2. Executive Summary
This report recommends a change management plan for the change in
organisations structure executed in an Indian Subsidiary of an American
MNC Software Product Company. The Indian Subsidiary was changed
from a development organisation (cost center) to a service organisation
(revenue center).
This report has four parts, Introduction, Analysis, Change Management
Plan and Conclusions
The Introduction provides background of the Organisational Change and
lessons learnt from the change execution. The Analysis elaborates the
change management theories that could have been used, and
recommends an approach for the change execution. The Change
Management Plan details the activities, timeline, and key personnel for
the recommended approach.
Since I was part of the Indian subsidiary, the names of the individual and
company have been kept anonymous.
3. Contents
Introduction ..............................................................................................4
Planning for the change.........................................................................4
Execution of the Change........................................................................4
Lessons Learnt.....................................................................................5
Analysis ....................................................................................................6
The Approach.......................................................................................6
Change Management Plan ...........................................................................8
Scope & Purpose ..................................................................................8
“Kotter’s Eight step model” Framework ...................................................8
Mckinsey’s 7S Model ........................................................................... 10
Change Management Team (CMT) ........................................................ 12
Conclusions............................................................................................. 13
References .............................................................................................. 14
Appendix 1.............................................................................................. 15
Appendix II ............................................................................................. 16
4. Introduction
The credit crunch in 2008 led to decrease in sales of software products, forcing
the American MNC company to look for other revenue avenues. This led to the
company’s focus towards the service market of its software products.
The top management’s vision was to maximise the service revenue of its
software products, within the least possible time and cost, by creating a new
service team.
Planning for the change
The top management identified the development centre in India for creating the
new service team. As it was a low cost center and had experiences of handling
many of its software products, the cost and time for change would be the
minimum.
A small team was created in US and Europe, to make the change management
plan. The team was instructed to completely transform the existing development
center in India to a Service center.
The small team from Europe and US changed the existing organisation structure
and identified new teams for every employee of the development center.
Execution of the Change
Upon finalising the new organisation structure, the small team along with top
management had a conference call with the local management of the Indian
subsidiary. In the conference call, the local management was directed to execute
the organisational change.
The local management then decided to send an email to all the employees of the
Indian subsidiary informing them about the organisational change. Every
employee was directed to contact his/her reporting manager to their new
positions.
After 2 days, the local management informed the top management about the
completion of the organisational change.
5. Lessons Learnt
In the ground level, it took around 6 months for the employees of the Indian
subsidiary to acknowledge the new structure, position and job expectations. The
acceptance of the change was very low even after a year, since there was lack of
clarity from HR policies to decision making responsibility.
In short term, Indian subsidiary reached 50% utilisation of resources within first
4 months but after a year, the Indian subsidiary had issues in delivering better
quality service due to no effective internal process. Since after an initial phase,
lot of senior resources left the organisation and customer demand were
unpredictable.
Below are the some of the gaps identified from the above approach to change
management
1. Vision and strategy of top management was not shared with the
employees.
2. The local management was not involved in the planning stage.
3. The small team in Europe and US made the changes without skill set
mapping of the employees.
4. HR’s role was minimal
5. Training requirements to develop skill as per new job expectations was
not done.
6. Buy in and motivation of the employees were not done
7. Local management did not have a communication plan to execute the
change implementation
8. Cultural impact was not considered during the planning process
6. Analysis
Are there any change models and theories which could have been applied, to
ensure that the gaps are covered and execution of above change was more
successful?
This section is a detail the approach to apply some of the change management
models and theories to the above organisational change.
The goal of the approach is reduce the performance dip during implementation
of organisational change
Figure 01 – Change curve (Sbaglia, R. (2012)
The Approach
To identify the applicable models for the organisational change, it is essential to
identify the “metaphor” of the organisation.
