Strategic Change Management KPMG Company Case Study

Executive Summary

Strategic Change Management has become a strategic role of the management. Various business organizations have come to appreciate the need for change and have designed various methods and approaches of managing change. KPMG is one such organization. It has downed on the management that the market competition requires one to embrace change and ensure that it is creative in order to be in a position to manage market competition.

The firm has brought in all the stakeholders into one community and each given its role to play in the process of change management and implementation strategies. The model that this firm would use in implementing change is Kurt Lewin Model of unfreeze, change and then freeze. Value based organization is the approach to monitor the implementation of change. The strategies must be implemented within appropriate time to yield good results.

Introduction

Change is one of the most important factors that an organization must take into consideration when drawing their strategic goals and objectives. Daft (2009, p. 37) simply says that Change is constant. This statement is intriguing yet it is the best definition of change from a philosophical point of view.

Change and constant are two extremes under a normal dictionary definition. However, from an analytical perspective, change is constant. This scholar argues that change brings nothing new. It only enhances what is already in existence. McCarthy and Eastman (2010, p. 23) say, “The overarching purpose of change management is to accelerate the speed at which people move successfully through the change process so that anticipated benefits are achieved faster.”

As such, change should not be viewed as a shift from what is the norm. The only issue is that it brings new methodologies of handing the daily activities. In his book, The Rise and Fall of Strategic Planning, Henry Mintzberg (1994), the former leader of the Strategic Management Society, reprimanded himself and others for their sightless adherence to the strategic forecast practice.

His disputation rests with the exploration of the authoritative, scientific explanation to the future. He demonstrates how planning can asphyxiate obligation, constrict an organization’s dream, make change unfeasible, and lead to the politicization of an organization.

His point is based on the principle that “… analysis is not synthesis [and therefore], strategic planning is not strategy formulation” (p. 321). According to this scholar, many managers would agree that change is one of the defining external factors that have huge impact on the organization. The management is always faced with various factors that would demand change in the organization.

As a starting point, Griffin (2000) classifies the word management as: “A set of activities (including planning and decision-making, organizing, leading, and controlling) directed at an organization’s resources (human, financial, physical, and informational) with the aim of achieving organizational goals in an efficient and effective manner” (p. 6).

In the definition, several key concepts are used. Foremost, it is comprehended that management applies “uniformly to public, private, nonprofit, and religious organizations.” Murphy (2002) was of the view that “… management is an organizational phenomenon and not exclusive to the world of profit organizations” (p. 7).

KPMG is one of the leading consulting firms in the world. This American firm has grown and it currently covers several countries in North and South America, Asia, Europe and Africa. The recent entry into Africa, which is considered as the emerging markets, and some parts of Asia, was motivated by the increasing need for consulting firms as many of the businesses in these regions required guidance in a market that has increasingly gotten competitive.

Change is one of the major reasons that are making firms in the corporate world seek guidance. KPMG as a firm has change as one of the factors it has to deal with in order to ensure that it remains relevant in this industry. It must be in a position to demonstrate to the corporate world that it is the master of what it teaches.

Strategic change management to KPMG is not just important to demonstrate to others its prowess, but also to help it beat the market competition and increase its market share both at home and international markets. The need for strategic change management at KPMG has been fanned by the unpredictability of the market.

The market is so unpredictably and change is the agent for this. Because of this, the management of KPMG has come to realize that it may not be in a position to survive in this market if it fails to adopt changes that are brought about by the environmental forces.

Stakeholders of KPMG Who Are Involved in Change Management

DeAnne, Gary, Hyde, and Tipping, (2004, p. 1) note, “Any transformation of significance will create people issues.” KPMG is an American firm that was a culmination of a merger of different consulting firms in 1987. These firms merged upon the realization of the fact that they had a common goal, which could best be achieved by coming together as a unit. Stakeholders of this firm are the agents of change.

Their positions in the firm would define their role in the strategic change management within this firm. In a given firm such as KPMG, there are always three categories of people when it comes to change management. The first category is the initiators of change. These individuals would come up with creative ideas of how to approach some issues within the firm that would result in change. The second group is the implementers of change.

