Change Management At Sainsburys Plc Management Essay
This report will examine the change management with focus on how change could be introduced, implemented and how resistance to change could be mÃ©nage. Therefore we shallbriefly look at the change which had been taking place within sainsbury’splc how it was mange and the success rate. It also evaluates the need for the change. How the stake holder analyst was done therefore the Sainsbury’s was used and the mckinsey company.
1.1 The background of the Sainsbury’s plc
Sainsbury plc is a registered parental company of Sainsbury’s Supermarkets Ltd, which is popularly known as Sainsbury’s, a chain of supermarkets in the United Kingdom with special focus on property and banking business. “HYPERLINK “http://news.uk.msn.com/uk/article.aspx?cp-documentid=16788775″SainsburyHYPERLINK “http://news.uk.msn.com/uk/article.aspx?cp-documentid=16788775″‘HYPERLINK “http://news.uk.msn.com/uk/article.aspx?cp-documentid=16788775″s profits see 11% surgeHYPERLINK “http://news.uk.msn.com/uk/article.aspx?cp-documentid=16788775″”. MSN News. http://news.uk.msn.com/uk/article.aspx?cp-documentid=16788775 Retrieved 2009-06-13.. Its estate has been estimated to be about Â£8.6 billion March 2007. Sainsbury’s was the market leader in the UK supermarket sector in much of the 20th century, but lost its place as the UK’s largest grocer to Tesco in 1995 and in lost 1995 and was pushed into third by ASDA in 2003. The company’s performance has improved by CEO Justin King in 2004 since the launch of a recovery programme. The company has been reporting its 12th consecutive quarter of sales growth. Despite predictions that Sainsbury’s would regain second position in January 2008, Taylor Nelson Sofres data released in January 2008 shows Sainsbury’s market share at 16.4%, behind Asda’s share of 16.7%, but ahead of Morrison’s at 11.22%. This report shall evaluate the series of change programmes in the company under the last five years with special consideration to the change types of change, change processes and how the management has been able to deal with issues of stakeholder analysis while implementing the change and how resistance to change was dealt
1.2 Business Transformation as a form of change which has occurred in Sainsbury within t. 2004-2009
Developmental Changes in the year 2004
Between 2000 and 2004, Peter Davis was chief executive of Sainsbury’s. Davis’ appointment was well received by investors and analysts the appointment was only confirmed after Sainsbury’s was sure of the support of the Sainsbury family, who snubbed Davis’ offer of becoming chief executive in the early 1990s. . ( Shah, Saied 2000. “Sir Peter Davis brought back to take helm at Sainsbury’s” (The Independent (Newspaper Publishing): p.Â 19). Within the first two year Sainsbury was able to raise its profit above the target but later drop sharply in 2004 when compared with the performance of its major competitors.Davis was the architect of an almost Â£3 billion upgrade of stores, distribution and IT equipment, called “Business Transformation Programme.” . Business expansion and innovation strategy were used to implement the change.
However his successor later discovered that most of the investment was more or less wasted and considered failed in his key goal of improving availability. Fraction of the investments witness the construction of four fully automated depots, which was considered at Â£100 million each cost four times more than standard depots Townsend, Abigail 2006. ( “HYPERLINK “http://www.findarticles.com/p/articles/mi_qn4159/is_20060423/ai_n16212212″How the HYPERLINK “http://www.findarticles.com/p/articles/mi_qn4159/is_20060423/ai_n16212212″‘HYPERLINK “http://www.findarticles.com/p/articles/mi_qn4159/is_20060423/ai_n16212212″Newbury processHYPERLINK “http://www.findarticles.com/p/articles/mi_qn4159/is_20060423/ai_n16212212″‘HYPERLINK “http://www.findarticles.com/p/articles/mi_qn4159/is_20060423/ai_n16212212” turned SainsburyHYPERLINK “http://www.findarticles.com/p/articles/mi_qn4159/is_20060423/ai_n16212212″‘HYPERLINK “http://www.findarticles.com/p/articles/mi_qn4159/is_20060423/ai_n16212212″s roundHYPERLINK “http://www.findarticles.com/p/articles/mi_qn4159/is_20060423/ai_n16212212″”. The Independent on Sunday (Independent Newspapers). http://www.findarticles.com/p/articles . Retrieved 2007-02-08. .
However. Lack of accurate estimation and appropriate consultation of the stakeholder was fingered to have contributed to the failure of the project and the change programme.
