Change in Management, Outsourcing, Competitive Advantage

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Table of Contents

Introduction
Change in management, competitor advantage
Potential Pitfalls in Relation To Staff Adjusting
Outsourcing, Information Systems
Conclusion
Bibliography
Footnotes

Introduction

It is true that Virgin Train Company has a good reputation for providing apart from quality services, it also produces modernized practices. However, the company has been seeking ways of developing competitive advantage over its competitors. As a result, they have been involving employees in decision-making process to secure this successful change.

The management chose this option because, employees work with customers directly, hence are in a better position of coming up with customer-based solutions. This is in line with company’s vision which provides employees with a very clear direction.

In the process of strengthening this strategy, the company has been planning to change their structure of management to ensure comprehensive service delivery to their clients as well as employees. As a result, this paper outlines two issues, namely: potential problems they may face in making the changes proposed. Secondly, the paper outlines a strategy for outsourcing relevant parts of the IT operations in order to ensure that the core IT provision can be maintained.

Change in management, competitor advantage

Structure for Organisational Change

Planning-organizing-leading-controlling (P-O-L-C) framework for change can work better for Virgin Train Company. This is because, four principles of creative problem solving, which most managers view as being the key challenge in organizational management are summarized in the framework. Though the framework is good, there have been writers, who claimed that, it does not take into consideration day-to-day practices of any manager accurately.

This is because, managers under hectic & fragmented times, continuous threats of prioritizing actions and activities as a result of trivial many and important few. It has been concluded that planning, organizing, leading and controlling help management to have in place strategies to follow in the desire to meet goals and objectives of the organization.

Planning

Those in the management position are to bring to light the goals and objectives of the organization. Additionally managers decide on the best steps to be followed so that the desired goals and objectives are realized. For them to plan well, they will have to understand environmental factors affecting Virgin Trains Company, apart from focusing future factors. This will also need Virgin Trains’ managers to be good-decision makers.

Planning will involve several steps starting with environmental scanning. This step needs managers to identify critical contingencies facing Virgin Trains in terms of competitors, economic, clients/customers. With the help of this information, managers will be in a position of forecasting the company’s future.

Virgin Trains’ managers will also be called upon to set organization goal, which will outline what to be attained, and at what time. As a result, they will have to give directions along with alternative actions that will be followed or used to attain the set objectives. After evaluation of all available alternatives, managers will be charged with the responsibility of choosing the best direction.

After choosing the best alternative, managers will be called upon to come up with necessary procedure which will ensure effective implementations of involved steps. Last but not least, managers will be required to make evaluation of their plans constantly, and where necessary make some corrections. There are several planning and plan types that Virgin Trains company can choose from. Some of them are strategic planning, tactical planning, and operational planning among others.

Organizing

The major steps here is to develop organizational structure, allocate human resources to various tasks, duties and responsibilities with the aim of ensuring that the predetermined goals and objectives are successfully met. Organization structure describes the frame work under which effort coordination takes place. Organization will also involve individual job designs.. Organization will also call for ways of departmentalizing the company for effective effort coordination.

Some of the ways that can be used to departmentalize the company include following functions, services, customer and geography. Virgin Trains being a larger company, it has the opportunity of using multiple methods to departmentalize. Virgin Trains need to carefully balance on the needs of its workforce in terms of specialization as well as duties and responsibilities that have variety as well as autonomy.

Managers should ensure that they have designed jobs based on principles like empowerment, teamwork and job entrenchment. In doing this, the company will do away with its traditional departments to those that concentrates mainly on listening and responding to employees’ and customers’ needs.

Leading

This section calls for strategies that managers use to inspire their subordinates. This will call for effective leadership in the company. This will ensure that employees are enthusiastic about putting more efforts to attain the organization’s goals.

Effective leadership qualities such as being assertive, having exelent communication skills, being an active listener to mention but a few will go extra mile in contributing to motivated and inspired workforce. For instance, managers should understand subordinates’ values, personalities, emotions as well as attitudes.