They take instruction on the change strategies as defined by the initiators. This scholar defines the last group in as “the recipients of change.” This group has no role in the initiation or implementation of change. However, they feel the effect of change, either positively or negatively depending on the prevailing circumstances. KPMG has all the three categories of people among its stakeholders. The stakeholders of this firm in the above-mentioned groups can be analyzed as followers.

Initiators of Change

These people are the agents of change. They come up with creative ideas that can be transformed into new strategies. Some of the initiators of change at KPMG are the following categories of office holders.

The Top Management

The top management of KPMG has the biggest role to play in the strategic change management. Goolnik (2006, p. 10) observes that, “a clear vision should be in place at the most senior level(s) so that staff can gain understanding of why change is important and necessary.” They are the most important individuals in the firm in as far as policy generation and implementation is concerned. They are expected to understand the prevailing market forces and determine when change may be needed in the organization.

They are in a better position to understand some of the changing policies in the external business environment of this firm and initiate the same within the firm. As Wilson (1992, p. 14) notes, it is not necessary that every change that a firm implements must be original to it. A firm may borrow some changes from other firms that have successfully implemented them. The top management of this firm therefore has the role of identifying these new strategies and initiating their implementation within the firm.

They are therefore the first initiators of change. The Human Resource Management has the greatest role to play in this regard. Modern Human Resource Management (HRM) is radically different from the human relations movement in the 1920s or from the personnel management practiced decades ago (Carell, Elbert, Hatfield, 1995, p. 12). Today HRM is used to refer to the philosophy, policies, procedures, and practices related to the management of people within an organization (French, 1998). French continues by stating that:

It is now generally accepted that human resources management encompasses a dynamic, organization-wide perspective that is action oriented and based on theory and research from many disciplines and is necessarily interrelated with strategic planning. More and more it is recognized that HRM must be an integral part of the strategic planning of the top executive team of the organization (p. 5).

Research and Development Unit

This is the most important unit when it comes to creativity and innovativeness of the firm. They have the responsibility of scanning the business environment and understanding the forces that are prevailing in the market. They then would determine which of the strategies would best suite the firm in managing market competition.

They are expected to come up with creative ideas of how KPMG as a consulting firm can reach out to its customers with better services in the increasingly competitive business environment. They would advise the top management accordingly on how the firm should approach strategic change management issues.

General Employees

General employees of KPMG are also important agents of change. KPMG has been keen to allow all the team members, irrespective of the position they hold, to contribute to factors that affect the organization. The firm recognizes their role in the normal running of this firm and therefore appreciates the need to incorporate them on strategic management plans of the firm.

They can therefore make their contribution on how they feel some issue should be addressed within the firm, which may pass as a change strategy. The shift of the office from the farm to the industrial unit floor can be appreciated in the model of Toffler’s, The Third Wave (Toffler, 1991).

In The Third Wave, Toffler notes if you stride back and look at the main activities of the global societies, there are three major classes or effects in the proceedings of societies. “… flexible manufacturing, niche markets, the spread of part-time work, and the degasification of the media” (Toffler, 1990) Fayol’s points that “all organizations, regardless of mission or culture, are joined to one another by the universal process that is designed to focus the energy of an organization in order to accomplish a common purpose”.

The Government

The government plays a very important role in strategic change management of any firm within the country. According to Taborda (2011, p. 78), although the government may not be seen to be playing direct roles in the process of defining the path taken by the firm, it always has a great impact on the same.

A firm like KPMG cannot operate in a vacuum. It operates within a country with a government, which has its policies of how such firms should operate. These government policies change with the changing environmental factors. When the government changes its policies and such changes have effect on KPMG, then this firm would have very little but to implement the changes as specified by the government.

Customers

For a long time, customers have always been on the receiving end of change. They would always wait to be presented with products, some of which were not suiting their needs. However, the current marketplace is very different. Customers are more knowledgeable and more demanding.

