Case Study Analysis - Faslane

Acknowledgement

I would like to extend and acknowledge my sincere gratitude to my lecturer and tutor Dr. Gurutez Tej for his vital support and encouragement, his assistance and understanding, for his constant reminders and much needed motivation, help and inspiration and all his assistance in the collection of the relevant information and topics for the report.

At last I would like to take this opportunity to extend and acknowledge my sincere gratitude to my family members and all my friends.

Thank you all.

Nashib Khan

1.     Introduction:

This report has been prepared as per the academic requirements for the Module: Strategy Choices and Impact, which is taught by Dr. Gurutez Tej. Analysis of various aspects of strategic changes that occurred in the Faslane, HM Naval Base Clyde is the main focus of this report.

This report has been prepared as an academic requirement for the subject Strategy Choices and Impact taught by our Module tutor Dr. Gurutez Tej. This report mainly focuses on analysis of different aspects of strategic changes as occurred in Faslane, HM Naval Base Clyde (Faslane) before and after the partnership agreement of Ministry of Defence (MOD) and the Royal Navy with Babcock Marine.

Ministry of Defence (MOD) and the Royal Navy were managing Faslane until they decided to partner with Babcock Marine (which is a private sector company) in the year 2002. Refining their services and dropping the costs were the main reason behind the partnership. It was Babcock Marine’s responsibility to improve their operational effectiveness and also savings their costs. A saving target of £76 million within 5 years was given to Babcock Marine to achieve. The target was achieved by Faslane and also was considered best which was achieved with a significant change.

In case of Faslane we observe strategic change in terms of strategy, structure, processes, system, and culture. The change process has been analyzed through the analyzing of the impacts of change. Essentially, In order to measure the impacts of changes we have conducted Balogun and Hailey’s Change Kaleidoscope and Lewin’s Forcefield Analysis. And also, In order to analyze the internal features of Faslane we have used the analytical tools which are Johnson’s Cultural Web and McKinsey’s Seven S Model.

In addition, Lynch Model has been used to identify the strategic leadership style in the organization. Furthermore, Conclusion has been given at last in order to summarize the report.

2.     Analysis

Ministry of Defence (MOD) and the Royal Navy were managing Faslane until they decided to partner with Babcock Marine (which is a private sector company and a part of Babcock International) in the year 2002. The main aim of such partnering agreement was for the purpose of reducing cost and improving their services. It was very important for Babcock’s management team to reduce the operational costs as well as improving the performance, because all the management and control was transferred to Babcock with the agreement and it was also the main reason behind the partnership agreement.

2.1.         Strategic change (Context of Faslane in 2002):

During change, organizing and bringing together a wide range of implementation options and related features is very important and this purpose is fulfilled by Change Kaleidoscope.

We will be analyzing the change process in Faslane with the help of this model.

We have used Change Kaleidoscope to analyze the change process in Faslane; which can also be seen in below figure 2.1. “Revolutionary” is the word that can be used to describe the change process in Faslane as changing the mindset of the staffs was its main objective. We can see that the participative programs like “event in the tent” has garnered many huge participations.

Very short time of five years was given to the new management team to achieve a target of £76 million savings on cost; which was a very difficult task to accomplish. The management team required to have skilled employees who have already faced changes; they did so and transferred skilled employees who have already faced changes and it helped them to reduce the time for employee’s adaptation and achieve its target. Also, it made the implementations much easy as the changes were starting from low-levels.

The new management team’s structure, way of working and the scope was entirely different. Previously, facilities and infrastructures were the main focus of the staffs but not the people. Importance of inward looking was majorly emphasized by the new management team during the change context.

During the course of the change, Babcock mainly emphasized on increasing the efficiency with no compromise in maintaining the quality of services. This was achieved by bringing skilled employees and changing the mindsets of people in the Faslane. The employees were provided with flexibility in their wok by giving them with opportunities to maintain themselves, preparing plans and forming their own teams by the management. As for the diversity factor, the management team was mixed with various skilled people (Navy and Civilians) and reduced. Now for capability; majority of staffs had no experience in change and were not fully ready for the change. MOD and Royal Navy; who were previously managing the Faslane didn’t felt the need for change during their management duration.

Due to the fixed budget of Faslane, its capacity was considered to be positive. High skills of the people made it easy to overcome the impacts of the change. Furthermore, delivery target of £76 million in a very short-time period (five years) made the managerial time very less. However, its previous experiences and exceptional capabilities and skills helped them to become ready for the change. Also, lack of experience of any sort of change made the employees doubtful of the change. They were fearing that the change will not be beneficial for them.

