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BUSINESS MANAGEMENT UNIT 4

A case study of change management: environmental sustainability

Megan JefferyNorthcote High School

This unit of work is based on Area of Study 2 in Unit 4 and includes an overview of change management based on the key knowledge of Area of Study 2, a case study of Linfox’s GreenFox environmental sustainability program, and an assessment task for Outcome 2 in Unit 4 based on the GreenFox case study. The assessment task includes suggested answers.At this year’s VCTA Comview conference in November, David McInnes from Linfox will give a presentation about Linfox’s GreenFox initiative.

Part A: An overview of change managementAll modern large-scale organisations must be able to successfully recognise the need for change and implement it. Over the past two decades, the pressure for change has been continual. If a business is to survive, it must always be prepared for, and adaptable to, change. Organisations that do not recognise the need for change and adapt successfully to it are in danger of not surviving. Thus:

change is a continuous way of life for all large-scale organisations change is the process of altering the existing organisation in some way and re-establishing it in

a new or modified form.

Pressures for changeThe impetus for change in an organisation is one or more change pressures. Change pressures are factors that drive an organisation to adopt and implement change, that is, alterations to structures, activities, policies, behaviours, processes and/or culture.

Change pressures from the internal environmentChange pressures from the internal environment of a large-scale organisation can include:

a poor/inappropriate or negative corporate culture that has an adverse effect on productivity and/or competitiveness

policies that are outdated/inappropriate or non-existent; for example, the adoption of an environmental policy is an expectation that the community has for all organisations

VCTA © Megan Jeffery Published July 2011 page 1


management styles that do not allow for maximum productivity/efficiency and effectiveness; for example, moving to a more participative style to maximise motivation and productivity

employees, as an integral part of any organisation, will often demand change; for example, changes to enable work–life balance requirements.



Change pressures from the operating environment

Change pressures from the operating environment include: customers/clients—the needs and wants of customers and hence their tastes will often

change and therefore their expectations of an organisation, resulting in an organisation needing to change accordingly

suppliers—anything that affects a supplier’s ability to provide inputs can affect change, such as industrial action, a price rise or a shortage of a product

competitors—a large-scale organisation must keep up with its competitors and change in order to remain competitive

creditors—creditor demands and requirements can affect organisational change; for example, an increase in interest rates that raises the cost of credit for an organisation will necessitate change

trade unions—representing employees in the workplace, trade unions may exert pressure for change in a workplace; for example, in the areas of occupational health and safety and working conditions

investors—many investors favour organisations that are environmentally and socially responsible.

Change pressures from the macro environmentChange pressures from the macro environment include:

economic—the state of the economy will affect change in a business; for example, during an economic downturn a business may decide to downsize as consumers have less money to spend, which impacts on sales

political pressures—changes to laws and government policy are often a pressure for change in a large-scale organisation; for example, changes to equal opportunity laws will result in changes to employment policies or a change in environmental laws will result in the introduction of, or a change to existing, environmental/sustainability policies and practices

social and demographic pressures—changes in community attitudes, values and lifestyles may bring about a change in large-scale organisations

technology—developments in technology may require businesses to change in order to remain competitive

international pressures—economic globalisation has created greater levels of competition and less protection for local businesses; for example, world economic conditions due to the recent global financial crisis has forced many businesses to change in order to improve their competitiveness

geographic pressures—the opening up of new markets in the Asia-Pacific region has resulted in many changes in organisations

environmental pressures—increasing community awareness and concerns about environmental issues have influenced businesses to implement change.

A successful organisation is able to anticipate the pressures for change that it will experience in the future. They are then able to implement change both successfully and PROACTIVELY (before it is required). Those that are reactive to change will always lag behind their competitors.



Driving and restraining forces for changeKurt Lewin developed a change model based on the concept of force-field analysis, which is used as a tool to understand problems and the effects of change in an organisation. Force-field analysis involves the interaction of two opposing sets of forces. Lewin applied this concept to social situations by developing the concept into a change model consisting of factors supporting or influencing change (driving forces) and factors attempting to maintain the status quo or restraining a change from occurring (restraining forces).

