Rolls-Royce: Change Management Strategies

This assignment delves into the complex world of change management at Rolls-Royce. Students are tasked with analyzing various aspects of the company's transformation, including its recent restructuring efforts, the influence of different organizational structures (like Mintzberg's framework), and the impact of these changes on employees. The analysis should draw upon provided sources, such as academic papers, news articles, and financial reports, to present a comprehensive understanding of how Rolls-Royce has managed change.

Running head: MANAGEMENT OF CHANGE
Management of Change
Name of the Student
Name of the University
Author Note

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Executive Summary
The major aim of this business report is to identify the sources of change affecting organizations,
nature of organizational change and relevance of different organizational forms. The
organizational that is considered for the report is Rolls Royce. The context, culture and drivers
for change implemented in the organization are also identified along with the justification of the
plan for the implementation of successful change to overcome the barrier of the same. Lewin
Change Model and ADKAR model is utilized for highlighting the changes implemented for the
organization. It is found from the report assessment that Rolls Royce has faced five profit
warning in two years and the major reason is due to the less interest of the investor for investing
the financial resources. The reason found for this issue is the lack of ability in the aerospace
division for making the investors understands the necessary business process regarding the
manufacturing and designing of the automobiles. Another problem identified is the involvement
of more cost in maintaining multiple managerial hierarchies which is overcome through removal
of the managing hierarchy. Another change management that is identified in this report is
classification of the organizational divisions from two to five so as to simplify the managing
operation of the organization.

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Table of Contents
1.0 Introduction......................................................................................................................................3
2.0 Discussion........................................................................................................................................4
2.1 Context, culture and drivers for change.......................................................................................5
2.1.1 Context for change................................................................................................................6
2.1.2 Culture for change................................................................................................................6
2.1.3 Drivers for change................................................................................................................7
2.1.4 Barriers to change.................................................................................................................8
2.2 Models and framework for change management and plan for the implementation of successful
change initiatives.........................................................................................................................8
2.2.1 Lewin Change Model...........................................................................................................8
2.2.2 ADKAR model...................................................................................................................11
2.3 Explanation for overcoming the most significant barriers........................................................14
3.0 Conclusion.....................................................................................................................................17
4.0 Reference List................................................................................................................................19

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1.0 Introduction
Hornstein (2015) depict that the transition or transformation of an organization's goals,
technology and processes adopted by an organization is known as change management. The
major purpose of the change management is to implement effective changes, controlling the
change and enhance the capability of the employees for accepting the change. Benn et al. (2014)
on the other hand argued that employee of the organization sometimes is not ready to accept the
change and it impacts their performance which furthermore affects the profitability of the
organization. This business report is presented through the perception of the external change
management agent as this will provide more genuine critical analysis of the implemented change.
The company hires this agent as a third party agent during the change management.
In this business report, the organization selected for evaluating their change management
is Rolls Royce. Rolls Royce is an aerospace and motor vehicle manufacturing and design
company that formulates civil and military aero engines, automobiles, power generation
equipment and marine propulsion system (BBC News 2018). However, in the year 2015, the
management of the concerned organization intends to omit the top layer of management in order
to simplify the decision-making processes for the organization. This assessment aims for
identifying the sources of change affecting organizations, nature of organizational change and
relevance of different organizational forms. In this report, the context, culture and drivers for
change implemented in the organization is identified followed by the detailed description of a
plan for the implementation of successful change to overcome the barrier of the same. A range of
diagnostic models and frameworks will be applied to justify the plan for implementation of the
change. Lastly, the report illustrated to overcome the significant barriers that are raised while
implementing the change which is followed by a conclusion based on the entire discussion.

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2.0 Discussion
Rolls Royce is associated with the manufacturing of civil aerospace, power system,
defense aerospace, marine and nuclear products (The Guardian 2018). The underlying revenue
for the financial year 2017 of these segments is 10,824 U.S. million dollars for civil aerospace,
4,478062 U.S. million dollars for power system, 3,069.26 U.S. million dollars for defense
aerospace, 1,453.01 U.S. million dollars for marine and 1,103.58 U.S. million dollars for nuclear
products (Statista 2018).
Image 1: Underlying revenue in FY 2017 of the Rolls-Royce segments
(Source: Statista 2018)
The current situation for the concerned organization also illustrates that the sales volume
for the Rolls Royce has been increased these with every year. The data shows that the worldwide
sale of the Rolls Royce automobile for the year 2014 is 4,063, for the year 2013 it is 3,785 and
for the year 2016 the sale for the automobile was 4,011 (Statista 2018).

