Changes in organization culture at Tesco

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Changes in organization culture at Tesco

Contents

TOC o “1-3” h z u HYPERLINK l “_Toc359783766” Executive summary PAGEREF _Toc359783766 h 1

HYPERLINK l “_Toc359783767” Introduction PAGEREF _Toc359783767 h 2

HYPERLINK l “_Toc359783768” Company overview PAGEREF _Toc359783768 h 2

HYPERLINK l “_Toc359783769” Changes in organization culture at Tesco PAGEREF _Toc359783769 h 3

HYPERLINK l “_Toc359783770” The nature of organizational change brought about by innovation (multi-channel digital strategy) PAGEREF _Toc359783770 h 4

HYPERLINK l “_Toc359783771” The main drivers (motivation) for this change PAGEREF _Toc359783771 h 5

HYPERLINK l “_Toc359783772” The main objectives to be achieved by the change PAGEREF _Toc359783772 h 5

HYPERLINK l “_Toc359783773” Key stakeholders impacted by the change PAGEREF _Toc359783773 h 6

HYPERLINK l “_Toc359783774” Innovation resistance PAGEREF _Toc359783774 h 7

HYPERLINK l “_Toc359783775” Resistance to change PAGEREF _Toc359783775 h 7

HYPERLINK l “_Toc359783776” Causes of employee resistance to changes in organizational culture PAGEREF _Toc359783776 h 8

HYPERLINK l “_Toc359783777” The change management strategies to employ when implementing the strategy PAGEREF _Toc359783777 h 9

HYPERLINK l “_Toc359783778” Various types of organizational change PAGEREF _Toc359783778 h 10

HYPERLINK l “_Toc359783779” How to measure the success of change management process PAGEREF _Toc359783779 h 15

HYPERLINK l “_Toc359783780” References PAGEREF _Toc359783780 h 17

Executive summaryOrganization culture is a concept that is used to refer to a collection of organizational beliefs, values, general demeanor and policies that are critical to the daily running of companies (Mullins,2010). The concept is used to refer to the general context of all activities that are done within a given firm. In this paper, we explore the concept of change management within Tesco due to the possible resistance to changes in its organizational culture. The strategic change in this case is the adoption of a multi-channel digital strategy within the operations of the retail chain. The methods of implementing this strategic change are evaluated as well as the ways of measuring the success of the suggested change management strategies.

IntroductionOrganization culture is a concept that is used to refer to a collection of organizational beliefs, values, general demeanor and policies that are critical to the daily running of companies (Mullins,2010). The concept is used to refer to the general context of all activities that are done within a given firm. In this paper, we explore the concept of change management within Tesco due to the possible resistance to changes in its organizational culture. The strategic change in this case is the adoption of a multi-channel digital strategy within the operations of the retail chain. The methods of implementing this strategic change are evaluated as well as the ways of measuring the success of the suggested change management strategies.

Company overviewTesco PLC is a leading UK general merchandise and grocery retailer. It is also the 3rd largest grocery retailer worldwide (Potter,2011). The company controls over 30% market share within the UK market where its closes rivals are ASDA, Sainsbury’s, Morrison’s and the Co-operative Food. Tesco is famous for its excellent loyalty and endless dedication to its clients. The company’s workplace and staff policies tailored to create an excellent shopping experience. For the sake of achieving excellence, the employees at Tesco PLC are encouraged to be extremely courteous, friendly and polite with good mannerism being a mandatory requirement.

The organization also strives a creating an excellent operating environment that is professional and yet formal. All these are reflective of the personal touch, affordability and quality nature of their product offerings. Additionally, Tesco’s organization structure has a great emphasis on organization culture. The organization structure at Tesco is hierarchical with a top down operating structure. Briefly, the organization structure at Tesco PLC is autocratic as well as formal. This organization structure and culture are what makes Tesco one of the best performing retailers worldwide.

