1. Introduction:
The HM Naval Base Clyde (Faslane) is a
UK’s submarines base that was previously under direct control of the Ministry
of Defense (MOD) and the Royal Navy. But in 2002, it entered into partnership
with Babcock International, which was a private sector company. With this
substantial transition, the Babcock had the responsibility to adopt a suitable
change management strategy in order to improve performance as well as reduce
the cost significantly. They entered the contract for 5 years with the
target of £76 million cost savings without affecting the services.
The report analyses the change process
and impacts of change in the organization. In order to measure the impacts of
change process strategic model, Balogun and Hope
Hailey’s Change Kaleidoscope and Lewin’s Forcefield Analysis was used. Moreover
to identify the internal factors of Faslane, Kotter’s 8 Steps Process and McKinsey’s Seven S Model was used. Lastly, to analyze
the leadership style Lynch Model was used.
2. Analysis
The strategy change in Faslane can be
considered as an emergent strategy rather than an intended one. The intended
strategy come about as a result of careful deliberation typically associated
with top management where as the emergent strategy is an unplanned strategy
that arises due to the unexpected opportunities and challenges in an
organization. It is interrelated with three areas position, choice and action.
It is more of an emergent strategy
because the strategy of an organization was developed on the basis of series
strategic moves. The Babcock Company with the aim of reducing the cost they
firstly identified the problems in the management leading them to change the
structure by trimming down management layers from 7 to 4. They reduced the
bureaucratic burden and encouraged open discussion with workforce to find out
their views, which can be taken as an example of an emergent strategic process.
Also the series of review process was cut down from 56 days to 6 days making
the decision process speedier. The leadership style also evolved from
transactional which was top-down to more of a transformational (bottom-up)
style. They developed and communicated the organizations purpose to the
employees. They managed the human resources by reducing the number of employees
and also allowed the employees to make their own team manage themselves to
increase the productivity. The strategies in an organization emerged overtime
in an incremental way by learning from partial commitments and previous moves.
2.1 Strategic
change context in 2002
Change Kaleidoscope is model that deals
with all the contextual features and implementation options that are required
for consideration when organization undergoes change. The framework of the
model helps to design a ‘context sensitive’ approach to change. It contains 8
contextual features that can be assessed as positive, negative or neutral to
the change. If it suggests positive then those features facilitates change and
the negative restrict changes.
Figure: 2.1, Change Kaleidoscope.
From the Figure 2.1, we can observe see
that the management team had a target of reducing cost of £76 million within a
time limit of 5 years. The time period was very short as compared to the task,
which was relatively large. Since, the organization was not in crises it was
not urgent for implementing the change. The management changes were implemented
early, which was later followed by changes in personnel. They first decided to
bring in skilled employees from Babcock who also faced similar changes to Faslane.
With this transmission the time for adaption was reduced. Moreover, the company
focused on implementing low level changes first, as they were easy and less
time consuming. Speaking of the power, the workforce had limited autonomy but
the change in management brought about transparency in the system. They
transformed the organization management to a less bureaucratic one by reducing
the layer of management from 7 to 4. They realigned the task force and
encouraged teamwork to increase the productivity. The employees were given
flexibility to form their own groups and come up with new ideas and manage
their own work.
The structure of the organization’s
management was totally different. The major task was to change the employee’s
perception of the management and their view about the infrastructures and
facilities being more important than the service and support to the Navy. So,
the new management team focused on inward looking and providing better
services. The Babcock realized the importance of the stakeholders of the
company. Therefore, they maintained good relationship with the Naval Base
commander and the Navy boards as well as the other stakeholders. The management
team was highly diversified with different management team with various skill
set. At first, the majority off staffs was against change as they were
inexperienced. But later the Babcock Marines developed and communicated the
organization’s purpose by encouraging open discussions, for example they held
‘the event in the tent’ session, they changed the mindset of employees, and
they clearly explained them what are the company’s objectives.
The company had a positive capacity as
the budget was fixed and they had limited time period. They had sufficient
money, skilled people available to make the required changes. They even cut
down the management staff into more than half that helped to reduce the cost as
well as increased efficiency in performance.
We can conclude that Faslane went through
fundamental change in both strategy and culture. So that the change, which took
place, was revolutionary strategic change as the changes at Faslane occurred
simultaneously in several fronts such as People, Organizational Structures and
Systems within a short period of time.
2.2 Lewin’s
Force Field Analysis:
This model is used to define the change
context in Faslane. It identifies the problems that are for and against change
in an organization. The factors that control the change process at Faslane are
shown in the following table.