Marketing has moved from the traditional inward out approach to outward in. firm must therefore develop products that have the capacity to meet the changing needs of customers. Customers have therefore moved from the recipients of change to initiators of the same.

Implementers of Change

These individuals would affect the changes as suggested by the initiators of change. As Anderson (2011, p. 16) says, in most companies, KPMG included, the initiators of change are always part of the implementers of the same.

The Management

McGregor (1957) in his typical book, The Human Side of Enterprise, stated:

“Management is severely hampered today in its attempts to innovate with respect to the human side of enterprise by the inadequacy of conventional organization theory (p. 245). The management plays a very important role in the implementation of change within the organization.

Given their role of co-coordinating and controlling, this unit has the duty of explaining change to the employees and directing them on how these change strategies should be addressed. As such, they have the responsibility of understanding the strategies before explaining them to the employees. They are also the financiers of the policies of the organization. They have a role of ensuring that proper finance is allocated to the implementation of the strategies.

General Employees

Sharma (2008, p. 26) says that the employees have the greatest role to play in the implementation of change strategies. They are the implementers of the firm’s strategies.

They have a duty to ensure that they understand the organizational objectives. They should therefore know how to intertwine the change strategies and the general goals and objectives of the firm. They would receive the policies from the management and implement them in a manner that would generate maximum benefits to the firm’s customers and shareholders.

The Recipient of Change

As explained above, these individuals are neither the initiators nor implementers of change. Recipients of change may not necessarily involve those individuals that have no role in the initiation or implementation of change. According to this scholar, both the initiators and implementers of change may also pass as the recipients of the same if they are affected by this change, which is always the case. As such, all the above stakeholders may be considered as recipients of change under different contexts.

The management would be the recipient of change if the same affects the general growth of the firm either positively or negatively. The employees would be recipients if the process would result in benefit increment or change of position held in the firm. Customers would definitely be the recipients through the benefits they would receive from the changed strategies of the firm.

The competitors would be recipients if the change would also force them to redefine their own strategies. The government would be the recipient if the change would result in a downward or upward adjustment of the tax they receive from the firm. The organization as a whole would also be considered a recipient of change. This is because the organization would be subject to change in the production levels and styles and the general new product proposition it would assume in the market.

The structures would also feel the effect of change. In every organization, there are various structures that are always put in place to serve various tasks, for instance, the structures put in place at the sales unit. The structures may need to be restricted to reflect new picture of the firm. Generally, the entire system would have to be restructured. The new design would have to redefine the relationship of the stakeholders in the organization and the new roles that they would play.

In the implementation process however, care should be taken to avoid chaos at all the stages. Chaos can be the most destructive factor in change management. Chaos as defined in an older dictionary is “A condition of utter disorder and confusion, as the unformed primal state of the universe” (Funk and Wagnalls, 1940, p. 208).

In a more recent attempt to define the concept, Coveney and Highfield term it as “Unpredictable and apparently random behavior in dynamic systems” (1995, p. 425). In the latter definition, we can see a loosening of the fixed order of the world that was embedded in the first definition. Such scientists laid the foundation as Newton who accepted a fixed-order world as the ideal of objective knowledge (Prigogine, 1996, p.2).

A tenet of the Industrial Age was that some grand design of the universe that needed to be discovered existed. However, current writers and thinkers in the area of systems thinking and Chaos Theory argue that no such fixed design exists.

In fact, writers like Prigogine (1996) now define chaos as “the behavior of systems in which close trajectories separate exponentially in time” (p. 201). It is therefore the roles of everyone to understand the need for change, and cooperate in the process of its implementation. This would ensure smooth process of implementation.

Strategies Available for Change Management

Government Office for the South West (2004, p. 43) states, “It is worth recalling what we are trying to achieve.” It should be clear to the team why change is important and what the same would achieve.

