Managing change in the business environment

Managing change in the business environment

Ronaldo C. Cabuang
Sr. Staff Engineer, Manila Electric Company
Ortigas Ave, Pasig City, Philippines, 0300
Email: rccabuang@usa.net

Daniel A. Pangan
Superintendent, Manila Electric Company
Ortigas Ave, Pasig City, Philippines, 0300
Email: dapangan@meralco.com.ph

Nature of Change

Why Change?
"Life used to be so simple"; this is specifically true with Manila Electric Company (MERALCO). Although there are about 139 electrical distributors in the Philippines, MERALCO enjoys its status as a virtual monopoly on electrical distribution in the Philippines. Consider the following facts: in 1998 MERALCO maintained its position as the second biggest firm in the Philippines in terms of gross revenues. It accounted for 23.1 billion kilowatt-hours or 62 percent of the total energy of the entire country. Although its franchise area is equivalent to only three percent of the Philippines' total land area, it produces 49 percent of gross domestic product (GDP).

So why change when things are going right for you? We all know that everyone of us is facing the facts of life about change. We know that it is everywhere, it is constantly present and its pace is accelerating. It is all around us in the seasons, social environment and biological process. The very first breath we took depends on the ability to adapt from one to another that is dramatically different.

Forces for Change
Organizations are also encountering a wide variety of dramatic changes. Some are faced with regulation from the government, others experienced deregulation on their turf, some find their market share dwindling down while others find themselves head-to-head with global competition. In fact many organizations have experienced mergers or hostile takeovers, producing nerve wracking psychological and economic effects on employees.

Take the case of the telecommunications industry in the Philippines some years ago. Before, customers are literally begging the Telephone Company for connections. With the recent deregulation of the telecommunications industry, customers can now choose from the many companies, which they think suit their best needs. Now comes the imminent deregulation of the electrical industry, truly we can say that MERALCO could not afford to be complacent in doing business. It has foreseen that there is a need to implement major changes in order to stay competitive. Not only did it implement changes on processes that are considered inefficient but also made a bold move to change everything. This includes the redefining of the corporate culture of the company. With these recent developments we can say that in order to survive it is not a question of whether to change or not, but when and how to implement the necessary changes effectively.

Resistance to Change
Change affects everyone. In so doing, it is natural to wish that the current changes never happened, but we cannot wish them away so what normally follows is resistance to change. Resistance in itself is neither good nor bad. It is a natural reaction to change, but the success of any change efforts hinges on how well this resistance is managed and transformed into support. It is very important to characterize the forms of resistance before attempting to manage it. The three forms of resistance are:

Logical Resistance - also called as the rational resistance. This resistance arises from the need for time and effort to adjust to change being implemented. Also, included here is resistance due to the perceived technical incorrectness of the system.
Psychological Resistance - this is based on sentiments, emotions and attitudes. This arises from the classical fear of the unknown. Also, this type of resistance arises when employees feel that their security or self-esteem is threatened. Although management feels that this type of resistance is irrational and would have no justification, they should deal with this and manage it properly.
Sociological Resistance - also called resistance due to group interests. This resistance arises due to the social values of people involved where they perceived that their group interests are threatened. This type of resistance should also be considered since group values are powerful forces. Resistance encountered with this type causes a lot of nuisance during implementation.

AM/FM/GIS Project

Implementation
As MERALCO saw the need to institute changes, it envisioned different corporate programs that would improve the efficiency and quality of service. One of these projects is the implementation of an AM/FM/GIS system. As early as 1992 the company had embarked on an AM/FM/GIS project in a pilot area system implementation, it didn't materialize because of time and cost constraints. But in 1995 our mapping team decided to automate the primary maps using an incremental approach. Gradual transfer from a manual procedure to an automated one proved to be very beneficial. Using this approach we have prioritized which key areas should be automated first thus, lessening the complexity of its implementation. This lessened the impact on operational matters, particularly on our internal customers who rely on our manual maps. We were able to migrate into an automated system without much disruption on our day-to-day activities.

In 1996, with the help of a business consultant, the company started to initiate different information systems. One of them was the scheduled implementation of the AM/FM/GIS project in late 1997. During the initial stages of the project it used the data from the automated primary mapping system as a springboard in the implementation process. After the data was completely transferred, middle management then decided to implement a cutover procedure whereby stopping the use of the automated primary mapping system and completely migrating to the new AM/FM system. At this stage is where we have experienced resistance from users.

Resistance Encountered
Change is present in our daily activities that we hardly notice it, not even the resistance that accompanies it. Personnel are willing to accept that change is constant and an everyday event. While change is continual, it is hardly welcomed. When change becomes rapid and enormous, the resistance becomes more noticeable and harder to manage. In this case there are broad reasons on why employees resist the changes being implemented. For one, they may not be comfortable with the changes being implemented. Like in the case of the draftsmen, almost 50% of them have been with the company for more than ten years. They were used in doing updates on manual maps, that they are reluctant to exchange the comfort of familiarity with uncertainty. They may not be comfortable with the change itself, especially at the time when we have just recently implemented the automation of primary maps. Employees feel that it is just now that they have adjusted themselves with a major change and here comes another change being implemented. Others may feel that the decision for this change is technically incorrect and this is especially true for the end-users of the system.

