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Centralizing Varsity Inc. Managing and Communicating Change BUS/OCOM 610 November 30, 2004.

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Presentation on theme: "Centralizing Varsity Inc. Managing and Communicating Change BUS/OCOM 610 November 30, 2004."— Presentation transcript:

1 Centralizing Varsity Inc. Managing and Communicating Change BUS/OCOM 610 November 30, 2004

2 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

3 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

4 Varsity Inc. Gary N. Dixon President & CEO Will Byers Vice President Operations Marcus Cheung Vice President Communications Ryan Burton Vice President Human Resources Tom Davis Director Recruitment & Retention Bill Pecarro Director Training & Development Tim Loftus Vice President Legal Affairs Connie Giordano Vice President Sales & Marketing Shawn Hines Sr. Vice President Strategic Development Frank Ramirez Sr. Vice President Finance

5 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

6 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

7 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

8 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

9 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

10 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

11 Changing Varsity Inc From Decentralized to Centralized Justifications –Economies of scale –Competition and market factors –Technology decisions

12 Strategy for Varsity Inc Change Mission/Values analysis Cost analysis Operations Factors Phased implementation Internal communication Marketing changes Measurement / monitoring

13 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

14 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

15 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

16 Operations Factors (cont.) Infrastructure –Systems Compatibility –Logistics Shipping –Maintenance In-house Sub-contract –Suppliers Materials Tooling Office Supplies

17 Operations Factors (cont.) Operations –New Functions Specialization New lines Old lines –Reassignments People Plant capacities –Restructuring divisions

18 Phased Implementation Infrastructure Supplier/Vendor relationships Employee Issues –Communications –Benefits –Holidays Small trial runs – closed cell processes Build to large-scale implementation

19 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

20 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

21 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

22 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

23 Lewins Force Field Analysis Current StateDesired State

24 Individual Sources of Resistance Habit Security Economic Fear of the Unknown Social

25 Decision Making Structure Centralized vs. Decentralized Organization

26 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

27 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

28 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

29 Ethics Centralized Leadership and Communication Improves overall message Defined Direction of Initiatives –Single Overriding Messages Consistency –Human Resources –Motivational Initiatives

30 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

31 Motivation Professional development Recognition –Quarterly/Annual public recognition Compensation Incentives –Non-monetary perks –Company-wide benefits

32 Marketing Implications of change for marketing strategy –Customer relationship management –Vendor/supplier relationships –Advertising –Financial Relations –Public Relations/Public Affairs

33 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

34 Metrics & Monitoring (cont.) Metrics Methods –Financial Analyses Productivity Cost Reduction Sales –Surveys Baseline internal Baseline external On-going

35 Metrics & Monitoring (cont.) Measurement Frequency Feedback Adjustment to plan

36 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.

37 Questions & Answers

38 References (2000). Strategic Communication: A key to implementing organizational change, Mercer Delta Consulting LLC (nd). Adapting to Change. Downloaded November 1, 2004. Bast, M.R. (1999). Using resistance for change, out of the box coaching/breakthroughs with the Enneagram. Downloaded October 27, 2004. Bellanca, R. (2000) Managing Six Sigma Change Resistance. 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

39 References Moorhead, G., Griffin, R.W. (2004). Organizational Behavior: Managing People and Organizations. Mishra, K. E. (1998). Preserving employee morale during downsizing, Sloan Management Review,,. Scarborough, N. M. (1992) Gaining the Competitive Edge. Needham Heights, MA. Allyn & Bacon. Schultz, J., Bowers, J (1997). Bayers 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.

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