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Diagnosing Change
1 INTRODUCTION
This report is a retrospective case study based on the analysing of an organisation,
and the subsequent diagnosis of the need for change within it. This report will look at
the specific issues identified and the ways in which they were identified, the
appropriate diagnostic model in comparison to other models, and the scholarly
resources that support these hypotheses and evaluations.
The organisation in question is a major fast food chain within Australia. A number of
areas for change were identified in recent years. In accordance with these, a major
nation-wide overhaul has been undertaken. This report will look specifically at one
franchise of the overall organisation, and how its changes were influenced both
internally and externally to the wider organisation. Mintzberg (1978) specifies the
relevance of environment to changes within an organisation, particularly in relation to
its culture, technology, structure and product-market focus. In particular, the
technology and structure of this organisation were a focal point for change, largely
influenced by the changing environment around it.
This report will focus largely on the two most significant changes made in this franchise
– a restructuring of customer service procedures, and a redesign of the physical
appearance of the shopfront and the employees within it. Having identified these
problems through a systematic process of diagnosis, we will establish three main
goals:
To improve the overall efficiency of the franchise – based on service delivery
speed and customer satisfaction
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To modernise the layout and décor of the franchise, including employee
uniforms
To support the nation-wide changes to all franchises and outlets, in order for
the entire organisation to become uniform
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2 CONTENTS
1 Introduction................................................................................................................ 1
3 Conceptual Framework............................................................................................. 5
3.1 Patterns of Change............................................................................................ 5
3.2 Organisational Structure.................................................................................... 6
3.3 External Forces.................................................................................................. 7
3.4 Models for Change............................................................................................. 8
3.4.1 Open Systems Theory................................................................................ 9
3.4.2 Lewin’s Theory............................................................................................ 9
3.4.3 Kotter’s Theory and McKinsey’s Theory. ................................................. 10
3.4.4 SWOT Analysis......................................................................................... 11
3.4.5 Hayes and Hyde Model ............................................................................ 11
4 Method/Approach .................................................................................................... 12
4.1 Surveys ............................................................................................................ 12
4.2 Interviews ......................................................................................................... 13
5 Findings ................................................................................................................... 14
5.1 Surveys ............................................................................................................ 15
5.2 Interviews ......................................................................................................... 16
5.2.1 Store Manager .......................................................................................... 16
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3 CONCEPTUAL FRAMEWORK
As previously mentioned, this report will focus on two major changes undertaken by
this organisation – restructuring customer service procedures, and changing the
physical appearance of the organisation and its employees. Although this was a
nation-wide transformation for the organisation, the franchise in question was delayed
in its changes, and so the urgency of them was heightened by its need to become
uniform with the other retail outlets. This brings us to the very first point – what pattern
of change was exercised by the company. There are two major patterns that can be
identified within any organisational change. The first one is referred to as the
gradualist paradigm. In this approach, organisations are continuously evolving and
changing, with the aim of improving. These organisations do not strive for major
change. Hayes (2010) describes change in these organisations as the result of day-to-
day, transactional management practices, resulting in continuous updates in work
practices and procedures, and the social practices within the organisation. These
changes occur as the result of an assigned change agent deliberately striving for
change in one or more parts of an organisation from its current state to a new state
(Ford & Ford 1995; Hayes 2007), and according to Finch (2011), occur largely in
response to changes within the external environment of the organisation.
3.1 PATTERNS OF CHANGE
Companies that follow a gradualist paradigm pattern of change tend to be independent,
and have independent subunits within it (Hayes, 1998; Romanelli and Tushman, 1994).
This may be a major factor in the nature of this organisation’s approach to change,
following the punctuated equilibrium pattern. This particular company is a franchise of
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a larger organisation, and is under the control of the organisation’s head office. This
lack of independence, coupled with the nation-wide scale of the overall organisation,
does not provide suitable circumstances for a gradualist paradigm approach. This
organisation has a deep structure, and the changes that occurred did go deep into the
structure. Although deep structure organisations are still able to make minor changes
to the surface of the organisation (Gersick, 1991), the gradualist paradigm is not
suitable for deep structures, as it only makes changes to the surface of the
organisation, rather than delving into the more significant issues (Burke, 2002; Jones &
Gomez, 2011). It is for these reasons that this company adopted the punctuated
equilibrium approach.
