Strategic Change Management: KPMG Term Paper

Executive Summary

KPMG is an auditing and advisory firm that has its headquarters in the United States. The firm operates in 152 countries and has over 142,000 employees spread across these countries. Strategic change has been one of the major factors that this firm has had to consider.

The market is highly dynamic and firms like KPMG have come to realize that same old methods may not be effective over a long period of time. This firm has been challenged by new firms that come into this industry and fight for the same market share that it holds. Changes in the environment due to the emerging technologies are also forcing this firm to change its strategies in order to realize success in the increasingly competitive market.

KPMG has realized that it may not succeed without implementing change. There are various strategies that this firm has employed in order to ensure that it manages change within the global environment. It has employed four initiatives: creating a shared set of values, aligning employees’ goals with that of the company, developing common business process and creation of common infrastructure. The initiatives are meant to help shape up the firm’s action plan to be in line with the strategic goals.

Introduction

Managing change is one of the most important issues that currently arise in the corporate world. Business environment is very dynamic, especially due to the increasing changes in the way of life triggered by technological changes. One of the firm’s that have come to appreciate change is KPMG.

This is an auditing firm that has managed to capture markets beyond its home country. It has mastered the art of managing change, and the importance of responding to change the soonest time possible. The management teams of KPMG in its subsidiaries across the world have come to realize that there is need to ensure the management in the corporate world needs to be flexible and dynamic. Change may not be easy to accept, especially to large organizations like KPMG that are accustomed to traditional methods of doing business.

Such firms would always find it challenging to shift from one way of doing business to another. Change always comes at a cost, a cost that some management may not be ready to face. To a large firm, the expenses that would be incurred when a firm has to change from one strategy to another are very huge.

However, firms must be ready to overcome this. As Page (2010, p. 76) says, “Another problem you may encounter when implementing change is familiarity.” KPMG has however, managed to counter this challenge by ensuring that it employs individuals who understand the current conditions of the market. It is clear that a firm would either adapt to the changing environmental conditions or risk being swept away by the strong forces of change. For this reason, management must realize that they either have to accept change or be rendered irrelevant.

Discussion

Understand The Background To Organizational Strategic Change

The Models Of Strategic Change

McKinsey 7S Model is one of the most appropriate models that can be used to manage change. This model emphasizes the importance of aligning the company’s strategic objectives with employees’ objective. In order to achieve this, the model applies seven principles. The first principle of this model which is the core is Shared Values.

The firm should ensure that the desired values of the firm are shared by all the members of the firm, from the top management, to junior management. After knowing the values to be shared, the management should determine the best strategy to apply. Such strategy should be accompanied with skills that would ensure that the firm achieves what it desires. The system should incorporate all the right staff that would be in a position to employ the right skills in achieving their objectives.

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The structure put in place should be in a position to give the desired result that would have positive impact on the firm. Charantimath (2006, p. 82) says that “Quality is thus defined as fitness for purpose.” This strategy has been employed by KPMG in its overall operations across the world. The firm has ensured that all its employees, from the top management to the junior most employee clearly understands the shared value of the firm both in spirit and in letter.

Burke Litwin model of change ranks the forces of change in order of their importance. It starts with the most important factors and ends with the least. Unlike McKinsey model that talks about values that affect change, this model illustrates the facilitators of change. The model emphasizes the fact that change is driven by forces, some of which have stronger effect than others. To properly understand and adapt to the changes, it is appropriate that an individual understands the forces.

This strategy has been very useful to this firm, especially in its overseas subsidiaries. It has been keen to ensure that it responds to the most urgent and important forces first, before proceeding to look at other minor forces. This has ensured that this firm remains ahead of change.

Bullock and Batten model for change is probably the most appropriate model that would help management of any given firm manage change. This model gives steps that should be taken when implementing change. According to this model, the first step in implementing change is to explore the need for change. The management should first be in a position to explain why there should be change in the organizational structure.

The next step would be to create the change pattern and then plan for the change. After the plan, the management should then initiate an action to implement the plan. Firms should realize that when implementing this change, they do it within the right time frame so as not to be time barred. Some firm’s fail to adapt to the changes fast enough, a fact that has seen some of them forced out of the market. According to Warner (2011, p. 4), “they cannot change themselves rapidly enough to remain high performing organization”.

The management should then wait for the feedback as to whether the planned course of action is working appropriately or not. If the plan works out, the final stage is to formalize the whole process. If it doesn’t, the process is started all over again. This model differs from the above two models in that it gives procedures of adopting change in a given organization. KPMG has been very consistent in implementing change. It has ensured that it follows steps stated above are systematically followed when implementing change.

Approaches which can be used to describe Strategic Change in Organizations and KPMG

There are two main approaches that can be used to describe strategic change in organization, and specifically at KPMG. The first approach is the industrial organization approach. This approach has its basis on the economic theory. It takes into consideration the economic forces in the market like competitiveness and rivalry in the market, the resources and the importance of economies of scale. The main target of the process is to maximize the profits of the organization.

This approach has been applied in this research. The case study shows that KPMG has been keen in understanding the market forces. Through this, it has managed to maximize its profitability in its operations across the world. The other approach is the sociological approach.

This approach primarily deals with the interactivity of human. It entails behaving in a way that would result in profitability for the firm. It can be witnessed from the case study, that KPMG has been keen to ensure that its workforce work within the expectation of the firm, and in line with the current market forces. This is one of the reasons behind the firm’s success.

Appropriateness of these Models of Strategic Change to KPMG & Organizations in the Current Economy

Change is a force that many organizations have come to appreciate that it cannot be resisted. The models of strategic change given above are very appropriate for organizations in the current economy that is highly competitive. KPMG has succeeded because of its ability to apply them in its operations both at home and in its subsidiaries overseas.