Successful change is influenced by whether the change is being driven by driving or restraining forces. When driving forces are dominant, the change is more likely to be successful. However, if driving forces are met by restraining forces at a similar level, it is likely that change will not be successful.

The framework includes: a problem situation—the way things are and where things want to be is different. driving and restraining forces for change

driving forces—forces that push towards a change, supporting the change occurring restraining forces—act to decrease/restrain a change occurring successfully.

Driving and restraining forces for changes are listed in the following table.

FORCES FOR CHANGE

Examples of driving forces for change Examples of restraining forces for change

A positive corporate culture where employees are more likely to take a positive view of change.

Employees feel alienated from the organisation and do not feel appreciated. Therefore, it is less likely that employees will embrace and work with proposed changes.

A positive relationship between employees and management.

Employees and management distrust each other and there is a lack of consultation. Change will not be accepted or trusted.

A management style that is based on consultation and employee participation.

An autocratic management style may mean that employees do not trust or understand the need for change.

The organisation is able to plan ahead and put strategies in place ahead of time.

An organisation has not been proactive and has not anticipated the need for change. It results in little time to implement change.

High productivity means that the business can easily change operations in order to adopt the change.

Low productivity may mean changes may affect profitability.

Kotter’s theory of change managementKotter’s eight-step theory for successful change management includes:

1 Establish a sense of urgency.2 Assemble a group of leaders to lead the organisation through the changes.3 Create a vision for the organisation.4 Communicate the vision to all.5 Empower others to act on the vision.6 Plan to achieve short-term gains and wins (one small step at a time to implement the vision).7 Consolidate all changes. Develop employees who will assist with the change.8 Institutionalise new approaches and create a new culture so that the changed state becomes

‘the norm’.



Change is stressful and creates uncertainty and can be seen as a threat if not handled properly by management.

Strategies for effective change managementFacts relating to the experience of people in organisations dealing with change include:

Most people do not welcome or want change. Change is stressful and creates uncertainty, and can be seen as a threat if not handled properly

by management. Different people respond to change in different ways; for example, studies show that those who

find change most unsettling are those people who are reliable, dependable and process oriented.

People resistance is cited as the greatest cause of change failure in 76 per cent of cases.

Low-risk and high-risk practices for organisational change

Organisations should try to use low-risk practices for change, as these tend to be the most effective and give the change the greatest chance of succeeding.

Low-risk practicesLow-risk practices include:

two-way communication between employees and management a participative management style that empowers employees in decision-making use of work teams to implement changes support for those who are going through change, such as counselling and adequate time allowing employees to be involved and feel a sense of ownership of the change; they will then

be more likely to assist in bringing about successful change.

High-risk practicesHigh-risk practices include:

coercion and threats to those who do not go along with changes manipulation of the situation, such as distorting facts and omission of details use of autocratic management styles with little opportunity for employee discussion.



Strategies that may facilitate successful change

Strategies that may facilitate successful change include: educating change leaders about the change considering all aspects of the organisation and the potential effects of the change management

process and change itself on each aspect using a team approach and involving all people in the organisation in the change process sharing power in the implementation making plans but being flexible not taking too long between readying people and the implementation, as people are inclined to

lose motivation using what has worked in other organisations and is backed up by research recognising that change only happens through people; that is, people need to be kept on side understanding resistance and the reasons for it recognisng that conditions often get worse before change starts working helping employees to understand and accept reasons for the change seeking out change leaders recognisng that change takes time and not to expect people to change too quickly.

The role of leadership in successful changeAn essential ingredient of successful change is effective leadership. A leader must oversee and drive organisational change. Successful change managers need to be able to articulate the organisation’s vision for the change, be able to motivate and inspire staff, have good communication and interpersonal skills, effective strategies to implement change, and the resources needed to implement the change.

Three leadership skills are vital. These are: diagnosing—know the current situation and what can be expected in the future adapting—be able to adapt behaviour communication—must be able to communicate expectations and a vision to others effectively.

Leaders must be able to: articulate the strategy implement changes effectively keep staff informed about decisions that affect them, focusing on building relationship with staff

and external stakeholders cultivate teamwork coach staff encourage diversity develop talent maintain open communication.