Changes in organization culture at TescoExperts in organizational behavior, note the concept of organizational culture change to be a necessary element of every company. For performance to be optimal, adjustments must be made to existing organizational cultures. Companies must ensure that they adopt completely new changes for them to remain competitive within the contemporary and future marketplace. Armstrong (2009), for instance, reiterated that change is the only element in an organization that is constant. Kotter (2000), however, indicated that companies are in a state of constant flux. Mullins (2010) noted that the inescapability of organizational change is a constant element of every firm as a result of the quest by these firms to adapt to the new and emerging business challenges, technological innovations and new ways of doing business. Market forces such as the dynamism of products and services are what forces firms to adapt to changes. Organizational change is therefore an element that must be taken into account in the formulation of new business strategy as well as the creation of new insights. Several forces can initiate organizations within Tesco. In this paper, we concentrate on their need to align their business and marketing strategy by the adoption of a multi-channel digital strategy. This in itself is a technological innovation that can create serious changes to Tesco’s organizational culture.

The nature of organizational change brought about by innovation (multi-channel digital strategy)The work of Ellen, Bearden and Sharma (1991) argued that even though technological innovations can be seen as one of the main keys of success and survival for several firms, it can also be a key source of employee resistance. Hitachi Consulting UK noted that the adoption of a multichannel strategy is the only sure ways for UK retailers to maintain competitiveness within the current and future market place (Hitachi, 2012). The company issued a strong warning to all UK companies to adopt a strategic multi-channel approach in order for them to survive. Customers must first be taught how to engage these multichannel strategies. This must then proceeded by an effective re-orientation of the entire business operation in order to successfully deliver the identified engagement. The manner in which technology can be used in facilitating the engagement then becomes the final step. The process is noted by Hitachi Consulting Group to be greater than any other existing information technology platform initiative and should include people, system processes as well as technology changes across the entire business units such as e-commerce, marketing, customer service as well as social media (Hitachi,2012). This means that the implementation of the strategy would be enterprise-wide.

For Tesco PLC to realize this goal, it must ask itself pretty hard questions since its traditional organizational boundaries as well as responsibilities would be highly challenged. All areas of Tesco’s business (supply chain, buying and retailing operations, merchandising, finance, IT and human resources) would be affected by this change. The quest for a seamless consumer experiences as well as constant brand image would cause serious changes to Tesco’s organizational culture. Resistance to this change is therefore obvious.

The main drivers (motivation) for this changeAs noted earlier, the main driver for this change is the need to remain relevant and competitive within an increasingly competitive UK and global market place. Hitachi Consulting UK noted that the adoption of a multichannel strategy is the only sure ways for UK retailers to maintain competitiveness within the current and future market place (Hitachi, 2012). The company issued a strong warning to all UK companies to adopt a strategic multi-channel approach in order for them to survive. Customers must first be taught how to engage these multichannel strategies. This must then proceeded by an effective re-orientation of the entire business operation in order to successfully deliver the identified engagement. The manner in which technology can be used in facilitating the engagement then becomes the final step.

The main objectives to be achieved by the changeThe multi-channel approach would allow Tesco’s customers to shop from wherever they want (be it in-store, at home, from the company’s online catalogue, through their Smartphone or PCs). The system would allow consumers to locate their preferred products easily and shop online as well as order their products for delivery right straight to their doorsteps. All of the company’s digital marketing as well as PR initiatives would seamlessly be integrated. An elaborate mix of multi-channel strategies such as in-store advertisements, search engine optimization approaches, search engine marketing strategies, pay per click advertising as well as social media would be employed. The advantages of using this a multi-channel approach are improved sales and business performance, the ability to share all forms of actionable information as the ability to come up with a better attribution model that can help Tesco to gain a better strategic foresight. After all, the future of shopping is argued by Deloitte to lie within the digital realm. According to a research carried out by Deloitte, multi-channel customers spend about 82% (averagely £116) more money in each of their transactions as compared to the in-store ones. The contemporary multi-channel consumer is claimed by Deloitte to be well informed about their shopping and this, ultimately results in higher volume and value of their purchases.

Key stakeholders impacted by the changeIn order to determine the key stakeholders who would be impacted by the change, a stakeholders analysis is quite necessary. A stakeholder analysis is a process that helps us to determine the various individuals who would be affected by the introduction of the multi-channel digital strategy within the operations of Tesco PLC. A quick look at the scenario indicates that the implementation of the multi-channel digital strategy would be enterprise-wide. The specific areas whose operations would be directly affected in the company are supply chain, buying and retailing operations, merchandising, finance, IT and human resources. This means that the key stakeholders who would be impacted by the change are Tesco employees from various departments and customers. It is therefore important to evaluate the impact that this change would have on these key stakeholders.

