Bm 6 2012 Unit4 Change Management

BUSINESS MANAGEMENT UNIT 4

Change management:

technological development at

Australia PostJulie Cain

Lalor Secondary College

This article outlines a comprehensive five-part approach to the teaching and assessment of Area of Study 2 in VCE Business Management Unit 4: ‘The management of change’.

This article comprises:Part A: Key knowledge relating to the management of changePart B: Technological development as a significant change management issue Part C: Research material on the growth of online shopping as a form of technological change (significant issue)Part D: Case study using Australia Post and its response to online shoppingPart E: Assessment task based on Australia Post

Part A: Key knowledge relating to the management of change

Overview of change management

All organisations must be able to adapt to a rapidly changing environment by taking a proactive approach to pressures. Twenty years ago organisations were operating in stable environments with little change and certainty. Change is now rapid, unpredictable and will usually impact on all areas of an organisation. Organisations that do not have strategies to recognise pressures and changes in the environment will be impacted in a negative manner. Change is continuous and the only certainty in the business environment is that change will occur.

Pressures for change

Change impacts on all areas of an organisation. Pressures for change can come from the internal and external environment. Change can impact on the internal environment in areas such as structure, corporate culture, management styles, tasks, policies and processes, and management functions.

Pressures for change in the internal environment

Pressures in the internal environment are those that are unique to the organisation. Pressures include: owners/shareholders, board of directors and management, employees, organisational

VCTA © Julie Cain Published August 2012 page 1


structure and corporate culture. These pressures can impact on the organisation in a positive or negative way. Types of pressures and how they can impact on an organisation are listed in Table 1.



TABLE 1: TYPES OF INTERNAL PRESSURES AND HOW THEY IMPACT ON ORGANISATIONS

Pressure Impact on organisation

Owners/shareholders

Individuals or companies with a substantial shareholding may be able to exert influence over the organisation to bring about positive change.Shareholders can also influence the organisation and push for increased dividends. This may cause the organisation to look at ways of reducing costs and increasing profit margins.

Board of directors/ management

The board will influence the strategic direction of the organisation. Changes in strategic plans will impact all the way through the organisation. The board is not involved in the day-to-day activities of the organisation and should not interfere with the management; however, it should ensure that it does not ‘rubber stamp’ policies and that it is accountable if there are ethical issues involved.The management style adopted by managers and the skills they have, also impact on the organisation and the relationships with employees.

Employees Employees want to work in an ethical work place and be treated fairly. Employees will place pressure on organisations to ensure that there are flexible work practices and anti-bullying and equal opportunity policies. They will also pressure the organisation to become an ‘employer of choice’. Employees may also pressure an organisation to introduce or adapt work-related policies and practices.

Organisational structure

Many organisations have been downsizing and returning to their core businesses, often in an effort to reduce costs. These strategies have involved the removal of some layers of organisations. Employees have become increasingly multiskilled and downsizing has changed the structure of organisations. Most large organisations are now based on a less hierarchical functional structure rather than on a bureaucracy.

Corporate culture

Corporate culture refers to the shared values, beliefs and attitudes of an organisation. The management style, policies, structure and practices all impact on culture in either a positive or negative way.

Pressures for change in the external environment

Operating pressures

The operating environment is unique to the organisation’s particular sector of the economy. All organisations in a particular industry, for example the retail industry, have similar challenges and pressures in this sector of the environment. Table 2 outlines the main operating pressures on organisations.

All organisations need good working relationships with reliable suppliers; for example, the car industry depends on a regular supply of auto components.



TABLE 2: OPERATING PRESSURES ON ORGANISATIONS

Pressures Impact on organisation

Customers Customers pose an opportunity for organisations and also a risk. Organisations must ensure that they understand the needs and concerns of their customers if they are to keep them. Organisations should make sure that the ‘customer comes first’ if they are to remain competitive.If organisations are not adaptive to the needs of their customers, then they may miss opportunities to increase sales and market share.Being proactive rather than reactive will assist an organisation to retain and gain customers.

Competitors Competitors are an important pressure on organisations. They must be monitored and the organisation needs to ensure that it stays ahead of its competitors rather than simply follow and respond to their initiatives and strategies. The campaigns and marketing strategies of Coles and Woolworths are a good example of trying to increase sales in the market. Discount petrol vouchers, special offers and loyalty cards are part of their marketing campaigns.

Suppliers Suppliers are important to any organisation. There is a strong need for good working relationships with reliable suppliers, particularly in manufacturing organisations. The car industry, for example, needs to ensure that it has reliable suppliers, as any disputes or issues facing a supplier of components can have a dramatic impact on the production process of a car manufacturer. Some car manufacturers have had to shut down production due to issues faced by suppliers.

Trade unions Trade unions can have an impact on organisations and force it to change. For example, unions may take action in the pursuit of better pay and conditions on behalf of their members.This may cause the organisation to change practices or may disrupt their business.

Lobby/pressure groups

Special interest groups will attempt to influence the actions of an organisation. Pressure groups may lobby an organisation to change practices and policies, such as changes to carbon emissions, recycling and waste management.

Financial institutions

The deregulation of the banking and finance industry has allowed businesses to access funds more freely and has provided opportunities for businesses.

Macro environment

Pressures within the macro environment are outside the control of organisations, which must plan in an effort to manage these pressures. This area of the external environment is vital. Table 3 outlines the main macro pressures on organisations.

TABLE 3: MACRO PRESSURES ON ORGANISATIONS

Pressure Impact on organisation

Economic forces The state of the economy is vital and impacts on an organisation in a number of ways. Changes in interest rates, the business cycle, economic conditions in the rest of the world, government budgets and the value of the Australian dollar all impact on organisations.

Government forces Federal, state and local governments all impact on organisations. Changes in government policy and regulations may cause organisations to respond to and change either practices or policies.