Characteristics of a change-ready organisationThe characteristics of a change-ready organisation are:

a decentralised structure a participative management style encouragement of staff ideas and risk taking the breaking down of barriers between departments within the organisation an emphasis on leadership and on people a client/customer focus established informal links at all levels an enabling rather than a controlling approach.

Change management issue: corporate sustainabilityMore and more organisations are choosing to adopt sustainability policies and practices in order to be more socially responsible. Sustainable practices are good for business, so commercial outcomes also drive this type of change.

Industrialisation and globalisation has greatly increased the speed of consumption of the earth’s resources. In short, our demand for the earth’s goods and services is not sustainable, that is, we are using up the resources of planet earth at a faster rate than they are being created. This means that if ecological disasters are to be averted, we must change how we use resources.

Sustainability: driving factorsBusinesses are under increasing pressure to become environmentally sustainable, the driving factors for which include:

economic factors—it is often more cost effective to adopt sustainable practices as they use fewer resources, result in less waste of resources and can lead to an increase in sales

employees—will often bring about pressure for a business to adopt sustainable practices and will often choose to work for a socially responsible employer

customers—will often choose to patronise organisations that adopt sustainable practices shareholders—will often choose to purchase shares in businesses that adopt sustainable

practices growing community awareness of environmental issues—sustainable businesses are at an

advantage in the market legal factors—governments are passing environmental legislation that compels businesses to

adopt more sustainable business practices; for example, the federal government is introducing a carbon tax that will impact on business costs and therefore encourage organisations to integrate sustainable business practices

community attitudes—there is an increasing expectation in the community that organisations will adopt sustainable business practices

competition—change is often required in order to keep up with competitors costs of resources—as resources become scarce the cost of them will rise; organisations

must therefore reduce their use of resources in order to reduce costs and to remain competitive.



What is environmental sustainability?

Environmental sustainability involves using the earth’s resources at a rate that can be replenished or replaced. In other words, it means meeting present human needs while at the same time preserving the environment so that these needs can be met in the future as well as the present.

According to the Brundtland Report (World Commission on Environment and Development, UN, 1987), environmental sustainability or sustainable development is development that ‘meets the needs of the present without compromising the ability of future generations to meet their own needs’.

Features of sustainable business practices

Features of sustainable business practices include: reduced use of physical resources during production recycling of resources reduced creation of by-products that cannot be re-used a reduction in waste protecting and/or restoring natural habitats/environments.

Pressures to adopt sustainable business practices

Pressures to adopt sustainable business practices include: community concern—about global warming and the future of the planet; this has increased

markedly in recent years political and policy pressures—the government has begun to pass laws that encourage

businesses to adopt sustainable business practices; change is therefore required in order to avoid future legal problems

economic—cost savings and other economic benefits are offered through a reduction in the use and waste of resources, such as: a reduction in waste disposal costs increased productivity through new technologies a reduction in production costs suppliers giving preference to sustainable producers easier access to finance as investors are increasingly giving preference to sustainable

companies easier to retain good employees who are concerned about the environment.

Research shows that a large-scale organisation that adopts sustainable practices can expect a 46 per cent increase in profit over the next five years

reputation—the community is looking for sustainable business practices; sustainable practices will therefore enhance the reputation of a business, resulting in community respect, customer loyalty and increased competitiveness.

Triple bottom-line reporting

Triple bottom-line reporting refers to expanding the traditional accounting framework to include environmental and social performance as well as financial performance. It is based on the belief that a business has a responsibility to all of its stakeholders, not just customers (or clients) and shareholders.



Triple bottom-line reporting involves a business reporting on its: financial performance (profit after input costs and capital costs have been deducted) environmental performance (based on sustainable environmental practices) social performance (relates to fair and ethical practices towards employees and the

community).



A case study of change management: Greenfox at LinfoxPressures on organisations to adopt environmentally sustainable policies and practices are growing. The following case study examines the successful development and implementation of change arising from pressures for the business to become more environmentally sustainable and to reduce negative environmental impacts of the activities of the organisation. Linfox’s GreenFox policy is an example of a business implementing organisation-wide change with positive results, both for the environment and its balance sheet; all this from a business working within the transport sector, not one that has been traditionally bestowed with ‘green credentials’.

