Communicating company change

A R G U M EN TA OECONOMICA No 1(7)- 1999 P L ISSN 1233-5835

Zbigniew Antczak*

COMMUNICATING COMPANY CHANGE

The article discusses the importance o f social communication in a company undergoing change. Intensive communication is a prerequisite for any com pany to conduct a proper transformation in order to adapt to a free market economy.

1. INTRODUCTION

S ocial com m unication is a process of sh arin g b road ly understood inform ation by individuals, g ro u p s and institutions. T h e challenges that a com pany in change confronts are specific. The m odel proced u re (process) of m an ag in g change shown here takes into account th e b asic tenets of the W roclaw school o f personnel m anagem ent. The s tra te g ic im portance o f co m m u n icatin g within the co m pany has been stre sse d . N otions and d efin itio n s selected from the lite ra tu re on the su b ject h av e been verified in practice and they are som e o f th e definitions fo r s c ie n tific tools: career path, m ap o f force and in volvem ent, attitudes su rv e y , etc. Since m ost co m pan ies show pathological sym ptom s as fa r as im plem entation o f personnel function, only selected com panies have been tested ; those w hose m anagem ent realized the need to persuade their s ta ff to ch ang es (som etim es this ap p ro v al was achieved afte r o rganizational se le c tio n , and before or/and in the c o u rse o f further tran sfo rm atio n s).

C o m p an ies have undergone substan tial tran sfo rm atio n s (L istw an 1995, p. 1 1 -1 5 ). T h eir environm ent has becom e dense and tu rb u le n t (G arbarski, R utkow ski, W rzosek 1996, pp. 2 3 -1 1 8 ). N ow adays, co m p a n ie s cannot grant jo b se c u rity to their em ployees (K ram er 1997, pp. 1 1 -2 4 ). T he inform ation gap is w id en in g (D uliniec 1995, pp. 13-16). T he lo n g ev ity o f an average com pany has shrunk, w hile an em plo yee changes and m odernizes his/her q u a lific a tio n s five times d u rin g his/her career. T h e d y nam ics o f social tran sfo rm atio n s have grow n (N a isb itt 1997, pp. 2 9 -6 1 ). C hanges in co m p an y ’s environm ent have becom e a c h a lle n g e fo r com panies. N eg lectin g or not giving enough n o tice to the need to a d a p t the organization to the re q u irem en ts of the en v iro n m e n t may cause a h u g e accum ulation o f

needs, w hich in effect, may m ake th ese changes re v o lu tio n ary . Even if the crisis has been successfully overcome, another crisis or bankruptcy may be brought about by various problems piling up in a company, unless managers or employees change their behaviour patterns. Another path of behaving is implanting adaptation mechanisms in a company. Here, an

internal assumption

is m ade that a need for change has been accepted. This cannot be a top management decision only, although top management will have to revise their managerial style, but also the need must be shared by the majority of employees. In order to achieve this, one must provide the staff - within a frame of intensive social communication in a company (Antczak 1997; 1997, pp. 243-254) - with a good deal of information on the difficulties the company faces. The puipose behind this is to make people involved in the process, rather than have them passive in a blissful state of apparent job security.

We have to analyse the company and its environment. W e are distinguishing

external elem ents, internal, and also channels o f inform ation within the organization and its communication with environment (Figure 1).

2. COMPANY SITUATION ANALYSIS

I 1 management style |

o e ___ I___, ir £ c 57 7 c “

J I corporate culture | §

Fig. 1. External and internal factors in managing change Source: author’s treatment.

One must also take into account stage of the com pany’s developm ent and its size (Table 1). Larry E. Greiner distinguishes five stages, from a sm all-size company to a large-size, mature com pany.