Though, enough information were not make public on the implication of change on workers and other relevant stakeholders, but the sharp falling in the profit within the short period cold be used as yardstick to justify the reason while the project was considered good for dropping
Developmental changes programme in year 2006
Christensen spoke on the four automated depots introduced by Davis, that there was no single day went by without one, of the system developing if not all of them The systems were flawed. They most of the time to stop for four hours daily for repair maintenance. But because they were constantly breaking down you would be playing catch up. It was a vicious circle. Christensen believe it was a great mistake to build four such depots at a goal, instead of building one which could be thoroughly tested before investing in another.
Resuscitating of the Failed automated Project in 2007
The launch of the recovery programme by king, Sainsbury’s announced a further Â£12 million investment In 2007 in its depots in order maintain speed with sales growth and the removal of the failed automated systems from its depots. Since the launch of King’s recovery programmed, the company has reported fifteen consecutive quarters of sales growth, most recently in November 2008. Early sales increases have been attributed to the new company’s distribution system and the focus of the fresh and healthy food (“HYPERLINK “http://news.bbc.co.uk/1/hi/business/4378035.stm”Improved supply lifts SainsburyHYPERLINK “http://news.bbc.co.uk/1/hi/business/4378035.stm”‘HYPERLINK “http://news.bbc.co.uk/1/hi/business/4378035.stm”sHYPERLINK “http://news.bbc.co.uk/1/hi/business/4378035.stm””. BBC News. 2005-03-24. http://news.bbc.co.uk/1/hi/business/4378035.stm. Retrieved 2006-10-11.)
A transformational change:
In May 2007 Sainsbury’s identified five areas of focus to take the company from recovery to growth in order to transform its business strategy: therefore it identified the following focus as key factors to core activates in line with the concept of comparative advantage and the value chain (Michael p, 1985) the five core value include:
“Great food at fair prices”
Growth of non-food ranges
“Reaching more customers through additional channels” through opening of new convenience stores and growth of online home delivery and banking operations.
Expansion of supermarket space through new stores and development of the company’s “largely underdeveloped store portfolio”.
“Active property management”
Sainsbury embraced the external boundary as change model through merger and acquisitions to achieve this change
Sainsbury’s announced In March 2009 its intention to buy 24 stores from The Co-operative, 22 of which were Summerfield stores and the remaining 2 were Co-op stores. These were among of their estate which The Co-operative were required to sell after the completion of the Summerfield takeover. (Guardian (2009-11-04).
1.3 The issues which have made the company consider the change
The loss of market position; peter Davis Within the first two year Sainsbury was able to raise its profit above the target but later drop sharply in 2004 when compared with the performance of its major competitors.Davis was the architect of an almost Â£3 billion upgrade of stores, distribution and IT equipment, called “Business Transformation Programme.” This was among of the issues that necessitated the change
1.4 The process which the change took place
1.4.1 Identification of the need for change
At the end of March 2004 Davis was promoted to chairman and was replaced as CEO by Justin King. Justin King joined Sainsbury’s in 2004 from Marks and Spencer plc where he was a director with responsibility for its food division and Kings Super Markets, Inc. subsidiary in the United States. Schooled in Sol hull and a graduate of the University Of Bath, where he took a business administration degree, King was also previously a managing director at Ads with responsibility for hypermarkets.
1.4.2 Shareholders’ consultation: Gathering of useful data needed for the change from the relevant stakeholders
as part of his 6 month business review asking them what they wanted from the company and where the company could improve, King ordered a direct mail campaign to 1 million Sainsbury’s customers This confirm the commentary of retail analysts repot that the group was not ensuring that shelves are fully stocked, because of the IT systems introduced by Peter Davis. (SainsburyHYPERLINK “http://news.bbc.co.uk/1/hi/business/3755066.stm”‘HYPERLINK “http://news.bbc.co.uk/1/hi/business/3755066.stm”s heads back to basicsHYPERLINK “http://news.bbc.co.uk/1/hi/business/3755066.stm””. BBC News. 2004-10-19. http://news.bbc.co.uk/1/hi/business/3755066.stm. Retrieved 2008-10-09.)
1.4.3 Implementation of change
On 19 October 2004 King unveiled the results of the business review and his plans to revive the company’s fortunes – in a three year recovery plan entitled ‘Making Sainsbury’s Great Again’. This was generally well received by both the stock market and the media. He used CHANGING STRUCTURES MODEL in his implementation of the change. Immediate plans included lying off 750 headquarters staff and the recruitment of around 3,000 shop-floor staff to improve the quality of service and the firm’s main problem: stock availability. The aim would be to increase sales revenue by Â£2.5bn by the financial year ending March 2008.