From the various metaphors explained in Gareth Morgan’s work (Cameron, E.,
Green, M. 2009) on organizational metaphors, this organisation resembles both
like a “political system” (since American MNC consists of 40 organisations which
were acquired) and like an “organism” since changes are made in response to an
7. external change). Hence from the various models explained by Cameron, E.,
Green, M. (2009), the Nadler and Tushman’s congruence model and the Kotter’s
eight steps model (Kotter, J P. 2007) are more applicable since the organisation
is political system and organism metaphor. But Nadler’s and Tushman’s
congruence model is a good tool to organise the change process rather than a
template for implementing the organisation change and it focuses on the
problem rather than the solution (Cameron, E., Green, M. 2009). Hence
Mckinsey’s 7S model is considered as an alternative for Nadler’s and Tushman’s
congruence model (Cameron, E., Green, M. 2009)
Apart for the Kotter’s Eight Step model, the framework of Project Management
Body of Knowledge (PMBOK), created by the Project Management Institute (PMI)
was also considered (SoftExpert Software for Performance Excellence, 2012).
But since in many organisations, the organisation change can be more complex
than a project and to ensure the framework is more generic, the Kotter’s Eight
Step model was choose.
Hence the approach to the organisational change is to have Kotter’s Eight step
model as the overall framework and use Mckinsey’s 7S model in the planning
process.
Figure – 02: PMBOK Knowledge Areas and Respective PM Processes (SoftExpert Software for
Performance Excellence 2012)
8. Change Management Plan
This change management plan identifies the scope of the organisation change,
key players, the process and the framework to be followed for execution of
organisation change for the Indian subsidiary of an American MNC company.
The Kotter’s Eight step model is used as the framework for this plan.
Scope & Purpose
The purpose of this change management plan is to ensure minimum dip in the
performance level of the Indian subsidiary during the organisational change.
The scope of this plan is from the acknowledgement of need of change due to
external changes (in this case the 2008 crisis) to the post implementation plan
for the Indian subsidiary.
“Kotter’s Eight step model” Framework
The below tables details the Eight steps of Kotter’s model, their significance,
recommended activities, responsibilities and the duration for the organisational
change
Table 01 – Kotter’s Eight-Stage Process for Creating Major Change (Hemmes, C. 2009)
Stage Significance
Remarks &
Recommended Activities
Responsibility
Time
period
Stage 1:
Establishin
g a Sense
of Urgency
Help others see the
need for change and
the importance of
acting immediately
Identify and discuss
crises, potential crises
or major opportunities
In this case, the change was
external due to the 2008
financial crisis. Even though
the Top management was
late to react to the crisis,
there was urgency within the
Top management to act at
the earliest.
Top Management
team
Less
than a
week
Stage 2:
Creating
the Guiding
Coalition
(Change
Manageme
nt Team
(CMT)
Make sure there is a
powerful group
guiding the change,
one with leadership
skills, bias for action,
credibility,
communication skills
and authority and
analytical skills
Assemble a group
powerful enough to
lead & influence the
Instead of creating the small
team only with Europe and
US, the top management
should include the local
management.
A credible leader should be
projected as the sponsor of
the whole organisation
change project.
There should be a buy in with
the local management which
would then be cascaded into
the employees of the Indian
Top Management
team
1 week
9. change
Getting the group to
work together like a
team
subsidiary. The team should
also have an HR
representative.
Due to the urgency to act, the
CMT may not have the time
to develop as a high
performing team. Hence the
top management should
ensure that right people are
picked.
Stage 3:
Developing
a Vision
and
Strategy
Clarify how the future
will be different from
the past, and how you
will make the future a
reality
Creating a vision to
help direct the change
effort
Start with a SWOT analysis
of the Indian subsidiary to
understand the bigger
picture.
Develop strategies for
achieving the vision using the
Mckinsey 7S model (detailed
in the latter part).
Strategy includes
communication plan,
Organisation needs,
workforce planning and Key
Performance Indices (KPI) to
measure the effect of
change.