There are giant American companies that were brought to their feet either due to the failure to adopt changes that were needed, or implemented the same, but in a wrong way. Whichever the case, the underlying fact is that change is fixed factor in any organization whose implementation should be done in a conscious manner that would make the firm remain competitive in the market. Rogers Adopters Theory provides the best available strategies that are available for change management. The categories are as follows:

Innovators

This strategy requires individuals who have great desires for new ideas. It requires audacity and the willingness to pay for the consequences of the change. When implemented, the firm would implement changes as soon as they are availed in the business environment. This strategy would be the best for KPMG, but the consequences may outweigh the benefits. As such, many firms shy away from it because of the possible negative consequences. The popularity of this strategy is rated at 2.5 percent.

Early adopters

Early adoption theory would involve embracing change early enough to be able to reap maximally from it, but after analyzing the consequences that are involved. Early adoption is good, but as innovators, a firm may not have reference to other firms which had implemented the strategy before. As such, many firms would shy away from it for the fear of the unknown. However, given the nature of KPMG, this would be the best strategy that should be employed by this firm in the process of managing change.

Early majority

The early majority would adopt change before the average members have, but will take precautions by keenly monitoring how the innovators and early adapters were affected by the change. Although very popular, this strategy is dangerous to an innovative company like KPMG because by the time it would be implementing the change, it might be too late to be competitive in the market.

Late majority

Late majority are individuals who appreciate that change is necessary, but would want to evade any negative consequences of the same. They would therefore wait for others to implement change and confirm that the consequences are positive. They prefer going through the trodden path. This strategy may not work for KPMG because this industry is very dynamic and by taking this approach, it would always be several steps behind market standards.

Laggards

Kratschmer (2011, p. 19) describe this category of individuals as tradition keepers. They would want to maintain status quo, and because of this, they would fight any change in the organization. This may not be considered a strategy for change management, but passes as one because it seeks to fight the same. Those who hold this strategy would always be suspicious of change and all the change agents. This is the worst of the strategies of change management.

Stakeholders Role in the Implementation of Change Management Strategy

Sirkin, Keenan, and Jackson (2005 p. 2) say, “Managing change is tough, but part of the problem is that there is little agreement on what factors most influence transformation initiatives.” As stated above, the best strategy would be the early adoption. Various stakeholders would have different roles in this strategy. The management has the duty to understand the concept put forth in the specific change item in order to create awareness of the same among employees.

The management is also responsible for funding the entire process of the implementation of the change. The employees should be flexible enough to adjust to issues concerning change management. They have the responsibility of positively responding to change and ensuring that the policies of change are well taken and are appropriately implemented. The government, though may not have direct responsibility to the firm, should ensure that the business environment is kept safe.

System of Involving the Stakeholders in Planning of Strategic Change

A system refers to a collection of different units or subsystems, which work as a unit to accomplish a given objective. KPMG as an organization is a system made up of different stakeholders each with different duties all aimed at ensuring the firm’s strategic goals and objectives are achieved. The diagram below shows the stakeholders in this system, as well as how they are related.

As shown in the above diagram, the system involves all the members of the organization in their various capacities. In this system, change would be effected from the top management, and the lower cadre employees would be doing the implementation activities. The system should be well coordinated in a way that no unit will clash with the other in the process of implementation of change strategies. The management of KPMG must clearly set the overall goals and objectives of the firm.

This should be made known to all members of the organization. The overall objective would be to create a positive differential change to customers. The management would therefore create a system that would act as a wheel.

The management (both top and mid level management) would form systems, while the junior employees would form subsystems. In this wheel, the management should transfer a desirable rotation to the employees that would make them (the employees) rotate the customers in favor of the organization. This is demonstrated in the diagram below.

All members would share the new objectives, which would redefine the mission of the firm, in the firm. As seen in the case study, the last and very important part is the implementation of the shared mission. The management should identify various teams and assign them different roles that would help accomplish the objective of the organization.

The management should consider developing units within the firm, with each unit having their own specific duties. The stakeholders should fit into the units, with each unit having specified role to play in the overall policy implementation process. The management can also consider having each specific stakeholder assigned his or her own role within the firm to be achieved within a specified period.