Controlling

Issues addressed at this stage includes performance standard establishment, comparison of actual performance against established standards, and taking corrective measures when needed^[1]. Performance measurement in Virgin Trains should be based on customer satisfaction and financial statements.

The company can also use performance appraisals measurement method. However, managers should not take advantage of controlling as a function to confuse it with employee manipulation. As a result, the management should not interfere with employees’ personalities, values attitudes or even emotions. In place, the management should just ensure that work-related activities of employees are consistent and contributes towards attaining the company’s objectives.

To control effectively, the management should have a plan which will outline the necessary performance standards along with objectives to be accomplished. There is need for management to establish cases of deviation from the normal or set standards of the organization.

On the other hand, budget auditing provides managers with information concerning the company’s position as compared to what was budgeted for. Performance audit also provides the report concerning the accuracy of figures provided in terms of actual performance of the company. It is worth noting that it will be wrong for the organization to put control on issues relating to finances only. Other areas that need to be controlled include section relating to compliance to policies and regulations and service delivery steps.

Potential Pitfalls in Relation To Staff Adjusting

In minimizing the effects on of any form of change on employees and customers, it is good for the company to put into consideration the impacts of change in the company’s staff. As a result, this section outlines potential pitfalls in relation to staff adjusting to the -organizing-leading-controlling (P-O-L-C) framework for change.

Failure Fear: There will be many staff members who will end up becoming fear because of change. As a result, during change periods, there will be some staff members who will feel the importance of clinging to the past experience as they feel it as being more secure as compared to the new one.

In case what they used to do was well for them, and were meeting the targets, then be sure that due to the fact that this change strategy comes with new requirements along with different ways of achieving them, then staff members will be fearful as they might think that in future, they might not achieve more. Other forms of fear that might be experienced in the company might include fear of unknown as a result of new structure; fear that the new ways might not be better as compared against the previous.

Habit Creatures: when things are done in the same manner continuously, people ends up being comfortable with such things. Now, coming to realize that, implementation of this strategy will call for new ways of doing things, staff members might think that such operations will be out of their comfort zone.

Absence of oblivious needs: some staff members might perceive this organizational structure change only in the impact perspective, particularly on their jobs. It is not easy for employees to see any change in a big picture. This at the end will make them not to realize the positive effects of this change structure on the entire organization as a result; they will find this change as being very disruptive and unnecessary in general.

Control Loss: looking at it much deeper, the proposed strategy is a top-down kind of management approach. Now, coming to compare it with bottom-up system that the company is exercising now, most employees will feel they are not of any value to the company. This is because; they will feel as if they have no control over the company. In addition, since the structure comes with new ways of doing things, then it is much open that new operation systems will make employees to feel confused and powerless.

Support Systems: when staff members get used to a certain routine, they usually become sure that during challenging times, their system will back them up. So changing the organization structure as proposed makes them much less confidence in the available support systems.

As a result, there are those who will get worried because they are working under new supervisors or managers. Apart from that, there will be those who will get worried when told to work on a new project. This is because, most of them feel that, in case they fail, there will be no one or system to assist or support them.

Training: Some of the requirements in this structure need further training and education. As a result, staff members might be called upon to undergo extensive training to cope up with the new structure. However, there are those employees who might be unwilling to learn. So this might make them much uncomfortable.

Outsourcing, Information Systems

Outsourced IT operations

There are some IT operations which the company can realistically outsource without experiencing any problem. Some of these operations may include automatic train software design and maintenance, office data management systems, payroll processing, signalling and passenger operations like ticket buying & ticket validation.

Though automatic driving operations can be outsourced, in most cases it can lead to some problems like dictating the type of trains to be bought, as outsourced companies might lack some software used in the operation. So, it is good, if the company can provide such services by itself. In addition, driving operations are among the core operations of the company, so, outsourcing it might to lead to some problems.

