Assess Southwest Airlines’ strategic approach to human resource (HR) management, assignment help

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  • Must be original and pass all originality tests.
  • 1. Assess Southwest Airlines’ strategic approach to human resource (HR) management. Determine how its strategy increases organizational effectiveness.
  • 2. Propose three ways that HR can use competitive advantage in the marketplace to recruit new applicants in general.
  • 3. Go to the U.S. Equal Employment Opportunity Commission’s (EEOC) Website and review cases regarding diversity. Note: Enter the Website and in the search box under “Press Releases” type “diversity”. Review three of the results of your search. Next, propose three ways that an organization can increase diversity within itself. Take a position on whether diversity is or is not important and determine how the methods you provided support your position.
  • 4. Evaluate ways that an organization can measure and reward compliance. Determine if organizations that measure and reward compliance are more or less likely to experience lawsuits.
  • 5. Read the article titled “Multilevel Readiness to Organizational Change: A Conceptual Approach”. Give your opinion on which two (2) means of diagnosing change are most relevant to today’s organizations. What is meant by the term “readiness”?
  • 6. Review the case study entitled “Charles Chocolates”. Next, evaluate the organization and its industry in terms external and internal pressures. Create a proposal about how the company can overcome internal and external pressure
  • 7. Trust has been identified as a major consideration when choosing a consultant to improve business processes. Create a persuasive argument to convince a potential client that you are trustworthy and can deliver results.
  • 8. Accountability is also important in the consulting relationship. Recommend a strategy that you could employ in a consulting relationship that demonstrates you are accountable for your outcomes.
  • 0. Go to the U.S. Equal Employment Opportunity Commission website and review an EEOC case from within the past three (3) years. Assess the main problem or issue from the case, then create a brief intervention summary for the organization in the case you chose. Include in your intervention summary any necessary staff training for the organization. Explain at least one (1) method you will use to ensure effective communication of the summary to a diverse (deep-level) group of staff.