Another significant announcement was the halving of the dividend to increase funds available for price cuts and quality. King hired Lawrence Christensen as supply chain director in 2004. Previously he was an expert in logistics at Safeway, but left following its takeover by Morrison. Immediate supply chain improvements included the reactivation of two distribution centers. This led to developmental changes in 2006
2.0 Task 2
2.1 How the relevant stakeholder analysis was done during the change
Before 2004, series of transformational changes have been taking place within the company. Though, it was recorded that most of the change produced a favorable result in the short run. But the shortfall of the change became so sharply and worst than the formal position of the company. Sainsbury plc did not only witness decline in profit but also lost market position to his arch rivers Tesco and Asda. Poor project assessment and lack of proper consultation with relevant stakeholders.
Having learnt from the previous mistake committed by the predecessors who had caused the organization its place of pride in the market, King ordered a direct mail campaign to 1 million Sainsbury’s customers as part of his 6 month business review asking them what they wanted from the company and where the company could improve. This reaffirmed the commentary of retail analysts – the group was not ensuring that shelves are fully stocked, this due to the failure of the IT systems introduced by Peter Davis.
As one of the relevant stakeholder, is considered to be important to the success of any change introduce in an organization. The change affect people and people tend to react to changes. Negative reaction to change could mark the beginning of the failure of the new change while the positive reaction could fast track the success of such change programme. These confirmed by recent research conducted by mckinsey on the important of change to the organization and how important is people in the implementation of change and therefore suggested tactics that to successfully implement change. Employees were carried along in making the change by getting the employees involve at the beginning of change and in the process of implementation.
Organizations need for change
Constantly, for all kinds of reasons, but achieving a true step change in performance is rare. Indeed, in a recent McKinsey survey of executives from around the world, 1 only a third say that their organizations succeeded in doing so. Executives were also asked how their organizations designed and managed a recent change effort, how they engaged employees in it, and how involved senior leaders were. (http://blog.theleadershipsphere.com.au/the_leadership_sphere/2008/09/index.html)
The survey results highlight several important tactics that organizations use to transform themselves successfully. Setting clear and high aspirations for change is the most significant. A second tactic is engaging the whole company in the change effort through a wide variety of means; a highly involved and visible CEO is important, but successful companies also use various other communication and accountability methods to keep people involved-far more methods than unsuccessful companies use. Also notable: successful companies are far likelier to communicate the need for change in a positive way, encouraging employees to build on success rather than focusing exclusively on fixing problems. (The McKinsey Quarterly conducted the survey in July 2008.). Therefore Sainsbury was able to draft in the interest of their workers in terms of human resource planning, training and developmental programme reward team management and flat organisation structure which enhance effective two ways communication system. (http://blog.theleadershipsphere.com.au/the_leadership_sphere/2008/09/index.html)
One of the objectives to maximise is the maximisation of the shareholder’s wealth. Organisation tents to satisfy the interest of this group while pursuing profitability and handsome return on investment. Hence inability of the past administration had lead to change of leadership before the period to be considered in this project. Maximisation of shareholder’s wealth was put at the centre of interest in all the change programmes.
Through stakeholder analysis, competitor as always been a force to reckon with. Sainsbury was able to analysis his competitors to whom she as lost his place of priority in the market which had made her to settle for third position in the grocery market in up. Hence that is why Sainsbury has putting a lot marketing strategies in order to ensure customers satisfaction and retention through excellence customer service.
2.2 Where the staff involved or considered in the change
In the planning and the implementation process of change
The target of the change programme was to improve customer patronage and to make more profit. Therefore workers were put at the centre of the change in order to make them have the thorough knowledge of the change which was about to take place. Hence Sainsbury also embark on training and development. Staff got involved in the Implementation process as staff serve as a medium through new changes are being communicated to customers.
