Change Management. Overcoming Resistance Against Innovative Controlling Tools in Retail Companies

Table of Contents

List of Abbreviations

List of Figures

List of Tables

1. Introduction
1.1 Topic Background
1.2 Thesis Structure

2. Theoretical Framework: Change Management
2.1 Definition
2.2 Causes and Reasons for Change
2.3 Fundamental Prerequisites
2.4 Lewin's Change Model

3. Overcoming Resistance
3.1 Forms of Resistance
3.2 Causes and Reasons for Resistance
3.3 The Change Curve

4. Change of Controlling Tools in a Retail Company
4.1 T riggers of Change
4.2 Participants in the Change Process
4.3 Resistance to Change
4.4 Strategies for Avoiding and Overcoming Resistance

5. Conclusion

6. References

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1: Lewin's 3-Stage Model of Change

Figure 2: Symptoms of Resistance

Figure 3: Kubler-Ross Change Curve

Figure 4: Innovative Changes to Controlling Tools and possible Effects

Figure 5: Process for Dealing with Resistance

Figure 6: Outline of Possible Strategies to Overcome Resistance

List of Tables

Table 1: Basic Principles for Surviving in Competitive Markets

Table 2: Causes and Motives for Resistance

Table 3: Participatory Measures to Changes

1. Introduction

1.1 Topic Background

Successful and future-oriented corporate management is based on efficient and effec­tive controlling tools that form a holistic system. Its purpose is satisfying internal and external information needs as well as providing a mandatory base for the management of a company with which decisions can be made at all times. The demands for modern controlling tools are very diverse. Factors crucial to the success of a company must always be depicted in a consistent manner and controlling-relevant financial as well as non-financial information must be presented transparently and in a recipient-oriented fashion. At the same time, past and future-oriented assertions must be made that pro­vide a reliable idea of the current situation of a company. A company's controlling tools should meet the expectations of externs. The greatest challenges here include regula­tory and legal requirements as well as implicit expectations of the capital markets with regard to transparency and quality of the tools used. This applies in particular to inno­vative forms of financing, which are also becoming popular in the retail sector.

Efficient controlling tools must therefore be able to meet the expectations of internal report recipients as well as those of external shareholders and stakeholders. Such a broad spectrum of requirements means that the controlling tools used in a company must often be changed and adjusted. This is the only way to ensure that these tools can always meet a wide variety of growing demands in a timely manner. Furthermore, continuously expanding technical possibilities make changes within the implemented tools necessary, as they offer companies the opportunity to improve them continuously and to align them to their specific needs. However, the use of innovative controlling tools changes a company and is therefore often accompanied by resistance. Such re­sistance can even cause the implementation of an innovative controlling tool to fail, if countermeasures are not initiated early on. For these reasons, innovating controlling tools in retail companies are usually more difficult to implement than in other business sectors and are therefore associated with greater resistance.

Considering the complexity of these changes the following working paper aims to show the origin of resistance resulting from changing old controlling tools to more innovative ones in retail companies. Furthermore there will be strategies presented to avoid and overcome such resistances. For this purpose, typical situations as well as exemplary solutions for dealing with resistances in practice are outlined within a theoretical framework.

Highly relevant for companies of all sizes and industries, this topic is of particular im­portance for retail companies. This results mainly from the conservative corporate cul­ture, the high margin pressure and the associated risk aversion in retail companies.

1.2 Thesis Structure

The working paper at hand is divided into five chapters. In order to frame this paper, the first chapter presents the research subject as well as the objectives.

In the following chapter the theoretical framework of change management is the main subject matter, which forms the basis for this thesis. A comprehensive definition of change management is presented. Subsequently, the causes and reasons for change are elaborated. The basic requirements which are necessary to enable a change pro­cess are explained thereafter. Finally, the change management process is divided into separate phases using Lewin's model of change.

Chapter 3 deals with the resistances that occur whenever an organization undergoes a change process. In addition to the various forms of resistance, the causes are analyzed in further detail. The change curve is introduced in this context to better understand the change process as well as the impact the different stages throughout the curve have on the performance of the employees in a company.

In chapter 4 the theoretical deliberations are entwined with practical examples. Possi­ble triggers that can initiate innovative changes are presented using selected control tools, before the second subchapter deals with the participants in the change process. Additionally, this paper shows how the change of specific tools leads to resistance in retail companies. In this context, different forms of resistance are presented in detail. Finally, different solutions are derived from the aforementioned, which can potentially be used to avoid and overcome resistance against change.

Chapter 5 concludes this paper by summarizing the results.