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9B13M094 O PY CHARLES CHOCOLATES Professor Charlene Zietsma wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Version: 2014-11-17 C Copyright © 2013, Richard Ivey School of Business Foundation O T In March, 2012, Steve Parkland started his new job as president of Charles Chocolates (Charles), a privately held premium chocolate producer based in Portland, Maine. The board of directors had asked him to double or triple the size of the company within 10 years. Each member of the board and the management team had a different idea about what Charles needed to do. Parkland needed to devise a strategy that would fit the company’s culture, and then gain the support of the board, the management team and the employees. THE PREMIUM CHOCOLATE MARKET N The U.S. market for chocolates was US$19.3 billion 1 in 2011, and had been growing at about 6 per cent annually. The premium chocolate market ($2.7 billion), which had higher margins, was growing at 10 per cent annually, and imports of ethically produced cocoa grew by 156 per cent 2 as aging baby boomers emphasized quality and ethics in their purchases. Incumbents such as Hershey’s and Cadburys had moved into the premium chocolate market through acquisitions or upmarket launches. D O About one-quarter of annual chocolate sales typically occur in the eight weeks prior to Christmas. Twenty per cent of “heavy users” account for more than half of these pre-Christmas sales. These heavy users tend to be established families, middle aged childless couples and empty nesters with high incomes. They purchase more high quality boxed chocolate than bars or lower quality chocolate. 3 In line with social trends, demand was growing for organic chocolate and dark chocolate due to its hearthealthy anti-oxidant properties. At the same time, however, large chocolate manufacturers wanted the United States Food and Drug Administration to redefine the term “chocolate” to allow them to produce cheaper versions (with less chocolate content) and still call it chocolate. Consumers and employees also increasingly demanded corporate social responsibility. Chocolate companies were targeted because 1 All currency in U.S. dollars unless specified otherwise. http://www.vreelandassociates.com/us-chocolate-sales-up-6-while-premium-jumps-10/, accessed August 14, 2013. 3 Company insider citing a presentation by Neilson at the Confectionary Manufacturer’s Association conference, 2007. 2 Page 2 9B13M094 forced labor and child labor was still sometimes used in cocoa bean production in West Africa. Environmental concerns influenced packaging, procurement and operational decisions. COMPETITORS O PY Chocolate competitors in the premium chocolate segment in the United States featured strong regional brands and large international players. Godiva, backed by Nestle, had taken the business by storm with glitzy packaging, high price points, and widespread distribution among gift retailers. Godiva’s quality was not as high as Charles, but it obtained about 15 per cent higher price points for standard products on the strength of its sleek and modern packaging, variations in chocolate molding and coloring, advertising and distribution. Godiva’s high-end products sold for 200 per cent to 300 per cent of Charles prices. Lindt, a large Swiss firm, sold mid-quality chocolate bars and truffles broadly in mass merchandisers, drug and grocery retailers, and their pricing was about 90 per cent of Charles. T C Strong regional players included Delice Chocolates and Cardon’s. Delice, based in Providence, Rhode Island, had 32 retail stores, mostly in tourist and downtown locations in northeastern states, with four stores in California. The company’s quality was high and it excelled at frequent flavour introductions. Delice’s copper boxes could be customized at the store. Pricing was similar to Godiva. Cardon’s was a 120 year-old Boston firm with 50 locations nationally, nearly all in malls. Cardon’s was most successful in New England. It had tried to launch in Chicago, but had not done well there. Cardon’s price point was about 35 per cent lower than Charles, and it had moderate product quality level. Cardon’s did a strong business in corporate gifts and group purchases, offering 20 per cent to 25 per cent discounts for high volume orders. N O Other premium chocolate companies included extremely high end custom chocolatiers, Belgian producers that sold through American retailers or online and niche wholesalers of single varietal bean or organic chocolates. Other companies commanded price premiums over their quality level because of their distribution and/or store concept. For example, Dolce Via, which emphasized mall stores, and The Great American Candy Company, which sold more candy than chocolate and used a franchise model, had higher price points than Cardon’s but lesser quality. CHARLES CHOCOLATES COMPANY HISTORY D O Founded in 1885, Charles Chocolates was New England’s oldest chocolate company. For the last two decades (during which time sales had grown by more than 900 per cent), the company had been owned by a private group comprised principally of two financial executives, an art dealer, and a former owner of a bus company. These four plus a past president of Charles comprised the board of directors. Charles’ head office was located above its flagship store in Portland’s Old Port area, a tourist area known for its cobblestone streets, 19th century buildings, and active nightlife. Charles produced high-quality, hand-wrapped chocolates including its premier line, Portland Creams, along with truffles, nuts and chews, almond bark, chocolate-covered ginger, caramels, brittles, and orange peel in various assortments, bars, nutcorn and premium ice cream novelties. Charles chocolates were of the highest quality, and the company had many loyal customers around the world. In 2009, the company won a prestigious Superior Taste Award from Belgium’s Institute for Taste, which described the product as “classy, refined and elegant,” and “top-of-the-range,” with “rich chocolate aromas.” Page 3 9B13M094 PRODUCTION O PY Charles chocolates were made in a 24,000-square-foot factory owned by Charles on the outskirts of Portland. There were 75 retail and 35 production employees, all non-unionized, and 20 employees in management, administration and sales (see Exhibit 1). Production took place from 7 a.m. to 4 p.m. each day. With so many different products, batch processing and hand packing were used, and set-up times were a significant component of costs. Employees learned multiple job functions and enjoyed a variety of work and tasks. There were no measures of productivity or efficiency in the plant, and thus no way of telling on a day to day basis if the plant was doing a good job. C Demand forecasting was difficult due to the seasonality of sales, but product shelf life was long (up to a year), and significant inventories were kept. Nevertheless, there were significant problems with out-ofstocks each week. The Christmas season was particularly chaotic. The wholesale business required early seasonal production, whereas the online and retail business required late production. Production planning was complicated by data distortions arising from out-of-stocks and over stocks. When an item was produced after being out of stock for a month, filling back orders would unnaturally spike sales, yet these spikes would be used for production planning the following year. Similarly, when there was too much stock, the retail stores would push or discount the items, creating distortions in the sales data, which would be used for production planning the following year. Because out-of-stocks in the wholesale channel created problems with customers, short supplies were diverted from the company’s own stores and delivered to wholesalers. Furthermore, when a special order arrived in wholesale, it was not uncommon for the plant to put production plans on hold to focus on the special order. N BUSINESS LINES O T The company’s heritage, commitment to quality and strong family values were cherished by employees, some of whom were third-generation Charles employees. New ideas were often resisted by employees over fears that the company was compromising its values and heritage. Turnover was low, and wages were competitive. Permanent employees were on a first-name basis with all of the senior leaders, including the president. D O Charles earned revenues in four major areas: retailing chocolate products through company-owned stores, wholesaling, online/phone sales and sales from Sandwich Heaven, a well-known eatery in Portland, which Charles had purchased in 2009. Retail. Charles’ 11 wholly owned retail stores produced 50 per cent of sales. The stores’ theme was heritage, and the flagship store had been designated a heritage site. Sales staff offered chocolate samples to customers, and the aromas and images in the store contributed to an excellent retail experience. In 2005, Charles had won America’s Innovative Retailer of the Year award in the small business category. Most stores were in tourist locations, such as Bar Harbor, and Boston’s Back Bay and Beacon Hill areas. Most were leased, though the flagship store was owned. Stores were about 500 square feet in size, with the exception of the Bar Harbor and cruise ship terminal locations, which were booths. Although other retailers sold Charles Chocolates, they purchased the products wholesale through direct sales from Charles. Exhibit 2 shows the store locations and their approximate annual sales. The two newest stores, Back Bay and Beacon Hill in Boston, were showing steady sales growth in their first two years of operations, but significantly shy of expectations. The Portland stores benefited from Charles iconic brand image in Maine. Page 4 9B13M094 O PY Wholesale. Approximately 30 per cent of sales came from wholesale accounts in five categories: 1) independent gift/souvenir shops, 2) large retail chains, 3) tourist retailers, such as duty-free stores, airport or train station stores and hotel gift shops, 4) corporate accounts that purchased Charles products for gifts for customers or employees and 5) specialty high-end food retailers. Some large accounts, including department stores, gift chains and coffee chains, had been significant Charles customers, but had recently changed their purchasing to focus either on their own products or on less expensive lines. A salaried national sales manager based in Boston oversaw eight sales agents across the United States, and a salaried rep located in Maine. Sales agents had exclusive rights to sell Charles products within their territory but also carried non-competing giftware lines. Many had been with the company as long as the previous president, who had established the wholesale division nearly two decades earlier, but contractually, they could be terminated with 90 days’ notice. Marketing Vice-President Mary Bird