                 Figure 2.1:  Balogun and Hope Hailey’s Change Kaleidoscope of Faslane

Sociologist Kurt Lewin developed the “Force field analysis” in 1951. This technique is used to identify and analyze the positive factors of a situation that helps and negative factors that hinder an entity in achieving its objective.

And, we have used Force field analysis to analyze the factors that are for and against the change which can be seen in figure 2.2 below. As for the driving factors, MOD was in real need for cost saving (reducing cost) while also improving their services and operational efficiency. The change was welcomed from the top level as well as better quality services was expected by the customers. There was also diversity growth inside the organization due to the transfer of employees and the change was essential because of the rising sustainable costs and their future vision.

Force field analysis also does the analysis of resisting factors, and there were many resisting factors in Faslane regarding the changes. The workforce was fearing from the impact of change because they were worried that the change wouldn’t be beneficial for them. The workforce at Faslane were implementing and following traditional way of thinking and working as previously they just used to pass time while making money; therefore change would be very difficult for them. There was no awareness / attention in staffs for saving money, the existence of huge management structure was also resulting in spending of large amount of money. Another main problem in Faslane was existence of bureaucracy, the staffs had very limited autonomy. These all factors shows how important it was for Faslane to go through change in order to cut over the spending. Therefore, change process was started which was mainly done to save the money while also improving the operational efficiency.

The change process helped to change the working ways and mindset of the people at Faslane. It can be considered to be a revolutionary change because it was both cultural as well as strategic change.

Force Field Analysis
Driving Factors/Positive Forces	Resisting Factors/Negative Forces
Ü  Requirement for cost saving	Ü  Fear from impacts of change: workforce were fearing that change would not be beneficial
Ü  Operational efficiency improvement	Ü  Management structure
Ü  Support from the top for change (Naval Base Commodores were also supporting the change)	Ü  Traditional ways of thinking and working
Ü  Maintaining the quality of services and providing better quality services	Ü  Traditional mindset of staffs
Ü  Customer’s expectations	Ü  No awareness / attention for saving money: No incentives to reduce cost
Ü  Diversity growth	Ü  Political control system: arise in problems due to political interventions
Ü  Future vision	Ü  Bureaucracy: staffs had limited autonomy
Ü  Unsustainable cost	Ü  Organizational process were slow: everything was procedural and was done only for the sake of doing
	Ü  Staffs/People were conservative
	Ü  There was not any previous experience of change
	Ü  Slow to change

Figure 2.2: Lewin’s Force field Analysis of Faslane

2.2 Internal Features of Faslane:

Johnson’s cultural web up to 2001 and from 2002 to 2010 cab be seen in the figure 2.3 and figure 2.4 respectively, while McKinsey’s 7s Model can be seen in figure 2.5 and figure 2.6 up to 2001 and from 2002 to 2010 respectively. First of all, let’s observe Johnson’s cultural web for these two different time periods. We can see that an organization can get success if it can get positive changes in its management style.

After the partnership agreement with Babcock, it managed to get employee’s commitment, loyalty and their welfare. Before, people were not focused as the important element of the organization but the infrastructures were. Now, this has changed and Babcock has made it clear that human assets are the most important assets/elements for the organization. The management structure was also very complex and huge. The workforce was very accustomed to their daily routines only, and business plans and creativity were not thought to be important. There was seven management layers which makes the organizational structure very huge and to add they practiced traditional management. The time consuming decision making style was damaging the image of Faslane as a customer oriented company because it wasn’t being able to deliver good services to the customers. Also, the unclear responsibilities and roles were also its hindrances. There was also late adaption to change process from employees as well as management level. Only few people were being able to get benefits from the experience of their leaders because the leaders were bureaucratic too. Ethnocentric behavior from management level to employee level was also another hindrance.

The face of Faslane was changed after it was managed by Babcock Marine. The traditional mindset of the people was changed by Babcock. With the management responsibility that Babcock got, it brought many workforce to Faslane who had previously experienced and dealt with the change process and this helped in successful implementation of change is Faslane too. Active participation of employees was the major factor behind the success of the change process. Employees were requested to emphasize and collaborate the importance of change. This helped a lot in strengthening the management. Employees were also given autonomy by the management to form their own teams and create their own business plans. Now, people were considered to be the important factor for the company rather than only infrastructures and facilities. There was increment in diversity of the workforce which accompanied exceptional management teams with unique set of skills. Reduction of the management layers from 7 to 4 helped in cost reduction. Also, another important decision was made by the management which was to reduce the review period from 56 days to 6 days. Cut-off in jobs and reappointments of jobs also helped the company in achieving its goals over the years.