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Image 2: Worldwide sales volume of Rolls-Royce automobiles
(Source: Statista 2018)
2.1 Context, culture and drivers for change
The change that the company Rolls-Royce implemented in their organization is to
remove the top management so that the company can feel easy in taking decision for business
operations. Apart from the decision of simplifying the organizational structure, the company
planned to operate with five divisions- civil aerospace, defense aerospace, marine, nuclear, and
power systems (The Guardian 2018). The five division of the company is formulated by
scrapping two divisions to turnaround the struggling engineer. This plan was also include the job
cuts of 2,600 in the next 18 months from the decision (BBC News 2018). During the time 2014,
Rolls-Royce's global workforce shows the figure of 55,000 out of which 24,000 workers are
alone working in the UK (BBC News 2018). The job cut had been planned mainly for the

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aerospace divisions and 800-1200 engineering jobs cut were made in Bristol and Derby (BBC
News 2018).
2.1.1 Context for change
The main context of the change in the Rolls Royce is the estimation of series of profit
warnings which impact their market share (BBC News 2018). The share price for the company in
the year 2015 comes down to 38% and the company intends to make the company once again the
largest profit earning organization (Mail Online 2018). The company also noted that the
engineering group employed in the organization did not provide clear idea on the projects that
left investors unclear about its direction due to which the company faces much loss in profits and
business partnerships (BBC News 2018).
2.1.2 Culture for change
Kaufman (2017) stated that the culture of change represents the process and belief
followed in the organizations changes due to some reasons. In case of Rolls Royce, there are two
types cultural change identified in the organization- one in term of management and other for the
employees. In traditional times, Rolls Royce had centralized organizational structure, where
there are many hierarchies that delay the process that is implemented in the organization. Thus,
in order to remove the barriers of the ease in decision making process, the hierarchy are planned
to remove. The organization thus changed their organizational structure from centralized to de-
centralize. Lunenburg (2012) stated that the major advantage of a de-centralized organization is
that the employees or their immediate managers also have the power to participate in the
decision making sessions, maintenance of self-sufficiency as both managers and employees are
working autonomously and facilitating the process of expansion.

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Moreover, Jones (2012) highlighted that the culture also shows a participative culture in
the organization in which all the new policies when planned to implement were shared by the
employees. The employees are also asked for sharing their concern and often suggest valuable
recommendations that can be beneficial for the productivity and profitability of the company.
However, Rolls Royce noticed that this participative culture takes more time to implement a
decision which is the reason for delay in important decision making. Thus, in order to overcome
this barrier, they have opted for autocratic culture and just based on the management decision,
Rolls Royce took the choice for dividing the entire section into five divisions and planned for
cutting 2,600 jobs (BBC News 2018). Thus, the change is witnessed from making the
organization participative to autocratic.
2.1.3 Drivers for change
The profit warning is the main driver for the change in the company. The main reason
that is found are the lack of justified design and manufacturing planning to the investor as a
result the partnership was also affected. Rolls Royce is liable for making engines for the UK
nuclear submarine fleet and now the government has drawn up a contingency plan and
monitoring the situation carefully and the next plan for formulating the next generation of
nuclear submarines due by 2030 will be fully planned by government (BBC News 2018). Thus,
this is the reason for taking the decision for job cutting especially from the aerospace division.
The main driver for removing the top management from the organization is to make the decision
making process more clear and accurate. Initially, the organization is based on two divisions-
aerospace and land & sea division which is in recent times is divided into five sections. The
presidents of these five sections are instructed to report everything to Mr. East.

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2.1.4 Barriers to change
There are many barriers while implementing the change in the organization and one of
them is psychological barrier that is conflict among the employees as they are the one, who
have to lost their jobs, These employee do not have a clear idea whether or not they will get any
compensation or a change to prove their competency to survive the change. Another barrier is to
implement the change in the operational functionalities of the organization that is to divide the
organization’s operations into five divisions. In addition to that, flows in the business process
was also a barrier due to the absence of top hierarchies who are liable for assessing the alignment
of the production given by the organizational department with the demand of the clients. This has
risen to issue in less productive output compared to the initial performance. This can be
witnessed through the estimation that job losses would cost it £120m over the next two years
(BBC News 2018).
2.2 Models and framework for change management and plan for the implementation of
successful change initiatives
2.2.1 Lewin Change Model
In the 1950s, Kurt Lewin suggested a model for implementing changes in the
organization and this model comprised of three stages- unfreeze, change and re-freeze
(Cummings and Worley 2014). The main idea behind this model is that a stuff or established
organizational structure is hard to change and hence it is required to loosen the structure for
implementing sufficient changes. This process is again freeze once the changes have been
successfully implemented.