said: C Some [reps] perform very well. They cite many challenges with our brand — niche market, high prices, inadequate shelf life, old fashioned (“not glitzy or fashionable enough”) packaging, and an unknown brand in many areas. Some reps have stronger lines and just carry Charles as an add-on. The salaried rep in Maine receives constant requests for our products, as it is our “home turf” and we do extensive advertising locally for our own stores. In Portland, some accounts will say they are honored to carry Charles. In other parts of the United States, they have not heard of us and are dismissive of the products and their price points as they do not understand the brand and the value of the product. If the remote reps are not well trained, they just cannot present the brand adequately and sell it. N O T Retailers typically marked items up by 100 per cent. Charles earned about half the gross margins on wholesale sales as it did on retail and online sales and the company paid its sales agents approximately 10 per cent commission. There were 585 active wholesale customers in 2011. Of these, 221 purchased less than $1,000 per year, and another 125 purchased between $1,000 and $2,000 per year. There had been problems in the past with smaller accounts selling stock past its expiration date. Some wholesale accounts ordered custom products, such as logo bars for special events. In the past, some regular customers had ordered with too little lead time, so the plant typically kept some logo bars in inventory for customers in anticipation of their orders. D O Online and Phone. Charles’ online business generated four per cent of sales and its phone business generated 6 per cent of sales. Sixty per cent of all orders were from regular customers. Average sales were $138 by phone and $91 from the website. The proportion of people who shopped online in the United States had grown considerably in the last decade, with about 59 per cent of respondents in a 2012 Neilsen poll saying they prefer to shop online because of its convenience. 4 Charles’ online business had not gone up with the trends. Orders received by phone, mail or online were processed within three to four days, then shipped via FedEx. Shipping was free for orders over $500. Orders went to the United States (60 per cent), Canada (35 per cent) and 50 countries internationally (5 per cent). They were delivered to the far North, sometimes via dogsled, to lighthouses on both coasts and to Antarctica. Online and phone orders were given priority for inventory allocation, and stock would be transferred back to the factory from the retail stores if necessary. Sandwich Heaven. Ten per cent of sales came from Sandwich Heaven, which featured made-to-order sandwiches, soups and salads, desserts (including Charles ice cream) and wine and beer. At lunch in the summer, the lineup regularly extended out the door. Since Charles had purchased Sandwich Heaven, most of the long term staff had turned over, and recruiting new employees was difficult in Portland’s tight labor 4 http://www.medialifemagazine.com/nielsen-59-percent-prefer-to-shop-online/, posted June 7, 2012. Page 5 9B13M094 market. Sandwich Heaven had had to curtail its evening hours due to staff recruiting problems. Although Sandwich Heaven had a liquor license, the volume of alcohol sold was very small. MARKETING O PY Since Charles’ chocolates were fairly expensive, the company targeted affluent customers for themselves or for gifts. Cruise ship visitor and other tourists visited the store then often became phone or online customers. Locals were frequent and loyal purchasers. Local businesses also saw Charles as their corporate gift of choice. According to Bird: Our most loyal clients have an emotional connection to Charles. For example, they were in the Portland store on a holiday, or it was a traditional gift in their family. Many then give Charles as a gift and some of those recipients then become loyal customers. Other customers are affluent people who want something unique. They see us as an obscure but classic gift. But how do you reach these people to promote to them? They are scattered across the United States and of course they are courted by every advertiser. We cannot make mistakes or disappoint them in any way. If we do, we apologize and replace the product immediately — good old-fashioned service. C The Charles brand emphasized heritage, with traditional packaging, including pink or brown ginghamwrapped squares, packed in a burgundy box or tins. Some tins featured old-fashioned scenes such as English roses, cornucopias or floral arrangements, while others featured American art. Chocolate bars came in a variety of packaging. T The brand had a very loyal following. Parkland described the brand perception: N O When I first began investigating Charles, I asked everyone I knew what they thought of the brand. Most people had never heard of it. Others said “Oooooh, Charles! That’s the best chocolate I’ve ever had.” The retail experience is key in creating memories that lead to repeat sales. Through store décor, sampling, aromas, taste and service, I think Charles delivers “chocolate orgasms” to its customers. D O The growth challenge would be to increase awareness without diluting the brand. The premium price scared some consumers and wholesalers. Discounting, or making cheaper products to piggyback on the brand, would risk brand integrity. The brand’s heritage image was an issue. As Charles’ loyal customers aged, would younger buyers appreciate the traditional image? Bird cited brands such as Chanel and Lancôme, which had developed classic images and refused to compromise, and brands such as Jaguar, Cadillac, BMW and Volvo, which had developed a younger, sexier image while maintaining core design elements to maintain brand integrity. Charles advertised in tourist publications, seasonal print media and radio spots. Charles also donated product extensively to charitable events. Direct mail and solid search engine rankings promoted the online business. Charles’ website was kept basic to make it load easily. It had an ordering facility, a reminder service that emailed customers about their upcoming special occasions and optimized search engine placement. The website also had links to resellers, however, the sales agents had not been good about providing links for their top accounts, as they did not seem to understand the value provided by such links. Page 6 9B13M094 FINANCIALS 5 O PY Charles was in a strong financial position. Although Charles had gone through a period of significant growth just after the current shareholders acquired the company, growth had slowed considerably in the past few years. In part, this decline had resulted from the slowdown in tourism since the financial crisis. In fact, chocolate sales had declined since 2008, though the company’s revenues had grown slightly due to the contributions of Sandwich Heaven. Margins remained strong, however, at about 50 per cent of sales on average. Financial statements are shown in Exhibits 3 to 6. LEADERSHIP Jim Bell had been president of Charles from 1989 until 2012. When he announced his intention to retire in 2010, the controlling shareholders (and board of directors) considered selling Charles. It was a healthy company with significant assets, great cash flow and good margins. Yet the board felt that Charles had significant potential to grow and sought a new leader (see Exhibit 7). In the two years during the search, managers knew that Bell was retiring, and decisions were put off until a new leader could be found. T C Steve Parkland was vice-president of operations for a meat processing company, in charge of six plants and approximately 2,300 employees, when he saw the ad. Previously, Parkland had been president of a seafood company and general manager of a meat processing subsidiary. His career had involved stints in marketing and sales in addition to operations, and he had an MBA from Duke University. Parkland had an empowering style and a strong commitment to values and integrity. Charles appealed to Parkland because he enjoyed the strategy aspect of general management, and wanted to move to New England. He was offered the job with the provision that he purchase a significant number of shares in the company each year for the first three years. D O N O The senior management team included three others. Mary Bird, vice-president of sales and marketing, a Charles employee since 1999, managed the retail stores, developed marketing plans and oversaw the online and wholesale businesses, Sandwich Heaven, and the ice cream business. She supervised the wholesale sales manager, the retail operations manager, a communications manager, and the order desk staff. The product development person and purchasing and sales planner reported indirectly to Bird, though they worked more directly with Ray Wong. Bird worked long hours at the office and often helped at Sandwich Heaven when staff didn’t show, or drove product to stores on the weekends when they were short-shipped. Bird was a shareholder. Ray Wong, vice-president of production, oversaw production at the factory. Wong earned a bachelor of food science in 1983, and later took courses in material requirements planning, candy-making, ice-cream making and management. He had worked in progressively responsible operations positions in a variety of food and beverage companies prior to joining Charles in 1995. Wong did not own shares in the company. Wong was especially interested in computer programming, and he had developed all of Charles internal production planning systems himself. Sven Amundsen, vice-president of finance and chief financial officer, had retired as chief financial officer of a bus company in 1996, but joined Charles in 2002 at the urging of his former partner, who was on Charles’ board. Previously, Amundsen had worked in financial management in manufacturing and retail after articling as a chartered accountant with Price Waterhouse. Amundsen’s expertise was in 5 All financial figures in the case are disguised. Page 7 9B13M094 reorganizations, acquisitions and dispositions. He maintained Charles books by hand, as he had never learned accounting or spreadsheet software programs. Amundsen owned shares in the company. O PY Bird and Amundsen were a cohesive team, but conflict between Bird and Wong had escalated to the board level during the past two years, as Bird sought to reduce out of stocks and launch new products, while Wong sought to retain control of scheduling and production. Furthermore, because the wholesale division was favored by the past president, the wholesale manager in Boston had regularly gone over Bird’s head to have the president overturn her decisions. GROWTH OPPORTUNITIES During the recruitment process, Parkland had been probing the managers and board members to get their perspectives on growth options. There was a dizzying array. C The idea of franchising Charles stores or