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- 1. MHRM587 Foundational Model of Change Managing change is a complex process. Change does not occur in one great swoop. Few organizations manage the process as well as they would like. In order to make change work, organizations need to follow a process to enhance the probability of success versus just “winging it.” The following model of change provides one useful way to think about creating and implementing organization-wide change. Basic Change Process Model Consideration Stimulus Driving Forces Pre-Change Validate Need Preparation Commit Do –Check – Act Implementation RESULT New Normal Change Active Conscious Culture Passive Unconscious
- 2. Pre-Change Paradigm This is the first stage of the change journey. Without a paradigm that encourages “active searching,” organizations can ignore important early warning signs and wait until a crisis highlights the need for change (i.e., scenario planning) Make sure you know what is important? Who is important? What do they want? How are you doing? What could be improved? Stimulus (Driving Forces) & Assessment What are the driving forces or antecedents to change—internal and external. How do these driving forces influence the organization’s business model and force new requirements for success? Is change really necessary? Deciding the status quo is preferable is a productive learning activity. Caution #1: What must be guarded against is any denial that any driving forces or stimuli for change exist. Caution #2: Or when it’s recognized that change is required, the “disconfirming data” may induce anxiety which can obviate the change as necessary Sound analysis of driving forces is a prerequisite to good change strategy Validate Need Establish compelling need for change. Create a sense of urgency Begin to create psychological safety
- 3. Begin to address the inertia of the existing status quo (resistance to change) Preparation Caution: Avoid premature action without first developing an effective plan for the change What is the change vision? What will success look like? What are the criteria for success? What resources + administrative support systems will be needed? What is the timeline for this change? What kind of change is required? Incremental? Transformational? Commitment to Act Is the planned action the most effective and efficient way to deliver the required change? Begin the “unfreeze” process in the change cycle Do-Check-Act (Implementation) Implementing change is the most challenging aspect of any change effort. Once the momentum for change has been successfully launched, what is delivered must be effectively managed. We will introduce several frameworks useful for this purpose during the course:
- 4. PDCA Cycle {Plan-Do-Act-Change} Lewin’s 3-Phase Change Model Kotter’s 8-Step Model Nadler’s Congruence Model McKinsey 7-S Framework + STAR Model Others New Normal As organizational leadership recognizes, rewards, and models the new behavior in order to embed it in the fabric of the organization, the change becomes the new normal or the ‘the way we do business here.’ Of course, as soon as it is established, the new normal becomes the pre-change paradigm for whatever emerges next—otherwise we become trapped within existing mindsets. TEACHING NOTE1 Introduction to Change and Change Concepts Covered in HR587 Overview: I want to begin our first week by setting the stage for what we will cover in this course. The Terminal Course Objectives provide a good indication of the course outcomes. But more specifically, I want to set the stage for our topical coverage by providing you with a concrete, real-
- 5. world example of change in action. Any effective change process must account for all aspects related to that change. The article (case study) I request you all to review presents a "5-P" framework for implementing change [ We’ll review several more models later in the course] and illustrates the application of the framework with a case situation in which the operations at the Swan and Dolphin Hotels at Walt Disney World were consolidated. The five "P"s are as follows: purpose, priorities, people, process, and proof. Briefly put, change should have a stated purpose; specific targets of change should be identified and prioritized; people potentially affected by the change should be identified and brought into the change process; the process should use appropriate levels of direction, participation, and consultation; and the proof should demonstrate visibly and believably what the change accomplished. There is one major shortcoming in the 5-P framework I’ll comment on below. Classroom Application: The article helps set the stage for the change topics we’ll cover in the course. Source: Ford, R., Heisler, W., & McCreary, W. (2008, May). Leading Change with the 5-P Model. Cornell Hospitality Quarterly [Copy resides in document sharing] Discussion: One of the weaknesses in our textbook is that it does not focus enough, in my opinion, on the practical application of change concepts. My approach in teaching this
- 6. course will be to put a strong emphasis on application so that when you complete the course, you will feel better prepared and confident in taking on any change project and be successful at it. What I like about this short case study is that it provides us with a concrete example of many of the change concepts we will cover over the coming weeks. In fact, it really is a road map that highlights ALL the key concepts we will and must cover. The difference is that I shall endeavor to explore these topics in sufficient 1 This teaching note was prepared by Dr. Ron Stone, Senior Faculty, Keller Graduate School of Management, as the basis for class discussion. depth so that you more fully understand and can apply your understanding to future change initiatives you may be involved in as a participant or change agent. Note that the approach used in this example includes both a project management (we’ll say more about project management as the course progresses) and change management framework. Key change topics that surface in the article/case include: � Change models—5Ps + 7S � Leading vs Managing Change � Organizational culture
- 7. � Vision � Implementing change � Role of short-term wins � Timing + Sequencing of change � Types of change— transformational or incremental � Importance of short-term wins � Project Management + PERT, CPM and importance have a process � The Change Curve � Resistance � Communicating change strategy � Change + turnover � Change agents—internal vs external � Leadership styles � Readiness for change � Capacity for change As the class weeks unfold, I will refer back to the 5P article to spotlight the change topic that was part of the case study as we discuss and explore the concepts as they relate
- 8. to building your change management competencies. For now…Your charge is to-�Share with the class the single most important idea or concept you got out of the reading. Then help the class understand WHY this is important in leading and managing change. Note: A major weakness with the 5P framework is the absence of organizational culture. I will come back to this important issue at the end of course (as well as a bit throughout), but for now, I want you all to appreciate and recognize that CULTURE is an integral part of any change initiative. Change leaders need to shape and develop organizational cultures so they are in alignment with, and supportive of, the desired changes. I depict this relationship in the following graphic. 191 Leading Change with the 5-P Model “Complexing” the Swan and Dolphin Hotels at Walt Disney World by ROBERT FORD, WILLIAM HEISLER, and WILLIAM MCCREARY © 2008 CORNELL UNIVERSITY
