Organizational Transformation

Morrisons plc

Case Study

Consultancy Report

Presented to: Board of Morrisons plc

By

Adnan Taha

(L0016SZTSZT0616)

Submitted to: Dr. Agnes Taylor

2016
Consultancy Report Page #

Executive summary 1

Performance gap 2

Six Sigma model 3

value propositions for the change proposed 8

Leading the change proposed 10

The benefits of the change for Morrisons 10

The risk of not implementing the change 10

The risks perceived in implementing the change 11

Plan for implementation of the change proposed 11

Evidence review 13

Reflection 21

Bibliography 23

Appendix 25
1.Executive Summary

This consultancy report focuses the light on the change proposed. The purpose of this change
is to ensure that Morrisons will be successful company in the long run through tackling the
most significant problems that the company suffers from. This can be achieved by training
salespeople to improve their attitude and make them acquire interpersonal skills, besides,
increasing their salary and adopting the strategy of employee engagement. Moreover,
Morrisons has to be more competitive by reengineering the process of “made by Morrisons”
products. Furthermore, Morrisons should put the focus on distribution channels, online
channel and convenience stores, by choosing the most profitable locations to the convenience
stores through conducting a survey to ask customers questions about the best locations to
them. For the online channel, a specialist company should undertake this task. The problem of
increased absent rate can be tackled by eliminating the process of manager-centred decision
making and giving line managers the authority of decision making.

This will bring a lot of benefits to Morrisons such as increasing market share, profits, the
number of customers and the share price. Also, the cost of production and absence rate will
decrease. Furthermore, employees’ productivity and customers’ loyalty will go up and the
company will be able to attract rivals ‘customers.

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2.Introduction

The main objective of this consultancy report is to propose agenda for change to Morrisons by
focusing on the most significant problems that Morrisons is suffering from. This can be done
through the following:

1- Improving salespeople’s interpersonal skills and their way of communicating with

customers.
2- Increasing Morrisons’ competitiveness by reengineering the process of “made by
Morrisons” products.
3- Rebuilding online channel and convenience stores.
4- Giving line managers the decision-making authority.

2.1 Morrisons’ Background and introduction to the grocery industry in UK.

Morrisons holds fourth position in the grocery industry in UK. Tesco comes first, then it is
followed by Sainsbury’s, while Asda comes third. In 1899, William Morrisons established his
small shop for selling egg and butter in Bradford where the headquarter lies there now. By the
years of 2004, Morrisons has started to increase its presence in Wales, Scotland, besides to
London. In that year, Morrisons took over Safeway as well. The number of staff is about
117000 employees, while the number of stores is 569. Morrisons ‘market share is 10,4%.
Tesco comes first at 28.1%. It is followed by Sainsbury’s (15.9%), while Asda holds third
Position at 15.7% (Statista,2016).

The industry has experienced price war among Tesco, Sainsbury’s, Morrisons and Asda. This
war has caused loss because of the intense competition. This war reached its peak between
2013 and 2015. The intensity of rivalry has started to reduce now. Retail think tank (2014)
performed study on the consumer behaviour in the grocery industry in UK. The findings have
pointed out that online channel and convenience stores will be the best channels for shoppers
who like avoiding congested roads and saving time. Wharton (2007) did research into retail
customer dissatisfaction and the finding was that unwelcoming salespeople and word-of-
mouth lead to losing business.

3. Situation analysis

3.1 Performance gap.

Morrisons aims to close any gap between the actual performance and the goal(desired)
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performance or reducing it for making sure that this gap will disappear for a long time.
Closing or reducing the gap can be doing by making changes(improvements). Morrisons
experiences the following gaps:

1- Morrisons aims at serving customers better through concentrating on technology and

helpful employees. Actually, salespeople working in Morrisons are unwelcoming and
the clients cannot be served well.
2- The firm is eager to be competitive. In real, Morrisons is not competitive and the
company’s market share has experienced a decline.
3- The company’s mission is making Morrisons distinguished from other rivals.
Actually, Morrisons cannot differentiate itself form the competitors with the poor
channels, namely online channel and convenience stores.
4- Morrisons has reduced the leadership team from 110 to 65 and the number of head
office has declined from 3500 to 2000 to build a culture on speed and team work. The
gap is that line managers have sent employee absence reports to managers and there is
a delay in processing these reports because line managers are not entitled to make
decisions (Morrisons annual report,2015).