Sandwich Heaven had been discussed but not truly investigated. The online business also appeared exciting, with its low costs of sales, lack of intermediaries, and high reorder rate. The corporate gift market also seemed promising. Offering discounts of 25 per cent to corporate purchasers enabled Charles to still earn stronger margins than wholesale, without the costs of retail. One board member said Charles approach to cruise ship traffic needed to be reconsidered as many of the passengers were bypassing Charles’ location to visit attractions in other parts of town that were promoting themselves aggressively on the ships. N O T There were many other possibilities. Should Charles open more stores in Boston? Or should Charles extend its product line to take advantage of its strong brand awareness in Maine? Although ice cream had not been the runaway success the company had hoped, its sales were still building. Another option might be for Charles to concentrate its efforts outside of Maine. If tourists had stopped coming to Portland, should Charles go to them? Should Charles increase its wholesale or retail penetration outside of New England? Would the current sales agency structure be appropriate for increased wholesale penetration? Should Charles consider an acquisition of another niche chocolate company or a joint venture with another firm to increase its geographical reach? Were there opportunities to pair Charles chocolates with other high end brands for mutual benefit? D O Charles traditional brand image was also a concern: while it was treasured by loyal customers and employees alike, it didn’t seem to play well outside of Portland. The packaging had been described as homey or dowdy by some, yet others were adamant that it should not be changed. Parkland had spoken to a brand image consultant that had won numerous awards in the wine industry. The consultant had suggested that the only dangerous thing in today’s market was to play it safe – consumers loved edgy brands. Should Charles throw off tradition and try to reinvent itself? Of course, if sales were to be increased, Charles would need more internal capacity to produce products and fill orders. Should more capacity be added in Portland, with its expensive real estate and significant shipping costs to reach large markets, or should it be placed somewhere with lower costs and easier access to markets? As Parkland pondered all these options, he also knew that he had to take into consideration the culture of the organization and the desires of the board of directors and owners. Would the current managers and employees be willing and able to grow the organization? Would the board endorse a growth strategy that would increase the risk profile of the company? And with all these options, what should Parkland do first? Purchasing & Sales Planning Purchasing Assistant Production Staff Payroll, AR, AP Data Entry (3) Retail Staff Ass’t Marketing Manager Order Desk Mary Bird VP, Sales & Mktg O PY Store Managers Retail Store Coordinator C Sven Amundsen VP Fin & CFO T O Ray Wong VP Mf’g N Steve Parkland President Board of Directors EXHIBIT 1: ORGANIZATION CHART Production Supervisor Product Development D O Source: Company files. Page 8 Wholesale Reps Wholesale Manager 9B13M094 Page 9 9B13M094 EXHIBIT 2: RETAIL STORES SALES IN FISCAL 2007 (ROUNDED TO NEAREST THOUSAND) Store Date Acquired Approximate Annual Sales Contribution Margin 1885 $2,775,000 45.3% Sandwich Heaven 2009 $1,598,000 8.9%* Factory Store 1990 $726,000 36.7% Dec. 2010 $686,000 (11.5%) Portsmouth 2000 $639,000 8.2% Portland Arts District 1988 $517,000 22.86% Portland Fore Street 2008 $401,000 29.1% April 2011 $138,000 (22.3%) Portland Cruise Ship Terminal 2005 $60,000 (Mostly ice cream) 15.5% Bar Harbor downtown 2011 $42,000 (All ice cream; summer only) 18.2% Bar Harbor Cruise Ship Terminal 2010 Boston Back Bay *Reflects full costs of expenses to refurbish the store. C Boston Beacon Hill O PY Portland Old Port $35,000 D O N O T Source: Company files. (All ice cream; summer only) 21.1% Page 10 9B13M094 EXHIBIT 3: CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS Year Ended March 31 Cost of sales Amortization of property and equipment Direct labour Direct materials Overhead Gross profit $11,850,480 $11,991,558 135,385 1,545,794 1,770,603 1,933,306 108,759 1,677,247 2,745,995 846,186 5,385,088 5,378,187 6,465,392 6,613,371 664 1,610 C Interest income 2010 O PY Sales 2011 6,466,056 6,614,981 91,465 5,221,520 86,943 5,007,145 5,312,985 5,094,088 1,153,071 1,520,893 Income taxes 261,989 451,567 Net earnings $891,082 $1,069,326 $4,748,611 4,381,155 891,081 - 1,069,326 (701,870) $ 5,639,692 $4,748,611 O T Expenses Interest on long term debt Selling and administrative D O N Earnings before income taxes Retained earnings, beginning of year Net earnings Dividends Retained earnings, end of year Source: Company files. Page 11 9B13M094 EXHIBIT 4: SCHEDULE OF SELLING AND ADMINISTRATIVE EXPENSES 2011 $489,345 23,000 125,198 118,606 29,975 483,003 112,885 572,495 75,854 42,709 3,938 4,236 -87,103 168,157 29,862 812,269 68,364 3,246,999 343,116 2,903,883 196,970 28,658 22,533 102,241 -6,272 80,704 191,226 134,159 42,872 61,211 18,378 326,901 26,559 22,038 10,082 32,123 2010 $536,886 12,796 125,544 133,081 27,274 476,724 122,897 323,995 84,047 38,592 4,058 2,759 24,179 119,058 182,939 31,099 715,325 46,830 3,013,658 369,823 2,638,260 135,267 24,404 20,882 107,379 C O PY Year ended March 31 Selling Advertising & Promotion Bad debts Credit card charges Mail order Office & Telephone Postage and freight Stores: Factory Store Sandwich Heaven Portland Fore Street Cruise Ship Terminals Dept. Store Boston (closed in 2006) Dept. Store Portland (closed in 2006) Bar Harbour downtown Portland Arts District Portsmouth Royalties Salaries & benefits Travel Total Less: postage and freight recoveries Admin D O N O T Amortization Automotive Bank charges and interest Consulting Foreign exchange Insurance Management fees Office supplies and postage Professional fees Rent, property taxes and utilities Repairs and maintenance Stores: Sandwich Heaven Portland Fore Street Cruise Ship Terminals Dept. Store Boston Dept. Store Portland Bar Harbor Downtown Portland Arts District Portsmouth Salaries and benefits Telecommunications Travel and promotion Total Admin Expenses TOTAL S, G & A Expenses 49,849 112,450 810,049 27,824 27,082 $2,317,637 $5,221,520 78,777 183,627 118,582 67,952 56,815 21,105 179,834 28,159 26,927 18,251 37,939 14,647 45,002 105,720 1,030,336 32,588 34,692 $2,368,885 $5,007,145 Page 12 9B13M094 EXHIBIT 5: CONSOLIDATED BALANCE SHEET March 31 2011 112,185 358,969 T Property and equipment (see Note 1) Intangible assets Goodwill Trademarks Total Intangible Assets TOTAL ASSETS N O Liabilities Current Bank indebtedness Payables and accruals Income taxes payable Current portion of long term debt D O Long term debt TOTAL LIABILITIES Shareholders’ Equity Capital stock Retained earnings TOTAL EQUITY TOTAL LIABILITIES & EQUITY $ 620,452 169,235 89,146 643,105 21,878 1,543,816 103,136 127,515 84,620 2,330,241 C Investments Income taxes receivable Prepaids $ 750,948 461,874 O PY Assets Current Cash Receivables Inventories Packaging materials Raw materials Work in progress Manufactured finished goods Finished goods for resale 2010 576,287 179,119 66,467 692,517 36,241 1,550,631 76,822 – 56,566 2,896,842 4,364,527 3,922,183 916,999 783,596 1,700,595 $ 8,395,363 916,999 783,596 1,700,595 $ 8,519,620 $ $ 186,929 1,098,232 419,971 1,705,132 1,017,679 2,722,811 599,146 1,226,570 127,845 373,405 2,326,966 1,411,184 3,738,150 32,860 5,639,691 5,672,551 32,860 4,748,611 4,781,471 $ 8,395,362 $ 8,519,62 1 Land Buildings Manufacturing equipment Furniture and fixtures Office equipment Computer equipment Leasehold improvements Property and equipment Note 1 D O Source: Company files. Page 13 7735007.61 T O 1219819.20 2799181.35 1693140.69 749496.78 108352.86 250683.90 914332.83 N Cost 1219819.20 1699254.45 317544.69 363812.43 18053.64 25526.64 720515.64 Net Book Value 2011 4364526.69 O PY C 3370480.92 1099926.90 1375596.00 385684.35 90299.22 225157.26 193817.19 Accumulated Amortization EXHIBIT 5 (CONTINUED) 3922182.90 1219819.20 1770056.19 231858.99 249376.83 24020.76 53214.81 373836.12 Net Book Value 2010 9B13M094 Page 14 9B13M094 EXHIBIT 6: CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended March 31 Increase (decrease) in cash and cash equivalents Operating Net earnings Amortization Financing (Repayments of) advances from LT debt Dividends paid 891,081 332,355 1,223,436 (328,344) 895,092 $ 1,069,326 244,026 1,313,352 350,045 1,663,397 (349,168) (349,168) 661,806 (701,870) (40,064) (772,470) (1,198,500) (419,307) C Investing Purchase of assets of Sandwich Heaven Purchase of property and equipment 2010 O PY Change in non-cash oper. working capital $ 2011 Net (decrease) increase in cash and cash equivalents T Cash and cash equivalents, beginning of year O Cash and cash equivalents, end of year N Comprised of: Cash Bank indebtedness D O Source: Company files. (772,470) (1,617,807) (226,546) 5,526 151,802 146,276 $ 74,744 $ 151,802 $ 112,185 (186,929) $ 750,948 (599,146) $ 74,744 $ 151,802 Page 15 9B13M094 EXHIBIT 7: JOB AD A unique company........ a unique location........... a unique opportunity. Our client, one of New England’s oldest and respected confectionery companies, is seeking a PRESIDENT to oversee the entire business on a day-to-day basis, and provide the vision and guidance for long-term success and profitable growth. x x x x Deliver superior results and guide the organization to improve. Develop formal planning systems and ongoing personnel development. Oversee the development of business and marketing strategies to maintain market leadership. Provide the necessary leadership to motivate and transform the organization to meet growth expectations. Leads, protects and reinforces the positive corporate culture, and is the overseer of the ethics and values in the organization. C x O PY Reporting to the Board of Directors, the President will: An executive level compensation plan commensurate with the importance of this role is offered. T An opportunity that blends an executive level position with the lifestyle only Portland can offer. O CANDIDATE PROFILE: Given the high levels of autonomy and accountability, the President must display considerable maturity and business experience. From a personal perspective, the ideal candidate will be: N A strong non-authoritative team builder. A highly motivated and results oriented self-starter. Extremely, customer, quality and safety oriented. People oriented with the innate ability to establish a high degree of credibility. Capable of providing objective insight in a non-confrontational manner. D O x x x x x The successful candidate will likely be or have been in one of the following positions in a manufacturing environment: x x President or General Manager At a VP level in