3.2 ORGANISATIONAL STRUCTURE
Before diagnosis can occur, we must look at the structure of the organisation as a
whole, and then as a franchise, and consider what may be the implications of these
structures (Luangsuvimo & Kleiner, 2004). Looking at this organisation on its larger
scale, there is the Head Office at the very top. This is the franchisee, as well as the
sole owner of a number of storefronts. The CEO sits at the top of the Head Office, and
oversees all the practices of the organisation. This body of the organisation is
responsible for writing and distributing all policies and procedures, and formulating any
changes they feel are necessary.
In relation to the specific franchise in question, the structure consists of a store
manager, followed by department managers and shift managers, then crew trainers,
and then crew. This franchise, as with all the others, must follow the policies and
procedures set out by Head Office. This structure has a significant impact on the
company’s ability to diagnose and implement change. The decisions for such are
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ultimately made by Head Office, but are generally done in consultation with the
relevant stores and franchises.
3.3 EXTERNAL FORCES
A number of external forces, according to Nicastro (1991), also have an influence over
the need for change within an organisation of this sort. The first and foremost is
increased competition from similar organisations. Fast food is a major industry within
Australia, with a number of corporations standing out as industry leaders. It becomes
inevitable, in turn, that these organisations will need to undergo changes at various
intervals in order to maintain competitive advantage. Kleiner and Luangsuvimo (2004)
back this up, discussing the importance of distinguishing your organisation from others.
By re-working the customer service procedures and physically re-branding the entire
organisation, this company may be able to propel themselves in the market. Similar to
this, the consistently growing and increasingly competitive fast food market may result
in reduced consumer brand loyalty. The Retail and Personal Services Training Council
(Australia) in 2012 published an environmental scan of fast food in comparison to its
competitors, such as cafes and ‘casual’ restaurants. Its findings supported the claim
that fast food very much relies on customer loyalty, based on convenience and
reliability. Tschohl (1991) describes the importance of consumer loyalty, and states
that by securing loyal customers, less focus needs to be on attracting new ones.
However, two of the largest external factors that arguably called for the need for
change in this organisation is the increasing sophistication of competition and similar
retailers, and general changes in the marketing environment. A study done by
IBISWorld, published by Australian Food News Online (Langley, S. 2014) described
the trends currently existing in the Australian market, clearly indicating a shift of
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consumers from fast food operators to cafes for takeaway. According to their market
research, cafes are expected to expand by 3.7% over the coming year, compared to
2.8% for fast food operators. This impending shift in popularity highlighted the need of
the organisation at hand to make changes to their procedures, as well as their
appearance, if they are to provide sufficient competition to the growing café trend.
As mentioned previously, one of the major issues that was to be addressed through
these changes was the system and procedures for customer service. Kliener and
Luangsuvimo (2004) listed proven methods of customer satisfaction, each of which
should be taken into consideration when designing customer service procedures. Most
significantly, they stated that an organisation should “establish and maintain an image
appropriate to the type of business”. Graham (1996) supports this, stating that the
image perceived by all stakeholders and prospective stakeholders, as well as the
media and general public, can have a great influence over the success of the
organisation as a whole. As such, the organisation should exhibit a transparent image
that honestly portrays their values and mission.
3.4 MODELSFORCHANGE
Having considered the current issues and the structures of the organisation, we can
begin to consider the different methods by which we may actually diagnose the need
for change. There a number of models that are applied to change situations, and in
order to accurately assign the correct one to the issues at hand, this report will
consider a range of options.
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3.4.1 OpenSystems Theory
The Open Systems theory describes organisations that are transparent and open with
communication with and feedback from their external environment, as well as with their
internal environment. Using this information, open system organisations then use this
is a contributing factor to the diagnosis and implementation of change (Authenticity
Consulting Online, 2010; Breckenridge Institute Online, 2013). The topical
organisation may be regarded as an open system organisation, as it regularly and
proudly promotes customer feedback, and creates promotions based on this feedback
in order to create consumer satisfaction and improve the possibility of customer
retention (Emery, 2010).
