centralizing varsity inc
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Centralizing Varsity Inc. Managing and Communicating Change. BUS/OCOM 610 November 30, 2004. Agenda. Introduction Define centralized and decentralized org structure Advantages and disadvantages, strengths weakness Change effects Changing Varsity Inc.’s structure - PowerPoint PPT PresentationTRANSCRIPT
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Centralizing Varsity Inc.
Managing and Communicating Change
BUS/OCOM 610
November 30, 2004
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Agenda▲Introduction
– Define centralized and decentralized org structure– Advantages and disadvantages, strengths weakness– Change effects– Changing Varsity Inc.’s structure
▲Strategy for centralizing Varsity Inc– Mission/Values Analysis– Cost Analysis– Operations Factors– Phased implementation– Communications impact
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Agenda▲ Managing resistance to change
– Sources– Reactions– Group Dynamics
▲ Managing impact of change on culture– Decision-making– Ethics and Corporate citizenship – Motivation
▲ Marketing impact▲ Metrics & monitoring
– Types of Metrics– Methods– Measurement issues
▲ Conclusion & Q&A
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Varsity Inc.
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Decentralized Organizations
▲Features– Delegated authority– Broad decision-making scope
▲Advantages– Large companies with heterogeneous product lines,
and diverse supply/raw material needs.– Increases delegation and managerial ability to
handling larger workload– Improved customer service: Management resources
closer to customers– Shorter decision-making timeframe– Promotes creativity
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Decentralized Organizations
▲Disadvantages– Not a fit for small to medium-sized organizations– Loss of intra-departmental/intra-divisional
coordination– Loss of economies of scale– Reliance on lower-level employee competence
▲Example: NUCOR Steel– 22 people at corporate headquarters– Purchasing decisions at plant level– Line workers freely suggest ideas for improvements
and modifications to policies and practices
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Centralized Organizations
▲Features– Authority concentrated with a few key managers– Chain of command decision-making– Strict adherence to policy
▲Advantages– Better fit for companies with homogenous product
lines and less diverse supply/raw materials sources– Most experienced managers drive decision-making– Economies of scale/purchasing power
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Centralized Organizations▲Disadvantages
– Increased manager workload– Discourages creativity– Dramatically longer decision-making timeframe– Slower customer service– Higher overhead
▲Example: SouthTrust/Wachovia– Large bureaucracies with many levels of management– Business areas (e.g. Underwriting) centralize
rudimentary decision-making– Chain of command
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Change Effects: Centralizing
▲Communication – Flow changes to top-down orientation – Reduces bottom-up feedback
▲Motivation– Decision-making power stripped from lower
levels– Peak performance difficult to maintain or
measure
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Change Effects: Centralizing
▲Systems– Ensures uniformity of systems and levels of technology– Lowers costs– Simplifies knowledge transfer
▲Labor– Process orientation– Decision-making shift to management reduces need for
independent, competent employees at lower levels
▲Customers/Marketing– Uniform image and message to customers across geographic
areas– Reduced ability to develop relationships at point of contact
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Changing Varsity Inc
▲From Decentralized to Centralized▲Justifications
– Economies of scale– Competition and market factors– Technology decisions
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Strategy for Varsity Inc Change
▲Mission/Values analysis▲Cost analysis▲Operations Factors▲Phased implementation▲Internal communication▲Marketing changes▲Measurement / monitoring
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Mission & Values Analysis▲Mission
Varsity recognizes that part of being a successful and well-respected company is being socially responsible. Varsity is committed to serve the communities where we do business, to provide our customers with innovative, high-quality widgets and service, and to protect the health of our workers and our environment.
▲Core values– Employees– Integrity– Innovation/quality– Environment, health and safety– Community
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Cost/Benefits Analysis
▲Add up the value of benefits, subtract associated costs.
▲Benefits are received over time▲Basic analysis considers only financial values▲Sophisticated analysis considers financial
values of intangible costs and benefits▲Costs: training, lost sales (due to disruption),
lost time for planning▲Benefits: improved efficiency and customer
service
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Operations Factors
▲Human Resources– Health care providers
• National vs local• Plant medical staff
– Benefits• Global vs. national vs. local• Financial• Vacation/holidays
– Job placement and training
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Operations Factors (cont.)
▲Infrastructure– Systems Compatibility– Logistics
• Shipping
– Maintenance• In-house• Sub-contract
– Suppliers• Materials• Tooling• Office Supplies
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Operations Factors (cont.)