3.2 Six Sigma

Six sigma is a model used for organizational transformation or change to a firm willing to
change. Generally speaking, organizational transformation is making change at all
organization levels but change is making improvements in some sides. Six sigma, as a model
for change, is divided into five levels of performance as the following:

1- Define. In this phase of performance, we would know the most significant problems
that exist in the company. The problems are as the following:

1- Unwelcoming salespeople. According to a study performed by Wharton (2007), this

type of salespeople and word of mouth lead to losing business. This problem poses a
real risk to Morrisons because of dissatisfied customers. The effect of this problem is
devastating such as making loss instead of profits, a decline in Morrisons’ share price,
the problem of illiquidity will get worse, Morrisons will be unable to pay creditors and
suppliers and the company’s market share will decrease over time because of the

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 number of customers will decrease.
2- Morrisons is not competitive in the market, whereas Tesco, the second largest retailer
in the entire world, is operating in the market. If Morrisons cannot be competitive, this
means that the company will lose more customers and Morrisons will be unable to
acquire new customers. Also, this means a decline in the market share and in the share
price as well.
3- Channel constraints because Morrisons’ online channel does not work well compared
to the rivals. Also, Morrisons closed all the convenience stores as well. Ignorance of
this problem will result in disastrous consequences because there has been a change in
consumer behaviour in UK. Online shopping and shopping at convenience stores will
be the best shopping pattern to customers in UK. We have to be realistic about this
problem that poses a real threat to Morrisons as a brand equity.
4- Line managers have sent reports to their managers to make decisions about the
subordinates’ absence. These reports need a long time to be processed by managers.
This delay pushes some employees in other departments to take the matter lightly. So,
some of them have become absent from their work without reasonable excuse. This
will increase the labour cost that all organizations aim to reduce it and this problem
has become worse because employees from other departments take it lightly. So,
employees’ productivity and employees’ loyalty to the company will go down.

2- Measure. This stage answers the questions about the sources of information gathered
about the problems (measurements) to judge confidently that there is a problem or
problems. In other words, how is the process measured? what is its current
performance now? This is to know the shortcomings in the processes.

For the first problem, apart from other problems such as the intense competition
between the retailers in the grocery industry, it is noticeable that salespeople are not
welcoming. The information gathered about this problem is based on number of
problems observed between salespeople and customers (75 problems observed),
number of complaints against salespeople (85 complaints) and number of notes taken
by line managers about salespeople’s attitude and their way of communicating with
customers (36 notes). It is clear now that salespeople’s attitude poses a real risk to
Morrisons.

On the second problem, Morrisons is not competitive because. Morrisons ‘share

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 market has experienced a decline from 11.9% in 2012 to 10.4% in 2016
(statista,2016). This means that Morrisons is not competitive enough. Morrisons,
therefore, has to think out of the box to enhance the competitiveness.

Regarding to the third problem, Channel constraints. Morrisons closed all non-
profitable stores (Morrisons annual report,2015). Morrisons did not state in the annual
report that the company sold all the convenience stores of 25 million pounds because
of the bad location that caused huge loss (Simpson,2015). Furthermore, Morrisons has
witnessed poor sales because its online channel has not worked well (Jim,2015) and
the company did not state that in the annual report. This disagrees with the combined
code that urges firms to exercise honesty, frankness and transparency. The
consequences of channel constraints are clear because sale figures have seen a decline
from18.116 million pounds in 2013 to 16.816 million pounds in 2015
(Morningstar.2016).

For the fourth problem, the reports about subordinates’ absence are available in top
managers’ desks and line managers’ desks (90 absence cases). This problem is risky
because absence without reasonable excuse may become a habit for employees
working in other departments. Also, the cost of staffing will increase; productivity will
decrease and many employees become disloyal to the company.

3- Analysis. This phase of performance answers the question about the root cause of the
problems at hand and the major reasons for the emergence of the problems.

The major reason for salespeople’s attitude is attributed to their lack of interpersonal
skills and salespeople get paid low salaries compared to employees working in other
departments. Each employee has the right to get paid a good salary to live in a good
standard of living. The absence of good materialistic incentive pushes the employees
to underperform.

On the second problem, Morrisons is eager to be competitive. In real, Morrisons is not

competitive enough and the company’s market share has witnessed a decline over the
last five years. The principal reason for this is that Morrisons has to exploit its
competitive advantage that is “made by Morrisons” products. Morrisons manufactures
about 50% of the food products sold to customers. This can be a real chance to make

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 Morrisons more competitive than other rivals.

Regarding to the problem of channel constraints (convenience stores and online

channels) is attributed to not conducting questionnaires to ask the customers about the
best location to the convenience store. Also, Morrisons has no specialists in the
locations. For online channels, the major reason for the underperforming online
channel is that Morrisons did not choose a good specialist company able to undertake
this task.

For the fourth problem, the reason is that the authority of making decisions is
concentrated in the top managers and this causes a delay. Line mangers have sent
reports about their subordinate’s absence and the managers are busy with other
matters, while line managers are not entitled to make decisions about this issue.

4- Improve. In this stage of performance, we have to take the best actions to ensure that
the problems will be tackled and the root causes of them will be removed.