Olmstead (2002) describes the functions of open systems as including taking in raw
materials, people, energy and information. This highlights the central purpose of open
systems to be in tune with their external environment. They must “master their
environment”, which may be done through methods such as consumer surveys and
feedback in order to diagnose organisational issues accurately and thus implement the
correct changes. This organisation, as previously mentioned, strongly and consistently
promotes engagement with consumers, providing several avenues for feedback (e.g.
via the company website), and therefore in diagnosing the changes made largely
considered the attitudes and opinions of their target market.
3.4.2 Lewin’s Theory
Lewin’s model of organisational change provides the groundwork for many other
models of change, that being the ‘unfreeze, movement, refreeze’ approach to change
(Burnes 2004). This model is arguably the most adaptable and practicable in times of
change, and is highly relatable to organisations that have a punctuated equilibrium
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pattern of change, as the first step in this model is to unfreeze what may be referred to
as the equilibrium period. In terms of this organisation, this model is appropriate as it
promotes flexibility in order to achieve the change (NHS North West Leadership
Academy, 2014). Flexibility was vital in the change process for this organisation, as it
was not seen as a feasible option the close the franchise whilst undertaking the
changes.
Lewin’s model very much promotes the use of communication between all levels of the
organisation in order to establish any necessary changes, and acknowledges that
lacking communication may result in barriers to the change (NHW North West
Leadership Academy 2014; Levasseur, R.E. 2001). It focuses primarily on alignment
between all internal factors to the organisation, rather than external. For this reason,
Lewin’s approach may not have been the most appropriate for these changes.
3.4.3 Kotter’sTheory andMcKinsey’s Theory.
Unlike models similar to that of Lewin, who pertains to a more procedural approach to
change, Kotter places the values and people within the organisation at the centre of all
business decisions and changes. The need for change experienced by this
organisation was largely focused on the potential benefits for customers and
stakeholders, and as such was not as considerate of the employees as these models
would imply. Steps 3, 4 and 5 in Kotter’s model are all focused on gaining the support
of those within the organisation that will be affected by the change, however, as
previously mentioned, to sheer size of the organisation made this very difficult and as
such, the crew members were not consulted prior to the change process. Kotter’s
process also talks about the importance of generating short-term wins, which was not a
focal point for this organisation in relation to these changes (Kotter International Online
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2012). The goal was to complete the changes as smoothly as possible, without
compromising customer satisfaction and loyalty.
3.4.4 SWOT Analysis
SWOT analyses are conducted by organisations in order to identify any and all relevant
and influential factors at a given time in order to establish any necessary changes, and
how they should be conducted. Given the nature of this type of analysis, and its
reliance on the external environment, it is necessary that organisations conduct these
on a regular basis in order to accommodate for any changes in the external
environment (Minton, 2010; Pickton and Wright 1998). The Strengths and
Weaknesses sections of these analyses should account for the perceptions of
customers and stakeholders (Giles 1989), in order to ensure optimum alignment
between the internal and external environment of the organisation.
3.4.5 Hayes and Hyde Model
The Hayes and Hyde Model for change management is structured as a 7-step process
in which the need for change is identified, the problem is diagnosed, and appropriate
implementation practices are conducted (Adams 2010). Hayes and Hyde developed
this process based on Lewin’s theory of change as a process, rather than a one-off
action.