2.3 McKinsey’s
Seven S Model
This model is used to identify the internal
features of the organization. It contains 7 elements including hard and soft.
The hard factors are easily identifiable that includes strategy, structure and
system. The soft elements are tangible, hard to describe and more influenced by
culture. It includes shared values, skills, style and staff.
Elements
|
MOD and Royal Navy (up 10 2001)
|
Babcock Marine (2002-2010)
|
HARD ELEMENTS
|
||
Strategy
|
Progressive and customer oriented.
Delay in decision making
|
Willingness of MOD to reduce cost and
enhance performance
The decision process time made speedier
by reducing the review time to 6 days
|
Structure
|
Hierarchal structure with 7 layers
Unclear roles and responsibilities
|
Reduced the bureaucratic structure
(flat) by decreasing the management layers to 4
Alignment of workforce, work in team
having clear roles and responsibilities
|
Systems
|
People oriented system
Inflexible with political intervention
|
Process oriented system
Transparent system
|
SOFT ELEMENTS
|
||
Style
|
Transactional leadership style where
the decision was made by the top level management
|
Transformational leadership where
participation of employees is encouraged.
|
Shared values
|
More concerned about buildings and
infrastructure facilities than supporting the Navy
Resistant to change
|
Reduce the expenditure while
maintaining the quality.
Focused on staffs so as to increase
productivity and efficiency
|
Skills
|
Experienced staffs in their own
functional areas. But unfamiliar with modern management styles.
|
Experienced employee on change process.
Sharing of ideas and skills on naval
base
|
Staffs
|
Large number of staffs about 7,500
employees
250 management team
|
Reduced the management team to 125.
Reduction of 400 full time local posts
|
From the model above we can observe that
there were many operation hurdles faced by Babcock while handling Faslane. The
biggest obstacle was to change the complex culture of the Naval Base. Until
2001, the management system was more of a top-down system. But after the
partnership the management changes to more of a transformational one.
Leadership moved from command and control to managed teams, capable of leading
their own team. The process was totally reengineered by removing the unwanted
systems and changing the process to more effective ones. With all these changes
MOD was able to achieve cost effective operations with 20% reduction in annual
running cost. Babcock delivered £197m of cost reduction till today.
(babcockinternational.com, 2013)
2.4. Kotter’s 8
Steps Process For Leading Change:
Step1:
Establishing sense of urgency:
For Faslane, the change initiations began
after analyzing the company’s competitive position and its financial
performance. Thus creating sense of urgency in the organization. Therefore
after partnering with Babcock marines, the task was to reduce the cost and
increase performance. They first communicated the change to the employees as
they often refrain from change. They put an effort to motivate people to
embrace the change by giving hem flexibility to manage their own team and share
ideas. The company also encouraged open discussion and honest conversation with
the staffs by informing them about where the company’s stands in the market
place, creating transparency.
Step 2:
Creating the Guiding Coalition:
To lead the change the manager need to
bring together a team of influential people. In this case Babcock recruited a
team of experienced individuals who were capable of carrying out the change.
They focused more on team building to guide the coalition as a unit. They also
reduced the workforce to more than half and also reduced 400 full time posts.
Step 3:
Developing a Change Vision:
An organization must develop a clear
vision of the future, which is easy to communicate to customers and
stakeholders. This evolves clear understanding of what the change is about by
the employees. The vision of improving the operations for better performance
derived the employees to work efficiently. Maintaining scorecards to measure
outputs encouraged the employees to work along the objectives as it made the
strategy and vision transparent.
Step 4:
Communicating the Vision:
Communicating the vision in daily
activities is fairly important. The Babcock Marines developed and communicated
the organization’s purpose by encouraging open discussions, for example they
held ‘the event in the tent’ session, they changed the mindset of employees,
and they clearly explained them what are the company’s objectives.
Step 5: Remove
Obstacles:
Removing barriers helps to
empower people to implement the vision and support the change. The decision to
position John Howie as MD for managing change in organization brought about
positive changes. He identified the obstacles in the management structure,
which was complex having 7 layers, and brought about change by reducing it to 4
layers. The decision making process was relatively slow due to a long review
process of 56 days which he reduced to 6 days. This allowed them to aligns the
change system with the change vision.
Step 6:
Generate Short-term goals:
Generating short terms wins is needed to
maintain enthusiasm and momentum to keep the change initiative going. The
Babcock was able to achieve 4 million pounds cost saving in year 1 against the
target of 3 million pounds and 16 million pounds cost reduction in year 2 where
the target was just 12 million pounds. This performance goals supported the
change process goals i.e. cost reduction, encouraged the management and the
staffs encourage to work towards change.