CO M M U N IC A TIN G COM PANY CHANGE 1 05 T a b le 1

Stages o f the c o m p a n y ’s d e v elo p m en t acco rd in g to L. E .G re in e r S tag e/g ro w th

th ro u g h I/creativity ll/o b je c tiv e s

Ill/delegating authority IV /co -o rd in a tin g V/co-op eratio n Organization Informal

Functional-hierarchical centralized

Decentralized T eam functions strategic units units w orking in gro u p s resp. for products Matrix structure

C om m unication Network From the top From the bottom

D ecentralized Mixed

System Fast response to environ­ ment requirements System standards-cost centres, budget reward system Profit centres bonuses - exception rule Form al proce­ dures o f p lan­ ning, investing centres, rigid sp en d in g s control Simplified integrated information Behaviours Individualism initiative ownership creativity Authoritarian leadership conformity group Autonomy participation delegating authority B ureaucratic supervision Innovating orientations: improving group& lcam ing interpersonal skills Crisis of: Leadership A utonomy Control B ureaucracy Self-esteem Virtues Involvement Flexibility Effectiveness High motivation o f management Effective allocation o f resources Spontaneity Flexibility

Vices Founder can not be a manager: over­ worked D oesn't fit diversity, hierarchy hinders staff developm ent S taff loses control over decentralized company B ureaucratic d iv isio n s w ithin the co m p an y Extreme psychologizing

Source: a u th o r’s stu d y m odified on the b asis o f G re in e r (1972).

External factors analysis is continued by diagnosing the potential of changes (forces supporting and hindering changes). We have to be more specific about the

strategy

- in order to get the answer which transformation incentives should be applied to succeed in change. What is the company strategy? Does it match the requirements of the environment and the challenges set forth by the company itself? Do employees

know,

accept, and put this strategy into practice?

Structure:

what is the current company structure? How does the process o f sharing information work, range of control, tasks, and specializations? Has the structure to date been successful? -

people:

what do behaviour, attitides, and skills lack? Is the Management effective? Is the former/recent managment style proper? How does the corporate culture look like? How does communication and personnel motivation look like? -

systems:

are there systems that would guarantee dynamic functioning

of the company: operative management, continuity of personnel, reward system,

communicating?

Each of the incentives mentioned encloses elements of social communication within a company (Clarke 1997, pp. 37-58).

3. ACCEPTING CHANGE BY THE EMPLOYEES

A pproaching change on a broad basis is very im portant, as well as winning em ployees’ support. Changes breed anxieties, insecurity, threat of losing hard- earned priviledges, feeling o f loss. Intensive com m unication should help em ployees to build a belief that previous ways of behaviour have proved unsuccessful, and unless em ployees learn to do som ething different, the company will fail, and they will lose their jobs. Change is a process of learning new form o f team work (Crozier, Freidberg 1982, pp. 3 6 3 -3 7 3 ). K. Lewin - E. H. S chein’s model of de-frosting-change-freezing o f attitudes (Lewin 1947, pp. 5-41; Schein 1980, pp. 2 4 3 -2 4 7 ) describes the process well. If the m anagem ent, due to intensive com m unication, provides conditions for experim enting, makes their staff aw are of the change, gives support and encourages participation in change, creates perspective for training and im plem enting changes, the em ployees will become the driving force of the change. T he next step is to introduce mechanisms supporting change; these would be prom oting proper attitudes in order to internalize them (social com m unication!), revising rew arding systems, perform ance assessm ents, career paths and trainings. Another effective way of doing this is also translating long­ term, strategic changes into short-term , operational (step by step) changes, and also anticipating resistance. Introducing change in a com pany may cause the fall of the current: performance, organizational abilities, form al relationships. The following appear: feeling of losing control (among the m anagem ent), fears of challenges to com e, insecurity and ambiguity due to excessive information (on the other hand, it is necessary in order to work out new solutions and attitudes in em ployees), additional duties and work. Withdrawal from change may cause total breakdow n o f the changes in progress.

4. SUPERIORS’ TASK: BUILDING THE CULTURE OF CHANGE

Effective managing change requires understanding the culture of the organization. L. Clarke’s model presents leadership thanks to making staff sensitive to change (Table 2). Simon M ajaro’s model (Figure 2) shows the impact which the management have on building such a culture. It is not possible to make such systems of behaviour, values, etc. widespread without social communication, both through

official channels

and

unofficial channels.

C O M M U N IC A TIN G COMPANY CHANGE 107 T a b le 2

L eadership th an k s to m ak in g staff sen sitiv e to c h a n g e

P h a s e W o rk

A nalyse e x te rn a l and internal m a rk e t for ch an g es

Tune yourself up to the environment; build internal m arket for change; test perception o f change and attitudes through polls and audits in order to assess the level o f custom er satisfaction and present results to the most appropriate people; create ch an n els that would enable e x p re ssin g dissid en t views and diagnosing problems.