Resistance to Change

In many occasions, change would meet a lot of resistance from those who want to maintain status quo. They would ensure that all efforts are directed towards derailing change. Change can be resisted in a number of ways. The first type of resistance to change may involve adoption of the laggard approach to change. Such an individual would try to cling to the traditional ways of operation as much as is possible.

Another approach may involve refusal to cooperate in the process of working as a system to implement change. The management can also resist change by failing to advocate for the same to the employees. They can also resist change by failing to allocate enough finance for the same.

The best way to manage any form of resistance is to make every member of the organization understand the need for, and the urgency with which change is needed. The management should ensure that all stakeholders are brought on board in the process of implementing change. They should be allowed to share their views and fears about change so that the concerned authorities may address it.

Plans for Implementation of Change Management Strategies

Appropriate Model for Change

A number of models for change that are used by various organizations, given different scenarios exist. Some of the most popular models of change include ADKAR Model for change, Stephen Covey Seven Habits Model, Kubler Ross Stages of Change and Kurt Lewin’s Strategy of Unfreeze-Change-Refreeze.

These strategies are suitable in different scenario. They have their own advantages and disadvantages that makes each most suitable in different applications. Given the scenario of KPM, the best model would be Kurt Lewin’s three staged Model of Change Management of Unfreeze, Change, and then Freeze.

Unfreeze is the first stage where the firm would need to appreciate that given the current market forces, there is need for change. As such, every member of the organization prepares psychologically for a possible change. After unfreezing, the next step is change. The members, having accepted the need for change, would embrace the same and adopt new strategies brought about by change.

The freezing stage, also known as refreezing, involves establishing stability after the adoption of change.

Plan for the Implementation of the Model

KPMG has a healthy business environment. It must choose the best strategy that would best suit all the stakeholders in the implementation of the above-mentioned model of change. Value Based organization would be the best strategy for this firm. The first principle in this strategy is to embrace community spirit.

All the stakeholders should view themselves as members of a larger community. The community should embrace open and honest communication and there should be agreement in the values of the organization. The organizational structure should be flexible to allow for adjustments in the process of implementation.

Measures for the Implementation of Change Model

There are measures that should be put in place to ensure that the implementation of change model is successful. The first measure is that there should be a clear procedure of monitoring change. Baekdal, Hansen, Todbjerg and Mikkelsen (2006, p. 7) say, “All models are guidelines.

You should always evaluate the relevance of each individual step vs. your situation and your project. Large projects often demands detailed analysis and documentation, while small projects can be finished with much lesser work.” The concerned individuals should know the basis of objectives and goals of the organization. With this, they should assess the effect of change against what was expected.

The second measure is that the implementing parties should have a clear timeline set for the achievement of various objectives. There should be regular meetings to review the success of the organization. Another measure is that the management should set short-term manageable objectives to be achieved within a given timeline.

A mechanism through which objectives would be measured should exist. This way, it would be easy for the management to determine if the implementation process is effective, or if some changes might be necessary. Above all, the stakeholders should all be made to appreciate the need for change and the potential benefits that may accrue from the same.

Conclusion

In a business set up, the top management is always under a constant challenge of planning how to manage change. Strategic change management has become one of the strategic duties of a firm. It is considered strategic because it affects the entire firm from the top management to the junior most employees, and all the departments of the firm.

Change management is considered as strategic because, just like strategic goals and objectives, change should be initiated by the top management of the organization and channeled to other employees of the organization. Older members of the society, especially those that have already gotten used to a certain way of doing things may not find it easy to shed their normal ways of approaching their duties.

They are used to the normal methods and fear that they may not be in a position to adapt to these changes fast enough and as such would be seen as incompetent. KPMG has the duty to implement change management strategies that would help it manage market competition. Change must involve all the stakeholders in the organization for success to be achieved. KPMG must incorporate all its stakeholders and assign them different roles in the process of implementing change.

Kurt Lewin’s three staged Model of Change Management of Unfreeze, Change, and then Freeze is the best strategy of implementing change in this organization. With a positive attitude towards change management among the stakeholders, KPMG will always be a step ahead of competition in the market.

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