- 9. DOI: 10.1177/0010880407306361 Volume 49, Issue 2 191-205 An effective change process must account for all aspects related to that change. This article presents a “5-P” framework for implementing change and illus- trates the application of the framework with a case situation in which the operations at the Swan and Dolphin Hotels at Walt Disney World were consoli- dated. The five “P”s are as follows: purpose, priori- ties, people, process, and proof. Briefly put, change should have a stated purpose; specific targets of change should be identified and prioritized; people potentially affected by the change should be identi- fied and brought into the change process; the process should use appropriate levels of direction, participation, and consultation; and the proof should demonstrate visibly and believably what the change accomplished. While the Swan-Dolphin complexing was not without bumps along the way, the approach resulted in a successful change implementation that saved $4 million in annual expenses. Keywords: change management; leading change; hotel management N ewspapers and trade magazines are full of accounts of organizations implementing new and innovative strategies to meet changing business conditions. Whether implementing a major change such as installing an enterprise resource planning (ERP) system within a global organization, or a rela- tively minor one such as implementing a new procedure
- 10. within a single department, leadership of the change process is an increasingly valued managerial skill (Kouzes and Posner 1995). While some propose that the management of change is a specialized competency of people in organizational development or human resources (Ulrich 1997), it is becoming increasingly clear that change management is more than merely http://cqx.sagepub.com MAY 2008 CASE LEADING CHANGE WITH THE 5-P MODEL managing the process of change; it involves leading people who must themselves change to make the process successful. As John Kotter (1996, 30) suggested in his classic work, Leading Change, “Managing change is important. Without competent manage- ment, the transformation process can get out of control. But for most organizations, the much bigger challenge is leading change.” While there is a wealth of articles and books that can help the manager trying to bring about organizational change, these writings tend to focus either on specific, but limited, aspects of the change process or provide advice that is long on prescriptive generali- ties and short on specific examples that illustrate the application of these change principles (see, e.g., Beitler 2003; Burke 2002; Dawson 2003; Fernandez and Rainey
- 11. 2006; Kanter, Stein, and Jick 1992; Nadler 1997; Quinn 2004). In contrast, this article proposes a straight- forward, comprehensive framework for lead- ing change that both integrates and expands on material typically found in the change lit- erature. Moreover, the article relates this framework to other change frameworks that have been proposed by various authors. Using a change situation in which two hotels under separate management were merged or “complexed” to form a single operating entity under new ownership, we illustrate how our model can be used to implement effective change. In particular, we explain the importance of attending to each aspect of the change process, as well as demonstrating that the change has achieved its purpose. We call our framework the “5-P model”: purpose, priorities, people, process, and proof. The change began in February 1998 when the Starwood Corporation bought the Westin Hotels and Resorts Company, which man- aged the 758-room Swan Hotel and, shortly thereafter, the Sheraton Hotel Corporation, which managed the 1,509-room Dolphin. Since the hotels are adjacent to each other and had been jointly marketed since 1996 by a marketing group organized by one of their joint owners, Tishman Hotel and Realty Corporation, the logical next step was to seek a way to merge the two hotels’ management and operations. A complication associated
- 12. with this merger was that each hotel had its own specific history and way of doing things, as well as a distinct corporate culture. The larger Dolphin’s Sheraton culture and the smaller Swan’s Westin culture were already overshadowed by the omnipresent and dominant Disney culture. Nevertheless most observers, and certainly those who worked there, thought the relationship between the two hotels involved tension, since the smaller Westin deemed itself supe- rior in status to the larger Sheraton. Merging these cultures, along with the attendant structural and staff changes, was going to challenge the general manager’s change- management skills. The 5-P Model of Leading Change To provide managers with a simple but logical and comprehensive approach to facil- itating change, we have developed a change approach that we term the 5-P model. As we stated previously, the five “P”s represent the five key aspects of leading a successful change: purpose, priorities, people, process, and proof. To bring about successful change, change leaders must consider and effectively address each of these five components. While there are a number of books and articles that discuss how to define the need for change, deal with the people involved, or detail the steps in the change process, few sources put together all of these compo-
- 13. nents in a way that guides the entire change process. More important, we find even fewer writings that address our fifth “P,” the proof that the change worked. We believe that a complete change mechanism must include proof that the change approach actually brought about the results intended. Without that proof, employees will be demoralized after suffering through the change process but having nothing to show for their ordeal. To paraphrase Alice in Wonderland, it does not matter how hard you run if you do not know where you are going or what it looks like when you get there.1 As we explain next, the 5-P model ensures that the change effort is properly directed, that the right people are involved, and that the process achieves results consistent with the intended purpose of the change effort. “P”—Purpose The first “P” in the model is purpose. Most scholars and writers agree that change is something that should be done only with a purpose (Kanter, Stein, and Jick 1992; Love, Gunasekaran, and Li 1998; Kreigel and Patler 1991). Effective change man- agers identify a purpose, which is a goal, vision, or compelling problem that needs to be addressed in the course of a change
- 14. effort. These managers know that because change is disruptive, it should not be attempted without an intended outcome in mind (Denning 2005). Managers not only need to know what the final result should look like after the change has been imple- mented, but they need a compelling vision of what the organization will look like when the change is completed to guide them and all those that are involved in the change process along the way. The vision should not only provide hope that the future will be worth the pain of change, but it should be inspiring and motivating to those that are engaged in the change process as well. Purpose can also be thought of as a gap between the current state of affairs and what is desired. Thus, purpose starts with having a vision of “what ought to be.” Purpose flows directly from vision, and the vision can be used to communicate the purpose to all those that will have a role to play in the eventual change. To use Kotter’s (1996, 7) terms, “Vision plays a key role in producing useful change by helping to align and inspire actions on the part of large numbers of people.” He and many others have asserted that nothing is more important in successful change than a sensible, com- pelling vision. Without purpose, there can be no deci- sion about what to change or the level of change needed since the gap is unknown.