3.1 The significant change that took place in Mckinsey and company
Transformational change in Mckinsey and company with special attention on knowledge management over the Years
Between I926 and 1950s
Mckinsey & company was established in 1926 as an Accounting and Engineering Advisors. the was using a system integrated approach which could be otherwise refers to as General Survey Outline basis of knowledge managements, the company was pursuing undeviating sequence of analysis goal strategy, policies, organization, facilities procedures and personnel, data which are to be synthesized and think for themselves while solving clients problems. as a result of business boom, more hands were employed and the organizations value chain were broadened, more policies were created with the clients as the main stake holder putting them at the center of the activities
The company belief that every assignment must to bring more than revenue to the company, more of experience due to business expansion in the 20th century the company need more hand to meet the increasing demand these made the company to adopt generalist approach which leaves the problem solving task with hired experts. This was the beginning of the change in the organization
Between 1950 and 1967
Introducing the expert base problem solving system by the Bower lead administration. He assumed that a highly intelligent generalist (expert) could easily diagnose client issues and through it professional capabilities solve the problem without waste of time and resources this was believed to be the appropriate way of dealing with the increase in demand which the company was enjoying at present
so instead of allowing the traditional practice where the collective, brainstorming section of solving client problems that encourage the participative system, which was the cultural practices of the company before the business expansion, bower prefer to rely more on the solving client problems by the means of expertise. However, the knowledge issue of development within the organization was considered to be peripheral as the solving clients problem was believed to be core issues that is important if the customer’s demand is to be achieved and the business expansion goal is to be continues. The assumptions worked for short period as the company experience increase in sales and expansion of business spreading across the globe. This work well as the company witness a lot of expansion during the period in terms of market growth at the expense of internal growth (knowledge development), but looking at the cultural web of McKinley which is was known for participative system of clients problem solving system through which the knowledge were gathered developed and shared that enhance staffs improvement was not considered. living the problem solving in the hand of the expert in a company like mckinsey where knowledge remain the core activities when considering the value added to the end product(porter’ value chain 1985). The growth of the organization stopped within the short time.
3.2 The key challenges the organization has faced in implementing changes
Integration of objectivity due to massive business expansion: The massive business expansion which has led to the diversifying into other business had posse series of challenge to the company, the organization was growing bigger and the system of administration was also going more complex. This made series of change programmes to be difficult to implement. http://www.changeminds.org/disciplines/change_management/resistance_change/dealing_resistance.htm
3.3 Resistance to change from the employees and partners
Resistance to change from the staff that begins to see change introduce as a treat and therefore change their perspective towards participation in the change programmes. Example of such resistance was their unwilling to contribute to data collection programmes which the company was trying to use for database in order to enhance knowledge management within the organization. However the company use consultation and staff involvement in the change planning processes to win the support of the workers to embrace the change programmes http://www.changeminds.org/disciplines/change_management/resistance_change/dealing_resistance.htm
3.4 My suggestion for the organization to resolve the various challenges facing the organization in implementing change programmes
Here are things the organization can do to handle resistance, starting with kind and moral approaches and ending with the harsher end of gaining compliance.
It has been argued that best approach in creating change is by working with them, helping them achieve goals that somehow also reach to the goals of the change project. People will be very happy to work with you when you work with them. This could be said to appropriate and good practice where people are willing to support programme but finding it difficult to adjust. http://www.changeminds.org/disciplines/change_management/resistance_change/dealing_resistance.htm
When people are not willing to support changes due to lack of clear understanding of the benefits and the rationale behind the change programme, manger might use education to enlighten people in order to understand the benefit of the change from positive perspectives.
When people are not involved physically or intellectually, they are unlikely to be involved emotionally either, involving people in change planning is one of the best methods dealing with people’s resistance to change. Their involvement will make them support the success of the programme by persuading others to begin to see the change from the positive perspectives. http://www.changeminds.org/disciplines/change_management/resistance_change/dealing_resistance.htm
When persuasion seem to have failed to yield positive result, then manager might need to introduce a round table discussion by Sitting them down and ask what they want, find out what they want and what they will not. negotiate a mutually agreeable solution that satisfy them and the fundamental objective of the change. http://www.changeminds.org/disciplines/change_management/resistance_change/dealing_resistance.htm
Manipulation means controlling a person’s environment such that they are shaped by what is around them. It can be a tempting solution, but is morally questionable and, if they sense what you are doing, will lead to a very dangerous backlash. It is only good for short term purposes and after when all the other options has failed
Here manager tend to apply force in making people to accept the change threat of loss of job if fail to comply perhaps in a humiliating public sacking. This could be used when the change is urgent and speed is considered to be of essences and the process of other alternative has been considered too slow and not likely to yield any good result
The change has been seen as an agent of business growth and development. Hence change could be said to important to the organization survival especially in the highly competitive business environment, how it capable of improving the organization, leverage the organization cultural web. Therefore, managers need to evaluate change within the context of the organization cultural web with the consideration of the relevant stakeholder with an appropriate implementation strategy. This will facilitate dealing with resistance to change and people’s corporation in achieving the fundamental objective of the change. An effective change processes will be of advantage as it will also pave way for constant review.Order Now