But on the contrary, the quality of service can be hampered because of the reduction in costs which can damage the name and image of the company. Staffs are given autonomy by the management to form their own teams and create their own business plans and implement them. But, this kind of flexibility can result in damage of the organization’s hierarchy and can cause serious problems. During the change process, the management layers have been decreased from 7 to 4, which have resulted in significant loss of jobs. This is not an encouraging factor for the employees, and can affect their performance.

At last, during the change process, Faslane has completely changed its organizational structure and management team and we can say that the change process has been favorable for them and this can be justified from the fact that they have been able to achieve their organizational goals within the time limit.

SEVEN S	STRENGTH	WEAKNESS
HARD ELEMENTS
STRATEGY	Ü  It was customer oriented and progressive.	Ü  Slow decision making (Time Consuming).
STRUCTURE	Ü  Chain of command was clear.	Ü  The roles and responsibilities were not clear.
SYSTEM	Ü  Management was good and there was improvement in manpower.	Ü  Problems in satisfying customers. Ü  Problems in adaption to change.
SOFT ELEMENTS
SKILLS	Ü  Experienced and skilled as most of the workforce were Civil servants.	Ü  The change process and modern management style was unfamiliar to them.
STYLE	Ü  Experienced Leaders.	Ü  Although the leaders were bureaucratic but few people could only benefit from it.
STAFF	Ü  More than 1700 staffs from Civil service were working with Faslane.	Ü  Feared of change and not ready for it. Ü  The staffs focused more on facilities and infrastructures rather than improving customers service (people).
SHARED VALUES	Ü  Top commodore’s believed that change was essential. Ü  Committed to provide quality services to Naval Base.	Ü  Workforce was accustomed to the daily routine, therefore resistance to change was there from workforce. Ü  Ethnocentricity beliefs were there.

Figure 2.5: McKinsey’s Seven S Model (up to 2001)

SEVEN S		STRENGTH	WEAKNESS
HARD ELEMENTS
STRATEGY	Ü  Improved performance, good quality services with cost savings.		Ü  Quality of service could decrease through cost savings.
STRUCTURE	Ü  Formal structure: provides the staffs with flexibility to create their own team and develop own business plans. Ü  Roles and responsibilities were clear. Ü  Reduction of management layers from 7 to 4.		Ü  The hierarchy of the organization can be managed by providing excessive freedom to the staffs and can result in serious problems.
SYSTEM	Ü  Changed the traditional mindset of people. Ü  Expert team of management.		Ü  Problems were arising in handling complaints from customers. Ü  Immediate change process.
SOFT ELEMENTS
SKILLS	Ü  Workforce at MOD was experienced in operating the Naval Base. Ü  Experience of change (most of the staffs).		Ü  Workforce from Bobcock Marine were unfamiliar with the operation of Naval Base.
STYLE	Ü  Leaders have experience of change process.		Ü  Such industries carries a potential for risks associated with change process.
STAFF	Ü  More than 2000 staffs from Civil service working with Faslane. Ü  More focus on people rather than infrastructure and facilities by the staffs.		Ü  Loss of jobs arises after reducing the management layers and this is not a motivating factor for the staffs.
SHARED VALUES	Ü  Committed to reduce cost while not damaging the quality of services.		Ü  The strategy of the organization can be hampered because Bobcock is a private company which will seek more profits as the time goes.

Figure 2.6: McKinsey’s Seven S Model (2002-2010)

2.3 Strategic Leadership Style at Faslane:

In 2002, Craig Lockhart replaced John Howie as the new managing director of Bobcock Marine. And, Faslane saw a significant change process from 2002. Babcock Marine was totally different from Faslane in many ways. First of all, it was a private firm, it had experienced and skilled management, had different targets and was more competitive. We will be comparing the organization against the Five Elements of Successful and Effective Strategic Leadership Model.

v Developing and communicating the organizations' purpose:

This element states that the first and foremost job of the leader is developing on the organization’s purpose and then communicating the developed/decided organization’s purpose to every part of the organization. Employees in Faslane were aligned around a common objective and were provided with an autonomy to form their own teams/groups and create their own business plans. Also, several open discussion events like “the event in the tent” were organized by the management to motivate and encourage their employees.

