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
|
|
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.
.jpg)
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.
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·
Johnson, G. Whittington, R.
& Scholes. K. (2011) „Exploring Strategy‟, 9thedition,
Prentice Hall.
·
Babcock
International Group PLC (2009), Interim
Management Statement Feb 2009. Available at: [Accessed on 14th May 2013]
·
Johnson, Whittington and Scholes (2011) Exploring
Strategy, 9th Edition, Pearson Education, Chapter 14
·
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·
Hofer,
C. W., & Schendel, D. 1978.Strategy formulation:Analytic concepts. St.
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J. Balogun, ‘Managing change: steering a
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