Legal forces Changes in legislation impact on organisations. Laws may include equal opportunity, anti-discrimination, employee relations, and occupational health and safety.

Technological developments

Changes in technology, such as e-commerce, email, the Internet and new technologies, all impact on how businesses operate.

Social and cultural forces

Organisations must be aware of changing social and cultural conditions. Changes can include: increased participation rates for women; the need for work–life balance; higher levels of education; and changes in the expectations of employees.

Environmental issues

Awareness of the environment and the need to examine recycling practices, reduce carbon emissions and improve waste management have changed the way organisations are managed.



Driving and restraining forces for change

Kurt Lewin developed a change model and an approach to change. Part of his theory uses ‘force field analysis’, which is based on the physical sciences. The theory provides a tool for organisations to understand change and the impact it can have on an organisation. Lewin set out driving and restraining forces for change. Driving forces pressure or push an organisation to change.

These forces can impact in the following ways:

If driving forces are greater than the restraining forces then the change will be successful.

If restraining forces for change are greater than driving forces then the change will not be successful.

If driving forces and restraining forces are equal then the change will be unsuccessful.

Driving forces include:

a positive corporate culture

participative management style

group decision-making

a clear vision

high productivity

clear management practices and policies.

Restraining forces include:

autocratic management styles

poorly communicated vision

low levels of productivity

high levels of workplace accidents

high levels of staff turnover

poor morale.

Driving and restraining forces can be explained using a car as an example. If the driver has his or her foot on the accelerator then the car will go forward, if the driver has his/her foot on the brake (restraining force) then the car won’t move forward. If the driver has his/her foot on the brake and the accelerator at the same time then the car won’t go anywhere (and may stall).

Kotter’s theory of change management

John Kotter developed the eight-stage model for implementing and managing change. The main elements or steps in the process are:

1 Establish a sense of urgency.

2 Assemble a group of people.

3 Create a vision for the organisation.

4 Communicate the vision.

5 Empower others.

6 Plan to achieve short-term gains.

7 Consolidate the changes.

8 Institutionalise new approaches.



Strategies for effective change management

All organisations must develop strategies to manage change. Many people are reluctant to make changes due to uncertainty about the future and because it pushes people out of their comfort zone. Research has also shown that an individual’s first reaction to change or stress is to move to the negative. Organisations must find ways to successfully manage the change process. In order to successfully implement change, then organisations need to examine the strategies they are going to use. Strategies can be either low-risk or high-risk practices.

High-risk practices include:

coercion and threats

manipulation, for example omitting information

using an autocratic management style.

Low-risk practices include:

participative management style

two-way communication

empowerment of employees

using work teams

support all going through the change.

Leadership of change

Leaders and managers are important in the successful management of change. Leaders need skills such as being able to diagnose and understand a situation. They also need to be able to adapt to new situations and responses as required, and communicate to all stakeholders about a proposed change, why it is needed, and what stage it is at in the change process.

Management skills to assist in the change process include communication and interpersonal skills, visionary skills, delegation skills, decision-making skills and problem-solving skills.

Effective change management requires good leadership skills in order to move a team smoothly through a change that will benefit an organisation.



Part B: Technological development as a significant change management issue

Over the past 20 years organisations have been quick to adapt tools such as email, e-commerce, websites, computerised records and mobile technology. Australians have high rates of ownership and use of technology such as mobile phones and personal computers, and use it for work and personal applications.

Pressures and the impact of change due to technological development

Technological development is a significant change issue and impacts on all stakeholders in an organisation and creates a range of pressures for organisations, as outlined below:

Management—managers need to have skills to introduce and develop technology. This can include the need to be able to develop training programs, creative thinking skills, and the ability to manage effective teams, introduce changes in policies, and re-configure work processes.

Employees—employees need to develop new skills and change work practices in order to work in organisations. Employees also need to become increasingly multiskilled.

Corporate culture—this may change as a result of new technologies. Cultural shifts may occur when applicants are recruited with new skills, experiences and new attitudes that will in turn influence those in the organisation. These new demands may impact on employees and may cause some workers to feel stressed.

Customers—now expect organisations to use and develop technology as part of their business.

Trade unions—unions may have concerns about the introduction of new technologies as it may mean job losses for employees whose skills become redundant.

Competition—organisations will need to introduce and continue to improve the technology they use to keep ahead of rival organisations.

Social and demographic pressures—there are now a number of different generations in the workforce. These generations have different expectations about work and how organisations operate. New employees will expect to use technology as part of their job.

Globalisation—the world economy means that many countries and organisations are now linked via technology. Organisations can now operate globally and use technology to develop a customer base.

Driving and restraining forces for change due to technological development

Table 3 lists the main driving and restraining forces for change due to technological development.

TABLE 4: FORCES FOR CHANGE DUE TO TECHNOLOGICAL DEVELOPMENT

Driving forces Restraining forces

Community use of technology Cost of technology

Development of faster ways to complete tasks Uncertainty regarding costs of implementing technology

Multiskilling of employees—provides more flexibility for organisations

Employee resistance to technology

Large amounts of information can be processed quickly Costs associated with training employees

The availability of portable devices means business can be conducted at different times.

Issues around maintenance of computer systems



Part C: Research material on the growth of online shopping as a form of technological change (significant issue)

Technological developments have impacted on many areas of the management functions of organisations. Operations, finance, research and development and human resources are all impacted by technology. In Australia, more consumers are starting to purchase products using online shopping websites. Information on the background and rise of online shopping in Australia is provided on the following pages.