For the salespeople, Morrisons should train the salespeople for acquiring the required
skills. Also, Morrisons has to motivate salespeople by materialistic incentive through
increasing the salary from 9 pounds for work hour to 11 pounds for work hour to make
them pay more attention to their work. Active salespeople mean shorter waiting time
and this will enhance customer satisfaction, while unwelcoming salespeople mean that
there are a lot of employees who do not prioritize their work. Therefore, the healing
practice for this problem is employee engagement. Sadly, only 17 % of companies in
UK adopt this strategy although it is a profitable one and the consequences of adopting
the strategy are encouraging. This change will support employee value and the
outcome will be encouraging such increasing sales and profits.

The solution for Morrisons to become competitive is to reengineer the competitive

advantage “made by Morrisons” by expanding in manufacturing other food products
to sell them in Sweden and sell them to other huge supermarkets in other lands where
the demand for this type of goods is high. By reengineering this process, Morrisons
can bring the following benefits:

1- Increasing cash flow, especially all retailers, operating in this industry, are

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 suffering from illiquidity because they buy the products from suppliers on credit.
2- The cost of production will decrease because of the increased production,
especially the company has skilled workers and high quality of machines.
3- Avoiding the risk coming from suppliers who may stop providing Morrisons with
the food products.
4- Manufacturing food products will be cheaper than outsourcing, especially the
European suppliers after Brexit.
5- The cost of the process will include freight cost and other reasonable expenses
because the gulf countries do not impose high tax on imports.
The constraint on expanding in manufacturing other food products is financial
resources but this will not need so much cash if Morrisons will start with foods
that do not need new machines. Over time, this process will make cash available to
Morrisons that can purchase the new required machines. By reengineering this
process, Morrisons can be more competitive and the cost of production will
reduce, then the company can offer this type of products at competitive prices
compared to the rivals. This process will make the customers more satisfied and
the customer will prefer the company’s products to other companies’ products.
Also, the company will be more competitive and the share market will increase.

On the third problem, Morrisons has to establish his convenience store in

profitable locations. So, Morrisons must ask the customers about the best location
by conducting a survey. Morrisons failed to avoid or mitigate the physical risk
(location) that caused loss and the company should be aware of that now. Also,
Morrisons should find a specialized company to undertake the online channel. The
online channel should be distinguished and effective to compete with the rivals’
online channel. This improvement will increase customer value because the
products become easily obtainable.

The company should face the fourth problem by changing this culture, the
concentration of decision making in top managers, should be changed by giving
line managers the authority of decision making. Also, employee engagement has
a positive impact on employee absence rates because highly engaged workers
mean less absence rate and more employees ‘productivity. Also, the company will
increase customer value because this solution means shorter waiting time.
5-Control. In order to maintain and monitor the actions (improvements) that

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 should be measurable through giving them metrics (performance measurement).
This is to make sure that the actual performance matches the desired performance
after making corrections.
To gauge the improvements, the model used for measuring the performance is
shown in the table (1) in appendix (1). The methods are policies that if the
company implements them, then it will reach the sub-targets. If the company
reaches their sub-targets, this means that the company achieves its final target. For
the first problem, If Morrisons implements training, salary increases and employee
engagement that are methods, then the number of complaints against the
salespeople and the number of problems observed between the customers and
salespeople will reduce, reaching less than 3 problems for each. This will enable
the company to reach its final target that is improving salespeople’s attitude. The
same goes for the other problems.

3.3 value propositions for the change proposed

Any organizational transformation proposed means that these improvements will positively
reflect on the stakeholders but customers comes in the first place. So, we will explain the
effects of the improvements proposed on the customers, the employees, the suppliers and the
shareholders. Improving salespeople ‘s attitude will encourage the current customers to shop
at Morrisons. Also, this improvement will attract new customers (rivals’ customers) to shop at
Morrisons. So, sales will increase. Reengineering the process of “made by Morrisons” will
allow Morrisons to sell the products at competitive prices and this will enhance customer
value. So, sales and the market share will increase. Convenience stores and online channel
will contribute to enhancing customer satisfaction because the products are easily obtainable.
Hence, sales and profits will go up. For the fourth improvement, the operations will be done
quickly and this will reflect on customer satisfaction such as shorter waiting time. The effects
of these improvements will reflect on the employees as well. The salespeople will pay more
attention to their work and treat with the customers tactfully. Also, after adopting employee
engagement, the engaged employees will be more loyal to the company and their performance
and their productivity will increase too. Absence rates and the cost of staffing will go down as
well. Shareholders ‘value will increase as a result of an increase in share price due to an
increase in sales and the market share. As a result of the improvements, the company will be
able to pay suppliers on time and supplier relationship management will plays an important
role in purchasing goods at competitive prices. These improvements will enhance customer
value and keep the company’s health in the long run and this is the core of the organizational
8
transformation.

