Initially formed as a small family business making engineering tools 100 years ago, HS Engineering has steadily grown and expanded. Today, the company targets two specific markets: First, low end products to general and automotive industries and secondly, precision (high quality) good to the aerospace market.
Due to its high dependency from the revenues coming from low end products, the general loss of manufacturing in the UK caused by the restructuring of the economy towards higher valued products and services, and the rise in cheaper products from the Far East, cost efficiency and price have emerged as key success factors to both the firm and the industry in which it is sited. These economic developments have been further amplified by the financial crisis which caused a 30 per cent reduction in turnover and more than 65 per cent decline in profits just in one year.
Change and Change Management at HS Engineering
Diagnosing Change
In essence, the concept of organisational change refers to modifications in leadership, goals, structure, culture, technology and work tasks of organisations (Linstead et al., 2004). In the case of HS Engineering, change is planned as the management sees that changes in the external environment need to be rationally controlled. The view reflects the inclusion of systems theory advanced by Plant (1987) and the complexity systems identified by Morgan (1986) (Linstead et.al. 2004). According to Palmer et al., (2008), it is systems theory which provides specific tools and models for diagnosing the type and scope of change. In this regard, therefore, to diagnose the required change means to identify the level, type and intensity of the required change upfront as further posited by Cummings and Worley (2008).
In the case of HS Engineering, the management decided to implement cost cutting measures by closing two plants (Wolverhampton and Oldham), moving the non-precision work done in Leeds and Wolverhampton to Malaysia, (where the cost of labour is cheaper, and access to new markets easier), while moving the operations in the precision manufacturing into Leeds. The change is thus transformational as it impacts the mission and strategy of the company and its culture which is according to Burke and Litwin (1992) a systems model, is a second order change.
Implementing Change and Resistance
In the case of the change in HS engineering, the external forces are associated with the reallocation of the precise products factory from Oldham to Leeds, the loss of production during the period and the move towards a more distant location of the factory from the BA maintenance units. Further, other external forces of resistance are associated with the re-allocation of the low end factories in Malaysia, as are findings adequate labour, training the labour, transportation links and similar.
The literature and best practice in planned change management most often cites the impact of the employee resistance as the main internal resistance force which can cause a failure of the change initiative (Ford and Ford 2009, Aiken and Keller 2009). This, however, is not entirely true, as in the case of HS engineering where management as a key stakeholder have clearly influenced a different choice of strategy from the one supported by the external trends i.e. the changes in the external environment.
In general, the literature on change management identifies three categories of stakeholder's resistance. First, are the technical barriers (habit and inertia), identified in the change literature by Adams (1987). Second are the political reasons argued by Aiken and Keller (2009) as irrational self-serving behaviour (Ford and Ford 2009) while last are the cultural reasons (lack of a climate's support of change, regressing to ``old days'' of operations) (Ford et.al. 2008, Ford and Ford 2009).
In the case of the planned change at HS Engineering, all of the three categories of resistance are present. The majority of employees will lose their job, or will need to relocate or travel to Leeds. The re-allocation in particular targets the high skilled employees who will be difficult to replace, which clearly creates resistance associated with technical barriers. The training of employees in Leeds to undertake the high end precision products for the aviation market will be as difficult out of the same reasons: habit and inertia. Accordingly, the academic opinions expressed by the likes of Ford et.al. (2009), Aitken and Keller (2009) are each relevant to this study.
There are also issues relating to cultural barriers that need to be assessed with regard to the changes brought about within the structure at HS Engineering. For instance, it may be very difficult to assimilate the flat, team based organisational structure and power culture of Oldham's operations into the vertical organisational structure and vertical clan culture of the factory in Leeds. Indeed there are many examples of organisations which prove these developments, as Compaq, Samsung and even British Airlines in the 1990s (Palmer et.al. 2008).
Political resistance comes in several forms: the irrational self-serving behaviour of the Sales Manager who exercised influence over the change decision not to invest into new products and markets, and, in this particular case, case the impact of the unionised force in Leeds and Wolverhampton will create strong resistance to the planned changes.
Overall, the identified resistance from the main stakeholders (management, owners, and employees) is very high increasing the implementation risks for either failure of the changed initiative or its radical modification in the implementation process.
Lewin's model on managing planned change argues that a successful planned change involves three steps (Palmer et al., 2008): unfreezing the present level, moving to the new level and refreezing the new level. According to the model, how people are treated in the implementation of the change has a considerable influence on their resistance to change (Palmer et al., 2008). The same conclusion is supported by numerous case studies from the 1950s onwards as Boohene and Williams (2012) case study on the employee change at Oti-Yeboah Complex Limited shows. Only Kotter (1995) in his article based on the observation of more than 100 cases concluded that management should encourage employee participation in decision making, build confidence, accept constructive criticism, be transparent and communicate clearly the need for change to employees.
According to employee resistance is associated with the change in the nature of the relationship between the employees and the organisation. These changes affect the employee's psychological contract and the psychological contract affects employee attitudes (organizational commitment, job satisfaction) and behaviour at work (job performance, stress, burnout, absenteeism and similar). This is why in most of the cases where there is a high employee resistance to change, there is a significant decline in organisational performance and even organisational sabotage (Fedor et al., 2006) and accordingly the recommendations proffered to HS Engineering needs to be aware of these developments.
Recommended Approach
It is difficult to argue whether the choice of strategy is the right one or not, what however is important to do is to actually implement Lewin's model in HS engineering and from there allow the development in the organisation determine the actual course of action. The Lewin's model in all of its forms provides a voice to all stakeholders (Kotter 1995, 2007). The unfreezing stage allows all stakeholders to be made aware of the need for change. At the moment only the Managers are aware something needs to be done. The same limits the creation of a good vision, which usually articulates a common understanding of the new course of action as noted by Cummings and Worley (2008) and Kotter (1995). The tools used for unfreezing the stakeholders involve communication, information and education and involvement. These tools provide a participation of all stakeholders which can enable the company to identify a better solution for the required change, one which will be easily accepted by all stakeholders as they participated in its creation. Once the environment unfreezes, there is a need for modifying the new behaviour with negotiation and agreement with the unions, trainings, cooperation and explicit and implicit coercion (Cummings and Worley 2008, Kotter 1995) .
The most viable criticism of Lewin's model comes from the emerged change management view identified by Burnes (2004). The meta-research of Graetz and Smith (2010,) is loudest in its criticism; arguing that the model only provides tools for employee manipulation, not for genuine concern of their involvement in the process. Nonetheless the same is the only available model which provides for a wider stakeholder participation in the change management, and the development of the best and most accepted solutions. Therefore, its application in the case of HS Engineering will provide the best results in managing the required change.
Conclusion
Overall, the analysis of the change at HS Engineering provides an interesting opportunity to analyse a planned change management process in a contemporary organisation facing difficult times. The external barriers to the change arise from the chosen course of the change (closing of the factories, their reallocation and similar), and these barriers usually change with the solution as noted by Kotter (1995, 2007). Contrary to the external barriers, the internal one arising from the technical, political and cultural resistance of stakeholders is more constant and occurs in any type of change. In the case of HS Engineering the stakeholder's resistance should be approached through the Lewin's model into an opportunity for involving more people in the process of identifying the best solution which will enable the company to actually succeed in the implementation of its envisaged change programme (Kotter 1997).