2. Theoretical Framework: Change Management

Change management is a very diverse concept and therefore requires a more detailed view on its theory. The reasons and causes that make change management necessary for a company will be presented in more detail. Furthermore, a company must make its own contribution to a change process for it to be successful. For this purpose, it has to be clarified which requirements must be met. The whole process will hereby be struc­tured into separate phases, which will be explained in this chapter.

2.1 Definition

The term change management has only been used in recent years. The term can be equated with the handling of changes in organizations¹, but a generally valid definition of change management does not exist in practice.² Thus Stolzenberg & Heberle (2006) understand change management as the planning and execution of all activities that prepare the affected managers and employees for the upcoming situation and enable them to implement the changed requirements as ideally as possible. Change manage­ment can be subdivided into four basic topics: the development and implementation of a vision, the communication with the affected parties, the involvement and participation of those affected, and the qualification of those affected. These core topics are implied in the phases of professional change in an organization: planning, implementation and evaluation.³ However Al-Ani and Gatter-mayer (2001) rely on a more concise definition in which change management subsumes all measures that are necessary to initiate and implement new strategies, structures, systems and behaviors.⁴

The paper will be based on the definition of the Gabler-Wirtschaftslexikons (1997), as it is the most comprehensive and precise definition: „ Strategie des geplanten und syste- matischen Wandels, der durch die Beeinflussung der Organisationsstruktur, Unter- nehmenskultur und individuellen Verhaltens zu Stande kommt, und zwar unter groBt- moglicher Beteiligung der betroffenen Arbeitnehmer. Die gewahlte ganzheitliche Per- spektive berucksichtigt die Wechselwirkungen zwischen Individuen, Gruppen, Organi- sationen, Technologie, Umwelt, Zeit sowie die Kommunikationsmuster, Wertestruktu- ren, Machtkonstellationen etc., die in der jeweiligen Organisation real existieren.“⁵

The term "change" is used in this work as a synonym for the German terms "Verander- ung" and "Wandel". Furthermore, it is limited to the planned change, consequently a change strategically planned by the management in order to optimize the performance of the company.

Following this definition of change management, the next subchapter will examine the reasons and causes of change, which will explain the necessity for change processes.

2.2 Causes and Reasons for Change

„Die Welt hat sich radikal verandert.“⁶ The pace of change in the business environment has increased dramatically in recent decades, so that entrepreneurial business and operational management are taking place under completely different circumstances than just a few years ago. For individual companies the main challenge is to cope with the increasing diversity and to adapt to the rapidly changing requirements and tasks within and outside the company. Thus, there are different triggers for change like those from the external environment and those from the internal area of a company. The external influences can be further subdivided into technological, macroeconomical, socio-cultural and legislative aspects.⁷

The field of technology, communication and information technology in particular is un­dergoing rapid change which is evident from the large number of manufacturers and suppliers as well as the diverse and constantly renewing product range on the market.⁸ In order to remain competitive on the market, companies are forced to integrate these new technologies into their work systems.⁹ The continuous optimization of information technology also fastens global communication, which increases the speed of change processes and thus also the need for continuously practiced change management.¹⁰ Consequently, although technological change offers companies completely new oppor­tunities, it also forces them to make some negative adjustments.¹¹

Due to globalization, competition and the resulting cost pressure, the overall economic sector is strongly defined by changes.¹² Doppler & Lauterburg (2005) understand glob­alization as an appropriate response to the opportunities and risks of our time.¹³ On the global economic market, economic work processes are subject to rapidly increasing networking in many areas, since¹⁴:
1. Institutions and companies are becoming increasingly global,
2. the organizations are increasingly intertwined through cooperation and mergers,
3. through the optimization of business processes, also within companies, the boundaries between the previously separate functional areas, such as re­search, development, production, sales, logistics, etc., are eliminated and
4. manufacturers are increasingly creating cooperative networks with customers, suppliers and even competitors.

These factors thus open up numerous opportunities for companies in the market.¹⁵

As far as the socio-cultural sphere is concerned, people's expectations and ideas about life have changed. These diverse views range from the throwaway or leisure society to the health-conscious or aspirational society. Of course, this change also has an impact on entrepreneurial activity.¹⁶ This also includes the fact that the needs of customers have become more differentiated. When customers purchase a product they expect the corresponding service so that customer support has become a key selling point. Inten­sive and sustainable customer services as well as the continuous research of current customer needs and demands are therefore vital requirements to a company's survival in the global market.¹⁷