A n tic ip a te re sista n c e Key people g a th e r in fo rm a tio n on the potential level o f resistance in their area; use techniques, such as analysis o f field o f powers and m ap o f involvem ent in order to estimate risk o f changes and the level o f organizational readiness for the change. Outline preliminary scope o f changes; how broad are the changes, and what influence do they have on em ployees and customers? Should you con tin u e them?

Build a c o m m o n vision C om m u n icate o rg a n iz a tio n al vision w ith real in v o lv e m e n t; m ak e it cle ar that change and vision a re o n e; encourage team s to h y p o th e siz e to m ake them feel m ore co m fo rtab le a b o u t the future.

W in th e ir in v o lv e m e n t Spread the v isio n o f c h an g e behind the circle o f p e o p le in v o lv ed in it in o rd e r to reach critical m ass; a p p o in t agents o f ch an g e, p ro je c t te a m s, etc. O rganize training co u rses and em p lo y ee m eetings for th o se w h o rep resen t functional areas in order for all areas to m eet; c o m m u n ic a te a n d c o n s u lt em p lo y ees and g roups. M ake a p la n o f c h an g e M ake a p lan o f c h an g e step by step; split it in to e le m e n ts feasib le to im p lem en t;

introduce f o r m a l c h a n n e ls o f c o m m u n ic a tio n .

R ein fo rce c h a n g e s Poll the employees. A sses attitudes for further change th at would enable your m onitoring progress and correcting plans; institutionalize changes through proper adjusting o f procedures and systeins; identify and rew ard heroes; withstand and win. S o u rce : a u th o r ’s study on the b asis o f (C la rk e 1997, pp. 242).

Cn m o O 2 O > 3 m o x > z w conscious modelling of social roles, training and instructing systems describing control ^ effectiveness

promotional criteria and rewarding _ criteria of recruitment, advancement,

decruitment and pension scheme leader's reactions to failures and problems

PRIMARY MECHANISMS

Fig. 2. Influence o f leaders on company’s organizational culture Source: author’s study on the basis of (Clarke 1997).

C hanges in organizational culture alone, w ith o u t changes in organizational structure and its processes, will not be effective. There should be synchronization of the transform ation b etw een these elem ents in the pro cess of change im plem entatiqn. C reatin g an atm osphere conducive to changes should be supported by cre a tin g visions o f the future action s (Figure 3). T he leadership based on that vision has attributes o f cultural leadership, w hich is based on delegating authority, risk-taking, long-term vision, esteem for oneself an d for em ployees, building tru st, interpersonal skills, and focusing on key issues (Clarke

1997, pp. 184 ff.).

How do we get there from here? VISION Key mission Where are we now?? — ► S T , . Brf in®tor" lin 9 Analogies/metaphors, images Why change? — ► Defining vision and system of values Scenarios of possible trei rds Where ar« we going? development Why change?

Managing in a transient period

Fig. 3. Atmosphere conducive to changes: building a comm on vision Source: author’s study on the basis of (Beckhard, Harris 1989).

5. S T E P BY ST E P

Small changes introduced step by step brings us clo ser to the goal. The inherent paradox of managing change is not re-organising it once, but getting the com pany used to constant change. Ricky Griffin breaks the process of change into seven steps: acknow ledging the need for change, defining objectives o f change, diagnosing key variables, choosing proper techniques of change, planning change im plem entation, putting change into action, and assessm ent and continuation (Griffin 1996, pp. 397). Joe Peppard and Philip Rowland discuss seven stages: unaw areness of change shock, negation, acceptance m ixed with turbulence o f the change process, looking for solutions, and taking action (Peppard, Rowland 1997, pp. 254 0 - H orst Steinmann and Georg S chreyogg present a six-stage model: 1. em phasis on managem ent and stimulus to act, 2. intervention at the highest revel o f u-;tion and turning to internal problem s, 3. diagnosing and detecting problem s, 4. finding new solutions and implementing new rules of behaviour, 5. experimenting with new solutions and displaying results, 6. approval of correct results and acceptance of new

