Read the case study on managing change at Faslane on page 495 in Johnson Scholes and Whittington (2009) 9th edition (available on Blackboard) and answer the following questions
1. Critically evaluate the types of change being pursued at Faslane
2. Critically evaluate the levers of change being used. Outline any others that may have been applied
3. Assess the effectiveness of the change programme
Learning Outcomes
This assignment addresses the learning outcomes for the module and will be assessed on your ability to demonstrate the achievement of this outcome in relation to the set question. This learning outcome is:
Critically review the conceptual and theoretical bases of the Strategic Management process and to evaluate the application and implementation of Strategic change
Guidelines:
Your report should:
• Be an individual piece of work
• Not exceed 1,500 words
• Use academic theory and credible sources
• Be fully referenced and sourced
Solution
Managing Change at Faslane: A Case Study
Introduction
Faslane, also known as the HM Naval Base Clyde, is the home of UK’s nuclear submarines carrying the Trident weapon system. It is an installation of the Ministry of Defence (MOD). However, it is managed independently by Babcock International, through its Babcock Marine branch. Babcock Marine took over the management of Faslane in 2002. The change in management of Faslane is the critical change management process in this instance.
Types of Change at Faslane
The principal change process at Faslane was the transfer of the management function of Faslane from the MOD and the Royal Navy, to Babcock Marine, a private enterprise. Through this change, management was transformed from a functional structure to a bureaucratic structure. Under the functional structure, individuals perform specialized tasks, while a bureaucratic structure involves supervision and standardization of tasks. Another way of looking at the change in management is that it moved from management by a public body, to management through a private enterprise. The type of change at Faslane is intended change. Such a change strategy is a formal change process. It is a change process that is preplanned and intended to be implemented straight from the beginning. With intended change strategy implementation, a set of goals and objectives for the organization are set out at the beginning of the change process. In the current case, the MOD signed a five-year contract, with a target goal of delivering £76 million, without necessarily compromising on the quality of service to the navy. As part of the contract, Babcock’s profits would come from the resulting cost savings. Besides the cost savings, the change in management was also intended to improve operational effectiveness.
Apart from the intended strategic change, there are also aspects of emergent change. Emergent change occurs haphazardly, with the specific change processes not being preplanned. It occurs as a diversification in the initial strategy. Aspects of emergent change management are evident through the shift in management structure from 7 layers to 4 layers. Moreover, the management review period was reduced from 56 days to just 6 days. In this manner, some of the aspects of change were emergent and supported the overall change objectives. The impacts of strategic change in Faslane are seen through changes in structure, process, people, systems, and organizational culture.
Levers of Change
Babcock applied several levers of change in their takeover of operations at Faslane. The first lever of change is a communication plan, which was used by both Howie and Lockhart. The communication plan ensured the use of structured methods of communication between supervisors and employees. Communication is important as it facilitates the exchange of ideas through dialogue (Griffith-Cooper & King, 2007), thereby allowing both the employees and management to co-create and own the future together. Satisfaction with management communication during times of change has been found to be closely associated with positive responses to organizational change (Nelissen & Selm, 2008). Evidence of the use of a communication plan can be seen through the tent session and employee consultation by the two, which was aimed at getting employee feedback. The use of dialogue involves explanations and discussions of the change proposition (Kushalappas & Pakkeerappa, 2014). Moreover, the use of performance scorecards also supports the use of communication as a lever of change.
Another lever of change is structural realignment. Structural realignment enables the organization to put in place a more efficacious structure and to implement other change levers. Howie also notes that through their consultation with other companies that had undergone similar changes, it emerged that a change in structure was fundamental in improving the change outcomes. This resulted in the consequent restructuring of management from seven layers to four layers. The management team was also downscaled to about half its initial number. The structural realignment allowed Babcock to realize savings of £14 million in the first year, against its target of £3 million. The structural realignment further facilitated the application of other levers of change, such as transformational management.
Transformational management is another important lever of change. Transformational leadership is an important leadership approach particularly during periods of change when uncertainty prevails. Van der Voet (2014) contends that transformational leadership is powerful in defining why change is necessary, formulating new visions and pressing the commitment of followers to these visions. It allows organizations to quell the turbulence that is characteristic of these periods. The first instance of transformational change process is highlighted by Howie, who talks about the need for different skill sets when it comes to such implementation. An even better instance of a transformational approach is manifested during Lockhart’s stint at the helm. First, there is the event in the tent session where people were allowed to express their view concerning the change process. These sessions enhanced the sense of ownership of the change process amongst employees. Change ownership as a motivator for change can only occur if the vision is shared by everyone (Nastase, et al., 2012). Moreover, employees were given a wider role in managing themselves. This is another feature of transformative leadership, whereby it entails a more participative leadership approach. Lockhart highlight that this resulted in the talk of “our company”, which is evidence of an enhanced sense of ownership. Employee involvement during change is important in wearing down the resistance of change recipients to the change process (Oreg, et al., 2011). Enhanced ownership further increases commitment to change objectives.