- 15. Without purpose, there can be no easily communicated rationale for change. If you cannot explain how a prospective change will make something better (close the gap between what you now have and what is desired), it should not be attempted. The purpose of the change that merged the Dolphin with the Swan stemmed from Starwood Corporation’s purchase of the Westin and Sheraton companies. Having two hotels operated side by side in two sep- arate structures with different operating pro- cedures, polices, and systems seemed inefficient once the hotels were both owned by the same company. The merger created a “burning platform” situation in which employees expected that something would MAY 2008 Cornell Hospitality Quarterly 193 LEADING CHANGE WITH THE 5-P MODEL CASE 1. “The Cat only grinned when it saw Alice. It looked good- natured, she thought: still it had very long claws and a great many teeth, so she felt that it ought to be treated with respect. “ ‘Cheshire Puss,’ she began, rather timidly, . . . ‘Would you tell me, please, which way I ought to go from here?’ “ ‘That depends a good deal on where you want to get to,’ said the Cat. “ ‘I don’t much care where—’ said Alice. “ ‘Then it doesn’t matter which way you go,’ said the Cat.
- 16. “ ‘—so long as I get somewhere,’ Alice added as an explanation. “ ‘Oh, you’re sure to do that,’ said the Cat, ‘if you only walk long enough.’ ” (Lewis Carroll, Alice’s Adventures in Wonderland, chap. 6) http://cqx.sagepub.com happen. Management seized the moment and created a vision to inspire hope and show all concerned what the new combined hotel would look like. The vision would also create a sense of urgency that the complex- ing was vital to everyone’s future. A vision that is compelling means that the change leader has to be sensitive to what his or her stakeholders would see as com- pelling. For a hotel, there are three primary stakeholders. First is the ownership or man- agement of the hotel, second are the employ- ees, and third are the customers. For the ownership and management of the hotel, the complexing of the two hotels into a sin- gle operational structure was seen as pro- ducing enormous economies. The savings were conservatively estimated at $1.8 mil- lion, but the final result proved to be closer to $4 million. With regard to the hotel employees, telling them that the merger is a great under-
- 17. taking because it will “make a lot of money for Starwood” would not be a compelling purpose, especially the housekeepers or the front-desk supervisors. Instead, the com- pelling vision that was presented to the staff of the newly combined hotel was that this complexing would allow the new hotel team to produce a hotel experience for the cus- tomers or guests that was so extraordinary that the complexed hotel would become a “trophy asset.” This vision was compelling for several reasons. First, the central idea of guest satisfaction is the key driver for hote- liers. Second, the vision meant setting high levels of customer-service standards to guide the actions of the employees and change leaders as they assessed and weighed the various aspects of the change. Finally, a tro- phy experience inspires people and suggests milestones to keep track of how well the change is working. As we discuss below, identifying small victories is critical to keep- ing the change process working, and having a customer service metric to allow celebra- tions of the progress that all were making in achieving trophy hotel status was vital feed- back that made sense for the entire staff. Since the Swan and the Dolphin were pre- dominantly convention hotels, there was the potential to attain many public industry awards and recognitions that would serve to reinforce the higher service standards (and, indeed, the hotel received such awards). Setting a vision of becoming a trophy
- 18. hotel did not require a benchmark, nor was identifying a benchmark viewed as help- ful, for two reasons. First, management did not want to be tied down to comparing itself with any competitor in a way that the competitor could use for marketing advan- tage. Second, key staff members already knew what it meant to be a trophy hotel, as the more senior staff had a wide variety of backgrounds in the hotel industry. Also, guests who had never seen a trophy hotel would not have seen anything inspiring about a named competitor. Thus, the idea of a trophy asset or trophy hotel became an idealized perception of what the best customer service experiences would be, and customers’ service satisfaction scores gave a running measure of how well the organization was doing in reaching this trophy hotel status. In essence, the hotel benchmarked against itself. Change can be either transformational or incremental (Armenakis 1999; Weick and Quinn 1999). The rationale for transforma- tional change is that the situation that currently exists is so unsatisfactory that rad- ical alteration is required. We believe that the automotive and airline industries, for instance, are facing such a situation. In the case of incremental change, the current situ- ation is relatively good, but management recognizes that success is never final and gradual change or continuous improvement is necessary to maintain or improve compet- itive advantage. Organizations implementing
- 19. incremental change are typically involved in an ongoing program such as total quality management (TQM), quality circles, or zero 194 Cornell Hospitality Quarterly MAY 2008 CASE LEADING CHANGE WITH THE 5-P MODEL http://cqx.sagepub.com defects (Crosby 1980; Love, Gunasekaran, and Li 1998). It is important to recognize the type of change desired because the purpose and process of change will be different in each of these change situations. The Swan-Dolphin complexing involved both transformational and incremental change. Recognizing that he should set a finite period to merge two distinct organiza- tions, as well as their strategies, cultures, and operating systems, the general manager (GM) publicly stated that the transformation period was eighteen months. But the GM also recognized that this eighteen-month time frame would only be the beginning of a long-term change that would unfold grad- ually. With that recognition, he designed the change strategy in two stages. He recog- nized that, as is true for many major change situations, the full extent of the change can- not be presented until people are ready. In many cases, such as a merger of this magni-