C O M M U N IC A TIN G COMPANY C H AN G E 109 methods (Steinman, Schreyogg 1995, pp. 29In). L. Clarke uses a four-arm star to describe changes: 1. Why change? W e must describe, together with employees, argum ents for change based on economic calculation (internal and external factors); encourage people to ask themselves about reasons to change, and to critically assess status quo\ com m unicate benefits that com e with change; m ake sure in advance that key people are involved in the process o f managing change; 2. M ake sure that the change is workable: estimate im pact o f change on staff and on custom ers; make sure enough time and space is provided for change; break changes into smaller stages; be visible and supportive; appoint winners o f change process; 3. Shared approach: if you get people involved now, it might be too late; co-authorship of change should be at the very outset o f preparing change; open and direct com m unication is a foundation for proper changes; announcing change too soon may be risky; it is b etter to announce change already in progress, the one w hich has its com m itted supporters; 4. reinforce teams and individuals; people m ay be willing to take the risk o f transition from what is known to something that is unknown if they have self-confidence; build self-confidence through people-oriented style; create a favourable, confident environm ent; reinforce view -point o f the winners (not losers), help people to retain the feeling o f team unity (C larke 1997, pp. 238).

I was able to formulate this decalogue for m anaging change thanks to the inform ation collected during research and consultations: 1. Analysing (leader- manager) assumptions for m anaging a company, m odernizing current system o f values, creating assumptions for the future vision; 2. A nalysing internal and external environm ent of the com pany (analysis, and looking for jeopardies and w eak/strong points of the com pany, diagnosing subjects that could be driving forces o f change or our allies in their implementing); 3. Getting to know the process o f introducing change, intensifying com m unication within the com pany in order to make employees aw are of the need for change; 4. W ithin the fram ew ork of intensive com m unication between the m anagem ent and the staff, assessing who is for and who is against change; 5. By letting employees express their concerns and their com m ents, involving them in the process; 6. M aking the assum ptions of the vision know n to the em ployees, giving them the chance to m ake it more specific to m atch their needs in detail; 7. W ithin the fram ew ork of creating culture of change we de-frost behaviours and attitudes and, along with em ployees, create a detailed plan of action; 8. Arranging inform ation stream s by intensive com m unication to promote involvem ent, innovations, etc. 9. R einforcing new behaviours (freezing);

10.

C reating organizational and cultural reinforcem ents through proper motivation system s, assessment criteria, career paths, image, organizational changes, etc. in o rd er to provide long-term flexibility to stimuli from the environm ent.

6. CO N C LU SIO N S: C O M M U N IC A T E A B O V E ALL!

By show ing the model of m anaging change I have stressed the leading role of social communication in the com pany. The successful application of social com m unication is a prerequisite for implementing change in a contemporary com pany. Bill Quirke proves that in a hierarchical structure o f a big company a small num ber o f people have m ost information. This m eans that access to information is in conflict with organizational pyram id (Quirke 1996, pp. 114nn). Transition from what is known to what is unknow n is connected with risk and insecurity. Active, sincere communication is a rem edy to this situation. Another prerequisite for successful change is providing an intensive flow of inform ation not only from the top to the bottom, but also from the bottom to the top, as well as along the horizontal axis of the organization. Informing em ployees involves controlling the com pany’s future, delegating authority, acknow ledging reasons for change, it also serves as a rem edy to the fear of change. Com plex communication enables employees to articulate their fears and concerns, express their feelings, share responsibility for change. It is a transition from organizational-inform ational hierarchy to networking hierarchy (Naisbitt 1997, pp. 232-249; STRA TEG O R 1995, pp. 387-4 07 ). In the first period o f introducing change inform ational ambiguity may occur, and the vision may not have yet been translated into action. H ence the necessity of com m unicating, in order to be open to information and to co-relate this inform ation with the developing situation (i.e. with the proper moment for change).

7. C A S E STUDY: C O M M U N IC A T IN G C H A N G E IN P O L IS H R E A L IT Y : S P R IN G IN G A S U R PR IS E A N D ITS

A C C E P T A N C E /A P P R O V A L A F T E R W A R D S (W R IT T E N A N A LYSIS O F T H E CO M PA N Y M A N A G E M E N T T R A N S F O R M A T IO N ) N eed

for

a change. Forte Serwis Ltd. was established in September 1997. The m anagem ent embarked on a change of usual practices and a new concept for m anaging the company was initiated. The m anagem ent relied here on its own experience, and also on the services of consulting firm s. The company, however, had not met the basic requirement: the need fo r a change in a company was clearly noticed by the management of Forte, but administration and floor workers were not, for m any reasons, interested in them at all. There was not enough time to arouse the aw areness of the w orkers to the need for the change. Transform ation was executed surgically. A new Forte Serwis capital group was created which employed only those adm inistrative workers who had