As shown below in the conceptual model, the problems, such as salespeople’ attitude and the
problem of competitiveness, are symbolized as square. The root causes of these problems are
shown as rectangle such as lack of interpersonal skills and low salary, while the solutions are
symbolized as rounded rectangle such as training and increasing salary. The risk is
represented as oval such as financial resources for convenience stores, online channel and the
reengineered process, while the risk of location for the convenience stores. The target is
shown as diamond. The target is proposing agenda for change and the results of reaching the
target are symbolized as circle such as an increase in sales, share price, market share and
employee’s productivity.

Training and
Lack of
Employe
Interpersonal
Salespeople’s engagement
skills
attitiude

Low salary
Increase
in salary

Morrisons is not Not exploiting

Reengine Agenda
competitive Made by
ering the for
enough Morrisons
process change

Location for Conducting

channe
convenience a survey
Channels
stores for
constraints
locations
Not effective
online channel Highly
Specialist
Delays in company
processing Decision making
absence reports concentration
Decision
making financial
by line resources
An increase in manager
competitiveness, s
Customer
share price,
retention, Location
market share
attracting
and employees
new
‘productivity
customers

9
 The diagram illustrates the conceptual model for the problems and the solutions.

4. Leading the change proposed

For the first improvement, Human resources management(HR) will lead this improvement by
training the salespeople and make them acquire the interpersonal skills. If Morrisons has no
qualified people, a specialist company will undertake the task and HR should choose a
company that is able to perform it at a good price and a high quality. For the second and the
third improvement, channels and reengineering the process, cross-functional team will lead
these improvements because both of them need a lot of functions such as procurement,
customer service, logistics, information technology(IT) and marketing. The board of directors
will lead the fourth improvement that is giving line managers decision making authority.

5.The benefits of the change for Morrisons.

The effects of the improvements on Morrisons will be encouraging as the following:

1- Improving salespeople’s attitude. This will lead to customer retention and word-of-
mouth will help Morrisons to attract rivals’ customers. Salespeople will be more loyal
to their company and their productivity will increase too. So, revenue will go up.
2- Reengineering made by Morrisons will result in an increase in market share, profits
and cash. Also, Morrisons can sell the products at a competitive price.
3- Convenience stores and online channel. This improvement is very important because
of the change in consumer behaviour. Morrisons can attract new customers (rivals’
customers). Also, the company can increase profits and its market share. Furthermore,
the company will satisfy shareholders value by increasing the share price.
4- Giving line managers the authority of decision making. The improvement will
decrease the cost of staffing and absence rates. This improvement will make the
employees more loyal to their company, especially after adopting employee
engagement and their productivity will increase as well.

6. The risk of not implementing the change.

Morrisons will lose more customers because of salespeople’s attitude. Word of mouth will
have a negative impact on the company. Also, the company cannot attract rivals’
customers. So, market share and profit will decrease. If Morrisons does not reengineer the
process (made by Morrisons), the company cannot be competitive. Therefore, the market
share will decline. The consequences of not rebuilding the convenience stores and online
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channel are devastating. Profits, market share and sales will decrease and the company
will lose the current customers because of the problems with accessibility. Not giving line
manager decision making authority means an increase in labour cost and many employees
will be absent from their work without reasonable excuse. So, many employees will be
disloyal to the company and the productivity will go down. Customers waiting time will
increase too.

7. The risks perceived in implementing the change and ways to overcome these risks.

The first improvement, improving salespeople’s attitude, may be costly if the company
has no qualified people who are capable of performing it. In this case, the company should
find a specialist company at a good price and a high quality. For the second change,
reengineering the process of “made by Morrisons” may need cash. So, the company has to
expand in manufacturing goods that do not need new machines. Over time, the company
can purchase the new required machines from money can be available from this process.
Rebuilding convenience stores need a lot of cash. Therefore, Morrisons should start with
the most profitable locations. In this way, the company can finance the next convenience
stores from these profits. The new Online channel may be expensive and the company has
to find a company that is able to undertake this task at a reasonable price and a high
quality.

8. Plan for implementation of the change proposed.

Please see the next page number (12).

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Change/improvement Target Leading Timeline
change
2017 2018 2019
Improving Less than 3 HR or 2017 - -
salespeople’ attitude complaints, less specialist
than 3 problems institution
observed and
less than 3 notes
taken by line
managers
Expanding in made -An increase in Cross- 2017 2018
by Morrisons market share functional
from (10,4%) to team
(13%). This
means that the
total revenue
will go up too.