Background information—the growth of online shopping in Australia

The value of online shopping using credit cards in Australia has grown by an average of 15 per cent per year since 2005. The Reserve Bank has noted that postal flows from overseas suggest that international online purchases have also increased by an average of 10 per cent per year since 2005. This is in contrast to the 1 per cent average fall in domestic postal deliveries during the same period. Private sector estimates of e-commerce growth vary, with groups like IBISWorld tipping that the industry in Australia will grow to $23.4 billion by 2014. IBISworld estimated that the overall e-commerce industry was worth $18.6 billion in 2009. (‘Strong growth in online shopping’, The Age, 4 February 2011). Another organisation, Quantium Online, run by Simon Smith, the former boss of eBay in Australia, believes that the value of Australian online purchases is rising by 26 per cent a year. Quantium has also found and highlighted a number of trends. Some of the main findings about online retailing include:

Of the top 20 online retailers used by Australians, 11 are domestic (fully online) stores, five are both traditional retailers and online stores, and only four are based overseas.

The turnover of the top 15 domestic online retailers is now greater than the largest single non-food retailer, Big W.

Some 40 per cent of online shoppers are aged over 45, while those under 25 account for just 15 per cent of transactions.

A Commonwealth Bank of Australia (CBA) report states that over 45s make up 35 per cent of the market and use a different age grouping at the younger end, suggesting those under 30 account for 28 per cent of the business. (Reference: ‘Finally, a clearer picture of online shopping’, The Sydney Morning Herald, 29 July 2011)

During Christmas 2011 Australia had its busiest period of online shopping. At the top of the shopping list were electronic goods, toys sporting goods, clothes and in-store vouchers. Most of these orders were placed with local Australian businesses. Liquor retailer Dan Murphy’s and toys retailer Toys‘R‘Us both experienced their largest ever online sales in the lead-up to Christmas. Some of the most popular items purchased online from Toys‘R‘Us were trampolines, pools, swing sets, Monster High Dolls, LEGO and collectibles. Figures from Market Blueprint, Quantium’s database of CBA customers’ transaction data, highlight the rise of Australian-based ‘e-tailing’. The likes of DealsDirect.com.au, GraysOnline.com, domestic eBay sellers and their peers have grabbed this rapidly growing space while the established retailers were still in online denial.

PayPal spokesperson Adrian Christie said that about 70 per cent of purchases were made with Australian retailers and about 30 per cent with overseas ones. ‘Our research shows there is definitely a preference to buy Australian (goods)’, he said. Mr Christie said customers went to overseas websites not only to take advantage of the high value of the Australian dollar but also because many items were simply not available here. He also believed that retail stores in Australia would start using their physical retail spaces for customer service and returns and pick-ups for example. (Reference: ‘Biggest ever online shopping spree’, The Age, 11 January 2011)

In the 12 months since April 2011 Australians spent more than $11 billion buying goods online.



The value of online shopping using credit cards in Australia has grown by an average of 15 per cent per year since

2005.

The National Australia Bank's latest online retail sales index found that Internet sales made up 5.1 per cent of total retail spending in the 12-month period, up from 4.9 per cent a year earlier. Nearly three quarters of the $11.1 billion spent by shoppers was on buying goods from Australian websites.

Online spending was strongest in the ACT and Northern Territory, with those in Queensland and Victoria the most reluctant to shop online. (Reference: ‘Aussies’ online shopping bill hits $11b’, The Age, 28 May 2011)

Kmart CEO Guy Russo believes that online shopping does not pose a threat to retailers. He sees online shopping as based on convenience and that retailers such as Kmart focus on pricing strategies as Kmart is able to sell clothing at cheaper prices than online retailers.

There are also some issues for retailers as a result of online shopping. Shop owners and retailers are concerned about people scoping their stores—only to use information to buy cheaper products online. Some retailers are starting to develop strategies to deal with this and many have started to charge customers who try on clothing and shoes. Some retailers have then refunded these charges if the customer buys something from the store.

Australian Retailers Association executive director Russell Zimmerman said retailers were hurting from high employment costs, such as weekend penalty rates, expensive rent in shopping malls and the GST exemption on overseas purchases up to $1000. A brand-marketing expert advises against applying fitting charges as an online countermeasure and argues that retailers should be ‘selling the shopping experience’ and ‘building that relationship’.

It is argued that too many discount sales also hurt traditional retailers and they should be offering value to customers through two-for-one deals or a free gift with a purchase. Consumers were using smartphones to compare prices between rival stores and asking retailers to ‘match that’, a far more significant threat than online purchases from overseas.

The skill levels of some sales assistants was a concern, Dr Peters said. ‘Being a retailer is and has always been a skilled expertise’, he said. ‘It’s not a matter of having an idea and filling up a store with stock and waiting for customers to walk in.’ Tony Eades, the creative director of BrandManager, said retailers should not be cutting corners ‘by putting the younger school kids on and not training them properly’.

Canberra Business Council is running courses through Canberra BusinessPoint, which provide advice on adjusting to the business cycle, to help retailers adapt to the small but growing online threat. (Reference: ‘The ugly side of online shopping’, The Age, 11 April 2012).



Online shopping may also mean that consumers are buying products from businesses that are not as ethical as consumers may believe they should be.

While online shopping has provided many opportunities for organisations, there are a number of issues related to the rise in this type of business activity. For example, some online businesses are employing relatively unskilled staff who are given difficult, if not impossible, quotas and time to carry out their job. This has led to exploitation of more vulnerable employees.

There has been a trend here, as in America, for some companies to replace full-time distribution workers with third-party logistics contractors that employ casual warehouse staff through labour hire firms. ‘They have no obligation to those workers’, Donnelly says. ‘They can tell them at any time, “You are finished”.' (Reference: ‘The dark face of a cheap and easy online shopping habit’, The Age, 6 April 2012)

More Australians are starting to complete shopping, such as Christmas shopping, online. In the three months to October 2011, Australia Post saw a 24 per cent increase in overseas packages shipped into Australia; at the same time the Australian dollar also increased in value.

Purchases bought overseas for less than $1000 are currently exempt from GST. Many retailers believe that this is unfair and means that retailers cannot remain competitive.