BackgroundLinfox is the largest privately owned supply chain solutions company in the Asia-Pacific region. The business was founded in Melbourne in 1956 by Lindsay Fox as a one-truck operation delivering soft drinks in summer and solid fuel for heating in winter. Currently, the business:

operates more than 1.8 million square metres of warehousing space utilises a fleet of 5000 delivery vehicles employs more than 15 000 people has more than 260 operating sites operates across 11 countries in the Asia-Pacific region.

Linfox caters for other businesses that outsource their warehousing and delivery requirements. Major clients include:

Campbell Arnott’s (biscuits and snack foods) BlueScope Steel Kellogg’s BHP Billiton National Foods Ltd.

Linfox annually: delivers more than 4.5 billion litres of fuels and 15 million pallets of goods to retailers annually,

as well as 1 million tonnes of wood products serves nine of the Asia-Pacific region’s top consumer goods moving producers.

Linfox is divided into three business units: Retail Business Unit Fast Moving Consumer Goods (FMCG) Business Unit Resources and Industrial Unit.

Pressures for change at LinfoxIn 2006 Linfox’s North American customers began to ask questions about the impact that the transport industry was having on the environment. This showed that sustainability was becoming a core interest of important stakeholder groups, as well as longstanding issues like safety and operational efficiency and effectiveness.



There was also a general increase in pressures on large organisations to adopt sustainable business practices around this time, emanating from:

increased community awareness of and about ‘green’ issues, such as global warming, prompted by scientific research, environmental pressure groups and media coverage such as Al Gore’s film, An Inconvenient Truth—this placed pressures on both organisations and individuals to act in order to reduce their carbon footprint

the possibility of increased productivity and reduced costs of production through a potential decrease in the use of resources, for example reduced fuel costs

a potential competitive advantage is being seen as socially responsible through the adoption of a sustainable business model

the introduction of a carbon tax on polluters, which will force all transport companies to adopt environmentally friendly and sustainable practices in order to survive and comply with government requirements.

GreenFoxLinfox initially developed a strategic plan for the 2008–11 period known as ‘GreenFox’. This program was designed to cut Linfox’s greenhouse gas emissions by 15 per cent of its 2006–2007 levels.

Linfox’s energy consumption for the 2008–09 period was 95 per cent from transport fuels and 5 per cent from electricity.

The three areas of focus were: improved business practices the introduction and development of environmentally friendly technologies changing the behaviours of people within the organisation.

Linfox management accepted climate change as a reality from the onset. They saw themselves as having a responsibility to both their customers and to wider society to act on the environmental problem of greenhouse gas emissions.

Every Linfox Board meeting now begins with a discussion about the company’s social obligations, including environmental responsibilities.

The Linfox view of climate changeWe have accepted the scientific evidence that Climate Change, caused by Global Warming is a reality.

We have accepted that, on balance, it is most probable that man-made emissions play a part in Global Warming.

We have accepted that Transport is a significant contributor to manmade CO2-e emissions.

We have accepted that everyone must play a part in reducing CO2-e emissions.

We have adopted a plan based on a Greenhouse Gas Reduction Cycle that impacts on all aspects of our business.

We regard reducing the use of energy and thereby emissions is good for the environment and good for business.

Source: http://pdf.aigroup.asn.au/environment/GreenFox_Sust_transport.pdf


http://pdf.aigroup.asn.au/environment/GreenFox_Sust_transport.pdf


Key objectives and activities of GreenFox

Leadership Lean organisation through business units for operating environmental controls. Adopting emissions controls. Coach/mentor/train all front-line leaders in environmental management.

Behaviour Develop a visible environmental emissions minimisation culture. Involve our people in solutions to manage environmental emissions. Train our people to work in an environmentally sensitive way.

Systems Comply with legislative requirements. Integrate environmental emissions into business processes. Improve efficiency through fleet reductions, information technology, and the supply chain

solutions group.