As noted earlier, technological innovation is often seen as the secret to success and survival for most companies. This is regardless of whether such a technology is to be used for internal or external users. The adoption of any technological innovation should and must take consideration of the final user’s reaction. According to the work of Mahajan, Muller, and Wind (2000), a vast majority of technological innovations have experienced great failure in the marketplace. This has happened without regard to the benefits that they have or may have brought to the firms or the economy. One of the main causes of innovation failure in the marketplace is customer resistance to these innovations (Sheth, 1981). A multi-channel strategy is a concept that relies on a multiplicity of technological innovations.

Innovation resistanceAccording to Gatignon and Robertson (1989), resistance to innovation is a perfect case of resistance to institutional or organizational change. This is for the reason that innovation is a cause of changes in consumption as well as production. Resistance to change is defined by Zaltman and Duncan (1977) as any behavior aimed at maintaining the current state of affairs in the presence of great pressure to modify the current state. Resistance to organizational change is therefore, a purely normal process or reaction of people to any changes that may interfere with the prevailing equilibrium of organizational activities as noted by Watson (1971). Innovation resistance on the other hand takes place when people resist the various changes that are associated with a given innovation but not the rejection of the innovation in itself. During the course of innovation diffusion, resistance is normally experienced at the stage right before adoption, as indicated in the work of Woodside and Biemans (2005). If the vendor of a given innovation is incapable of overcoming the resistance, then its adoption may be delayed or completely fail. Chances of multi-channel digital innovation creating resistance within Tesco are therefore real.

Resistance to changeThe contemporary global economy is rife with changes within the participating organizations. The changes are continuous and swift. Due to the reason that change is part of organizational dynamism, employees and customers who resist these changes may ultimately impede the operations of these companies. Individuals can never change overnight. People change gradually and it takes them time to acclimatize to the new behavior set as well as work-defined patterns. In this paper, our focus is the effect of organizational change on employees and how to manage the resistance associated with the adoption of new changes within Tesco as an organization. Care must be taken to manage organizational culture change due to the fact that the process can create resistance and skepticism and thereby make it impossible to successfully implement various organizational improvements (such as the adoption of a multi-channel strategy) (Folger & Skarlicki, 1999).

Causes of employee resistance to changes in organizational cultureThere are several causes of resistance to change within an organizational setting. These particular factors can be categorized into two main groups- organizational and individual sources. The individual sources of resistance emanate from fundamental human traits like needs, perceptions, personalities as well as needs. These categories of human traits are inherently ingrained deeply into a person’s behaviors and core beliefs. They are also not easy to manipulate. For instance, there are employees who believe that the adoption of any kind of technological innovation would result in layoffs and forceful retrenchments. The adoption of a multi-channel digital strategy could therefore, be perceived as a threat to their jobs. Other examples of individual sources of resistance to change are fear of the unknown, security, economic reasons as well as selective processing of information. Security in this case refers to an individual’s need to experience safety within their working environment (Robbins & Judge, 2010).Issues like job security are therefore what might be the main source of concern among a certain class of workers at Tesco. Economic factors on the other hand are a source of change resistance due to individual reasons like the fear of not performing new tasks in the best way possible. This they feel could get them either demoted or replaced altogether. Tesco employees in the marketing and sales force may therefore feel inadequate against technology that would be brought about by the multi-channel strategy.

The change management strategies to employ when implementing the strategyChange management is the elaborate study of the reasons why firms require change, how those change influences them as well as how they should respond to those changes within their environment. All stakeholders within a given firm or organization have a key role to play in the effective and successful realization of change management. In order for Tesco to succeed in implementing change management, it must engage in doing the following;

Establishing a very clear change management strategy both at its management level while also communicating this shared vision to the entire organization

Realizing that effective communication the key to a successful implementation of any given change management strategy.

All Tesco managers must beat the temptation of resisting participation of reaching a decision during the very early stages of involvement. Usually, there are two main advantages for allowing all sorts of early participation to occur during the change process. This is because it encourages stakeholders to have a sense of project ownership

The creation of an open climate that is necessary for expressing individual apprehension as well as concerns and the application of positive effects of thoughts and understanding of the given organization.

It is also important for Tesco to set goals that are quite clear for individuals or workers to aim at

Training should be viewed as an important investment in the developing of skills as well as creation of an alternative organizational type.