-sales from
other countries
comprise 8% of
total sale
Convenience store Sales comprise Cross- 2017 2018 2019
15% of total functional
sale team
Online-channel Sales constitute Cross- 2017
20% of total functional
sale team
Line managers’ Absence rate The board 2017
decision making decreases by of directors
authority 90%

The table shows the plan for the change proposed.

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Second: Evidence review

A company’s share price is no longer the compelling evidence that the company will succeed
in the long run. Therefore, a company should be curious about organizational transformation
to face the external changes related to costs, skills, customer’s expectation …etcetera and to
face the intense competition as well. The company should review its businesses to discover
the gaps, then work on them to close or reduce them. Also, it has to transform from reactive
company that is concerned with solving the current problems to a proactive one that is able to
expect the coming problems to tackle them. This brings many benefits such as reducing costs
and eliminating duplication.

In this section. We will focus the light on the following topics:

1-Organizational Transformation.

2-Gap analysis.

3- Six Sigma model.

4-Business process reengineering (BPR).

5-Employee Engagement
Six Sigma
6-Organizational culture change.

Organizational
culture

Gap
Organizational Analysis
Transformation

Employee
Engagement Business Process
reengineering
(BPR)

The diagram explains Organizational Transformation and its tools.

As shown, organizational transformation aims to make a company proactive through making

the operations easier and tackling the most significant problems that the company suffers
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from. This requires that the firm identifies gaps between the current performance (actual
performance) and the expected one to close them. This can be achieved by many means such
as organizational culture change, business process reengineering and Employee Engagement.
A model for change should be taken into account. So, Six Sigma one of the models used for
organizational transformation or change.

First: Organizational Transformation and gap analysis

Mckinsey & company (2011) stated that organizational transformation is a way to make a
company strive and grow through aligning its strategy, people, technology and business
processes. The purpose of organizational transformation is to maintain a firm’s performance
at a high level in order to face the following:

1-External changes. Firms are operating in a changing world and this may put a firm’s
existence at risk. Therefore, the firm should proactively act to survive and grow.

2- Intense competition: The intensity of competition among companies which belong to the
same industry is increasing over time and it cannot be overlooked or ignored. So, the
company is forced to transform from its current state to required state. The company’s share
price does not mean that it will survive for ever and it should manage itself in this changing
world through focusing on company’s long-run health by renewing, aligning and executing
faster than rivals.

PWC (2014) asserted that gap performance is between strategy intent and strategy
performance. This gap poses a real threat to firms that should align their strategy in order to
make long and short-term profits. PWC conducted a survey on US firms’ readiness for
organizational transformation and the findings have pointed out that only 50 % of firms are
ready for it in response to the competition and the environmental change. The firms are
successful when they pay more attention to strategy alignment because companies should
leverage its operations to increase customers’ value. Unable companies to align its business
units will result in more dissatisfied customers and increase costs.

Consulting research group (2010) stated that the purpose of organizational transformation is
to reduce cost, increase profits, eliminating duplication and processes that cannot create value.
organizational transformation goes through phases as the following:

1- Organizational assessment.

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 The company is assessed from top to bottom in relation to risks, leadership
commitment, organizational requirements (plans, experienced staff …etcetera) and
human resources (HR) to align HR to the strategic objectives.
2- Transforming.
It means transforming a company from current state to required state. The success of
this step depends on HR alignment with the strategic objectives. In other words,
allocating HR needed and other resources to processes that create value.
3- Performance monitor.
To know shortcomings in processes and explore opportunities available in processes
as well through exploring the root cause of each problem.
4- Process improvement.
Through giving solutions to each problem to tackle the company’s problems
5- Performance review.
By giving processes indicators (metrics) to be reviewable.

We should notice that the programme used for organizational transformation is different
from firm to another but all of them follow the same guidelines such as the problems, the
major reasons for the problems, improvements(solutions) and giving metrics to the
improvements for monitoring them. After implementing the organizational transformation,
the company transforms into one efficient team that manages the strategic objectives with
focusing on sustainability for the future. Also, we have to pay more attention to the concept
of organizational transformation and change management. Change management means
making improvements by implementing limited initiatives that may not include all aspects of
the organization, while organizational transformations means a radical change by
implementing a lot of initiatives to reinvent the firm. Organizational transformation is riskier
than change management.

Mckinsey & company (2011) argued that the successful organisation transformation answers
the following questions:

1- What are the actions taken to improve the firm’s performance?

2- What are the underlying risks of transforming the firm and how can the firm mitigate
or overcome them?
3- How can the firm ensure that these improvements will last?
4- How can the company create a culture of persistent change to stay on top for long
time?
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 5- How can the company create a sustainable competitive advantage?