Initiatives to reduce greenhouse gas emissions

Initiatives trialled by Linfox aimed at reducing greenhouse gas emissions included: 2007—Linfox engaged an accounting firm to identify areas of potential carbon emissions

reduction. Eco Driver Training. Linfox drivers are encouraged to complete this program based on 10

principles of fuel-efficient driving. Those who complete the program are given a badge to wear on their uniform. Many have also opted to become ambassadors who go to schools to talk about climate change.

Introduction of carbon-mapping software as part of supply chain optimisation. This software provides detailed analysis of carbon emissions from each element of the supply chain, right down to individual vehicle measurements of carbon emissions. This will help with identification of the environmental impact of logistics choices; for example, determining if the most efficient route is being taken, or to ensure that trucks never travel back from a job empty, or that the most efficient mode of transport is being selected. This carbon accounting system generates monthly reports, down to the level of individual trucks. It is an accurate tracking of emissions.

A new fleet tracking system, with the aim of achieving improved vehicle utilisation. A hybrid or four-cylinder hire car policy. All company cars were to be replaced with hybrid vehicles at trade in. A tyre pressure-monitoring program designed to reduce fuel use, reduce emissions and

improve safety.



Electricity savings: project ‘Switch Off’ for all lights, computers, chargers, photocopiers in order to achieve electricity savings. Also, the installation of smarter warehouse lighting systems and the launch of a Linfox Energy Efficiency Guidebook in 2011, which was distributed to all employees.

Use of ‘green’ energy. Introduction of paper recycling throughout the entire organisation. A Greenhouse Home Gas Calculator to be provided to all employees to educate them about

greenhouse gas issues. Appointment of GreenFox workplace environment champions across the business to mentor

and educate colleagues about greenhouse gas issues. Registering for the Energy Efficiencies Opportunity Legislation Act. Working with Monash University on the development of more aerodynamic vehicle designs. The 25C Project, which trials environmental initiatives at 25 sites. Participation in global environmental events such as World Environment Day and Earth Hour. GreenFox is directed to achieve cultural change regarding energy awareness and energy use.

It focuses on individual actions and behaviours to inform, educate and change behaviours, both at work and at home. The creation of a new ‘green’ workplace culture is the ultimate goal.

GreenFox is supported by newsletters, weekly tips and publications; all are designed to focus on reductions in energy use.

In early 2011 an Environmental Management System (EMS) was introduced. This is designed to identify, control and record environmental performance on an ongoing basis across the company. It also ensures that a proper reporting system is in place, so that all sites meet legal obligations.

Participative management styles and the participation of employees and customers in workshops have been used in order to identify the most practical and valuable initiatives. This staff engagement program is aimed at making better use of what the organisation has rather than investing in new technology. Staff are involved in initiating and implementing change in their own workplace.

‘Linfox has tried to inculcate its employees with a green approach to life generally which makes for a better environment wherever they’re operating.’ (David McInnes, Group Manager of Environment and Climate Change, Linfox)


http://carbonetix.com.au/wwx/blog/wp-content/uploads/davidmcinnes_linfox_greenfox.jpg


Results/evaluation Between 2006–07 and 2008–09 a 16 per cent reduction in total energy use was achieved at

Linfox. This was despite the fact that the total number of kilometres travelled by Linfox vehicles had increased by 21 per cent over that period of time, and the company had experienced 40 per cent growth over the period. Linfox is aiming to continue this trend.

The rate of greenhouse emissions by Linfox has decreased each year since 2006–07 significantly. The 15 per cent target, originally set for 2010, was met in 2007–08 and a reduction of 28 per cent had been achieved by 2009. A further 10 per cent reduction was achieved during the 2009–2010 financial year.

Massive savings have been made by Linfox in its fuel costs. Already these savings have outweighed the cost of implementing the GreenFox program.

The Chairman of Linfox, Peter Fox, has since announced a new target: ‘Linfox will reduce its rate of greenhouse gas emissions from its global operations by 50 per cent by 2015 based on 2006–2007 emission levels’.

Linfox was the recipient of the Logistics Magazine 2009 inaugural Best Green Initiative Award. Linfox was also awarded the Mercury Award for Best Green Category for the development of

the carbon-mapping software.