Australians still prefer to purchase online from Australian organisations rather than those based overseas. Surveys have found that Australian consumers feel safer dealing with Australian companies and this provides potential for future growth. (Reference: ‘Winners and losers at the online shopping mall’, The Age, 28 November 2011)

Part D: Case study using Australia Post and its response to online shopping

(Reference: http://auspost.com.au)

Overview and background

Vision and mission statements

Australia Post is a government business enterprise (GBE). Its vision statement is: ‘Australia Post is committed to providing high-quality mail and parcel services to all Australians’. Australia Post’s mission includes:

We will meet our customers' changing needs by providing:

innovative and easy-to-use products and services

friendly service by knowledgeable staff

consistent on-time delivery

value for money

modern, efficient networks.

We will build our people's commitment to these goals by:

promoting job satisfaction

encouraging participation in the success of the business

recognising outstanding service to customers

rewarding outstanding performance.

As a progressive commercial corporation, Australia Post makes the best use of its assets and earns profits so that it can sustain and develop its business.


http://auspost.com.au/


Australia Post had three elements in its strategic plan. These are:

a. restore a self-sustaining letters business

b. grow the full-value chain in parcels and win in e-commerce

c. build a trusted multi-channelled services offer in retail and digital.

(Source: Australia Post Annual Report, 2010–11)

Customer service charter

Australia Post plays an important role in the Australian community and is required by law to meet specific performance standards. These are called Community Service Obligations (CSOs). The Customer Service Charter aims to communicate these standards to customers.

Corporate governance

Australia Post has clearly set out corporate governance practices, which means that it focuses on providing appropriate levels of accountability and disclosure. This information is provided to the public through its Annual Report.

In addition, as a GBE, Australia Post is subject to the requirements of the Australian Postal Corporation Act, and the Commonwealth Authorities and Companies Act, as well as the government's Governance Arrangements for Commonwealth Business Enterprises.

Organisational structure

Within the Australian Government, the Minister for Broadband, Communications and the Digital Economy has portfolio responsibility for Australia Post. Under a dual shareholder model, overall responsibility is shared with the Minister for Finance and Deregulation.

The organisation was restructured in 2010 into four strategic business units, namely: Postal Services, Retail Services, Express Distributor Services, and e-Services. The focus of these units is on business efficiency and service quality.

Australia Post is a government business enterprise (GBE) and consists of four strategic business units: Postal Services, Retail Services, Express Distributor Services, and e-Services.



Board of directors

The Australia Post Board comprises up to nine directors, eight of whom serve in a non-executive capacity. The Managing Director is the sole executive director. Non-executive directors are appointed by the Governor-General on the nomination of the portfolio minister.

The Board is accountable for Australia Post's overall performance. It sets the corporation's key objectives and strategies through a rolling three-year Corporate Plan, which is submitted annually to the shareholder ministers. Progress against the plan is reported quarterly.

Committees

Two Board committees assist the Board in the discharge of its responsibilities: Audit & Risk Committee and Human Resources.

The Audit & Risk Committee focuses on the areas of financial reporting, risk management and internal controls, and reviews items such as the annual financial statements, financial policies and legal compliance.

The Human Resources Committee oversees areas such as:

recruitment, selection and succession planning

remuneration

culture and ethics

learning and development

occupational health and safety

terms and conditions of employment

organisational structure.

Policies

Australia Post has developed a range of policies including:

Ethics Policy

Equal Opportunity Policy

Diversity Policy

Procurement Policy (relates to supply chain management)

Supplier Code of Conduct

Refund Policy

Corporate Responsibility Policy

Environmental Policy.

Corporate social responsibility (CSR) and business ethics

Australia Post’s primary corporate objective is to build a sustainable business that provides trusted distribution, communications and transaction services for all Australians, wherever they reside.

It has worked on developing a sustainable business by managing Australia Post in a way that balances the needs and expectations of the four key stakeholder groups—people (employees), customers, the Australian community, and shareholder (the federal government).

At the heart of the approach to corporate responsibility is the notion of ‘balance’. In order to satisfy stakeholder expectations, Australia Post accepts that the business must be managed in a way that balances commercial returns with customer service and community interests.



The key objectives of the Corporate Responsibility Policy are to:

ensure that long-term sustainability is founded on responsible business practices

give meaningful consideration to community and environmental impacts and stakeholder expectations when decisions are made

be open and accountable to employees, customers, the Australian community and shareholder on the decisions made and the impact.

Sponsorship

Australia Post's sponsorship programs seek to achieve a balance between community, environmental, sporting, educational, health and arts/cultural events and activities. Examples of Australia Post sponsorship programs include:

Australia Post Legends

Australia Post initiated the Australia Post Australian Legends Award in 1997 to honour living Australians who have made a unique contribution to our way of life, inspired the community and influenced the way Australians think about themselves and their country.

These are people whose achievements have inspired and enriched lives and people who are motivated by the achievement of excellence and the education of others.

Stawell Gift

Australia Post sponsors the Stawell Gift. It has had the naming rights for the gift for the past 16 years.

Melanoma research

Since 1998, Australia Post has supported the Australia Post Medical Research Fellowship through the Royal Australasian College of Physicians. This fellowship provides continued support for melanoma research.

Breast Cancer Network Australia

Australia Post is a major sponsor of Breast Cancer Network Australia's community based ‘Mini-Field of Women’ events. Mini-Fields, held in over 80 communities across Australia, raises public awareness and funds for breast cancer.

Australia Post is also providing free delivery of Breast Cancer Network Australia's (BCNA) My Journey Kit. The kit contains information and resources for women newly diagnosed with breast cancer, plus a repository for test results and a personal journal. BCNA has developed the content of the kit by consulting Australian women who have experienced breast cancer.