operations/finance/marketing looking to rise to the next level While food manufacturing experience would be a clear asset, it is not a pre-requisite. Journal of Change Management, 2013 Vol. 13, No. 1, 96 – 109, http://dx.doi.org/10.1080/14697017.2013.768436 Multilevel Readiness to Organizational Change: A Conceptual Approach MARIA VAKOLA Athens University of Economics and Business, Greece ABSTRACT One area of emerging research focuses on readiness to change, which has a strong impact on many decisions in a change process such as planning, implementation, communication and institutionalization. However, the term ‘readiness’ still creates confusion as it is presented in a simplistic way. This conceptual article aims at increasing our understating of readiness impact on change success by examining various levels of this concept, namely, micro-individual readiness, meso-group readiness and macro-organizational readiness, and their dynamics. This article ends with a discussion of how to create multilevel readiness to change for both planning and implementing organizational change. KEY WORDS : Individual readiness, group readiness, organizational readiness, organizational change, multilevel readiness to change Introduction Organizational change is considered an integral part of organizational life. However, there is evidence that up to 70% of all major change initiatives fail (Cartwright & Schoenberg, 2006; Washington & Hacker, 2005). A number of authors have observed that recipients’ reactions to change play a key role in its potential success (Bartunek, Rousseau, Rudolph, & DePalma, 2006; Oreg, Vakola, & Armenakis, 2011). In this context, recipients’ beliefs and perceptions of their organization level of readiness have an impact on their acceptance and adaptation to change (Armenakis & Bedeian, 1999; Armenakis, Bernerth, Pitts, & Walker, 2007; Armenakis, Harris, & Mossholder, 1993). As a result, change initiatives may not produce the intended results because recipients are simply not ready (Armenakis, et al., 1993; By, 2007; Neves, 2009). Correspondence Address: Maria Vakola, Athens University of Economics and Business, 76 Patission str, Athens 104 34, Greece. Email: mvakola@aueb.gr # 2013 Taylor & Francis Multilevel Readiness to Organizational Change 97 Although beliefs, attitudes and intentions are basically the filters through which individuals decide whether there is a need for change or whether the organization is capable of implemention, the concept of ‘individual readiness’ as a stand-alone concept in an organizational context does not appear in the literature. The term ‘readiness’ is used to reflect three different concepts: individual readiness to change such as confidence in one’s abilities (self-efficacy); perceived organizational readiness to change, such as confidence in organizational ability to manage the change; and the actual organizational readiness to change, which is the organization’s ability to implement change. Thus, readiness to change is conceptualized as a broad construct, reflecting a combination of a number of factors that indicate the likelihood that someone will start or continue being engaged in behaviours associated with change such as support and participation. For example, an employee may be more likely to engage in change, if he or she feels ready and willing to support change, has confidence in his/her ability to succeed in change, perceives his/her organization as ready and capable of implementing the change, and perceives his/her group or social environment as supportive of such initiative(s). There are three issues of concern here. First, the literature does not differentiate between individual and organizational readiness to change, which shows lack of definitional and conceptual clarity and creates confusion for both research and practice. Second, individuals are likely to resist organizational change that is not supported by group norms and expectations (J.N. Cummings, 2004). Although groups can have a powerful effect on members’ behaviour, beliefs and values, group readiness to change is neglected in the literature. Third, neglecting the dynamics between the various levels of readiness contributes to the development of a partial approach to both theoretical and empirical work. This article aims to look at readiness using a macro-, meso- and micro level of analysis, distinguishing between individual readiness to change, group readiness to change and organizational readiness to change. The macro level refers to an organization’s capability of implementing change, the meso level refers to a group’s capacity and decision to support change, and the micro level refers to the individual’s perception of change (Judge, Thoresen, Pucik, & Welbourne, 1999; Oreg, 2003; Vakola & Nikolaou, 2005; Wanberg & Banas, 2000). Individual readiness to change is a critical success factor because ‘organizations only change and act through their members and even the most collective activities that take place in organizations are the result of some amalgamation of the activities of individual organizational members’ (George & Jones, 2001, p. 420). The aim here is to examine readiness through a multilevel approach trying to define the various levels and add clarity to their interrelationships and readiness dynamics. This process is designed to assist change researchers and practitioners in realizing various levels of readiness in a more holistic way, which will enable them to design more effective change interventions. Defining Readiness to Change According to the work of Armenakis et al. (1993, p. 683), readiness is defined as the ‘cognitive precursor to the behavior of either resistance to, or support for, a change effort.’ Readiness is ‘a mindset that exists among employees during the 98 M. Vakola implementation of organizational changes. It comprises beliefs, attitudes and intentions of change target members regarding the need for and capability of implementing organizational change’ (Armenakis & Fredenberger, 1997, p.144). This is a widely used definition of readiness to change that does not, however, differentiate between the three levels of readiness to change – microlevel or individual readiness, meso-level or group readiness, and macro-level or organizational readiness to change. The following aims at clarifying these three levels. Individual Readiness to Change Organizational change cannot be effectively implemented without change recipients’ willingness to change themselves and support the suggested organizational change programme/initiative. These changes cannot occur if employees are not ready for it. In other words, individual or organizational change will be facilitated by a high level of individual readiness to change, which is a malleable trait based on psychological predispositions and is shaped by the organizational and change context. To explain the malleability of the self, social psychologists argued for an integrationist approach to behaviour, which is based on the view that the self is influenced by both personality and situational characteristics (Markus & Kunda, 1986). Markus and Kunda (1986) also explained that the malleability of the self is dynamic, which means that a particular set of traits must be activated when the person decides to take up a particular role in a situation. In the context of organizational change, dispositional characteristics, such as openness to change, self-esteem, self-efficacy, locus of control and positive affectivity, were found to act as antecedents of positive attitudes to change (Oreg et al., 2011). These dispositional characteristics become accessible if they were activated before a change event, evoked by a past experience (e.g. a past change programme) and if they have been elicited by the social situation (e.g. the organizational context). When made accessible, the characteristics are subsequently shaped by situational characteristics, such as high or low trust, high or low organizational commitment, opportunities to participate in the change planning and implementation and the perceived impact of change (for a detailed analysis of the situational characteristics found to have an impact on change recipients’ attitude formulation, please see a review by Oreg et al., 2011). Describing an individual as ready to change means that he/she exhibits a proactive and positive attitude that can be translated into willingness to support and confidence in succeeding in such an initiative. The readiness level may then vary on the basis of the situational characteristics of the change event. To illustrate, a change recipient may be willing to support change according to what he/she perceives to be the balance between costs and benefits of maintaining a behaviour and the costs and benefits of change. This preparation for action/ support depends on whether the perceived benefits of change outweigh the anticipated risks for change. Individual readiness to change is based on the interaction of enduring predispositions and situationally induced responses, which are affected by individual’s cognitive and affective processes. The outcome of this Multilevel Readiness to Organizational Change 99 interaction will result in formatting supportive or non-supportive behaviour toward change. Is individual readiness to change different from resistance to change and positive or negative attitudes to change? Shein (1979, p. 144) argued that ‘. . .the reason so many change efforts run into resistance or outright failure is usually directly traceable to their not providing for an effective unfreezing process before attempting a change induction.’ Following this argument, Armenakis et al. (1993, p. 682) explained that ‘readiness for change may act to pre-empt the likelihood of resistance to change, increasing the potential for change efforts to be more effective.’ Based on these arguments, resistance and positive or negative attitudes towards change is considered as an outcome variable of high or low individual readiness to change. Group Readiness to Change Group readiness to change is based on collective perceptions and beliefs that: (1) change is needed, (2) the organization has the ability to cope with change effectively, (3) the group will benefit from change outcomes and (4) the group has the capacity to cope with change requirements. Group readiness to change needs to be analysed and discussed along with individual readiness and organizational readiness for two main reasons: first, following Coghlan’s (1994, p. 18) argument, which states that ‘articles that focus on how individuals resist change tend to be deficient or one sided in that they deal with individual in isolation from the groups with which an individual may identify,’ Thus, individual readiness to change has to be explored along with group readiness to change in the future. Second, although there are some empirical evidence linking groups and readiness to change (cf. Pond et al. 1984), there is no clear definition and analysis of this concept. On the contrary, groups and resistance to change have been analyzed in the literature. The work of King and Anderson (1995, p. 167), for example, identified ‘group cohesiveness, social norms, participation in decision-making and autonomy for self determination of actions’ as sources of group resistance. They also identified similar ways in which teams function to resist change, which are team solidarity, rejection of outsiders, conformity to norms, conflict and team insight (King & Anderson, 1995, 2002). To overcome this resistance and prepare teams for accepting organizational change, the change management literature offers many insights such as getting members directly involved in understanding the need for change, engaging members in understanding their own situation, creating ownership of the design and implementation phase, and involving members in the decision-making process (J. N. Cummings, 2004). Change Recipients’ Perceived Organizational Readiness to Change Although perceived organizational readiness to change is crucial because failure to analyse readiness ‘can lead to abortive organization development effort’ (Beer, 1980, p. 80), little empirical research has focused on this construct (Armenakis, et al., 1993; Eby, Adams, Russell, & Gaby, 2000). An employee’s 100 M. Vakola perception of an organization’s readiness may influence their attitude toward change (Eby et al., 2000). Research shows that positive attitudes to change are found to be vital in achieving organizational goals and in succeeding in change programmes (Gilmore & Barneyt, 1992; Iacovini, 1992; Oreg et al., 2011; Vakola, Tsaousis, & Nikolaou, 2004). By contrast, negative attitudes to change are associated with lower job satisfaction and organizational commitment (Schweiger & Denisi, 1991). The perception of organizational readiness is seen on a continuum ranging from viewing the organization as capable of successfully undertaking change (high perceived organizational readiness to change) to realizing that the organization is not ready to be engaged in such an effort (low perceived organizational readiness to change) (Eby et al., 2000). Is There a Relationship Between Employee Perceived Organizational Readiness to Change and Actual Organizational Readiness to Change? An employee’s perception of readiness may be indicative of the organization’s ability to successfully change (Armenakis et al., 1993). To illustrate, on an organizational level, the organizational culture literature shows that culture, which reflects a set of beliefs, expectations and shared values, guides the behaviour of an organization (Hatch, 1993). On an individual level, the study by Schneider and Bowen in the banking industry (1985) showed that employees’ perceptions of their organization’s service climate correlate with customers’ perceptions of the quality of service. Schneider and Bowen (1993) argued that employees’ positive perception of internal organizational climate reflects on their behaviour, and as a result, customers report more positive service experience as a result of this psychological and physical closeness that is involved in service encounter. Bettencourt and Brown (1997) argued that bank tellers perceiving fair pay rules were likely to receive higher supervisor ratings for extra-role customer service behaviours. The argument here is that when employees perceive their organization as ready to change, this will reflect on their behaviour, thus enabling their organization to actually implement changes. Perceptions of organizational readiness to change may be affected by the state of individual readiness to change. According to Eby et al. (2000, p. 425), ‘an individual who perceives him or herself as adapting easily to change may be more perceptive to organizational change efforts and be more likely to view an organization’s readiness for change as favorable.’ Eby and colleagues continued providing indirect evidence from Lau and Woodman (1995) who found that individuals who perceived themselves as having control over a changing situation tended to have positive beliefs about change, in general, and about their reactions to a specific type of change. Organizational Readiness to Change Organizational readiness to change is seen as similar to Lewin’s concept of unfreezing (Armenakis et al., 1993). Following this rationale of phases, unfreezing – moving– refreezing (Lewin, 1947), that organizations go through to successfully implement changes, the readiness phase involves realizing the need for Multilevel Readiness to Organizational Change 101 change and securing mechanisms, such as communication or culture, that will support change in the adoption and institutionalisation phases. To immediately begin doing things in a different way and to use these ways on a permanent basis may be a shock to the organization. Therefore, a state of readiness needs to be established in order to ensure that the organization is indeed capable of undertaking the proposed change successfully (R. A. Jones, Jimmieson, & Griffiths, 2005). Organizational readiness refers to the existing mechanisms, processes or policies that can encourage or disrupt change such as organizational structure, culture, climate, leadership commitment, etc. For example, if an organization wants to change its culture to a more customer-oriented one, a rigid and hierarchical structure and poor communication will most likely hinder this process. These two elements are signs of an organization low on readiness to change because such initiatives will not be supported by existing mechanisms. Exploring Readiness Dynamics The Relationship Between Individual and Group Readiness Kozlowski and Klein (2000) suggested that a lower level individual-based phenomenon, such as a dispositional characteristic or a psychological state, emerges into a higher level phenomenon through composition, a linear combination similar to an additive effect, or compilation, which represents nonlinear interactive combination similar to dominance. Group dynamics research suggests that combinations of group member dispositional and other characteristics have been conceptually associated with group processes and performance (Barry & Stewart, 1997). For example, George (1990) found that individual characteristics are associated with the level of positive or negative group affectivity and with the overall emotional tone of group interaction. Haythorn (1953) also suggested that groups function more effectively when all members are adaptable and accepting of others. Teams that do not have disagreeable or introverted members were found to be higher performing (Barrick, Stewart, Neubert, & Mount, 1998). These findings indicate that individual phenomena aggregate to form collective phenomena. Therefore, it can be hypothesized that Proposition 1: Teams with greater proportion of members with high individual readiness to change will report higher levels of group readiness to change. The Impact of Group Readiness to Change on Individual Readiness to Change Following the work of Kuhn and Corman (2003) who suggest not overlooking the complex interactive forces that influence planned change, it is important to discuss the impact of group readiness on individual readiness to change. Groups can have powerful effects on members’ behaviours, beliefs and values, exerting pressure on members to conform to norms, which govern group behaviour (J.N. Cummings 2004). Group norms are the ‘informal rules that groups adopt to regulate and regularize group member’s behaviour’ (Hackman, 1976) and Bettenhausen and Murnighan (1985) indicated that such norms are one of the least visible but most 102 M. Vakola powerful forms of control over individual action and behaviour. For example, individuals within a social network who claim to be open to new ideas and accept changes can in fact act against any change if perceived as being a threat to their existing relations (Macrı̀, Tagliaventi, & Bertolotti, 2002). Feldman (1984) notes that norms develop in four ways: members carry over past situations; team members and leaders make explicit statements; critical events occur; and primacy effects make early patterns difficult to alter. Previous experiences may influence individual predispositions, and statements are manifestations of such. Critical events and primacy effects suggest that initiatives such as change can have an impact on groups’ level of readiness. Group readiness to change forms as group members collectively acquire, store, manipulate and exchange information about each other’s attitudes toward change and about their task, context, process and past behaviour related to change. Through processes of interaction, this information is combined, weighted and integrated to form group readiness. The level of group readiness to change is shaped by group norms, which have a strong impact on the promotion and adoption of behaviours within an organizational change context. Therefore, in this conceptual framework, it is suggested that group norms will influence and sometimes shape perceptions, beliefs and attitudes toward change if the individual strongly identifies with the group. This view is supported by Jimmieson, White, and Peach (2004) who suggested that perceptions of group norm predicted intentions only for those employees who identified strongly with their reference group. Hence, subjective norm, which reflects perceived social pressure to perform or not perform the behaviour, and is one of the three independent determinants of the theory of planned behaviour (Ajzen & Fishbein, 1980), should be particularly relevant to both individual and group readiness to change. Therefore, it can be hypothesized that Proposition 2: The more favourable the subjective norm with respect to support of change, the stronger the positive influence on change recipients’ individual readiness to change. The Relationship Among Organizational Readiness and Individual Readiness and Group Readiness Employees’ perceptions and beliefs about readiness may be indicative of the organization’s ability to successfully change (Armenakis et al., 1993). Research suggests that resistance is a social systemic phenomenon, which is maintained by the background conversations of the organizations (Ford & Ford, 2009). Beliefs and perceptions of organizational readiness to change may be affected by the state of group readiness to change, which in turn is constantly being influenced by the readiness of individual members. These interpersonal and social dynamics within one’s work group may impact organizational readiness to change (Armenakis et al., 1993). Proposition 3: Organizational readiness to change will be positively influenced by a high level of individual readiness to change. Multilevel Readiness to Organizational Change 103 Proposition 4: Organizational readiness to change will be positively influenced by a high level of group readiness to change. Creating Multilevel