Strauss (2008) discusses the benefits of the Hayes and Hyde model, and effectively
conveys it as an appropriate model for open systems organisations. Hayes and Hyde’s
model engages significantly with the external environment of the organisation, and
uses the information gathered from relevant sources to make appropriate changes. In
particular, the last 3 stages of the process use this to implement permanent and
ongoing change that is intended to benefit all parties to the organisation. This model
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also focuses on the processes of the organisation as a whole, to create synergy and
productivity, rather than focusing on the individual parts of the organisation that each
have their own specific functions. Ragsdell (2000) also highlights the benefits of this
type of approach, adopting a holistic view of the organisation and the changes
necessary. This holistic approach allows managers and change agents to view the
organisation in its entirety, not just the individual parts. In terms of the organisation in
question, this concept is applicable in the sense that the specific franchise in this
discussion was viewed holistically, and the changes were diagnosed with the intention
of improving the entire functioning of the business. Additionally, looking at the entire
organisation on the wider scale, we may also see this change diagnosis as holistic.
Despite the significantly identifiable changes were made to the store outlets, beyond
that, the corporate side of the organisation underwent changes in order to
accommodate these changes (i.e. through changes in training, productivity analysis,
etc.)
It is for these reasons that the Hayes and Hyde model of change management was
chosen as the most suitable model for the diagnosis of change within this organisation.
4 METHOD/APPROACH
In order to effectively diagnose the need for change within this organisation, I
undertook a number of methods and approaches.
4.1 SURVEYS
Surveys are one of the most widely accepted tools in diagnosing the need for change
in organisations, and are important for organisational development (Lok and Crawford
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2000; Hassin 2010). For the purpose of this diagnosis and report, surveys were
conducted by employees within the organisation, which, according to Brown and
Harvey (2006), provides useful insight into the current condition of the organisation,
which can be compared to the desired future state (Werner and DeSimone 2006;
Hassin 2010). Most significantly, these surveys identify the values, attitudes and
beliefs of employees.
I developed a short but concise survey for 20 employees within this organisation using
Survey Monkey, which allowed me to not only receive their results, but identify trends
and common opinions. This was a questionnaire-based survey, a popular data
collection tool for managers and change agents to understand specifically what issues
the organisation is currently facing (Lok and Crawford 2000; Hassin 2010). For the
retrospective purposes of this report, the survey I designed angled questions towards
the opinions of employees about the changes prior to their commencement, and their
opinion of the organisation overall since the changes have taken place. I initially
piloted a sample survey and received a small amount of constructive feedback
regarding the structure of the questions. Once making the appropriate changes, I sent
out the official survey. The results of this survey will be discussed under “Findings”.
4.2 INTERVIEWS
Hill and Stewart (2000) discuss the benefits of interviews compared to other forms of
organisational data collection, describing them as more direct, flexible and confidential.
Brown and Harvey (2006) support this claim, adding that interviews may provide
managers and change agents with information that may be unattainable via other
means of data collection. Through my own experience, I endorse the use of interviews
in conjunction with other forms of data collection, as it allows the interviewer and
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interviewee to connect on a level in which more honest information is produced, purely
confidentially, which may be useful in the diagnosis of the need for change.
For the purposes of this report, I conducted 3 interviews, with different parties to the
organisation: a shift supervisor, a crew member, and a customer. I designed the
interviews to be structured and following a prescribed set of questions. This allowed
me to gain insight into the macro and micro elements of the organisation in terms of the
change that has occurred, and to gain a wider scope of opinion. I chose this method
as the nature of the change largely affected those internal and external to the
organisation, and so it seemed suitable that I receive feedback from both areas.
A copy of the interview questions is available in the appendices. The results of these
interviews will be discussed under “Findings”.
5 FINDINGS
Through my investigation of this organisation, using a number of different data
collection tools, I was able to identify what lead to the changes made, and diagnose the
necessity of this change in the first instant. The results from these different tools
proved that there were both macro and micro environmental forces influencing the
need for change, as these environments were both bound to be affected by the
changes.
In discussing my findings, I will refer to each of the data collection tools I used, and
more specifically, discuss what forces came from the internal environment, and what
forces came from the external environment.
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5.1 SURVEYS
I conducted three surveys during the data collection phase of diagnosing the need for
change in this organisation. I developed a survey designed for 20 employees within
the organisation, referring to their opinions and attitudes before and after the changes
occurred. A copy of the survey is available in the appendices of this document. The
results of the survey are as follows:
85% of the employees have casual employment.
70% found the old system of service to be sufficient and enjoyable, 30% did
not.