Another major reasons why we have encountered resistance came from the method by which the change was introduced. Majority resisted because they feel that they were not been properly involved in the change process. Some are annoyed in situations where they are ill informed while others simply resist an authoritarian approach.

During the implementation of our project, personnel did not agree on both the nature of change and the methods used during the implementation, thus it proved doubly hard for us to manage employees resistance to change. As the saying goes "The way that people feel about a change determines how they will respond to it".

Evaluation of the Project Implementation

Benefits of Resistance During our implementation as we are adjusting to the planned change, people became discouraged because of the problems that developed. The project was subjected to criticism, attacks and even failure, because it appears to be not working. So what we did was to stop for a while, look back and re-examine the change proposals. We then revised the implementation procedure making sure that they are appropriate and then use the system for its intended purpose. This is one benefit we got from employee resistance wherein it served as a check and balance on the proper implementation of the project, and resulted into benefits on the company's interests. It also shows that that reasonable employee resistance causes management to screen its proposed changes more carefully, and it discouraged careless project implementation.

The kind of resistance that we got helped us identify specific problem areas; thus we can take corrective measures before serious problem occurs. It also serves as a guide so that implementors do a better job of communicating a change that would lead to a better acceptance in the long run. Building Support for Change

By looking at the reasonable resistance offered by employees we were able to see what went wrong with the project implementation. We were able to determine what should we do in building support for change:

Identifying and communicating to the right people - this is very important before, during and after the planned implementation. During the planning stage of our AM/FM project there was no extensive talks between the planners and the users. So when the project was implemented some functional requirements that are needed for the operational activities were not yet available. This leads to the perceived technical incorrectness of the system. After the implementation of the project, communication is also very important in assessing the progress of the project. This would greatly increase the chances of success since we could make corrective measures decisively where it is needed. Which leads me to the next item.
Having a fallback procedure - As we have seen in our project implementation, cutover procedure is not the appropriate approach. Since there were functional inadequacies of the new system, operational activities were disrupted. Users became frustrated when expected work outputs could not be delivered. So, users have already made an impression that it was an incorrect decision to change eventhough the inadequacies were solved after some time. This resulted to a greater resistance that we have to deal with, which clearly illustrates the danger on the methods of change greatly affecting the nature of change.
Considering software preference - Although software selection is more on the technical issue, it has some effects on people issues. We know that all GIS softwares have similar basic functionalities. But it has a great impact on people if you are using a popular one. For one, you will have an abundant pool of workers in the market for your manpower complement. Also, it helps as a motivational factor for your employees knowing that proficiency in using them would mean a boost in self-esteem among their professional circle. Also, deep inside they know that it would be a value added in their marketability.

Leadership in Change
Although there are problems on the tactical implementation of the AM/FM project, we are very fortunate to have a good strategic plan in anticipating the need for change. Employees are well aware on the need to be prepared in a deregulated environment. Management had made a bold move in developing a master strategy for planned change. Not only did the company initiated different information systems to improve efficiency but it also addressed behavioral issues. This means that employees are taught on how to let go of the old methods of working, and it also addressed the problems on uncertainties inherent in change that cause workers to be fearful. MERALCO was successful in creating an organization that welcomes change by:

Having transformational leaders - Management initiated bold strategic changes to position the organization in the future. They articulated the company's vision and sell it vigorously. This helped the employees rise above their narrow focus to see a broader picture. They showed charisma that helped influence employees to take early and sustained action. They expressed high performance expectations making each employee feel their importance in the organization.
Creating a mission, vision statement - As MERALCO accepted the new challenges posed by the changing business environment, it redefined the mission, vision statement of the company. It made a more realistic and appropriate goal or idea of what should be accomplished. It redefined the corporate culture of the company that enabled employees to think beyond their capabilities and raised their awareness to new heights. This increased their levels of commitment and enthusiasm towards a common goal.
Stimulating Learning - Introducing change alone was not enough; one critical task is to develop people's capacity from the experience of change. MERALCO trained its seven thousand plus (7000+) employees to the different programs like MERALCO Values Course, Customer Service Excellence, and Total Quality in MERALCO. These opened the eyes of employees to a positive attitude towards change, to let go of the old ways and be more aware of the needs of our customers whether internal or external. We know that seminars involved cost to the company but it leaves no stone unturned to the development of its employees. This is reflective of the company's belief that its employees are its most valued asset. In fact, the company even went as far as offering non-work related seminars but self-improvement ones.

With this mindset in place we can say that we are not just leaving behind a legacy of simply the change itself but an end product of a dynamic organization that will continue to change.

References

Newstrom, J. W., Davis K., 1993, Organizational Behavior Human Behavior At Work, pp. 269-290
General Education Team, 1996, Meralco Values Course Manual