Consulting research group (2010) asserted that the success of organizational transformation
relies on many criteria. Some of them are the following:

1- Transformation risk assessment: This means that performance management evaluates

processes’ progress, stakeholder’s satisfaction and regulations.
2- Strategy: developing strategy to ensure that the company is proactive and allow it to
increase the company’s performance.
3- Organizational alliance: The key to success in organizational transformation is that
human resources(HR) works in harmony with the strategy and HR should be aligned
with the strategy that is tied up with metrics to develop the process.
4- Team: the company should institute cross-functional team (employees from all
departments) to make the organizational transformation succeed because the team will
implement the strategy.
5- Employee training and development: Successful organizational transformation needs
well-trained employees to increase their performance. This will increase their
productivity and reduce costs as well.

Second: Six Sigma.

This model is used when a company decides to make a change or to adopt the organizational
transformation.
Thomas etal (2009) stated that Six Sigma is a strategy that aims to reduce costs and create
improvements in the company through concentrating on customer satisfaction and cost
saving. The purpose of Six Sigma is to improve the internal process that makes
service/product offered to customers better. This model is divided into five levels of
performance as the following:
1- Define. Who are the targeted customers? What are the company’s priorities? What are
the problems that a company suffers from? What are the most significant problems?
2- Measure. What are the processes in the company? How can the processes be
measured? What are the shortcomings in the processes?
3- Analyse. What are the root causes of these shortcomings that lead to
underperformance?
4- Improve. What are the best solutions(improvements) to tackle the problems?
5- Control. How can the firm follow up the processes to make sure that the solutions
work smoothly? Metrics should be taken into account.

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Dumitresu and Dumitrache (2011) asserted that Six Sigma aims to improve the financial
performance to the company through focusing on reengineering the processes to produce
distinguished products/services. This model is interested to meet customers ‘needs through
offering products/ services at a competitive price and a good quality. Motorola developed six-
sigma in 1981 in order to rise up the quality and to get rid of the root causes of defects and to
decrease variation and defects resulting from manufacturing. Motorola could rise up its
competitiveness and increase its value through increasing customer satisfaction as a result of
developing the six-sigma model. Motorola could save about 17 billion dollars as well.

Jarrar and Neely (2008) stated that the critics of the model believe that the model is designed
to apply the scientific management but not all organizations are used to applying the scientific
methods of six sigma. Also, the model inhibits innovation because it has proven successful in
reducing variance, eliminating waste and increasing profits and productivity. So, when the
model becomes part of organization’s culture, it will prevent the employees and managers
from thinking in an innovative way. In addition to that, the companies that succeeded by
applying the model such as Motorola and GE did not document their cases in a scientific
manner. Therefore, the success may be accidental.

Third: Business Process Reengineering (BPR)

Neill (1999) argued that because of the intensity of competition for costs, quality, flexibility
and responsiveness, BPR has attracted managers ‘interest. The reason for this is that BPR
plays a crucial role in creating sustainable competitive advantage. BPR greatly contributes to
supporting a company’s performance. Making improvements in processes help any company
as the following:

1- It helps the company with customers who are aware of products ‘alternatives.
2- It assists the company in relation to competition that is intense to meet customers
‘needs.
3- It helps the company with change that has become continual to a company.

The role of BPR is to facilitate matching between market opportunities and firm’s capabilities
to make the firm grow over time. BPR is related to outsourcing because if the firm decides to
manufacture a product instead of purchasing it from suppliers, this will reflect on costs. The
company can use BPR if the company suffers from severe problems, the company that
expects risks or the company that likes to take advantage of opportunities to differentiate itself
from rivals.
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The success of BPR relies on the following:

1- Committed managers to firm’s objectives and vision.

2- Where can the change be done? What is expected after making the change?
3- Decision making should not be centred in the top managers.
4- Adopting teamwork that has the same objectives and can think innovatively.

Hernaus (2008) stated that BPR is a new approach to the firm’s design to get solutions for
problems related to competitiveness. The purpose of organizational change is to offer better
customer service, higher quality, faster delivery, lower inventory and to fulfil orders on time.
There is intense correlation between the organizational transformation and BPR. BPR is part
of organizational transformation. BPR assists the company to be more capable of competing
with its rivals.

Edwards and Peppard (1997) stated that any company should opt the process or processes that
bring benefits to a firm after reengineering it or them and BPR takes many months.

The operational processes are mostly the most profitable ones and they are the core of BPR.

Fourth: Employee Engagement.

It means that employees’ desire and their ability to assist their firm to make success through
doubling their best efforts to make the firm gain sustainable competitive advantage. Others
define employee engagement as employees involvement and making them feel enthusiastic
for their work. Management literature differentiates between employee engagement and job
satisfaction. The latter is used as a basis for employee engagement. All management literature
agrees that employee engagement focuses on the relationship between employees and
employers. So, some of them state that Employee engagement means employees’ loyalty to
employers. This concept is based on organizational citizenship behaviour (OCB) that means
employees ‘behaviour is focused on company’s progress. Also, the notion of employee
engagement is based on commitment to firm’s strategic objectives. There are five drivers
should be available to make employees highly engaged as the following:

1- Employees ‘effort should support the strategy.