70% found the old store layout and décor to be comfortable and welcome, 30%
did not.
100% agreed that the new system of service has improved morale, productivity
and efficiency.
100% either agreed or strongly agreed that they were given sufficient notice of
the coming changes.
70% either agreed or strongly agreed that overall they are satisfied with the
changes.
Through these results, overall we can see a strong trend of opinions. Most identifiable,
while majority of employees preferred the old layout and décor, they prefer the new
system of service, and all employees surveyed are satisfied with the new system of
service, although a majority of employees said they still preferred the old system.
This use of survey was useful to this report as it demonstrated the opinions of those
within the organisation arguably most directly affected by the changes. However, it is
evident through these surveys that despite the overall satisfaction with them, from a
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crew member point of view, they were not apparently necessary. To establish what
factors proved that these changes in fact were necessary, I conducted a number of
surveys to dig deeper into the process.
5.2 INTERVIEWS
During this process, I conducted three interviews in order to gain further insight into
what influenced and ultimately lead to the changes within this organisation. A copy of
the questions asked in each interview will be included in the appendices.
The significant responses given during the interviews are as follows:
5.2.1 Store Manager
They were consistently communicated with regarding the changes, but were not
highly involved in the actual decision-making process.
Head office determined the ‘need for change’ about 4 years ago, and began
incrementally implementing these changes throughout Australia. Little sway
was provided to individual store owners and managers.
As it stands, the changes have been successful. Initial productivity rates have
improved and the working process appears to flow more smoothly.
5.2.2 Crew Trainer
The crew trainers, as with the managers, were communicated with and aware
of the impending changes with a significant amount of notice.
Crew training procedures were sufficient and usually successful prior to the
changes.
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Not much crew training as taken place yet following the changes, but the new
system should make it a more simple process.
The changes were not entirely necessary, but do improve the appearance and
efficiency of the organisation as a whole.
5.2.3 Crew Member
The old system of service was sufficient, and did not necessarily need to be
changed.
Ample warning was provided about the impending changes.
The initial perception of the changes was curiosity and slight concern, because
they did not seem necessary yet they were going to be quite significant.
The changes have overall been successful, although most crew members
agree that the old store layout and décor was more welcoming.
The best thing about the changes is the improved efficiency of customer service
due to the new system.
Through the results of these data collection analyses, we can see some significant
trends regarding communication and opinions about the change. Further
discussion of these findings will be done throughout the “Discussion”.
6 DISCUSSION
Based on the findings of my data collection, we can see the meaning and implications
of the diagnosis. To accurately demonstrate this, this report will refer to the chosen
model of change – the Hayes and Hyde model. This model consists of 7 steps. The
first four steps will be included in this section of the report, as they adequately describe
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the reasons and process of the change. The final three steps will be included in
“Recommendations”.
Step 1: Recognising the need for change.
The need for change become apparent largely due to external factors. As previously
mentioned, within Australia there is a growing culture of cafes, and we are seeing a
shift in consumer trends towards take-away from cafes rather than fast food chains.
This organisation had maintained a consistent company image for many years, and
had failed to adapt to the changing environment. This external factor was becoming
more and more apparent, and ultimately lead to the decision that some sort of change
was to be made.
Step 2: Starting the process.
This may have inadvertently been done by staff and customer exposure to the
impending changes that had already taken place in other franchises of the
organisation, and employees were preparing to change. By seeing the different
procedures, people were able to gain an opinion about whether the new system is
more efficient prior to experiencing it in their own workplace. Complimentary to this,
those who had witnessed the new systems in other stores may then have been able to
understand the need for these changes, as they compared them with their current
systems of work.
Step 3: Diagnosing
This begins with reviewing the current state of the organisation, and will the desired
future state be more efficient than the current one. The change agent also had to
weigh up the financial considerations of the process, and would the costs be work the
outcomes.
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Second, they were to identify the desired future state. This state involved improved
organisational efficiency, increased revenue, improved reputation, and competitive
advantage.