As can be seen in the case study, it is evident that KPMG has found McKinsey 7S Model very appropriate in the current market. This firm has realized that it is important for the firm to align the firm’s adjectives with that of the individual employees. Sharing of value is one of the easiest ways to ensure that a firm adapts to the various forces in the market. This is what KPMG has been keen to ensure it implements.

The Value of Using Strategic Intervention Techniques in an Organization like KPMG Undergoing Change

Strategic intervention techniques are very important to organization undergoing change. Not all changes have positive impact. KPMG has employed intervention techniques that would help it detect the right changes and how to respond to them in a manner that would ensure that it remains competitive in the market. Huber and William (1993, p. 1) say, “The change that occurs in organizations is, for the most part, unplanned and gradual.”

A firm like KPMG should therefore be ready to detect this gradual change and act in a way that would enable the firm achieve the best out of the change. It is also important to note that some changes may work in one organization but fail to deliver in another. As such, it would require an organization like KPMG to lay down strategic intervention techniques that would help determine appropriate changes to adopt at a specific time, and which to avoid or postpone to a future date.

Understand Issues Relating To Strategic Change In An Organisation

Reasons why KPMG Needed to Plan for Change

It is very important to plan for change. KPMG planned for change due to a number of reasons. First, consumer taste in the market was changing, and therefore there was a need to change in light of these changes. Secondly, the level of competition was so stiff. Firms were fighting to increase their market share. KPMG had to lay down plans that would help it counter this competition and protect its market share.

The plan was also important because during such competitive occasions, weak firms would always be acquired by stronger ones. KPMG hoped to take over some crippling firms that had previously built strong brands. Downward economic change, especially in the home country also necessitated the plan for change.

According to a report by Harvard Business School Press (2009, p. 27), “Innovation is the product of the connections between individuals and their ideas.” With the shrinking economy, there was need to ensure that this firm lays down appropriate plans. Also important was the need to reengineer Total Quality Management in the firm. Finally, the plan was motivated by the need to restructure the firm to reflect the current needs of the market.

Drivers Of Strategic Change In Organisations

Change is always driven by forces within the environment. The first driver is competition. If there is competition, there would be need to develop strategies that would ensure success for the firm. In order to manage competition, a firm must ensure that it understands the changing customer needs in the market. Cummings and Worley (2008, p. 24) say, “The classical action research model focus on planned change as cyclical process.”

A firm like KPMG should therefore consider change as one of the strategic objectives for the firm. In this case, the firm can set some changes to be implemented within a specific period of time and the expected benefits to be generated from that particular change. This would make the firm unique in the market hence highly competitive.

The societal environment also plays a vital role. This includes such factors as culture and political structure of the society. When cultural practices change, the strategy used in the market must also change. Change must be aligned to the societal needs. Economic situations like boom and recessions would also trigger change.

The last but very important driver of change is the emerging technologies. Technology would always determine ways of conducting business, and should a firm assume them, then it may be faced out of the market as Kodak was.

Implications of a Firm’s Failure to Adopt to the Strategic Changes

When a firm fails to adapt to the changes brought about by the above drivers, the implications can be very devastating. Kodak was completely faced out of the market for its failure to adapt to the technological changes in the market. It lost all its resources in the process. However, Nokia and KPMG have been keen to adopt the changes fast enough, a fact that has seen them expand their resources.

Nokia is one of the most successful electronic firms, especially in the mobile telephony because of its quick response to emerging technologies. General Motors was overtaken by firms like Toyota because of slow response to change. However, having realized the implications of failing to respond to change, it is making a comeback because it is currently adopting the emerging technologies. It has realized that strategic changes must be embraced for there to be success.

Conclusion

This paper clearly demonstrates that change is one of the environmental factors that a firm cannot avoid. Change should be embraced using various strategies and models that would help ensure that the firm remains relevant in a given market. The world is changing, and with this change comes various forces within the business environment that a business unit must come to terms with. It is clear, from the above discussion, that change must be managed.

KPMG, as an auditing firm, operates in one of the most competitive industries. Many new firms have come into this industry offering the same products and KPMG must ensure that it is in a position to manage this new market trend. It has embraced various models of managing change in its effort to ensure that it retains its market share. This research has proven that a firm cannot manage to stay competitive without managing change.

The models of change discussed above can be applied by firms in real life situations, especially if a firm has to counter change in new environments. In the current complex world, it would be very important for a firm like KPMG to devise new models of managing change. It is important to note that one strategy successfully applied in one occasion may not automatically apply in another.

Flexibility is therefore very important as it would enable a firm face new challenge each time they come. Some of the above mentioned models, like Bullock and Batten model, may only act as a guideline in managing change. This way, a firm would always be ahead of change. This is what has ensured that KPMG remains successful in the increasingly competitive market.

Reference List

Charantimath, 2006, Total Quality Management, Pearson Education, New Delhi.

Cummings, G & Worley, G 2008, Organization Development & Change, Cengage, Manson.

Harvard Business School Press, 2009, Executing Innovation: Expert Solutions to Everyday Challenges, Harvard Business School Press, New York.

Huber, P & William, G 1993, Organizational Change and Redesign: Ideas and Insights for Improving Performance, Oxford University Press, New York.

Page, S 2010, The Power of Business Process Improvement: 10 Simple Steps to Increase Effectiveness, Efficiency and Adaptability, AMACOM, New York.

Warner, B 2011, Organization Change: Theory and Practice, Sage, Thousand Oaks.