Staff health and wellbeing

Australia Post provides a health and wellbeing program for all employees. As part of this program, and recognising that men's issues play an important role in employee wellbeing, Post has been a financial supporter of Mensline Australia since 2002. Australia Post now sponsors a dedicated Mensline Australia telephone counselling line for its male employees.

Core business

Australia Post is required by law to provide a universal letter service that is reasonably accessible to all Australians and, in addition, to provide a standard letter service at a uniform price (currently 60 cents) from anywhere to anywhere in the country.



Australia Post also provides a range of products and services including:

Load and Go cards (these can be used as a debit card to purchase goods online). Customers can purchase these from Australia Post and use them to shop. The advantage is that they are not linked to a credit card or bank accounts and provide extra security, and there are no ongoing costs or interest charges on the card.)

Express Post

Parcel Post

postage products

stamp collections

Samsung Galaxy phones

gift cards

gifts

coins

My Shop in a Box, an all-in-one e-commerce solution that helps small and medium-sized businesses to set up their own customised and secure online shop. Businesses receive:

a unique Web address to give to their customers

a 30-day live trial

an online catalogue where a picture and description of the product can be uploaded

a simple-to-use order and customer management system to manage inventory and sales

unlimited local hosting

a payment gateway through SecurePay as well as PayPal

local support is available via phone or email.

stationery

personalised stamps.

Changes at Australia Post

The increase in the number of Australians using online shopping has led to a change at Australia Post. The increased number of sales online has meant that customers need to have these purchases delivered. There were a number of pressures on the organisation, including the use of email rather than traditional letters, the use of BPay rather than paying bills at Australia Post outlets, and the increase in the value of the Australian dollar, which led to Australia Post losing money delivering all parcels weighing less than 2 kg.

As a result of this change, Australia Post has further developed its core business. It has introduced a range of changes to parcel delivery and to the operations management function. These include:

parcel lockers to allows customers to pick up goods bought online

self-service machines for domestic parcels and special eBay low-cost satchels and boxes

extended hours of operations at some 100 outlets; these are being trialled in some capital cities

access to parcel lockers 24 hours a day to allow people who work long hours and full-time to access parcels outside of Australia Post opening hours

the changes will allow Australia Post to cope with the technological changes related to the Internet and digital capabilities.



Australia Post estimates that 70 per cent of its parcel business was generated by online shopping and generated $1b in revenue. In the future there are moves to upgrade 60 business hubs to focus on small to medium-sized business activity and the introduction of new technology that will be able to electronically track products between Australia and the United States. The organisation is also going to work with Australian retailers with their online ordering and payments through its SecurePay business and the My Shop in a Box product. (Reference: ‘Post changes to cope with online shopping boom’, The Sydney Morning Herald, 10 October 2011)

Impact of changes on Australia Post

Changes have been made to the core business of Australia Post. These have included:

new extended business hours, such as late opening and Saturday mornings

new products for customers and businesses

new technology to track parcels

staff trained in the new products, such as Load and Go

support offered for some products such as My Shop in a Box

increased complexity in regard to parcel delivery and logistics

increased number of employees and contractors to deliver parcels during peak periods, such as Christmas

Australia Post iPhone app launched in July 2011 has been the number 1 most downloaded free app in the iTunes business category.

Performance indicators and evaluation of Australia Post’s performance

Increased sales due to online shopping. Christmas 2011 saw record deliveries for the organisation. In 2010–11 by 2 revenue increased.8 per cent (at the same time costs increased by 1.2 per cent).

Level of customer complaints, such as delays in parcels being delivered, cards being left when customers were at home rather than delivering the parcel. The managing director of the courier and express freight company Allied Express, which was criticised on http://www.productreview.com.au, said that about 98 per cent of its deliveries arrived in time for Christmas and there were valid reasons for those that did not.

$20m was spent on ‘Future Skills’—training and employability skills (staff training in areas such as parcels, logistics, retail and digital services due to the growth in online shopping).

Increased profits came from the handling of parcels in some areas while costs associated with items such as DVDs were not profitable. Profits increased in 2010–11 to $332.3m compared to $253.2m in 2009–10 (up by 31.3 per cent from last year).

96 per cent of domestic letters were delivered on time or early.

public donations collected totalled $2.9m

31 per cent of non-hazardous waste was recycled (the target is 70 per cent by 2016).

Some retailers were critical of Australia Post for delivering items from overseas, as it cut into the earnings of traditional retailers.

(Some data sourced from: ‘Christmas online rush a “learning process”: Australia Post’, The Age and Australia Post Annual Report, 2010–11).


http://www.productreview.com.au/


Student tasks

Complete the following four tables in preparation for the assessment task.

TABLE 1: PRESSURES ON AUSTRALIA POST

Pressure Level of the environment Explanation Impact on Australia Post

TABLE 2: EVALUATION OF PERFORMANCE OF AUSTRALIA POST

Performance Indicator

Explanation Trends/results



TABLE 3: IMPACT OF TECHNOLOGICAL DEVELOPMENTS ON AUSTRALIA POST

Internal environment Impact



TABLE 4: AUSTRALIA POST—CHANGES USING KOTTER’S THEORY OF CHANGE MANAGEMENT

Stage Explanation Impact/example at Australia Post

1 Establish a sense of urgency

2 Assemble a group of people

3 Create a vision for the organisation

4 Communicate the vision

5 Empower others

6 Plan to achieve short-term goals

7 Consolidate all of the changes

8 Institutionalise new approaches



Part E: Assessment task based on Australia Post

The following assessment task is divided into two tasks—a test and a case study analysis.

Your teacher will decide whether the two tasks are to be completed separately (50 minutes each part) or as one larger task (100 minutes).