CMT
4
weeks
Stage 4:
Communic
ating the
Change
Vision
Make sure as many
others as possible
understand and
accept the vision and
the strategy
Communication plan and
also identify the risk involved
in the whole process.
(detailed in the latter part)
Communication includes HR
policies, defined roles for
individuals, training plan and
organisation structure
CMT
Stage 5:
Empowerin
g Broad-
Based
Action
Enabling others to act
on the vision by
getting rid of
obstacles, encourage
risk taking
Altering systems or
structures that
undermine the change
vision
Remove obstacles,
encourage risk taking and
non-traditional ideas,
activities, and actions. So the
responsible personnel can
execute their role as
identified by CMT.
CMT
Stage 6:
Generating
Short-Term
Wins
Planning for and
generating short term
wins / improvements
in performance
Recognising and
rewarding those
people who make
wins possible
Create milestones in the
timeline to ensure
measurable short term wins.
Bring out consistent HR
polices for recognition and
rewards.
CMT
Stage 7:
Consolidati
ng Gains
and
Producing
Press harder and
faster after the first
success
Consolidate
improvements and
Develop people who can
sustain the new vision
CMT should execute the
succession process
CMT and local
management
1 week
10. More
Change
sustain the
momentum for change
Stage 8:
Anchoring
New
Approache
s in the
Culture
Articulate the
connections between
new behaviours and
organisational
success
Institutionalise the new
approaches and ensure
induction / orientation
programs reflect the new way
of working.
CMT should be dissolved
and the local management
should start flowing
CMT & Local
management
1 week
The total duration for the organisation change to be executed is less than 8
weeks.
Mckinsey’s 7S Model
The planning for the change management is recommended to be done using the
Mckinsey’s 7S model.
Figure 03 – Mckinsey 7S model (Papers4You.Com, 2009)
The seven ‘S’ categories for this organisational change are:
Table – 02 – Mckinsey 7S model (Cameron, E., Green, M. 2009)
Category Description Activities CMT role
Staff Important categories of
people
Mapping existing team
with required team
composition
Change manager, HR
manager, respective
local manager and
11. related manager
Skills Distinctive capabilities
of key people;
Derive a Training plan
and estimate the cost
of training (refer
Appendix II)
Change manager, HR
manager, respective
local manager and
related manager
Systems Routine processes Review HR systems
and other support
systems
HR manager and
shared services
managers
Style Management style and
culture
Communication plan,
Risk assessment
CMT
Shared values Guiding principles Converting a cost
center to revenue
center
CMT
Strategy Organizational goals
and plan, use of
resources
Bring out the vision for
the new organisation
and detail the
workforce plan
CMT
Structure Organization chart. By understanding the
strategy, develop the
best structure for
sustained performance
CMT
By executing the above activities for the 7S model, planning for change
management would be holistic, thereby increasing the success of the
organisation change.
To further simplify the output from the 7S model, all the required outputs can be
categories into Organisational Needs, Communication Plan and Workforce
Planning. This would facilitate better assignment roles and responsibilities for
execution.
ORGANISATIONAL NEEDS
•Structure
•Management Systems
•Policies
•Procedures
•Protocols
•Software
•Assets
•Resources
COMMUNICATION PLAN
•Employee Meetings
•Newsletters
•Communication Peer
Support Team
•Staff integration
meetings and workshops
WORKFORCE PLANNING
•Capacity Audit
•Clearly identified roles
and responsibilities
•Position Descriptions
•Skills and Knowledge
Register of current staff
•Register of required skills
and knowledge
•Plans for addition or
reduction of staff
•Recruitment and
retention strategies
•Salaries, wages, and
benefits benchmarks and
review processes
12. Change Management Team (CMT)
Creating the change management team is the step which defines the success of
the organisation change.