However, the other operations can realistically be outsourced as they are not the major operations of Virgin Trains, operations. Moreover, if such operations can be outsourced, there are higher chances of bringing in operational expertise, which will enable the company to access intellectual property as well as wider experience and knowledge.

Impact of Outsourcing on the Remaining IT Provision

It has been found that, the remaining operations will experience quality improvement. This is based on the fact that, since their subordinate operations are resulting to quality services, then such quality will be reflected on the main operations of the company. This quality improvement will be as a result of securing quality resources that the company might be lacking.

The company will outsource because it has no access to quality resources needed in achieving some of its core operations. For instance, if Virgin Trains is expanding its operations to new geographical regions, outsourcing will provide the viable and needed abilities starting from the ground.

Since outsourcing reduces operating costs as outsiders provide lower costs structures, then the remaining operations can receive more investments. This is because, outsourcing has reduced investments on non-core company operations, hence; more capital will be available to be invested in the remaining IT operations which forms the major company operations.

Impact on the Technical Capability

Studies have found that, the IT outsourcing degree is positively correlated to it cost structure as well as business operations. However, it is negatively correlated to the existing IT infrastructure performance. Moreover, “level of business value created by IT outsourcing is contingent on firms’ core IT capability. That is, firms with superior core IT capability have an advantage in leveraging their outsourcing initiatives to enhance firm value.”^[2]

However, there might be no effects on productivity along with profitability. By comparing the outsourcing strategy and against in-sourcing, it is evident that, there are chances that cost reduction can be attained just like in outsourcing, if in-house IT functions is given maximum freedom to reorganize itself.

Staff capability will also be affected as a result of employee relation in the company as the company will be depending more on the third party. This is because; their influence will be reduced, as they will be sharing responsibilities with third Parties.

Buying In To an Irreversible Situation

In outsourcing, there are chances that the company might be buying in to an irreversible situation. This is because; the company might loss its managerial control. Regardless of whether the outsourced company will be contracted to perform a single task or entire departmental functions, the management and control of that function is turned over to another company.

Though the contract will be in place, but the reality is managerial control will be pegged on another company. This is because, the outsourced company will never be driven by the mission and vision of Virgin Trains mission and vision, they have their own. As a result, the Virgin Trains will start depending more on that company, hence will not train its own workers, or even buy its own facilities. At the end, this will lead to an irreversible situation.

Security threats and confidentiality are another factor that might lead to an irreversible situation. Information kept by any company, forms the blood-life of its existence. In case payroll, business strategies and other competitive advantage strategies of any company are shared with the outsourced company, there are chances that confidentiality will be compromised.

As a result, the company will be forced to remain in contract with the outsourced company with which it has disclosed its confidential information to. In case the relation breaks up, there are chances that the company’s information will be at risk of being shared with other companies. In case another company is outsourced again, then confidentiality and privacy will be losing meaning in the company.

In dealing with such scenarios, the company should measure significant measurable effects on the company’s performance. In addition, the company has to evaluate its outsourcing company to ensure that its information is well protected. It should also ensure that, the outsourcing contract has a penalty clause which will prohibit occurrence of some incidences.

Conclusion

In conclusion, this research has proposed planning-organizing-leading-controlling (P-O-L-C) framework as being a structure for change that has least impact on employees and customers. It has also dealt with different potential pitfalls in relation to staff adjusting to the proposed new structure. In the second section, the report has outlined the effects of outsourcing information systems.

Bibliography

Koontz, Harold, and Cyril ‘Donnell. Principles of Management: An Analysis of Managerial Functions. (New York: McGraw-Hill Book Co., 1955).

Ward, John. and Peppard, Joe. Strategic Planning for Information Systems, (3rd Ed). (New York: Wiley Publishers. 2002).

Footnotes

Ward, John. and Peppard, Joe. Strategic Planning for Information Systems, (3rd Ed). (New York: Wiley Publishers. 2002).
Ward, John. & Peppard, Joe. Strategic Planning for Information Systems, (3rd Ed). (New York: Wiley Publishers. Pp. 64-111, 2002).

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