Further information and updates on the GreenFox program can be obtained from: Scrutinising Suppliers: When Your Chain Gang Goes Green, Australian School of Business,

19 April 2010, http://knowledge.asb.unsw.edu.au/article.cfm?articleid=1112 Linfox Logistics’ Sustainable Strategy, LInfox, http://www.linfox.com/Sustainability.aspx.


http://www.linfox.com/Sustainability.aspx

http://knowledge.asb.unsw.edu.au/article.cfm?articleid=1112


Task detailsAssessment taskCase study

Unit/area of studyUnit 4: Managing People and Change

Area of Study 2: ‘The management of change’

Outcome 2Analyse and evaluate the management of change in a large-scale organisation, and evaluate the impact of change on the internal environment of a large-scale organisation.

Marks allocated to Outcome 2The marks allocated to Outcome 2 in Unit 4 are 40 marks.

Instructions and conditionsIn completing this case study, students should demonstrate an understanding of the key knowledge and key skills for Outcome 2, and an ability to plan, organise and undertake written communication.

Answer all questions in this answer book. The marks for each question are indicated after each question.

Conditions: Closed book

Time allowed: 100 minutes (including 10 minutes reading time)

Marks allocated: 80 marks

QuestionsQuestion 1Define the following terms. For each term, provide an example relevant to a large-scale organisation such as Linfox Pty Ltd.

a. Environmental sustainability

2 marks



b. Change pressures

2 marks

c. Cultural change

2 marks

Question 2Explain why it is important for Australian large-scale organisations to be able to respond to change pressures and to successfully implement change if they are to survive in a global economy.

2 marks



Question 3List three features of Linfox that indicate that it is a large-scale organisation.

3 marks

Question 4Discuss how each of the following factors would have acted as pressures on Linfox to adopt environmentally sustainable policies and practices.

a. Employees

2 marks

b. Customers

2 marks



c. The federal government has proposed the introduction of a carbon tax on businesses that are large producers of greenhouse gases.

2 marks

d. As a result of increased media attention and scientific research, the community has become more aware of the potential effects of climate change on the environment.

2 marks

Question 5Explain the potential benefits for Linfox of adopting sustainable business practices and policies in terms of:

a. potential cost savings

3 marks



b. ethical and social responsibility

3 marks

c. business competitiveness

3 marks

Question 6List three stakeholders of Linfox. For each stakeholder group, explain how it is likely to be affected by the adoption of the GreenFox policy.

6 marks



Question 7Outline the following aspects of the GreenFox policy at Linfox.

a. Initial goals and current goals

2 marks

b. Two initiatives designed to achieve the goals

2 marks

Question 8Explain the difference between driving and restraining forces for change. Identify one driving force for change at Linfox and one potential restraining force for change.



4 marks

Question 9Identify and analyse two likely impacts of the introduction of the GreenFox policy at Linfox on the following structures, activities and key performance indicators at Linfox. Give reasons for your answers.

a. The operations system

3 marks

b. Employee training and development

3 marks



c. Employee motivation and job satisfaction

3 marks

Question 10A key factor in successful change management is leadership. Explain why effective leadership is a vital component of successful change management. Identify and discuss the role of Linfox leaders and the skills that they would require for the successful implementation of the GreenFox policy.



6 marks

Question 11Outline three performance indicators (KPIs) that would be used by Linfox when evaluating the level of success of the implementation of the GreenFox policy.

3 marks

Question 12An aim of GreenFox is to achieve cultural change at Linfox. Explain what is meant by this statement. Identify and outline the strategies that Linfox is using in order to change its corporate culture.

4 marks



Question 13‘The implementation of the GreenFox policy at Linfox has been a great success.’ List and explain three factors that support this viewpoint.

6 marks

Question 14Linfox has used the eight-step model for change developed by JP Kotter in implementing the GreenFox model for sustainability.

Explain and analyse the Kotter model of change management. In your answer, explain the steps that Kotter recommends should be implemented for successful change management.

Discuss the strategies that Linfox would have adopted at each stage in order to implement the GreenFox program in line with Kotter’s theory.



10 marks


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ohsbusinessmanagement.weebly.comohsbusinessmanagement.weebly.com/uploads/7/0/6/5/7065396/... · Web viewLinfox is the largest privately owned supply chain solutions company in the