- 20. tude, an understanding of the full extent of the change is limited to the top manager or the senior management team. Seldom does this discussion trickle down to the lower levels in the initial stages of the change effort. However, the GM also real- ized that the merger would require continu- ing, incremental change to bring about the full effects desired. Anyone observing the close proximity of the Dolphin Hotel and the Swan Hotel might well speculate that significant economies and improved customer service could be realized by merging the two hotels into a single complex. Indeed, cus- tomer dissatisfaction with the two hotels’ overlapping in convention sales had led previously to the merger of the hotels’ sales teams. This consolidation eliminated a significant customer service problem, as customers saw the two hotels as a single entity and did not care about the two dis- tinct organizations that managed them separately. Making sales seamless to the customer made so much sense to the owners of the two hotels that the seed was planted to combine other overlapping parts of these two operations. In presenting the compelling vision of creating a single complex, the GM focused on customers’ satisfaction levels associ- ated with a trophy hotel, while defining an eighteen-month plan to achieve the most
- 21. significant features of the complexing. At the hotel level, four employee-wide rallies were held with different themes, such as “The Wizard of Oz,” to focus on the positive “Emerald City outcome” of the hotels’ “journey.” These rallies were designed to create positive energy for the complexing. They included food, T-shirts proclaiming “We’re Complexing,” and an upbeat mes- sage from the GM. The rallies were repeated for each shift. Department and unit heads were expected to duplicate the rallies within their areas to reinforce the message that the two hotels were to become one and, more important, to pick up and report back to the leadership team any problems that the merger might be creating at the unit level. The GM thought the full package of long- term changes was too disruptive to explain at the beginning of the process. Instead, he sub- divided the long-run changes into those that could be implemented during the eighteen- month plan and those that would be under- taken later. His logic of framing the initial change as radical, but one that was time limited, allowed him to subdivide this change into specific events that could be cel- ebrated as short-run victories. He felt that this approach made it possible for the people involved to deal with the disruptive nature of the change because this plan defined an end point when “the pain would stop.” As demon- strated by this approach, every change leader must assess how much change people can take without becoming discouraged. High
- 22. goals are inspiring, but goals that are per- ceived as impossible to attain are defeating. MAY 2008 Cornell Hospitality Quarterly 195 LEADING CHANGE WITH THE 5-P MODEL CASE http://cqx.sagepub.com The successful change leader needs to find the correct balance between enough and too much. “P”—Priorities The second “P” involves setting priori- ties for change. This stage involves identi- fying the targets of change and establishing a sequence or schedule for addressing each target. With regard to selecting the targets of change, we draw upon the earlier work of Pascale and Athos (1981), who first proposed what has become a popular framework incorporat- ing seven interdependent organizational components, each beginning with the letter “S.” Subsequently, this framework has become known as the McKinsey 7-S model, following its adoption by the global management consultancy firm McKinsey & Company (Rasiel and Friga 2002). The seven components of the 7-S model are shown in Exhibit 1.
- 23. Briefly, the components are defined as follows. Strategy is the plan of action that an organization adopts to achieve its primary mission or objectives. Structure is the way in which an organization’s units are arranged to accomplish its purpose. Systems refer to the procedures, processes, and measures that characterize how work is carried out. Staff refers to the numbers and types of people employed by the orga- nization. Style refers to the way in which management deals with employees in achieving the organization’s goals. Skills refer to the distinctive capabilities of per- sonnel or of the organization as a whole. Shared values (also referred to as superor- dinate goals) refers to what the organiza- tion stands for and what it believes in. The Swan-Dolphin complexing targeted all seven of the 7-S components. The pur- pose of the change was the merger of the two hotels into a single operating entity. Thus, a primary target was the structure of the orga- nizations. Since consolidation would result in fewer management and staff members than required by the separate hotels, a sec- ondary target was the staff or people of the organization (i.e., determining whom to retain and whom to terminate). Staffing deci- sions were based on several factors including the skills, style, and shared values desired in the resultant organization. Finally, the deci- sion to position the Swan-Dolphin as a “tro-
- 24. phy hotel” dictated the strategy and systems that would be put in place to ensure that the policies, procedures, and processes of the new organization supported the values embedded in the change effort. To ensure that change actions are carried out in an appropriate sequence and time frame, top management may consider use of a program planning and control technique— known by the acronym PERT (Program Evaluation and Review Technique)— developed for the nuclear submarine program in the 1950s. The chart associated with this approach serves both as a planning device and a feedback mechanism to provide proof that the desired change had occurred. The chart also serves as the foundation for each individual department to develop its own planning chart. 196 Cornell Hospitality Quarterly MAY 2008 CASE LEADING CHANGE WITH THE 5-P MODEL Exhibit 1: Change Targets Similar to the critical path method (CPM), developed about the same time by the Dupont Company for planning large- scale projects, the essential elements of
- 25. PERT are the establishment of a time esti- mate for each project activity and the delin- eation of what activities have to precede other activities, what things can be done simultane- ously, and what events have to follow other events (Lewis 1999; AMA Handbook 2006; Kerzner 2005; Project-Management Institute 1998; Strebal 1996; Wiest and Levy 1990). The result of this process is the creation of a chart that shows all the events that have to happen, the sequ- ences of those events, and the time lines by which events have to be completed. The “critical path” is the path along the chart that denotes the event sequences that must be accomplished on time if the project is to meet its targeted comple- tion date. Exhibit 2 shows a simplified ver- sion of the role that PERT played in planning the Swan-Dolphin complexing. From the day of the merger announce- ment, the PERT chart established that top management would identify, within fourteen days, employees who were to be retained and those who would be terminated as a result of the complexing. Since it was appar- ent to all that some job losses would occur, it seemed critical to ensure that all employ- ees knew what was going to happen to them as soon as possible. Therefore, a short time line was established for this activity. By highlighting this decision on the PERT chart, employees could see a defined “end” MAY 2008 Cornell Hospitality Quarterly 197