▲Operations– New Functions
• Specialization• New lines• Old lines
– Reassignments• People• Plant capacities
– Restructuring divisions
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Phased Implementation
▲Infrastructure▲Supplier/Vendor relationships▲Employee Issues
– Communications– Benefits– Holidays
▲Small trial runs – closed cell processes▲Build to large-scale implementation
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Communications Impact
Five Principles of Communication Strategy
▲Active Involvement of Senior Leaders▲Communications development and
deployment▲Integrate basic elements of effective
communications▲Individual is the ultimate audience ▲Assure credibility
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Communicating Change
▲ Shape the political dynamics Communications Strategies• Articulate a compelling case for
change• Build cohesion through consistency• Solidify support and build
momentum• Reinforce the perceived acceptance
of change
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Communicating Change
▲ Motivate constructive behavior Communications Strategies
• Use communication to help people understand
• Design communications to build participation
• Spotlight performance and behavior that meet the new requirements
• Recognize success and celebrate milestones
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Communicating Change
▲ Manage the transition Communications Strategies
• Describe a clear direction and transition process
• Constantly update people on change that will directly affect them.
• Keep lines of communication open during periods of instability
• Actively seek feedback
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Lewin’s Force Field Analysis
Current State Desired State
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Individual Sources of Resistance
▲Habit▲Security▲Economic▲Fear of the Unknown▲Social
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Decision Making Structure
▲Centralized vs. Decentralized Organization
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Decision Making
▲Centralized– Hierarchy– Decisions from Main Headquarters to field
units– Policies and Procedures– Operations Manual– Committees– Bureaucracy/ Red tape
▲Decentralized– Flat organizational
structure– Autonomous
operating units– Guidelines– Operating principles– Decision making at
local level
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Middle/Lower Management Role
▲Centralized Organization– Manage– Follow the rules and procedures– Process environment– Execute plans from main office– Paperwork/ administrative tasks
▲Decentralized Organization– Lead– Make business decisions– Create work environment
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Transition to Centralized
▲Pros– Standardized processes– Consistency– Control – Resources
▲Cons– Less local input– Bureaucratic– Operate within the “box”– Reaction time for issues in gray areas
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Ethics
▲Centralized Leadership and Communication Improves overall message
▲Defined Direction of Initiatives– Single Overriding Messages
▲Consistency– Human Resources– Motivational Initiatives
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Corporate Citizenship
▲Better serve the community on a united and centralized Front.
▲Improve implementation of overall organizational mission and strategy
▲Higher level of control with public relations with regard to image and branding.
▲Consistency in corporate citizenship– Structure in various community contribution– Defined set of values shared throughout
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Motivation
▲Professional development▲Recognition
– Quarterly/Annual public recognition
▲Compensation▲Incentives
– Non-monetary “perks”– Company-wide benefits
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Marketing
▲Implications of change for marketing strategy– Customer relationship management– Vendor/supplier relationships– Advertising– Financial Relations– Public Relations/Public Affairs
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Metrics & Monitoring▲Types of Metrics
– Operations• Productivity• Cost Reduction
– Staff/Line Performance• Competencies• Satisfaction• Values orientation
– Financial• Sales Volume• Return on Assets
– Perception• Market Share• Image
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Metrics & Monitoring (cont.)
▲Metrics Methods– Financial Analyses
• Productivity• Cost Reduction• Sales
– Surveys• Baseline internal• Baseline external• On-going
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Metrics & Monitoring (cont.)
▲Measurement Frequency▲Feedback▲Adjustment to plan
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Summary & Conclusions▲Both centralized and decentralized structures have
advantages and disadvantages.▲Make a strategic decision to change based on analysis
of mission, values, operations, human resources, and market factors.
▲Plan structural change in phases, with go/no-go decision points.
▲Communicate constantly and consistently, recognizing cultural and group-based limitations, obstacles and potential.
▲Monitor and modify plans according to results and feedback.
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Questions & Answers
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References(2000). Strategic Communication: A key to implementing
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Downloaded November 1, 2004.Bast, M.R. (1999). Using resistance for change, out of the box
coaching/breakthroughs with the Enneagram. http://breakoutofthebox.com/changetheory.htm . Downloaded October 27, 2004.
Bellanca, R. (2000) “Managing Six Sigma Change Resistance.” http://www.isixsigma.com/library/content/c031027a.asp Downloaded October 27, 2004.
Certo, S. C. (1994) Modern Management 6th Ed. Englewood Cliffs, NJ. Prentice Hall.
Lewis, P., Goodman,S., Fandt, P. (2001) Management Challenges in the 21st Century 3rd Ed. Cincinnati, OH. Southwestern
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ReferencesMoorhead, G., Griffin, R.W. (2004). Organizational Behavior:
Managing People and Organizations.
Mishra, K. E. (1998). Preserving employee morale during downsizing, Sloan Management Review, , . http://www.mba.wfu.edu/faculty/facres998mishra.htm
Scarborough, N. M. (1992) Gaining the Competitive Edge. Needham Heights, MA. Allyn & Bacon.
Schultz, J., Bowers, J (1997). Bayer’s new work ‘metrics’ align vision and values. Journal of Compensation & Benefits, 12, 36-43. Downloaded from Business Source Elite database, November 3, 2004.
Sheridan, J. (Feb. 1997). Culture change lessons. Industry Week, 20-34. Downloaded from Business Source Elite database, November 1, 2004.