2- Employees should be given the authority of decision making.
3- Work should be based on collaboration and team work.
4- The company encourages employees to grow and develop (positions, new skills).
18
 5- Recognition and support(incentives).

The best consulting firm at employee engagement, Gallup, has found out that the success of
employee engagement depends on manager and his way of communicating with his
employees. Also, most drivers are not financial ones (Markos and sieve, 2010).

The Henry Miller group (2014) argued that a company with highly engaged employees has
experienced an increase in satisfied customer’s rates and this firm can make more profits than
a firm with less engaged employees. Also, well engaged employees put all the focus on their
work where tasks can be done in a short time. Furthermore, this firm has less turnover rates
and less safety incidents as well. Less absence rates among employees and less theft rates too.
Moreover, highly-engaged employees are interested in the quality of products offered to
customers.

Fifth: Organizational culture change.

Organizational culture is assumptions are taught by employees in the company about how to
solve problems. These assumptions become more familiar, valid and accepted among the
employees over time. Also, the assumptions will be taught by the new employees as well.

The organizational culture reflects the following:

1- How do the employees understand firm’s mission and strategy?

2- How do staff think of their organization, customers and other organizations?
3- How do employees conduct their daily business?

The above-mentioned points reflect the personality of a company. Organizational culture is

very important to any company because it may be a constructive factor or a destructive one
because the culture plays a big role in shaping the following:

1- The right decisions.

2- Employees’ behaviour and their interaction with each other in the firm.
3- Team work and how individuals perform their work.
4- Organizations’ ability to accept or reject any change.
5- Stakeholders’ attitude.

So, Organizational culture may support or hinder the strategic objectives (Desson and
clouthier, 2010).

19
Muscalu (2014) asserted that there are reasons for changing the organizational culture as the
following:

1- If a company faces a reduction in performance.

2- If there is a change in the company’s vision or mission.
3- When there is a change in top management.
4- If the managers’ priorities change (paying more attention to new issues).
5- When the managers want to face the crises as a quick response to incidents.
6- When the company is unable to adapt to the environmental changes.

DBA research perspectives.

1- The role of organizational transformation in facing the international financial crisis in

the grocery industry, especially a lot of experts warn of coming crises.
2- How can organizational transformation rescue the firms operating in the grocery
industry that is suffering from severe problems?

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Third: Reflection
1- Knowledge gained.

I have gained too muck knowledge of organizational transformation. All managers should
put the focus on company’s health in the long run. This means lasting successful
company. So, the topic of performance gap is important to any company because of
transforming it from current state to better state. Also, Managers should pay attention to a
company’s share price but this does not mean that the company will succeed for ever.
Improvements in processes, risk management, internals factors and external ones should
be taken into account. Managers should think in an innovative way by reengineering
processes, especially the operational processes that enhance the company’s performance
and add value to customers.

The organizational culture plays a crucial role in the success of any company. This
culture should be reviewed and assessed to change it if a company needs that because a
lot of mistakes could be made because of this culture. Also, the organizational culture
reflects the company’s personality. Moreover, in addition to the materialistic incentives,
the nature of the relationship between employees and employers is more important than
other incentives. A lot of studies have stated that employee engagement is very important
to make any company successful and it does not mean materialistic incentives only.
Furthermore, Human resources (HR) are very important ones to any company that strives
to transform into better state because HR are the basis for any organizational
transformation and change. Also, the organizational transformation is concerned with
people (customers, suppliers, managers). Performance measurement is important to
monitor the improvements and the company should concentrate on them.

This module is useful because any researcher should follow the logical thinking such as
identifying the most significant problems, the root causes of the problems, solutions and
monitoring. Also, I have learned from this module that I have to propose agenda for
change in my personal life. I mean that I have to make improvements in my working life
such as new skills and new knowledge because the labour market is competitive.

2- Challenges

I have some difficulties when making this assignment. The subject of organizational
transformation covers many topics such as performance gap, models for change,
organizational culture and others. So, I have to read deeply about these topics. Also, I
have difficulty in identifying the problems that the company is suffering from because the
problems should be significant. The problems that affect the company’s performance in
the long run because we talk about company’s health and sustainability. Furthermore, the
model used for change. There are a lot of models used for change such as six sigma and
gap model. So, I have to read many models to choose the fittest one.