The test will be undertaken under closed-book conditions. Prior to undertaking the case study part of the assessment task, your teacher will authenticate your handwritten copy of Tables 1 to 4 on Australia Post, which you may then use for reference in the case study part of the assessment task. For ease of use, your teacher may set the test first, collect it and then hand out the case study part of the assessment task.

Assessment task details

Name of task

Test and case study analysis of Australia Post

Unit/area of study

Unit 4: Managing People and Change

Area of Study 2: ‘The management of change’

Outcome 2

Analyse and evaluate the management of change in a large-scale organisation and evaluate the impact of change on the internal environment of a large-scale organisation.

Instructions and conditions

Part A: Test—closed book

Part B: Case study analysis—you may refer to your handwritten copy of the tables (1 to 4) prepared as part of your research (which have been authenticated by your teacher)

Answer all questions in this answer book. The marks for each question are indicated after each question.

Time allowed: 100 minutes (including reading time)

Marks allocated: 50 marks (to be adjusted to a mark out of 40)



Part A: TestQuestion 1

Explain the concept of change and provide an example of organisational change.

2 marks

Question 2

Define the following concepts.

a. organisational inertia

b. empowerment

2 marks



Question 3

Identify each type of pressure and explain how the pressure might cause change in an organisation.

a. The federal government introduces a carbon tax.

b. Trade unions are negotiating a new enterprise bargaining agreement (EBA).

4 marks

Question 4

Organisations can use high-risk and low-risk practices as part of the change process. Define these concepts, provide one example of each and evaluate the effectiveness of each practice.



6 marks

Question 5

Explain Lewin’s ‘force-field analysis’ theory. Identify and explain one possible driving force and one possible restraining force an organisation might face when introducing change.

4 marks



Question 6

Analyse and evaluate the role of leadership in the change management process.

2 marks

Question 7

‘All organisations must manage change to try to ensure that the process is successful.’ Identify and explain four stages of Kotter’s change management theory. Explain why it might be important for an organisation to have developed a change management strategy.



10 marks



Extra writing space if required. Clearly label the question.



Part B: Case study analysis—Australia PostQuestion 1

Explain the issue of technological development and how it has impacted on Australia Post.

3 marks

Question 2

Explain how the following three factors acted as pressures on Australia Post.

a. The increased value of the Australia dollar.



b. Changes in social attitudes and lifestyle.

c. Access to technology, such as computers, the Internet and e-commerce.

3 x 2 marks = 6 marks

Question 3

Identify one driving force and one restraining force faced by Australia Post.

2 marks



Question 4

Describe the impact of technological development on Australia Post’s internal environment.

5 marks



Question 5

Australia Post has undergone organisational change. Evaluate the performance of the organisation in relation to the changes introduced. You may use performance indicators (PIs) as part of your evaluation.

4 marks



Extra writing space if required. Clearly label the question.



Suggested answers and marking guide

Part D: Case study using Australia Post and its response to online shopping

The following completed tables contain suggested answers only, as other issues and concepts could be discussed.

TABLE 1: PRESSURES ON AUSTRALIA POST

Pressure Level of the environment Explanation Impact on Australia Post

Use of computers Macro Customers and the population in general are using computers and email more often.

Fewer letters being delivered; impact on core business operations.Increased use of BPay has impacted on the number of bills people pay at the post office.

Increased participation in the workforce and increased hours of work

Macro Many people are working longer hours, unable to access retail outlets as often. More convenient to shop online.

Increased number of parcels posted and Australia Post has had to develop and refine its logistics.

The strong Australian dollar Macro The strong dollar has meant that more people are purchasing goods from overseas.

Need to change delivery modes; have had to employ more contractors to deliver parcels.

TABLE 2: EVALUATION OF PERFORMANCE OF AUSTRALIA POST

Performance indicator

Explanation Trends/results

Sales revenue—level of sales of postal and other items in a given period, e.g. one year

Revenue increased by 2.8 per cent in the years 2009–2010 to 2010–2011.

Profit—the difference between revenue and expenses 2009–2010—pre-tax profit was $253.2m compared with $332.3m in 2010–2011. Profit growth was up by 31.3 per cent.

Staff satisfaction—a survey indicating whether employees are happy and motivated in their employment

The new EBA was overwhelmingly voted for and Australia Post has spent $20m on training employees to improve their skill levels.

Customer satisfaction 96 per cent of domestic letters were delivered on time.

Level of waste 31 per cent of non-hazardous waste is recycled currently. The plan is to reach a target of 70 per cent by 2016.



TABLE 3: IMPACT OF TECHNOLOGICAL DEVELOPMENT ON AUSTRALIA POST

Internal environment Impact

Operations New systems have had to be put into place to cope with the extra demand for parcel delivery.New logistics systems put into place.New extended opening hours for some outlets.New range of products introduced, e.g. My Shop in a Box, Load and Go cards.

Marketing Changes in the product range have led to increased marketing campaigns to improve customer awareness, e.g. television advertisements for Load and Go cards.

Research and innovation New developments using technology, e.g. being able to track parcels between Australia and the United States.

Finance Australia Post has had to develop new costing structures. Present binding world agreements place a limit on what they can charge for a parcel from overseas that weighs less than 2kg. Costing Australia Post money, they need to look at other products to boost profit.

Human resources (HR) More staff are needed, particularly at peak times such as Christmas. This has led to the employment of more contractors. HR needs to source these contractors and ensure that they have the skills required.New training programs have to be introduced for staff with the advent of new products. Some, for example My Shop in a Box, require specialised knowledge to support customers and small businesses.

Corporate culture Change management can be stressful for those involved. Australia Post has introduced new programs to its health and wellbeing program area to support employees and has provided money to improve employability skills; such measures usually lead to improved corporate culture and staff satisfaction.

Structure Organisational structure changes due to changes in the needs of customers. Australia Post has restructured its business units and branched into new areas beyond the traditional postal services.