The above levers of change were important in improving the effectiveness and outcomes of managing change. Another lever of change that would have been of great use is resistance management. Despite the numerous changes taking place throughout the organizational base, enough was not done to overcome fears amongst the employees of possible negative outcomes of the change process. If employees are fearful about negative outcomes of the change process, resistance to change is naturally likely to result. If employees react negatively to changes, these negative reactions are likely to severely impede the realization of the benefits that were intended to result from the change (Fugate, et al., 2012). The resistance to change would in turn hamper productivity and progress, as well as the generation of ideas. For example, Howie discusses how people may not be incentivized to come up with change ideas if the change idea may result in close associates losing their job. This is in line with Fugate et al. (2012), who argue that in coping with change situations, employees will conduct a threat appraisal to determine whether the change event is a threat to themselves. They will then react in accordance to their appraisal. Through the management of resistance, these challenges and issues could have been overcome more easily.
Effectiveness of the Change Program
Overall, the change management program appears to have been very effective. Evidence of this success can be seen through the cost savings delivered by the change process, as well as the overall change outcomes. For example, in the first year, Babcock delivered over 500% of its targeted cost savings, at 14 million versus 3 million. The overall cost savings amounted to around 100 million, against a target of 76 million for the first five year period. Thus, in terms of realizing the cost-reduction objective, the change management process was a success. Other indicators of successfully managing change include outcomes to and satisfaction of a wide range of stakeholders. One of the inevitable outcomes of the change process was redundancies, and this would likely result in significant strife with not just employees, but community stakeholders. For example, the local council in the area was concerned about job cuts since the naval base accounted for a significant portion of employment in the area. Howie, however, indicates that these challenges were overcome and meetings with the local council soon ended since the council was satisfied with the handling and outcomes on jobs.
Finally, managing change was also successful since there was increased ownership of the process by employees. Moreover, employees also became committed to the change process and this meant that there was improved productivity. The company was also able to produce a joint business plan with its client. Perhaps the epitome of the change management process is the announcement that Faslane would soon become the home base for the entire UK submarines fleet. This would also result in 2000 more jobs at the base. The co-location of the entire UK navy fleet is evidence of the confidence of a wide range of stakeholders in the change management at Faslane.
The implementation of change at Faslane was successful due
to the correct application of levers of change management. Communication was
especially significant in guaranteeing this success, by allowing a wide range
of stakeholders to become aware about the intended change and its objectives.
Moreover, transformational leadership was also key in this process. The change
management process could have been improved further through a better management
of resistance to change. Nonetheless, the levers of change that were used were
effective in managing the resistance to change.
References
Fugate, M., Prussia, G. E. & Kinicki, A. J., 2012. Managing Employee Withdrawal During Organizational Change: The Role of Threat Appraisal. Journal of Management, 38(3), pp. 890-914.
Griffith-Cooper, B. & King, K., 2007. The Partnership Between Project Management And Organizational Change: Integrating Change Management With Change Leadership. Performance Improvement, 46(1), pp. 14-20.
Kushalappas, S. & Pakkeerappa, P., 2014. Participative Leadership Style: An Effective Tool for Change Management. International Journal of Organizational Behaviour & Management Perspectives, 3(3), pp. 1095-1100.
Nastase, M., Giuclea, M. & Bold, O., 2012. The Impact of Change Management in Organizations – a Survey of Methods and Techniques for a Successful Change. Review of International Comparative Management, 13(1), pp. 5-16.
Nelissen, P. & Selm, M. v., 2008. Surviving organizational change: how management communication helps balance mixed feelings. Corporate Communications, 13(3), pp. 306-318.
Oreg, S., M. V. & Armenakis, A., 2011. Change Recipients’Reactions to Organizational Change: A 60-Year Review of Quantitative Studies. The Journal of Applied Behavioral Science, 47(4), p. 461 –524.
van der Voet, J., 2014. The effectiveness and specificity of change management in a public organization: Transformational leadership and a bureaucratic organizational structure. European Management Journal, 32(3), pp. 373-382.