Readiness to Organizational Change Successful change is viewed as dependent on a certain degree of organizational readiness to change (By, 2007; Madsen, Miller, & John, 2005; Peach, Jimmieson, & White, 2005; By, 2007). As a result, any change programme may consider diagnosing the readiness level and introduce it by a series of steps to create and enhance individual, group and organizational readiness to change. Rather than creating readiness each time the organization attempts to implement change, readiness could be perceived and ‘invested’ in as a constant state, which is conceived as a core competency to cope with continuous changing external, as well as internal, conditions. Up to now, readiness has been conceived as a prechange concern neglecting the need of maintaining readiness throughout the change process and beyond. Change readiness should be incorporated at macro, meso and micro levels. Starting with the macro level, such readiness should be incorporated into the strategic plan because through the creation of constant change readiness, organizations gain flexibility and adaptability. Furthermore, it is important to build an environment of trust, which has an impact on formulating positive attitudes toward organizational change. At the meso level, high readiness facilitates change implementation because, through the diagnostic stage, those responsible for change can create a feasible change plan addressing the organization’s specific needs. More specifically, at a meso level, change interventions could put emphasis on creating and fostering favourable group norms through in-group identification. On a micro level, readiness is a malleable trait and, therefore, can be identified and developed through employee training and development programmes, in performance appraisals, and in change agent selection processes, to name a few. Trust Building When considering readiness to change, one should look at trust building as a way of creating readiness and managing change. Trust is not a new concept and it is found to be positively related with various work behaviours and organizational results such as sharing of information and participation in task completion (Mishra & Morrissey, 1990), superior levels of performance, and more positive attitudes and actions (Dirks & Ferrin, 2001; G.R. Jones & George, 1998; Rousseau, Sitkin, Burt, & Camerer, 1998). More recently, trust was identified as the factor that yielded the strongest relationship with change reactions (Oreg et al., 2011; Stanley, Meyer, & Topolnytsky, 2005) as it was related with greater acceptance and willingness to cooperate towards achieving change (Coyle-Shapiro & Morrow, 2003; Kiefer, 2005; Wanberg, Kanfer, & Banas, 2000). Organizations are advised to foster perceptions of trust among employees by encouraging open communication with emphasis on feedback, accurate information, adequate explanation of decisions and open exchange of thoughts and ideas (Butler, 1991). 104 M. Vakola Managers can consider involving employees in organizational processes, such as decision-making or determination of work roles, as this is found to positively influence the development of trust (Whitener, Brodt, Korsgaard, & Werner, 1998). Fostering Favourable Group Norms There is evidence to suggests that change management interventions should foster favourable group norms and strengthen in-group identification to develop stronger intentions to support a specific change event (Jimmieson, White, & Zajdlewicz., 2009; R.A. Jones et al., 2005). In combining with other theories of how to develop group norms (Feldman, 1984), this finding suggests that it is important to develop group norms supportive to change. For example, leaders or change agents need to define the specific role and task expectations to individual group members. Reducing uncertainty in a context of an imminent change will support the development of favourable group norms. Also, the first behaviour pattern that emerges in a group often sets group expectations (Feldman 1984). If, in the early days of a change programme, speaking up is not encouraged and organizational silence prevails, then the group will expect that this climate will continue to exist. This expectation may have an impact on beliefs and intentions to act. It has to be noted here that the impact of favourable group norms depends on the strength of in-group identification. Individual Readiness Profiles One way of making change efforts more successful is the diagnosis and assessment of individual readiness to change of those involved or affected by the change. It would be useful for organizations which are undergoing change or are interested in creating a high state of readiness to assess managers and change agents for readiness to change. Assessing the dispositional aspect of individual readiness contributes to creating profiles to select employees for those positions and assignments that inherently entail changes, or employees who will become responsible for change implementation in their roles as change agents, managers and leaders. Oreg et al. (2011), in their 60-year review of the relevant literature, have identified a number of dispositional characteristics that contribute to change recipients’ attitude formulation. This information can be used as the basis of assessment, which will lead to individual readiness profiles. For example, locus of control, which reflects individuals’ beliefs of their responsibility for their own fate, was positively related with positive reactions to change (Holt, Armenakis, Feild, & Harris, 2007; Lau & Woodman, 1995; Naswall, Sverke, & Hellgren, 2005). Also, higher levels of self-efficacy were associated with increased change acceptance (Wanberg & Banas, 2000) and increased commitment to the change (Herold, Fedor, & Caldwell, 2007). Other dispositional traits identified in this review were the increased sense of control over the change, which was related with greater acceptance (Wanberg & Banas, 2000), and positive affectivity was related to coping with (Judge et al., 1999) and accepting change (Iverson, 1996). Multilevel Readiness to Organizational Change 105 Furthermore, these profiles may be used to identify employees who could benefit from a training programme in which coping with change strategies will be the main focus. Training programmes and interventions can be designed and tailored for individual employees in accordance to their profile. For example, programmes can include emotions management because managing emotions created by change, such as excitement and enthusiasm as well as fear, anger and resentment, is fast becoming a necessary tool for change leaders and is a required competency to become a change agent (Vakola et al., 2004). Moreover, individual profiles based on readiness assessments may support strategy formulation regarding dealing with resistance to change. Employees who do not feel confident about their ability to perform their job – especially after a change event – may be supported through adequate training and mentoring before developing symptoms of resistance. Diagnosing and Assessing Readiness to Change Armenakis and Fredenberger (1997) suggested that readiness assessment should be based on observing, interviewing and administering questionnaires. They continue by describing how this information can be obtained ‘. . .by asking broad questions about organizational strengths and weaknesses and employee attitudes and expectations, followed by more specific probing questions, change agents can assess an organization’s readiness for change’ (Armenakis and Fredenberger, 1997, p. 144). Although the literature does not support the use of climate surveys to diagnose readiness levels, practice confirms that external consultants or change agents use climate surveys as readiness assessment tools. In a change context, a climate survey is particularly useful because it assesses the current situation showing the gap between, for example, the existing decision-making practices, employee responsibilities and information systems, and the future ones that the change aims at establishing. These results are critical because they show the level of alignment between the existing and the desired state. Hence, defining the change action plan. Although climate surveys can give realistic results about the existing situation, readiness assessment methodology could be enhanced by adding several scales aiming at measuring specific constructs such as trust, related to readiness (e.g. L. L. Cummings & Bromiley, 1996). Furthermore, administering questionnaires specifically designed and validated to measure readiness (e.g. readiness scale developed by Holt et al., 2007) may also enhance the methodology. Limitations and Future Research This conceptual article addresses the need for a multilevel approach to readiness of change by exploring this concept at a macro, meso and micro level and identifying some of the dynamics among these levels. However, empirical research needs to take place to assess these concepts and their interrelationships. There are some important concerns when considering readiness to change. First, it is important to further clarify and empirically test the relationship between individual, group and organizational readiness to change and behaviour toward change. 106 M. Vakola Second, research is required in order to shed light on and determine whether individual readiness to change is a malleable trait. This article perceived individual readiness to change as a malleable trait, which is based on certain dispositional characteristics, but is shaped and influenced by specific organizational and change context. Longitudinal studies can clarify and identify which predispositions are stable over time and which can be conceived as amenable to training. Third, it is essential to examine the impact of individual, group and and organizational readiness to change, answering critical questions such as: What is the relationship between individual readiness to change and job performance? What is the relationship between organizational readiness to change and organizational effectiveness? Can a lack of readiness to change be added to the list of potential failure factors in change implementation? Conclusion To sum up, in examining readiness to change, researchers and practitioners are presented with a conceptual article that provides a structure for further understanding the macro, meso and micro levels of readiness to change. Diagnosing, assessing and creating individual readiness for change should be viewed as an integral part of planning, implementing and evaluating organizational change. Moreover, creating a multilevel readiness may be the answer to some important phenomena such as resistance to change. Models and theories of change at a higher level must be informed by an understanding and analysis of change at macro, meso and micro-levels. 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1