Step 7: Build
on the Change:
It is important to consolidate gains to
produce more change by focusing on short-term success for the enabler of future
success. The restructuring process of the management, gaining the trust of the
people, transforming the leadership, and achieving cost reduction goals were
brought about by the change process.
Step
8: Incorporating Changes into the Culture
The corporate culture
determines the values of the vision. The employees were allowed to express
their view about change allowing them to gain trust. Sense of belonging among
the employees was developed. The Navy’s view and attitude towards the service
was better. They were able to achieve service improvement. In 2009, Craig
Lockhart was able to produce joint business with the customer. Finally by 2010,
Faslane became the home base for the entire UK submarines.
2.5. Leadership
style at Faslane (2002-2010)
For a successful management a good
strategic leader is essential. The leader should be able to give correct
direction, organize and implement strategies. They must be able to adapt to
change easily and should also be able to motivate and support his
follower/employees.
Before the contract agreement with
Babcock, Faslane was totally controlled by the MOD and the government. But in
2002, John Howie was appointed as the managing director. He was most concerned
about the system and the structure process within the organization. He focused
mainly on changing management responsibilities, saving costs, re engineering
the system and maintaining good customer relationship. In 2010, Craig Lockward
took over the role of managing director. He focused on performance improvement
and quality service rather than structural processes. He aligned all the
workforce to come at a common objective. He was more concerned about creating
good relationship with stakeholders of the company. Both the leaders adopted
different change management styles to achieve the desired goals. We can compare
the Babcock’s leadership Model using the Lynch Model.
Five Elements
of Successful and Effective Strategic Leadership Model (Lynch Model)
1. Developing and communicating the organization’s purpose: The main
purpose of the company was to significantly reduce the cost and improve the
performance by increasing the operational effectiveness. This goal was clearly
defined and communicated to the entire employee within the organization.
2. Sustaining competitive advantage over time: The Company was able
to change the staffs’ attitude, decrease the time of decision-making process
and also improve the operational activities. These progresses undoubtedly
helped to enhance the competitive advantage of the company over time.
3. Managing human resources and organizational decisions: The company
brought change experienced specialists from Babcock to Faslane and also managed
the Faslane employees to work in teams and groups that allowed them to sustain
the change process. They also cut more than half of jobs to maintain a flat
structure of the organization. This reduced the hierarchy in the management
system.
4. Setting ethical standards: They changed the idea of spending the
tax to receive budget was quickly changed to giving quality services to the
customer. By doing so they were able to create more jobs and set ethical
standard.
5. Defining and delivering to Stakeholders: They understood the
importance of the stakeholders, which build the success of the company. The
MOD, Navy Board, the commanding officer and the local communality were the
stakeholders of the company. So, they maintained good relationship with them.
2.6 Transcendent Leadership at Faslane (2002-2010)
3. Conclusion:
After examining and analyzing different
strategic model we can conclude that strategic change in Faslane was
successful. Faslane underwent changes involving people, system and the
organization. They practiced changes in strategy, leadership, structure, culture
and process. They re-engineered the system, maintained continuous improvement
in change and focused on customer-centered changes. All this changes were aimed
at reducing the cost and improving the effectiveness of the operations.
Finally, the change was effective because
of the exceptional management style and ability to adapt to that change
processes. The company was able to provide better services to both the
customers and the employees. They excelled in providing better quality service
to the customers that made them the home base for entire UK submarines. They
were also able to motivate the employees by providing job opportunities leading
them to better performance results and they were able to achieve organization’s
goals and objectives.
4. References:
A. Franken, C. Edward, and R. Lambert, ‘Executing
Strategic Change’, California Management Review, (2009), pp. 49-71.
Babcock International.
2011. Marine & Technology Division Clyde Operational efficiency in a
mission critical environment. [ONLINE] Available at: http://www.babcockinternational.com/media/205608/glb168368_-_case_study_-_partnering_-_print_file.pdf.
[Accessed 11 January 14].
Lynch, R., (2009) Strategic Management, 5th Edition, Prentice Hall, chapter 16.
Erwin Losekoot, ‘How change does not happen: The impact of culture on a
submarine base, May (2008), pg. 255-264
G. Johnson and K. Scholes (eds), Exploring Techniques of Analysis and Evaluation inStrategic Management, Prentice Hall, 1998.
J. Kotter, ‘What leaders really do’, Harvard
Business Review, December (2001), pp. 85–96.
Mindtools. (2010). The McKinsey
7S Framework Ensuring That All Parts of Your Organization Work in Harmony. [Online] Available at: http://www.mindtools.com/pages/article/newSTR_91.htm. [Accessed 12 January 2014]