Various types of organizational changeIn order to fully understand the best strategies for implementing organizational change at Tesco, it is important that we outline the various type sof organizational changes in existence. First, we must note that there are several ways of grouping organizational change. The property understanding of the actual nature of organizational change is critical to the proper determination of a suitable strategy. These are the different types of organizational change;

Incremental changes

The concept of incremental change could be a major and even highly important change. However, it is repetitive and gradual. Change if done incrementally, may help in stopping all aspects of employee resistance.

Strategic change

According to Pettigrew and Whipp (1991) strategic change is a very wide concept. This is because it is long term and can be used in addressing issues that are enterprise-wide. The ability of an organization to accurately determine and comprehend the various competitive forces at work as well as how these forces change over a period can be associated with the ability of a business operation to rally as well as utilize the available resources for a given competitive response over time. All organizations must within this line of thought, expect change. The proper planning as well as management of the concept of organizational change must be made a critical part of organizational strategy.

Lewin’s Force Field Model

According to this model, an equilibrium must first be interfered with in a rather planned way for change to be realized. This is accomplished by strengthening the change forces while also weakening the forces that act against organizational change. According to this model, the following are the key processes;

Unfreeze – the process that effectively alerts a system to the actual need for realizing a give change

Change – the development of new responses on the basis of new information.

Refreeze – the establishing of change through the introduction of new responses into the concerned personalities.

The continuous change model

According to this model, the top leaders within a given organization are critical in the process of articulating the mission and strategic vision of a given company. They must discuss the main changes that are important in the meeting of corporate objectives with the other employees while also telling them the suitable alternatives and the most likely results of the process as noted by Kotter (1995).

The Emergent approach of change

According to this strategy, Tesco’s management has a vital role in the advancement of change agenda. As Tsoukas and Chia, (2002) noted, this observation is expressed and derived from the ‘emergent approach’ of change management. It is generally known that there exists a scope for the initiation as well as implementation of change in a bottom-up approach as opposed to the opposite.

Kotter’s model

According to this model, the change process involves a series of eight steps. The steps include;

1. Establishing of urgency

2. Establishing an alliance

3. Creating a vision as well as strategy for organizational change

4. Communicating this vision as well as organizational strategy clearly.

5. Removing obstacles

6. Production of noticeable signs of the improvement in terms of short-term goals

7. Adhering to the process of change and avoiding quitting when circumstances are tough

8. Cultivation as well as determining a new culture to help in supporting organizational improvements together with the innovations that are being instilled.

Overall, there are four major steps that Tesco must involve itself in for the change management process to be successful. The first process involves communicating to its employees and customers in a clear and quite straightforward manner the importance as well as need for the change process. This process must take place in a civilized manner without crating any dramatic pictures. All Tesco employees must visualize and feel assured by the senior management that the situation is under control. They have to be assured that everything that is to be changed is for their best interest of the company. In the process, the employees must be acknowledged and be heard. The communication process must therefore be interactive.

The second step involves the provision of reinforcement of organizational support for the change process. The transitions that people face during the change process must be considered at this stage. It is important to note that whenever change takes place, people usually need adequate time to absorb the meaning of these changes. It is important to note that some of the workers may get into a negative spiral. Tesco must therefore provide such employees with the support and resources that they require to succeed and cope . This can be done by means of internal sessions with their senior management or training opportunities for the workers to learn the required new skills that are necessary for change.

The third step involves the reinforcement of the positive through the recognition of both individuals as well as groups who need to embrace the given change. This means that at Tesco, the employees who demonstrate great performance during the transition phase would eventually be recognized through promotions and other incentives.

The forth process involves making sure that Tesco establishes various measures of organizational or change management success.

The reasons why change was important at Tesco

There are various reasons why change is important at Tesco.They involve the following;

The creation of better value for their customers

As part of the company’s specific strategy for retaining its clientele and also attract new ones, it had to adopt the multi-channel strategy as part of its value creation process. This is what led to the adoption of the multi-channel strategy.

A growing customer base

Tesco’s success in the present time can be partly attributed to the rapidly growing clientele vase. The multi-channel strategy is suitable since it would allow the company to target a larger customer base without any physical limitations.

Technological innovations

In regard to the growth and advancements in technology, it is critical for companies to use advanced technologies for them to become successful. The company needs to implement the multi-channel strategy for it to improve its operational throughput.