For the goal of achieving cost savings and quality of service improvements, the employee were asked to help the management team. On the contrary, more than 400 full time posts were reduced due to the change process of reducing the layers of management from 7 to 4, this has been a discouraging factor for the employees and has affected the efficiency.

v Managing human resources and organizational decisions:

Babcock understood the fact that the change process should be implemented from lower level in order to get the success. Babcock managed human resources by cutting-off jobs which reduced costs. The review period was reduced from 56 days to 6 days improving the decision making (process reengineering) and saving money. Employees were also given the empowerment to form their own teams and develop business plans.

On the contrary, the huge cut-off of jobs created fear in minds of the employees of losing their jobs and therefore they were not motivated to work.

v Setting ethical standards:

According to Lynch Model, “Leaders are responsible for setting and monitoring ethical standards and corporate social responsibility (CSR) of the organization.” In case of Faslane, we can see that Faslane received large budget (money from public) every year and if that budget is not spent in that fiscal year then it would be deducted from coming year. Therefore, because of this fear budget is wasted by the public companies which is unethical. Hence, in order to reduce costs, restructure the organization, improve its performance, and thus improve the service quality, Babcock was given the responsibility to manage Faslane.

v Defining and delivering stakeholders:

According to Lynch Model, “Leaders need to maintain good relation with stakeholders inside and outside the organization.” The stakeholders at Faslane experienced over achievement. The target for Babcock was to make a saving of £76 million in 5 years but it managed to reach to £100 million in 5 years, it shows us that Babcock successfully managed to save cost while improving the operational performance and the service quality. Both stakeholders were satisfied with Babcock. On the contrary, employees were unsatisfied because of the numerous job cut-offs.

v Sustaining competitive advantage over time:

Leaders and managers are the personnel who are held responsible for achieving as well as sustaining the competitive advantage of the company over time. Faslane (a public sector company) was managed by Babcock Marine (a private firm), and Babcock was able to successfully manage it, which it showed by improving the performance and reducing the costs drastically. Babcock successfully transferred the culture of private organization to public organization. Because of the successful venture between Babcock and Faslane, Faslane is expected to become the home base for the entire UK submarine fleet.

Hence, we can conclude by saying that, they have properly and successfully used the Lynch Model, and Faslane achieved its objective/goal of cost saving and operational improvement because of the successful utilization of all its resources. Due to Babcock’s successful venture with Faslane, they were given the entire UK submarine fleet to handle.

1.     Conclusion:

After this analysis on Faslane, it is clear that the implementation of change process at Faslane has been a success. After all of this experience with Faslane case study, I can say that strategic change is not a piece of cake. Although, the strategic change process can be made much manageable and systematic with the help of management models like Change Kaleidoscope, Force field analysis, Johnson’s Cultural Web, and McKinsey’s 7s Model. Faslane was able to perform well and achieve its objectives and goals by changing the traditional mindset of people. Being a public sector company and managed by a private firm, it has been an evolutionary transformation for Faslane. The change process was successfully conducted with the help of the employees and experienced management even with the existence of restraining factors that were restricting the change process in Faslane.

While comparing the internal features of Faslane when it was managed by the MOD and the Royal Navy, we can find that the management structure of Faslane was needlessly huge and there was not any proper services. Employees were accustomed to their daily routines and there was no creativity. But, drastic changes were seen after Babcock started to manage Faslane in 2002. Babcock had only human assets to initiate and implement change. Babcock provided the employees with an opportunity to explore themselves and made it clear that human capital are the most important assets of an organization. Additionally, the cost burden of the organization was reduced by Babcock by reducing the management structure and defining clear rules and responsibilities.

Furthermore, under the leadership of John Howie and Craig Lockhart changes have come and their leadership style fits the criteria of the “5 elements of effective and successful leadership (Lynch).” Hence, Faslane was able to fulfill all the five elements of successful and effective strategic leadership. From communicating to each and every stakeholders regarding the purpose of the organization, to successfully managing human resource and maintaining ethical standards; Faslane complies with all elements of successful and effective strategic leadership. Because of the successful venture of Faslane and Babcock, Faslane was given the entire UK submarine fleet to handle.

At last, successful adaption of change process by Faslane and the exceptional management styles inside Faslane management teams have helped it to perform well.

Reference:

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