HR QUESTIONS

HR Questions

Institution Affiliation:

Date:

2

HR QUESTIONS

HR QUESTIONS

1. Assess Southwest Airlines’ strategic approach to human resource (HR) management.
Determine how its strategy increases organizational effectiveness.

When it comes to efficient human resource management, Southwest Airlines is
considered as one of the most unique companies. This is as a result of the many strategic
decisions they have made increasing their organizational effectiveness.
Among the most important strategic approach which have been taken by Southwest
Airlines is making their human resource strategy synchronize with their mission and vision and
therefore the major responsibility of the human resource department is to ensure that an efficient
human resource strategy is created to reflect both the mission and the vision of the organization.
This same strategy is set to be followed by each employee thus increasing its organizational
effectiveness.
Another strategic approach that increased the organizational effectiveness of
Southwest Airlines is naming its human resource department as the people’s department and
putting emphasis on compassion and common sense.
The other most important strategic approach adopted by Southwest Airlines is
encouraging their employees to always deliver excellent customer service and to involve fun at
work. This worked best for the Southwest Airlines in providing the best in class customer service
to its customers. As a result, its employees much enjoyed their work since providing best in class
customer service makes them be bestowed with many powers as w ell (Gittell , 2003).

HR QUESTIONS

2. Propose three ways that HR can use competitive advantage in the marketplace to recruit
new applicants in general.

Three ways in which HR can use competitive advantage in the marketplace to recruit new
applicants in general.

Competitive advantage in the marketplace can be attained by hiring through references which is
a very effective way since a person who work within the organization is best suited to refer
someone else instead of seeking the talent from outside. Hiring through Linkedln or
Monster.com is another way of using competitive advantage since these are areas one can get
more information about the kind of skills you require instead of searching in any recruitment
portal. Lastly, one can recruit future employees from the local job fairs where local talents and
fresh graduates might attend and apply for different positions within the organization (Martin,
2013).
3. Go to the U.S. Equal Employment Opportunity Commission’s (EEOC) Website and
review cases regarding diversity. Note: Enter the Website and in the search box under
“Press Releases” type “diversity”. Review three of the results of your search. Next, propose
three ways that an organization can increase diversity within itself. Take a position on
whether diversity is or is not important and determine how the methods you provided
support your position.

There are various ways of increasing the diversity of an organization within itself. The most
three effective ways to ac...


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Excellent resource! Really helped me get the gist of things.

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