- 26. LEADING CHANGE WITH THE 5-P MODEL CASE Review Current Structure (1 day) Conduct “Best Practice” Review of Current Capabilities (2 days) Review Current Culture / Shared Values (2 days) Merger “Go Button” Review Current Management Capabilities (2 days)
- 27. Identify Change Targets and Establish Timetable/ Build PERT Chart (1 week) Finish Identify Staff to Retain/ Terminate (2 days) Develop Outplacement Strategy (2 days) Select Units to Consolidate / Reorganize (3 days) Execute Reorganization (2 weeks
- 28. ) Notify Staff to be Retained (1 day) Develop Staff Separation Protocols (1 week) Conduct Separation Interviews (2 days) Develop Detailed Division/Dept. PERT charts to Implement New Systems, etc. (2 weeks) Publicly Announce End to Personnel Separations (1 day) Conduct “Best Practice” Review Of Current
- 29. Capabilities (1 week) Identify and Develop New Systems, Policies and Procedures for New Org. (1 month) Conduct Training in New Systems, Policies, and Procedures (2 months) Plan Approval (3 days) Conduct Cultural Training Events to Reinforce New Values (18 months) Identify New Theme / Shared Values (3 days)
- 30. Develop Events, Measures, Symbols for New Shared Values (2 weeks) Exhibit 2: PERT (Program Evaluation and Review Technique) Chart for Swan-Dolphin Change Process http://cqx.sagepub.com to this and other crucial aspects of the change process. The PERT chart listed and noted time lines for the variety of tasks that had to be completed to complete the transforma- tional aspect of the change. A duration of eighteen months was believed to be long enough to effect the transformational aspects of the change, yet short enough that the people involved could see an end to the process. Also, behavioral science lit- erature suggests that this time frame allows for performance to return to “nor- mal” following the disruptions that typi- cally accompany a major change effort. The major tasks identified for implemen- tation are indicated in Exhibit 3. Finally,
- 31. time lines were established for accom- plishing major change tasks, and measure- ments were established to identify when milestones were hit and what successful execution of the change would look like. “P”—People The third “P” represents “people.” Change inevitably involves people. Once the purpose and priorities for change have been estab- lished, the people who will both imple- ment the change and be affected by the change need to be identified. This stage— identifying the people who will be involved in the change effort—serves as a transition between purpose and process. Unless we understand the needs, motives, personalities, skills, and abilities of those involved in the change effort, we will not be able to identify the best process for implementing change to achieve our purpose. One useful approach for this phase is to think of the impact of change in terms of a series of concentric circles. Within the first circle are those individuals who will be directly involved in the change, including the decision-making group. Change leaders need to ensure that this group is fully aware of the purpose for the change and the gap that the organization needs to close. The next circle includes those whose input may be valuable in ensuring a success-
- 32. ful change effort. These individuals should be consulted and asked for their opinions, concerns, and questions concerning the 198 Cornell Hospitality Quarterly MAY 2008 CASE LEADING CHANGE WITH THE 5-P MODEL Exhibit 3: Major Change Tasks Change Target Major Tasks Structure Identify redundant positions, reorganization of departments, reviews of organizational reporting relationships Strategy Determine how to become and operate as a “trophy hotel” Systems Assess and select organizational philosophies, systems, and procedures that would be retained (e.g., Dolphin, Westin, or something new) Skills Identify skills needed by new position holders Staff Match existing personnel with new position requirements, identify staff to retain or terminate based on performance Shared values Define new cultural values, norms, customs, and language Style Identify management to retain or terminate based on definition of shared values and performance
- 33. http://cqx.sagepub.com change effort. At the outer levels are those individuals who need to be informed of the change and its purpose, so that they can pre- pare for its effective implementation. Some employees will be immediately supportive of the change effort, while others will resist. Although people resist change for many reasons, resistance will usually fall within one of the following three categories: (1) people who perceive that the change will diminish their ability to accomplish what they perceive as their job, (2) those who feel that they do not have the skills needed to accomplish the change, and (3) employees who feel threatened personally by the change (e.g., loss of job, friendships, earning opportuni- ties, career growth, power, status, prestige, comfort with existing methods, habits, or control; Strebal 1996). Regardless of the level of involvement, the crucial message that people at each level must hear is the purpose of the change. While it is widely held that people resist change, the reality is that people resist change that they believe will damage them in some way, particularly if the change means more difficulty in getting the job done, significantly longer hours of work,
- 34. less prestige, or elimination of a friendship group. Resistance from those sources can be reduced when the overriding purpose of the change is perceived to be beneficial in some important way. The challenge for the change leaders is to frame the change in a way that conveys its importance to the employee (i.e., creates an awareness of the need for change) and relates to the employee’s motivation for being a part of the organization. However, since any change effort inevitably will adversely affect some people, it is important that the change leader identify these situations and address the issues involved directly and forthrightly. Because of the special importance of people to a service-oriented business like a hotel, the GM spent considerable time assessing how each employee would fare in the change. In particular, it was impor- tant to identify those who would be a part of the new organization and those who would not. The change leaders also knew that the employees selected to remain would watch closely what happened to employees identified for termination to see how this new organization would treat its people. The GM and his leadership team took a stepwise approach in selecting who would stay. First, they identified the people who seemed to be candidates for the expanded jobs that the merger would create. While