The Change management team should consists of
1. Change Manager
2. Local Management
3. Related Managers
4. HR Manager
5. Shared Services Manager
The Change manager is the face of the whole organisation change. A credible
leader whose main role is to ensure buy in from all stakeholders. For this
organisational change, it is recommended that the Change manger is the head of
the Indian subsidiary as this would also help is creating an ownership of the
organisational change among the local management.
The Local Management are the managers in the India subsidiary who understand
the capabilities of their team and can provide inputs on the mapping of the
individual according to the new organisation structure.
Related managers are the stakeholders across the organisation geographies. For
this organisational change, the related managers are the team in US and
Europe.
HR Manager should be part of the CMT to ensure that the policies and
procedures for the new organisations are in accordance to overall organisation’s
HR policies.
Shared Service manager is part of the CMT to ensure that the new organisation’s
process and systems are in accordance with the existing systems.
13. Conclusions
The proposed framework and process will ensure clear communication of the
change; understanding the concerns of the employees; getting a buy in and
motivating each employee for a successful organisational change and thereby
would resolve the gaps identified (in the introduction section).
Even though the detailed change management plan is specific to the
organisational change discussed, the proposed framework and process are kept
generic to ensure applicability for change management in other organisations.
It should be considered that the proposed framework and process can be applied
to organisation with political system and organism metaphor only. For
organisations with other metaphors, it is recommended to analyse all other
applicable models before considering the proposed framework and processes.
14. References
Cameron, E., Green, M. (2009). Making Sense of Change Management: A
Complete Guide to the Models Tools and Techniques of Organizational Change
(2nd ed). London: Kogan Page
Hemmes, C. (2009). Kotter Bridges Checklist. Available:
http://www.adelaide.edu.au/hr/strategic/kotter_bridges_chcklist.doc. Last
accessed 02nd July 2012.
Kotter, J P. (2007). Leading Change Why Transformation Efforts Fail. Harvard
Business Review. Jan 2007, p96 - 103.
Papers4You.Com . (2009). What is McKinsey 7S Model?. Available:
http://www.coursework4you.co.uk/essays-and-dissertations/mckinsey-7s-
framework.php. Last accessed 02nd July 2012.
Sbaglia, R. (2012). A Level Playing Field. Available:
http://www.globaleducationconference.com/profiles/blogs/a-level-playing-field.
Last accessed 02nd July 2012.
SoftExpert Software for Performance Excellence. (2012). PMBOK Guide to the
Project Management Body of Knowledge. Available:
http://www.softexpert.com/regulation-pmbok.php. Last accessed 02nd July
2012.
15. Appendix 1
Short History of the Organisation
(replicated from the pre assignment submitted)
Merger and Acquisitions are very common in the software product industry. Due
to the dynamic changes in the technology field, companies opt for inorganic
growth to ensure sustainable growth. An American software company became a
big player through acquisitions of smaller companies thereby creating forty
organisations within it. Each organisation owned a software product and had its
own business units. To bring in commonality across the company, all the
organisations were merged together and made into three verticals, Development
center, Service center and Sales. The development centers were cost centers
(i.e resource allocation depends on R&D budget) and Service centers and Sales
were revenue centers (i.e. resource allocation depends on revenue generated).
The Indian subsidiary, which was created as a low cost development center
during the late 90’s, had the experience of being acquired twice before it became
part of the American MNC in early 2000’s. Soon after the acquisition, the
American MNC started to move more development work to the Indian subsidiary
to take advantage of the low cost. This increased the employee strength of
Indian subsidiary to more than 500 members.
16. Appendix II
Training Cost - Sample Analysis
Total no of employees in Indian Subsidiary = 500 employees
No of Training hours required for an employee = 40 hrs
Total hours of Training = 500 x 40 = 20,000 hrs
Cost of employee per hour = $ 50 (low cost center)
Opportunity cost of Training = 20,000 x 50 = $1,000,000
Average Cost of Training per employee = $ 15 (low cost center)
Cost of Training = 15 x 500 = $ 7,500
Hence Budget required for Training = $7,500
