Build a sustainable awareness within the organization for changes happened in internal as well as external environment. Create a sustainable development in individual skills, team performance, and organization services and facilities to meet the market demand and win the competition. Create an achievable and informative vision and objectives for strategic change process. Maintain and manage the change process by providing a proper learning guidance and motivation methods to avoid resistances. Involve the group of stakeholders in order to gain more support and efforts in the

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change process. Monitor the implementation process of change by scheduling the process, reviewing the progress and report the result to the management and shareholders.

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