- 35. many of the jobs would not change at the first level of supervision and below, many would change at the second level and above as redundancies from two hotels were eliminated by the merger. Specifically, it is a far different thing to be a division head overseeing a team of twenty housekeeping supervisors than it is to manage a team of forty spread across two buildings that are geographically separated. Because the Swan-Dolphin is primarily a large conven- tion hotel, its division heads must not be intimidated by the scope of operations. Thus, the ability to manage large spans of control was a major factor in determining the first cut. The second cut was determined by per- sonality or style. While size worked in favor of the Dolphin managers for the first cut, size worked against them in the second cut. The feeling was that those managers who had been working with large spans of control would generally have less expe- rience in managing with the level of empa- thy that the changed organization would require. Those who were considered to be more people oriented and shared the desired corporate values for the new orga- nization were selected over those who were less so. MAY 2008 Cornell Hospitality Quarterly 199 LEADING CHANGE WITH THE 5-P MODEL CASE
- 36. http://cqx.sagepub.com Third, operational skills were consid- ered. Taking as an example the two execu- tive chefs, only one could remain after the complexing. The team selected the chef who seemed both more creative with the menu and, because he had been a corpo- rate chef, more able to supervise multiunit operations. Finally, and perhaps implicit in the other three criteria, the leadership team assessed each individual’s potential for future growth and development. While the primary criterion for selec- tion was assessed capability in managing large units, these other factors entered into the equation when that ability was judged to be equal among candidates. This led to an imbalance in the selection process such that the Dolphin managers’ experience with its larger size tended to give them the edge. This made it even more imperative to create a new organizational culture that did not leave the Swan people with the feeling that they had been relegated to second-class citizenship. The attempt to create a culture that respected the heritages of both hotels was not perfect. For example, the hotels had a tradition of carving decorative pumpkins at Halloween. The Swan engineers decided to
- 37. show their displeasure with the perception of imbalance in the selection process by dis- playing as their entry a dolphin swallowing a swan. While this act demonstrated that the Swan engineers were obviously upset and wanted to make a statement, the expression of their unhappiness in this public way pro- vided the management team with the oppor- tunity to schedule a meeting and address the engineers’ concerns. The next order of business was to make sure that the people who would be part of the final team were informed of their sta- tus. This information was critically impor- tant for relieving the stress of uncertainty and removing the resistance of fear that could impede the change effort. Those who were not to be retained were also informed of their situation, offered coun- seling, and provided with an outplacement service to transfer them to other hotels in the Starwood brands if at all possible. Orlando has more than one hundred thousand hotel rooms, making it likely that those who could not be placed in a Starwood hotel could use company assistance to find jobs elsewhere. The GM of the combined hotel was a visible member of both the state and local hotel associations, so this offer of assistance to employees was not insignifi- cant. If the displaced employees could not find employment elsewhere, the company would provide a generous severance pack-
- 38. age. The point here is that the change leaders recognized the importance and value of treating these employees with respect and dignity and keeping them fully informed of their options and actions being taken on their behalf. This had a beneficial longer- term consequence as those who departed still felt somewhat positive about their expe- rience at the Swan-Dolphin. The Swan-Dolphin managers recognized the importance of the organization’s treat- ment of its employees to its reputation as an employer and also to its reputation for cus- tomer service. In other words, the extensive thought that went into the treatment of all employees affected by the change would spill over into the way the hotel’s guests would be treated by those employees. A simple schematic using an upside down pyramid was printed and published to explain this servant-leader philosophy (see Exhibit 4). As this graphic depicts, it was recognized that the way top management treated and supported its subordinates would reverberate throughout the organization, right down to the linkage between service employees and customers. If top manage- ment was taking the time to consider the ramifications of the change on its own sub- ordinates and was holding its subordinates accountable for the way they handled the change at lower levels of the organization, it 200 Cornell Hospitality Quarterly MAY 2008
- 39. CASE LEADING CHANGE WITH THE 5-P MODEL http://cqx.sagepub.com sent a powerful message that everyone needed to pay attention to how people- related issues were handled. In keeping with the inverted-pyramid schematic, three primary tactics were used to address the people aspects of the Swan- Dolphin complexing process. First, employ- ees were given an overabundance of information that communicated the reasons for the change and what the result could look like. Second, employees were treated with respect and dignity so that they would have positive feelings about the company whether they stayed or left. Every effort was made to keep everyone economically whole. Third, a network of individuals who were part of the management team was established to quickly identify developing problems so that they could be addressed before they became major issues impeding the change. Even though the GM had access to employee satis- faction studies, the time lag associated with these surveys made them of little use for stay- ing on top of the issues as they developed. One of the earliest decisions, the selec- tion of a change agent, is another people issue. Many companies use external change