TABLE 4: AUSTRALIA POST—CHANGES USING KOTTER’S THEORY OF CHANGE MANAGEMENT

Stage Explanation Impact/example at Australia Post

1 Establish a sense of urgency Inspire and communicate the need to introduce changes.

Australia Post had to redesign some of its core business with the decline in the number of letters posted and the move to parcel delivery.

2 Assemble a group of people A group is needed to lead the organisation through the changes.

Australia Post and its main committees looked at the business and developed a new business model based on units. The senior managers and committees led this change.

3 Create a vision for the organisation The team leading the change need to develop a vision and be clear about what strategies are needed to carry out this vision.

Australia Post had three elements in its strategic plan, restore a self-sustaining letters business; grow the full-value chain in parcels and develop e-commerce; and build a trusted multi-channelled services offer in retail and digital.

4 Communicate the vision The vision needs to be made known to all stakeholders and involve as many people as possible in the process.

Australia Post has modified its vision statement and strategic plan to incorporate the changes. These have been communicated to government, customers, suppliers and employees.

5 Empower others To achieve the vision and the change, any obstacles or blocks need to be removed so that employees can make the necessary changes.

A lot of money was invested into training employees, and contractors were sourced to allow the employees to bring in the changes required by senior management. Training provides the skills to carry out the change. These changes were clearly communicated to those affected.

6 Plan to achieve short-term goals If short-term gains and wins are established and celebrated, then those involved in the change process can see some progress being made.

Australia Post set specific targets in the short-term so that they could measure the success or otherwise of the changes.

7 Consolidate all of the changes At this stage, changes that have been made have to be ingrained into current practice so that employees don’t slip back into the old methods prior to the change.

Australia Post has continued to consolidate the changes and plans to introduce more technology and services, e.g. parcel tracking and 24-hour access to parcel pick-up.

8 Institutionalise new approaches Once the changes have been made, they need to be reinforced so that the change becomes the norm. The change needs to be monitored to ensure that it has been implemented correctly.

Australia Post has made a number of changes to its structure, business units and products. The changes have been successful so far, as profit and revenue have both increased as a result of the changes.



Assessment task

Part A: Test

Question 1

Explain the concept of change and provide an example of organisational change. (2 marks)

The concept of change can be defined as any alteration to an organisation. The change or alterations may be significant and impact on the whole organisation or may be relatively minor where only one part of the organisation is affected. An example of organisational change is when an organisation restructures. It may change one or more of its management functions to ensure that it remains competitive. An organisation such as a motor vehicle manufacturer might decide to change its suppliers and supply chain management, therefore affecting operations.

Marking guide: 1 mark for definition, 1 mark for example

Question 2

Define the following concepts.

a. organisational inertia (1 mark)

Organisational inertia can be defined as the lack of ability of an organisation to react to pressures for change. If the organisation is inert then change is not likely to occur. A number of factors could cause this, for example a negative corporate culture, which means that employees resist change or if an organisation has a powerful tradition and is conservative then change is less likely to occur.

b. empowerment (1 mark)

Empowerment is when employees are given the power or authority to make decisions. There is likely to be less resistance if employees have the authority to introduce the changes and make their own decisions.

Marking guide: 1 mark for each definition; an example is not required but might support the definition

Question 3

Identify each type of pressure and explain how the pressure might cause change in an organisation.

a. The federal government introduces a carbon tax. (2 marks)

The introduction of a carbon tax is a macro pressure as it is outside the control of organisations and will impact on most, if not all, businesses. A new tax by the government means that costs for organisations will increase. This additional cost will either be passed on to customers in the form of higher prices or absorbed by the organisation, which may mean less profit if the higher costs cannot be offset with savings from other areas or the achievement of greater efficiencies.

b. Trade unions are negotiating a new enterprise bargaining agreement (EBA). (2 marks)

If trade unions are negotiating a new enterprise bargaining agreement (EBA), this can be classed as an operating pressure as it tends to involve trade unions from a particular industry or occupation. The negotiations can have an impact on the organisation. If the EBA negotiations are successful, then the organisation might have to make changes to work practices or look at production methods to implement changes in working conditions or a pay rise. If the negotiations are not successful, then the organisation might have to deal with strike action or other forms of industrial disputes, which may cause the organisation to lose money.



Marking guide: for each pressure, 1 mark for identification of the pressure and 1 mark for a description of how it might impact on the organisation.

Question 4

Organisations can use high-risk and low-risk practices as part of the change process. Define these concepts, provide one example of each and evaluate the effectiveness of each practice. (6 marks)

Low-risk practices are those based on a participative approach to implementing change. Low-risk practices include approaches based on two-way communication, empowerment of employees and establishing work teams. High-risk practices, on the other hand, encompass an autocratic approach to change. High-risk practices can include intimidation, coercion and threats. Communication is likely to be one way and the situation or information might be manipulated.

If an organisation wants to implement change successfully it must adopt low-risk strategies as these are more likely to be successful, and in the long-term the change is more likely to be made, as stakeholders are involved in the change process. The use of high-risk strategies might work in the short-term but are unlikely to lead to real and sustained changes.

Marking guide: two x 1 mark for definitions of low-risk and high-risk strategies; two x 1 mark for an example; two x 1 mark for an evaluation of each type of practice.

Question 5

Explain Lewin’s ‘force-field analysis’ theory. Identify and explain one possible driving force and one possible restraining force an organisation might face when introducing change. (4 marks)

Lewin’s ‘force field analysis’ is a tool or theory that can be used to understand the effects and problems associated with implementing change in an organisation. In any given situation, there is a point where forces and counter forces will either allow or block change. Driving forces are those forces that help push the change through. The driving force may be a positive corporate culture or incentives offered as a means to motivate employees. Restraining forces are those that block or prevent the change from happening. Restraining forces can include apathy, a negative corporate culture and hostility towards management. If the driving forces are greater than the restraining forces, then the change will be successful. If the restraining forces are equal to or greater than the driving forces then the change will be unsuccessful.