The state constantly confronts its citizens and thus also the organizations with new terms and conditions.¹⁸ Due to technological and social developments, it must con­stantly produce new laws and authorities that monitor compliance with these laws.¹⁹ This is most notable for administrations which have to continuously adapt their work­flows. In many areas, state functions can only be maintained by increasing taxes. Ac­cordingly, these acts made by the state also severely restrict companies in their ac­tions, both legally and financially.²⁰

In contrast to the external triggers, internal triggers occur within the organization itself and are often caused by the regulations and decisions of the management. Internal company processes such as a structural or personnel change²¹ or decisions, such as the introduction to new controlling tools for example have consequences for the entire organization and require corresponding adjustments.²²

The change in social values also clearly shows that the traditional management of companies is outdated. The multi-layered influencing factors in the psychology of highly complex and modern employees force companies to continuously adapt their struc­tures and processes. Future generations of employees expect a combination of partici­pation in company decision-making processes, variety in activities and fun at work.²³ It remains unclear how companies react to the factors that are crucial in a change pro­cess. In order to meet the challenges of the 21st century companies must fulfill funda­mental prerequisites which will be expounded in the next subchapter.

2.3 Fundamental Prerequisites

Changes and further developments are unavoidable as a company needs to adapt with foresight to the constantly changing market conditions which were described previous- ly.²⁴ Doppler/Lauterburg (2005) divide the requirements into the following categories²⁵:

1. The form of organization

The first factor pertains the organizational form of the company, whereby the concept of network structure has proven to be the most advantageous. A flat hierarchy, a con­siderable autonomy of the individual organizational units, a great variety of different organizational forms and the general control over common goals and strategies are only some of the many advantages of network organization. It handles by far the high­est level of complexity and ensures a rapid response to changes in the environment. It is less susceptible to disruption and crisis, which promotes the overall productivity, the ability to regenerate and thus the survival capability of the organization.²⁶

2. Thinking in process chains

Corporate change requires thinking in processes, not in structures.²⁷ Due to its flat hi­erarchy, the network organization, in contrast to the classic line organization, allows the organizational thought process to run in rapidly changing process chains.²⁸ As a result, information flows are brought directly and without detours to where they are needed.²⁹

3. High level of communication and cooperation

The ability to work in a team is a critical factor for the success of a company. Tasks and problems should be solved in the overall network, i.e. economic thinking and acting in the general interest. In the network organization, lively and open communication is a promising alternative to hierarchy. Accordingly, personal commitment, communication skills and willingness to cooperate are required of all employees and managers.³⁰

4. High motivation and identification

The identification with the company as well as a motivated attitude towards work are essential factors to initiate a change process. Motivation is created through varied, de­manding and interesting work but also through the assignment of appropriate scope for action, which can be organized in a targeted manner by developing new forms of work. In contrast, identifying with a company cannot be achieved instantly. Rather, it is a de­velopment process based on a strong corporate culture with openness and trust.³¹

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¹ Cf. Rischar (2005), p. 1.

² Cf. Helmcke (2007), p. 201.

³ Cf. Stolzenberg/Heberle (2006), p. 5 f.

⁴ Cf. Al-Ani/Gattermayer (2001), p. 14.

⁵ Arentzen, U./Winter, E. (1997), p. 2897.

⁶ Doppler/Lauterburg (2005), p. 21.

⁷ Cf. Rischar (2005), pp. 2.

⁸ Ibid.

⁹ Ibid.

¹⁰ Cf. Kostka/Monch (2006), p. 10.

¹¹ Cf. Doppler/Lauterburg (2005), p. 24.

¹² Cf. Rischar (2005), p. 2.

¹³ Cf. Doppler/Lauterburg (2005), pp. 26.

¹⁴ Ibid.

¹⁵ Cf. Rischar (2005), pp. 2.

¹⁶ Ibid.

¹⁷ Cf. Edtinger/Mayr/Wagner (2004), p. 10.

¹⁸ Cf. Rischar (2005), p. 3.

¹⁹ Cf. Doppler/Lauterburg (2005), p. 32.

²⁰ Cf. Rischar (2005), p. 3.

²¹ Ibid., p. 1.

²² Ibid., p. 3.

²³ Cf. Edtinger/Mayr/Wagner (2004), p. 10.

²⁴ Cf. Rischar (2005), p. 1.

²⁵ Cf. Doppler/Lauterburg (2005), p. 56 ff.

²⁶ Cf. Doppler/Lauterburg (2005), p. 56 f.

²⁷ Cf. Simon (2000), p. 189.

²⁸ Ibid., p. 183.

²⁹ Cf. Doppler/Lauterburg (2005), pp. 58.

³⁰ Ibid.

³¹ Cf. Doppler/Lauterburg (2005), pp. 60.