- 40. agents to gain the necessary change manage- ment skills (Buchanan and Boddy 1992). If the change process is to be implemented effectively, the change agent must have well- developed change management skills. Often these skills are not present within the orga- nization. Also, external change agents can be used to absorb some of the risk involved in implementing change. However, external change agents often do not have sufficient understanding of the internal landscape (e.g., organizational history and politics). An experienced manager and a trained leader in transactional processes, the GM of the Swan-Dolphin was the logical choice for change agent. Beyond his train- ing, his managerial experiences with both Westin and Sheraton gave him tremendous creditability with the new Starwood own- ership and the continuing Sheraton and Westin managers. As change agent, he real- ized that he had a specific window of opportunity to execute the Swan-Dolphin merger because Starwood’s executives were involved in other merger events in New York. Moreover, he knew it would be desir- able to under promise and over deliver on the savings, an approach that enhanced Starwood’s willingness to allow him consid- erable autonomy in managing the merger of the two hotels. He also had the trust and support of the Tishman ownership, which would intervene in his behalf if the Starwood managers sought to interfere. This support was important to the change efforts,
- 41. as he could make decisions on the spot, without clearing them with Starwood’s cor- porate executives. “P”—Process Only after identifying the purpose and priorities for the change, and the people who will be involved, is one ready to iden- tify the process to be used for implementing the desired change. Process focuses on the implementation strategy that will be used to bring about the desired changes. As there are many potential targets of change, there are also different implementation strategies MAY 2008 Cornell Hospitality Quarterly 201 LEADING CHANGE WITH THE 5-P MODEL CASE Customer Contact Employees Unit Managers Department Managers General Manager Customers Exhibit 4: Servant Leader Philosophy (Inverted Pyramid)
- 42. http://cqx.sagepub.com that can be adopted. These strategies can be loosely categorized into three overlapping types: decree, participation, and consensus. Each approach has its distinct advantages and disadvantages (Dunphy and Stace 1993). The “decree” or “autocratic” style is a strategy for implementing change that is all too common. Here, managers simply announce the change to be accomplished, most often without identifying the purpose of the change, leaving it up to those affected to figure out the why and how. Power and fear are typically the driving forces. Despite its shortcomings, this strategy can be appro- priate when the issue or target of change is so important that the change leader cannot risk the emergence of a lesser quality out- come or debate that may thwart the change effort; when there is little time to debate, dis- cuss, or consider alternative ways of accom- plishing the change; or when the change is not particularly important to anyone. For example, decree is likely to work well when the desired change is to require use of 18-lb bond paper instead of 20-lb bond in the copier to save money on office supplies. It can also be effective if a boat is sinking quickly and the captain orders all hands into the lifeboats. In the first case, the change is unlikely to be of interest or concern to any- one, and in the second, the life-or-death
- 43. immediacy of the situation means that there is no time to discuss options. Similarly, if an executive believes that there must be uncom- promising attention to quality, a decree to implement a Six Sigma, or other zero defects program, may be appropriate. Participation or consultation involves multiple levels of employees in the change process. In this approach, those to be affected by the change are consulted and asked for their ideas and input. Participation thus gives voice to those affected by change, increases the likelihood that those affected by the change will feel fairly treated what- ever the ultimate outcome, allows input by all concerned to open up for consideration a wider range of possible solutions to any problem requiring change, and reduces fear and apprehension about the future. As we mentioned previously, resistance to change comes in large part from the fear people have that the change will diminish their personal, social, or economic situation (Marjanovic 2000; Grimaud 1994). While one can tell people that a coming change is good for them, it is through the communication ema- nating from the participatory process that these fears can be addressed. Thus, this implementation strategy is especially valu- able for individuals who are likely to be affected negatively by the decision. In most cases, the individual is involved before the decision is implemented (thereby eliminat- ing surprises) and usually is appreciative of
- 44. the opportunity to be personally involved. While the participatory approach tends to be used more commonly during the implemen- tation phase of change, the decree approach is frequently used in establishing the targets and priorities of the change effort. In a consensus approach, decisions affect- ing the change process are essentially dele- gated to subordinates. The advantages of this approach include group commitment and responsibility for the outcome. Moreover, consensus influences two key decision dimensions: the quality of the decision (or how well the decision will meet the organi- zation’s needs) and acceptance of the deci- sion by those affected by the change. With consensus, everyone has a voice and a stake in the success of the decision. Also, in theory, a better decision can be made because many ideas, perspectives, and skills are involved. The difficulty with the consensus approach is that it can be slow and time-consuming. Moreover, it can be challenging to involve everyone in the organization who is likely to be affected by the decision. Further work is involved in teaching groups how to work together effectively. Finally, using consensus can be a riskier strategy 202 Cornell Hospitality Quarterly MAY 2008 CASE LEADING CHANGE WITH THE 5-P MODEL
- 45. http://cqx.sagepub.com for accomplishing the needed change, as it may give a greater voice to those who oppose the change effort. Consequently, consensus is best used when the change goals are widely shared and subordinates are highly skilled and professionally mature. It may also work effectively for implementing small, relatively uncontrover- sial pieces of the change process. The principal implementation strategy for the Swan-Dolphin change was a combi- nation of decree and participation. For example, the selection of change targets, the overall duration of the change, and the disci- pline of using the PERT chart were deter- mined by decree. However, the detailed events comprising the overall path and the times associated with their accomplishment were developed in a participatory manner with the top management team. Furthermore, managers then rolled out their own critical paths using the same process by decreeing their design and sequence while asking sub- ordinates to participate in developing the detailed action plans. A participation strat- egy involving other section managers was particularly useful in identifying staff to be retained and to be terminated because the managers were more knowledgeable regard- ing employees and could make more accurate assessments of employees’ competencies.