Finally, the change agent must motivate all relevant personnel within the company to
be on board with making changes, and portray a shared vision that will apparently
benefit everyone internal and external to the organisation.
Step 4: Preparing and Planning for Implementation
Time allocations must be set in order for the change to be carried out in the most
efficient way possible, and all parties within the organisation must be made aware of
the changes. Head Office must also sure that the organisation is financially capable of
the proposed changes. Employees must be provided with adequate and relevant
training in order to respond appropriately to the changes.
The need for change as identified through my own research as well as what was done
by the change agent means that the organisation has a strong determination to remain
an industry leader, and to hold onto their market share. The goals of improving
productivity and efficiency were only partially guided towards the benefit of employees
within the organisation. Ultimately, this desire to remain current and noticeable within
the market was aimed towards benefitting the consumers, which in turn benefits the
organisation as a whole by providing revenue and profits.
Further discussion about the ongoing implications of this change is conducted under
the “Recommendations” section of this report.
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7 RECOMMENDATIONS
The remaining three steps of the Hayes and Hyde model for change are relevant to my
recommendations to the organisation. In conjunction with this, the recommendations
will be based on the surveys and interviews prior to the changes.
Step 5: Implementing
As previously mentioned, this franchise followed a punctuated equilibrium pattern of
change in order to achieve their desired results, however the organisation as a whole
implemented the changes incrementally. I agree with this approach and would
recommend it to organisations in similar situations, as it allowed management to
assess the effectiveness of the changes on a smaller scale before continuing on to the
larger scale.
My greatest recommendation regarding the implementation would be for management
to gain insight from the relevant employees before committing to the changes.
Although the overall opinion towards the changes has been positive, a strong trend
throughout the data collection was the opinion that employees, including managers, did
not feel as though they were involved enough if the decision making process, despite
being directly affected by the changes made.
Step 6 and 7: Reviewing and sustaining change
These two steps in themselves are my two main recommendations for the
organisation.
Reviewing major changes to organisations is vital to ensuring their success, or, in the
case of their failure, learning what can be done differently next time. This reviewing
can be done by both quantitative and qualitative means, such as through surveys of
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employees and customers regarding their ongoing opinions of the organisation
following the changes, and analysing statistics and figures such as revenue and profit
and comparison to that prior to the changes.
Any issues with the changes must be reported as soon as practicable, so that they can
be modified and improve the overall system. Through these reviews and openness to
possible amendments, management provide themselves and the organisation with a
strong opportunity to sustain the changes for the desired period.
8 CONCLUSION
The purpose of this report is to identify and diagnose the need for change within a
franchise of a major fast food corporation within Australia. Through data collection and
scholarly research, I was able to identify what issues existed within this organisation
that lead to the need for change, the most appropriate model for conducting this
change, and provide recommendations for the change itself as well as for the ongoing
effects of it.
The information provided within this report is limited due to the lack of access to
information from the organisation’s Head Office, but ultimately, a substantial amount of
information as well as opinions was relevant and accessible.
Based on the practice of implementing these changes, the data collected, and the
recommendations made, we are able to see how and why the changes were made,
and possibly how they could have been done better. Further review of the ongoing
effects of the changes is necessary in order to truly appreciate the actions taken, and
the information and recommendations provided within this report.
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9 APPENDICES
9.1 APPENDIX 1
Interview Questions
Shift Manager
1. Did you play a role in the decision making process for the need for change?
2. Did you play a role in deciding what changes needed to be made?
3. Did Head Office consistently communicate with you and the other managers
about the coming changes?
4. What steps were taken when deciding to make the changes?
5. Do you believe the changes have been successful?
Crew Trainer
1. Were you made aware of the coming changes?
2. How did you find training crew prior to the changes?
3. How do you find training crew following the changes?
4. Do you believe that the changes were necessary?
5. Overall do you believe that the changes have been successful?
Crew Member
1. Did you find the old system of service sufficient?
2. Were you made aware of the coming changes?
3. What were your initial thoughts about the changes?
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4. Overall do you believe that the changes have been successful?
5. What do you believe is the best and worst thing about the changes?
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