Marking guide: 1 mark each for a definition of driving and restraining forces (2 marks); 1 mark each for an example(s) of a driving and restraining force (2 marks)

Question 6

Analyse and evaluate the role of leadership in the change management process. (2 marks)

Leadership is vital in the change management process. Leaders need to be able to drive the change and keep up the momentum. If there is not skilled and positive leadership at the top of the organisation then the change is unlikely to occur. Leaders need to be possess a number of skills including: being able to communicate their vision with employees and other stakeholders; the ability to be proactive and also to adapt behaviours and other resources to stop any problems; and the ability to diagnose and analyse the process and then make changes as necessary.

Marking guide: 1 mark for an analysis and 1 mark for an evaluation of the skills needed



Question 7

‘All organisations must manage change to try to ensure that the process is successful.’ Identify and explain four stages of Kotter’s change management theory. Explain why it might be important for an organisation to have developed a change management strategy. (10 marks)

Suggested plan:

Four of the following stages are explained:

1 Establish a sense of urgency.

2 Assemble a group of people.

3 Create a vision for the organisation.

4 Communicate the vision.

5 Empower others.

6 Plan to achieve short-term goals.

7 Consolidate all of the changes.

8 Institutionalise new approaches.

Explanation of why it is important for an organisation to develop a change strategy; for example: communicate with stakeholders; overcome resistance and hostility; allow everyone to understand what the change process entails.

Marking guide: 2 marks per stage of Kotter identified and explained (needs to be detailed for full 2 marks); 2 marks for an explanation of why a change strategy is important.



Part B: Case study analysis—Australia Post

Question 1

Explain the issue of technological development and how it has impacted on Australia Post. (3 marks)

Technological development can cause change in an organisation. Increased use of ICT for business operations and communication has been a far-reaching change and has impacted on many organisations. Australia Post has been affected by change in a number of ways due to technological development. These include changes in the way people use the postal service. The increased use of email has led to a decrease in the amount of mail delivered. On the other hand, the rise of e-commerce and online shopping has meant that Australia Post has had to change to deal with the increased volume of parcels now being delivered. A further change due to technological development is changes in the types of products and services offered by Australia Post.

Marking guide: 1 mark for a definition of technology development as a change issue; an in-depth explanation of one impact or two or three in less detail (2 marks)

Question 2

Explain how the following three factors acted as pressures on Australia Post.

a. The increased value of the Australia dollar. (2 marks)

The increased value of the Australian dollar means that it is more attractive for Australian consumers to purchase overseas as they are able to obtain products at a cheaper price. This has led to an increase in the number of parcels that have to be delivered by Australia Post.

b. Changes in social attitudes and lifestyle. (2 marks)

Changes in social attitudes and lifestyle have led to changes in the way people shop and the methods used by businesses to reach their customers. Longer working hours, reduced leisure time and access to computers and mobile phones with Internet access has meant that people are staying at home and shopping online. As a result, Australia Post has to deliver these parcels and has also developed software to assist small businesses in selling online as well.

c. Access to technology, such as computers, the Internet and e-commerce. (2 marks)

Increased access to technology, such as computers, the Internet and e-commerce, for customers and businesses has changed the way customers are reached. More people are likely to use the website of a business before visiting the premises and businesses are starting to provide services for customers via the Internet and their website. Australia Post offers My Shop in a Box for small and medium-sized businesses to take advantage of the increased use of technology by customers.

Marking guide: three x 1 mark for definition/explanation of the pressure; three x 1 mark for an explanation of the link to Australia Post and the impact on it.

Question 3

Identify one driving force and one restraining force faced by Australia Post. (2 marks)

One driving force faced by Australia Post is the increased take up of technology and the use of the Internet for online shopping. This has meant that Australia Post has made changes to take advantage of this development. One restraining force has been the rapid increase in the volume of parcels that need to be delivered. Australia Post has had to employ contractors to cope with the extra demand, for example at Christmas time, and there have been issues with parcels not being delivered in a timely manner. It has been a restraining force, as Australia Post has not had the capacity and time to deal with the unexpected demand.



Marking guide: 1 mark for each force, must relate each force to Australia Post.

Question 4

Describe the impact of technological development on Australia Post’s internal environment. (5 marks)

Students need to discuss at least two changes in some detail.

The impact of each change could include one or more of the following;

operations

human resources

marketing

finance

structure

corporate culture

research and development.

Marking guide: see Table 3 on page 31 for more information; 1 mark for an overview of the impact of the change; two x 2 marks for a detailed description of two changes (or three or four in less detail).

Question 5

Australia Post has undergone organisational change. Evaluate the performance of the organisation in relation to the changes introduced. You may use performance indicators (PIs) as part of your evaluation. (4 marks)

Australia Post has been impacted by technological development. Performance has been mixed, with some increases in costs due to the cost of parcels weighing less than 2 kg and some increases in revenue and profit due to the changes made at Australia Post to take advantage of the new situation. Operations have changed as external pressures and technological development have brought about changes in the way customers shop. Australia Post has generally been successful in meeting these challenges as indicated by their performance indicators. Changes in the way people use the mail system (a move away from letters to online shopping) has provided Australia Post with more opportunities to expand and develop the postal services offered.

PIs include:

sales revenue—increased since 2009–2010

profit—increased by 31.3 per cent in 2010–2011

customer satisfaction—surveys found that 96 per cent of letters were delivered on time

level of waste—recycling of non-hazardous waste is 31 per cent.

Marking guide: 2 marks for an evaluation of how Australia Post has managed the change; 2 marks for information about the use of PIs to support the evaluation.


Bm 6 2012 Unit4 Change Management

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Transcript of Bm 6 2012 Unit4 Change Management