C O M M U N IC A TIN G COMPANY CH AN G E 111 previously expressed their acceptance of the change. Shop floor workers were offered jo b s in the new com pany but on different term s, both financial and organizational. A big majority accepted that. The w hole operation took three days. T h e question was w hether the outcome and effects of such a transform ation were successful, and to what extent the new situation of the com pany was perceived by the staff. How are the em ployees going to react to any further changes in the com pany? What difficulties is the management going to face w hile transforming the com pany towards chain organization with self­ training elem ents and self-learning structures? W hat inform ation did the staff get after this decision? Do the workers have any say in the matter of the com pany (management) requirem ents, or can they expect good treatment only when they keep up with the changes? Or are they expected to actively participate in the processes o f the company’s adjusting to the m arket requirem ents? Maybe, on the contrary, the employees drew no conclusions from these changes and they simply did not notice them? The question remains: what should be done in order for the staff to approve o f the need for change? Is it better to risky embarking on changes rather than to rem ain in the old and inefficient (from the m anagem ent point of view), but secure (from the em ployees’ point of view) organizational structure? W hat m easures should be undertaken so that the staff feel fully responsible for self-developm ent? W hat should be the critical mass o f change, so that it was perceived as necessary, im pending and desired? Econom ic realities require quick decisions. New staff, and those workers who rem ained in their previous positions were faced with different requirem ents concerning their qualifications, and also were given a set period o f tim e within which they should achieve new goals.

Coalition for change.

Organizational change has been executed successfully thanks to determ ination of the m anagem ent o f Forte and also thanks to support from a group o f workers. No coalition for change had been constructed before. After the management decided on the course o f transform ations due to econom ic reasons, a few prelim inary meetings were held with the staff. Also systematic training sessions were initiated whose objecive was explaining the neccessity for change (in that way the m anagement gained the approval o f the staff before any further changes). Then the m anagem ent em barked on certain proceedings which, however, could have been undertaken before any alterations to the system. Here the question arises: is the m anagem ent building a coalition for change, but in fact acting against it? The factor o f speed of change can be perceived as crucial in such situations. The m anagem ent has to analyse the possibility of gaining the acceptance of staff in various ways, both within the com pany and also in other associated structures. These people will have to support the change through their actions and opinions, reinforcing the changes already being im plem ented and those

awaiting im plem entation. The m anagem ent has to be aw are o f the fact that the involvement o f the board is also the prerequisite for success, because it is clearly an im portant sign to all the employees. However, the management also considers possibilities of quick changes in the aspect o f counter-coalitions which em erge in defence of the old status quo. A clear picture of the organization after change. The most important features of the new organization were form ulated and communicated to the staff in the form o f objectives in a letter from the chairman to the staff. This was also com m unicated directly during talks with the shop floor w orkers. Approval of these changes by the staff involved m any complex issues. T hat is why it is the objective of the management to reveal the motives behind certain proceedings, in order for the staff to follow the com pany’s policies, and also seeing the interest of the company and its staff behind those actions is crucial. T he picture of the company after change should be clear, so that the changes are desired by all involved, and also so that these changes are possible to im plem ent. At the same time the picture should be clear for the managers to allow them to take unam biguous decisions. The picture should be m anageable and open for various options that could fit within the fram ework. The attitude o f the management should be consistent in order to serve as a good exam ple. These are very important m essages for the staff. P roper behaviours and actions o f the middle management are closely watched by the workers. T he behaviour of the management which is perceived as reinforcing the change is crucial, but those actions w hich hinder it are probably even more conspicuous. In order to win this aspect certain actions were undertaken; adm inistration and managers of all the branches were given the task to reinforce the change by proper influencing the staff, partners and customers alike.

Effective communicating the direction of changes and the new

organization structure.