- 46. “P”—Proof The critical proof stage of change man- agement refers to the requirement that managers seeking to implement change should adduce evidence that the change has achieved the desired results. While many authors and practitioners propound the desirability of evaluation, we find it surprising how seldom change managers actually take the time to analyze whether the gap that they sought to close is actually narrower as a result of their change efforts. The requirements of proof are simple, but the mechanics of its implementation can be challenging. To facilitate the establishment of proof, change leaders must identify measures of the key dimensions that existed at the beginning of the change process and measures of those same key dimensions that exist at the end of the change process. For success, the results should meet or exceed the change goals. However, even if the goals are not fully achieved, the change can achieve a measure of success if the final state is better than the original. In an era of continuous change, measuring success may mean observing milestones rather than setting clearly defined end points, although this was not the case in the transformational phase of the Swan-Dolphin complexing. Regardless, in any type of change, it is critical to develop clear, objective measures of critical dimen-
- 47. sions both before and after the change process is undertaken. Proof requires clear change objectives and relevant measures of success. Consequently, assessing the results of change in large, com- plex organizations is difficult because many variables may be in flux concurrent with the change itself. At a minimum, change man- agers must obtain measures of the current state before initiating change. For example, if the change agent wants to improve collabora- tion within the organization, he or she must have a good measure of the current state of collaboration. This may be obtained, for example, by developing a questionnaire and surveying key organizational employees to assess organizational climate and levels of cooperation, measuring the time it takes to accomplish certain organizational processes, or exploring grievance rates and resolution times. One challenge in establishing proof is that even if the final conditions are better than the original, and meet or exceed the change goal, one cannot be certain that the implemented change effort was responsi- ble. It is possible that other critical fac- tors were changing at the same time and accounted for the change results. From a MAY 2008 Cornell Hospitality Quarterly 203 LEADING CHANGE WITH THE 5-P MODEL CASE
- 48. http://cqx.sagepub.com practical perspective, it is generally impos- sible to control for all such externalities. Nevertheless, it is necessary to attempt to identify and control for any concurrent fac- tors to assess their potential effect on eventual outcomes. For example, if an organization decides to improve performance by reorga- nizing from a functional structure to a product-based structure, it would be diffi- cult to determine the effectiveness of the reorganization if, at the same time, the orga- nization conducts a leadership development program and implements a team-based compensation program. Even with this measurement complication, if the goal was to improve performance, this distinction in the attribution of success may be inconsequential. The proof of the change for the Swan- Dolphin was intentionally designed to consist of two interrelated components. First, the change management team knew that it was crucial to have proof that was both believable and visible to all. The team also knew that there should be many “wins” that all could see and celebrate. For this purpose, spelling out the process on the PERT chart provided an efficient way to identify when events had occurred, and the wins associated with hitting target dates could be recognized. It was a visible
- 49. way to demonstrate the desired change was happening. The second interrelated component of the proof was to provide believable evi- dence that the change worked. The first piece of believable evidence was financial, in the form of reduced costs and improved profits. Just reducing the staff from around twenty-five hundred before the change to approximately sixteen hundred after the change resulted in considerable savings. The second believable evidence was the human measures of turnover and morale, as well as quarterly employee satisfaction sur- veys. For this purpose, the GM relied exten- sively on the twelve-question model that Buckingham and Coffman (1999) suggested distinguishes the strongest departments of a company in terms of employee engagement (see also Meyer and Stensaker 2006). This model includes questions such as the fol- lowing: “Does my supervisor seem to care about me as a person? At work, do my opin- ions seem to count?” The third measure was the monthly customer satisfaction scores that would gauge progress toward becom- ing a trophy hotel. All three components were important, but the third was especially vital in communicating the milestone proof of the achievement of the vision of becom- ing a trophy hotel. If customer satisfaction scores were going up, then the vision was being realized. That became not only an opportunity to celebrate short-term wins but
- 50. gave hope to all that the change was a good one and worth the pain. A Holistic Framework for Change In both texts and articles about change, the emphasis we have seen is on the process and people, with less emphasis on purpose, priorities, and proof. The 5-P model pro- vides a comprehensive approach to ensure that all critical components of successful change are thoughtfully addressed. The use of the Swan-Dolphin case study supports our contention that all five “Ps” are important to effecting successful organizational change. The Swan-Dolphin case also shows the value of paying close attention to a definition of what the end of the change process should look like. By using a PERT chart to guide the change effort and including in that chart milestone measures of when each change outcome had been attained, the leadership of this change effort was not only able to define the purpose and priorities for the change, but could also provide an indication of when the change had been successfully completed. The Swan-Dolphin leadership knew that the pain of change had to end before the employees could stop being afraid of what might happen next and begin rebuilding the 204 Cornell Hospitality Quarterly MAY 2008 CASE LEADING CHANGE WITH THE 5-P MODEL
- 51. http://cqx.sagepub.com new organization and culture. The use of PERT made certain that this date was acknowledged and publicly celebrated. Also, by carefully measuring the financial and human outcomes associated with the change, this management team could prove to its cor- porate leaders and its own employees that the change worked. Bringing about change is often difficult and problematic. The 5-P model provides a holistic framework for guiding an organiza- tion’s change efforts. Purpose provides the compelling vision that motivates employee support and commitment. Priorities establish the targets and sequence of change. People carry out the process to achieve the purpose. Process identifies the manner in which decision making will be carried out. Proof demonstrates the attainment of the intended purpose of the change. The Swan-Dolphin case illustrated the importance of addressing all five aspects of the 5-P framework and the special role of the often-overlooked “proof” that shows those involved in, and affected by, change that the gain was worth the pain. References The AMA handbook of project management. 2006. Edited by P. C. Dinsmore and J. Cabanis-Brewin. New York:
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- 55. LEADING CHANGE WITH THE 5-P MODEL CASE Robert Ford, Ph.D., is a professor of management in the College of Business Administration at the University of Central Florida ([email protected]). William Heisler, Ph.D., is an associate profes- sor of human resources management at Troy University ([email protected]). William McCreary, for- merly president of Tishman Hotel Corporation, is general manager (GM) of the Sheraton New Orleans. He was the GM responsible for the combination of operations at the Swan-Dolphin Hotel at Walt Disney World ([email protected]). http://cqx.sagepub.com << /ASCII85EncodePages false /AllowTransparency false /AutoPositionEPSFiles true /AutoRotatePages /None /Binding /Left /CalGrayProfile (Dot Gain 20%) /CalRGBProfile (sRGB IEC61966-2.1) /CalCMYKProfile (U.S. Web Coated 050SWOP051 v2) /sRGBProfile (sRGB IEC61966-2.1) /CannotEmbedFontPolicy /Error /CompatibilityLevel 1.3 /CompressObjects /Off /CompressPages true /ConvertImagesToIndexed true /PassThroughJPEGImages true /CreateJobTicket false /DefaultRenderingIntent /Default /DetectBlends true
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