For the performance measurement, the model of six sigma requires that the company has
to monitor and control the improvements in the processes by giving metrics. The metric
depends on the nature of improvement. Hence, I have to read about it and think of the
most suitable performance metric for each change. Moreover, the term of conceptual
model is not new to me but I should read about it to draw my own conceptual model
21
related to the problems, the root cause of each problem, the solution for each problem, the
risk resulting from each solution and the expected outcome of implementing the
solutions. So, it was not easy task but I have studied hard to achieve the task.

Moreover, identifying the process that brings benefits to the company after reengineering
it and how I can expect the process after reengineering it is the most challenging task. I
am convinced that the notion of business process reengineering should be applied in this
assignment. So, I read a lot of articles about it.

Sadly, I am looking forward to achieving this task completely. Therefore, I emailed

Morrisons to get information about the cost of convenience store and the online channel
to make the cost appear in the plan in the company report but no one answered me.

3- Employability skills.

I do not say that I am highly experienced but I have gained too much knowledge of how a
company can transform from current state to better state. This can be done by identifying
gap performance between the goal performance and the actual performance. The point is
to know the root causes of the problems to work on solving them, then giving metrics
(performance measurement) to monitor them. I plan, as a leader, to use this knowledge
efficiently to greatly contribute to the company’s progress. Also, I have a good
background on performance measurement now to monitor organization’s performance
and it is a vital one to any firm, especially the global one. This will benefit the company
where I will work in.

In addition to that, I have benefitted from this module a lot because this subject gives the
way of logical thinking to solve any problems. This will differentiate my performance, as
a leader, in any workplace. In my working life or in any workplace, as a leader, I will
focus on the most significant problems that affect a company’s health in the long run and
I will put all my focus on this type of problems. Also, sustainability should be taken into
account because the gap should be closed or reduced for the long run.

Moreover, I will think in an innovative way to solve the problems that a company suffers
from using some strategies that have proven successful such as business process
reengineering and employee engagement. Furthermore, I will focus, as a leader, not only
on the problems but also on the profitable processes that can create better value after
reengineering them. In this way, a company can acquire new customers and increase
customer value.

To sum up, I have learned from this module that a leader should formulate the problems
in his own conceptual model to broaden his horizon about the problems, risks and the
solutions and I will follow this way in my working life. The subject of organizational
transformation is very wide and I plan to read about it more to gain too much knowledge
of this area due to the effects of global crisis.

22
Bibliography

Ashkenas, R.2015. We are still don’t know the difference between change and transformation.
Harvard business Review.
Consulting research group. 2010.organizational transformation what is it? why do it? and
how? [online]. British Columbia: Canada. Available at: consulting research group Database
[accessed :15 November 2016]
Desson, K. and clouthier, M.2010. organization culture -why does it matter. In Symposium on
international atomic energy agency. Vienna: Austria.
Dumitrescu, C. and Dumitrache, M.2011. the impact of lean six sigma on the overall result of
companies. Journal of economa. Seria management 14(2),pp.536-544.
Edward ,C. and peppard, j.1997. a critical issue in business process reengineering: focusing
the initiative. Centre for Business Performance, cranefield school of management.
Hemanus ,T .2008 .generic process transformation model transition to process-based
organization. EFZG working paper series/EF2G.Serijia clanaka. pp.1-16.
Jarrar, Y. and Neely, A., 2008. Six Sigma–Friend or Foe? Centre for Business Performance,
Cranfield School of Management
Jim, K.2015. Morrisons sales down as store loses out in convenience store and online
shopping. Cityam21 January 2015.
Markos, s and sridevi, M .2010. employee engagement: the key to improving performance.
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Mckinsey & company.2011. how do I transform my organization’s performance? [online].
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Morrisons supermarket plc.2015. Annual report and financial statements. Bradford:

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Muscalu, E.2014, Organizational culture change in the organization. land forces academy
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PWC. 2014.closing the gap between strategy and execution[online]. New York: PWC.
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Appendix (1)

Methods Sub-targets Final target

Training, increasing the
salary and employee
engagement
-Number of problems Improving salespeople ’s
observed will decrease, attitude
reaching less than 3
-Number of complaints
against salespeople will
reduce, reaching less than 3
-Number of notes taken by
line managers about
salespeople’s attitude and
their way of communicating
with customers will go
down, reaching less than 3

Reengineering the process of -An increase in the market Increasing Morrisons’

“made by Morrisons” share from 10.4 % to 13%. competitiveness.
This means the total revenue
will increase.
-Sales coming from the
process from other countries
comprise 8% of total
revenue.
Rebuilding Morrisons -Online channel sales Making Morrisons
channels (online and constitute 15% of total sale. differentiated from other
convenience stores) -Convenience store sales rivals.
comprise 20%of total sale.

-Giving line managers the Absence rate fells by 90%. Speeding up the operation.
authority of making decision
(Change in organizational
culture) and employee
engagement. Also, employee
engagement
The table explains the metrics used for monitoring the change proposed.

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26