The question arises whether the w ay of implementing the change in the company had been right? One can say that if it proved successful the action was proper. D irections of organizational changes and the picture o f the organization after the change had not been presented to the staff before. T his was done post factum. The objectives set are clear, realistic and indisputable; they are identified as being part of the process. The performance of the com pany after these changes prove they had been necessary; the company cut down on costs, figures improved, workers started m aking m ore money, the perception o f the company changed fo r the better, both am ong workers and also among its clients and associated structures. Workers are w itnesses to change. All this proves that the change had been necessary. A re the expectations concerning the change com m unicated to the staff? Partly, yes. These were com m unicated especially to the shop floor and m aintenance workers. They are expected to identify their work with the company’s objectives and its strategy;

C O M M U N IC A TIN G COMPANY C H AN G E 113 it is also expected that they acknow ledge the tasks set by the company. The m anagem ent expects the shop floor workers to co ntrib ute to the company actions through their professionalism . All workers are expected to educate them selves so that they can participate in the overall developm ent of the com pany.

A nother question arises: how to reinforce, consolidate and make more dynam ic the changes and also how to overcome resistance? What should be done in order not to lose the w orkers’ involvement. T h e management has to cope with these questions and m ust be aware of the fact that the speed o f change once slowed down is hard to regain. In the case o f changes in Forte Serwis m any people from the outside were involved through the establishm ent of interdisciplinary teams for realization of training objectives. Also many experts from outside the com pany were involved. T his contributed to keeping the staff in constant awareness. Reinforcing changes is necessary for a long period o f tim e, for it takes a long tim e for any change to sink in. The majority o f staff are not aware of the strong impact the organizational structure has on them. C hanges get accepted in the company culture if they bring about visible, positive effects, and that aspect m ust be stressed here. A lso the importance o f new attitudes, new conducts and new values need em phasising. Personnel may need to be changed, too.

Diagnosing and detecting problems.

The main o bstacles for the changes, both organizational and personal, had been detected before taking the decision about transform ation. Despite many questions concerning the pertinence of certain decisions there was unanim ous agreement about the necessity and direction o f change. This determ ination was clearly articulated both in actions and in decisions. A totally new com pany was established providing services for assem bling kitchen furniture to the producer. The status o f the sister com pany clearly described the role of the com pany within the firm . It defined goals and mutual relationships. A nother far-reaching effect w as decision about privatization of ’’-men assembly team s” . This involved new working agreem ents with those teams (similar to franchising). In the b eginning only a few team s were involved (firms of natural person status or general partnerships). At the moment a great deal of such firm s constitute an organization o f chain structure. By the end o f 1998 the restructuring of the com pany should have been com pleted creating a horizontal chain structure, made up o f many autonom ous teams, all o f these closely connected with the decision m aking centre.

Planning changes. Assimilating new skills and behaviours.

In its overall shape the whole new organization had been planned before the changes were undertaken. The most im portant decisions concerning changes, mainly personnel, took three days. T hese, of course, were preceeded by a period o f consultation. These decisions depended to a great extent on the pre­

transform ation situation, a small circle of people taken into consideration based on their m erits, specific services provided by the company, and the short period of time to do it. The management w ere fully aware of the fact that the operation must be executed swiftly, alongside the company’s daily routines, and also in such a way that no unexpected com m otion should have any affect on custom er services. The change planned was quite radical, but at the sam e time very clear to read by all employees. Its main objectives were well-laid, the future shape of organizational structure pre-determined. The new situation revealed the great importance o f organizational change in its cultural aspect. It was crucial because the period of “blissful” social security had dulled em ployees’ awareness o f individual responsibility for the com pany’s future. Therefore the company faced the need to make the workers aware of the fact that their well­ being was closely related to the com pany’s performance. W hat do we expect from changes, and how the com pany and its staff should behave? These expectations w ere formulated in the com pany’s internal docum entation and in the objectives for the assembly teams along with their m anuals and procedures. They were also written down in every work agreement. T ak in g into account the way assem bly teams function (autonom ously and with no direct supervision from headquarters) these teams were informed about the new basic values of the organization, and these objectives served as clear instructions. They involved: 1. Com pany goals and business rules o f the. 2. Perception o f the company, and its name, am ong customers which influence attitudes within the company and outside. 3. W ays of com m unication within the co m p an y and with the m arket; co n sc io u s m arketing. 4. A ttitude and serv ices provided by the com pany fo r clien ts, suppliers, public institutions, local com m unity and its w orkers. 5. P rofessionalism and p rid e of the assem bly team s.

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