Competition

Competition is a common factor in the triggering of organizational change worldwide. Tesco needs to use the multi-channel digital strategy to leverage its performance and to gain a competitive advantage over its competitors like ASDA.

Labor costs

One of the main business objectives of every enterprise is profit maximization. Tesco needs to improve on its operational efficiency both at back and front-end. The multi-channel digital strategy would allow the company to reduce the number of staff needed for functions such as marketing, order processing etc.

How to measure the success of change management processAccording to Rick (2012) measuring is the initial process in the quest for absolute control and eventual improvement of every organization. Some of the common measures for the success of change management strategies are the achievement of the set project goals and objectives, the implementation time as well as checking to what degree the expenditure is within the initial budgetary allocation.

Several change management experts advise that it is important to measure various activities like the number of employee communication sessions that are held. The main challenge is usually the measurement of the effectiveness of change management operations that are marked by cases of non-events. These includes the measurement of employees who are not resisting organizational changes, the measurement of valued employees who are not leaving the organization, measurement of projects that are not being abandoned, measuring rediuctions in productivity in the implementation stage as well as measuring the number of customers who are not negatively affected.

In order to assess the success of change management, one needs to measure the success of the individual transitions as a response to the changes. Whenever a given organization is implementing change, the change comes into live one individual at a time. Each of the affected workers must go through an intense personal transition for them to adopt any given change. Organizational success is therefore a cumulative outcome of these individual transitions. Change is therefore aimed at realizing successful individual transition.

In order to effectively measure the extent of individual transitions, the company must first define these transitions, measure the nature of individual progress and then measure the cumulative impact of these transitions.This information can be gathered by means of interviews with a representative samples of the affected stakeholders as well as via individual surveys.

The level and nature of individual progress as well as cumulative impact must be repetitively measured during the project lifecycle for the project effectiveness to be evaluated objectively. An effective as well as useful measurement regime must focus on how the various change management initiatives are contributing to the overall improvement of organizational outcomes.

The other techniques involve the use of benchmarking as well as gap analysis techniques. The benchmarking process involves comparing Tesco’s performmanbce with those of ASDA and other competitors. The firms must however belong to the same category. A gap analysis can also be used in measuring the gap between Tesco at present at where it should be in the future.

References

Armstrong, M.,(2006), ‘Human Resource Management’, London, Kogan Page

Folger,R. Skarlicki,DP (1999) “Unfairness and resistance to change: hardship as mistreatment”, Journal of Organizational Change

Gatignon, H., & Robertson, T. S. (1989) Technology diffusion: an empirical test of competitive effects. Journal of Marketing, 53(1), 35–49.

Hitachi (2012). UK Retailers Need to Adopt a Multi-Channel Strategy to Survive, warns Hitachi Consulting UK. Accessed on 22nd |June, 2013 from HYPERLINK “http://www.hitachiconsulting.co.uk/newsDetails.cfm?EID=918” http://www.hitachiconsulting.co.uk/newsDetails.cfm?EID=918

Kotter, J. P. (1995). Leading Change: Why Transformation Efforts Fail. Harvard Business Review

Mullins, L. J. (2010) Management & Organizational Behavior: 9th Ed. U.S.A.:Pearson Prentice Hall

Pettigrew, A. and Whipp, R., (1991). Managing Change for Competitive Success, Blackwell Publishers, Oxford

Rick,T (2012).How to measure change management success. HYPERLINK “http://www.torbenrick.eu/blog/change-management/”http://www.torbenrick.eu/blog/change-management/

Robbins & Timothy A. Judge., (2010) Organizational Behaviour, 14th Edition

Tsoukas, Haridi o s and Robert Chia. (2002). “On Organizational Becoming: Rethinking

Organizational Change.” Organization Science 13:567-582.

Watson, G. (1971), “Resistance to Change”, American Behavioral Scientist, Vol. 4, May – June, pp. 745 – 766.

Woodside, A. G. and Biemans, W. G. (2005). “Modeling Innovation, Manufacturing, Diffusion, and Adoption/Rejection Processes”, Journal of Business and Industrial Marketing, Vol. 20, No. 7, pp. 380 – 393.

Zaltman, G. and Duncan, R. (1977), Strategies for Planned Change, Wiley, Toronto.

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