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Image 3: Lewin’s for change management
(Source: Cummings and Worley 2014)
Identified areas for the changes made in the company
Unfreeze- Appelbaum et al. (2012) stated that Lewin discussed that this is the preparation stage,
where the company show your employees and convince them that the changes in important. Jabri
(2017) furthermore depicted that this process also focuses on the values and culture of the
company and the management is responsible to check for the changes occurred in the
organizational process. Rolls Royce identify the change in the management hierarchy in this
section along with the planning that for dividing the entire organization into five parts which was
initially two in number that is aerospace and Land-&-Sea (BBC News 2018).
Change- Erakovich and Anderson (2013) highlighted that in this aspect, the stakeholder of the
company accept and adopt the change. Rolls Royce makes the change in terms of not hiring any
new head for aerospace section after the departure of Tony Wood, president of the aerospace
division and made Lawrie Haynes, financial officer the president of land & sea as the new head
of the entire group who is also liable for giving business related suggestion directly to Mr.
Warren East (The Guardian 2018).

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Freeze- Worley and Mohrman (2014) portrays that in this phase company will operate going
forward and accept new ways of performing duties. Rolls Royce implements this phase through
the development of five divisions and assigning the roles to the presidents of these divisions for
directly report to Lawrie Haynes and Mr. East (BBC News 2018).
Justification for the implementation of successful change initiatives
According to that plan Rolls Royce removed the top management by not hiring any
official in place of Tony Wood. It is identified that the company planned for removing the
hierarchy between Mr. Warren East and presidents of the organizational department, it drives
operational excellence and reduce cost. In the year 2016, Rolls Royce announced 3,600
redundancies and rise of five profit warning in two years (Mail Online 2018). Thus, the
organization also made aware of the fact that this process also slimmed down corporate centre
and diminish the duplication in its management and support functions. Moreover, the managers
are also making knowledgeable regarding the underlying pre-tax profit due to the large
slowdown in orders and sliding oil prices (Mail Online 2018). Thus, it can be said that the
decision for removing 50 of the 200 top managers is also made in order to reduce the cost of the
entire business functions is actually beneficial for the organization and allow them to focus on
making more profit.
Furthermore, in the change process, the organization intends to segregate struggling
engineer from the total aerospace department based on the lack of ability to describe the
requirement and operation process to the investor. The decision was taken as these employees
are not able to make the investor understand regarding the significance of the undertaken
manufacturing and design aspects. The change plan enhances the performance of the remaining
employees regarding the business operations. The removal of the employees also provides

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beneficial aspects that are it is easier for the management to map the progress of each employee
regarding the accomplishment of the organizational objectives. Thus, this change aspect is also
justified and bring effective outcome for Rolls Royce.
Lastly, in the freezing phase, the employees, who remained with the organization, are
communicated concerning their achievement in surviving the change and how they make
difference to those employees, who are sacked from the organization. Moreover, the reason for
the removal of the management is for enhancing the direct communication with the management
regarding the business problem.
2.2.2 ADKAR model
Worley and Mohrman (2014) highlighted that all the phases identified in the changing
phase have to be in sequence and the outcome for each change management aspects should be
cumulative in order to make the entire change management a success. This model comprised of 5
phases that are awareness, desire, knowledge, ability and reinforcement (Boca, 2013).

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Image 4: ADKAR Model for change management
(Source: Worley and Mohrman 2014)
Identified areas for the changes made in the company
Awareness- According to Nasiri et al. (2013), this phase emphasizes on the need for the change.
Rolls Royce in this phase identified that they have profit issues, incapable aerospace employees
and improper functionalities in the existing two departments. The communication of the planned
change is also a major factor in this situation (Calder 2013). Rolls Royce had chosen the news
media rather than direct communication with the employees of the company.
Desire- Kazmi and Naarananoja (2013) on the other hand depicted that in the desire phase the
organization need to support the change that is planned to implement. The concerned
organization shows the desire to optimize the extra cost involved in performing the business
functionalities. This is done through job cuts in the employees of the aerospace division. The
cost involved in the maintaining the management officials of the company need to be diminished
and done through removing the managerial hierarchy.
Knowledge- According to Kliewe et al. (2013), this phase highlights how to implement the
change. In this phase, the stakeholder of the organization is provided with training and coaching
(Nasiri et al. 2013). Rolls Royce give training to the survived employees from the change
management regarding the new technological equipment implemented in the company for
performing the organizational functionalities.
Ability- Kliewe et al. (2013) stated that in this phase, the management provide justification
regarding the planned changes for the organization and its impact on the organizational
performances. Some officials of the organization also implement the change strategies in the
company. Rolls Royce presented some of the problem to the employees and management like

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they face five profit warning in two years, low interest of the invertors in contributing financial
resources for the same and delay in business information functionalities due to greater
management hierarchy. Rolls Royce implemented the process of removal of the struggling
engineers through group discussion with the management so that the struggling employees can
be segregated from the efficient one. The problem of the management hierarchy issue is
diminished by removing 600 of the managers out of which 50 are among top managers from the
group of 200.
Reinforcement- This is the last phase of the change management model in which the
organization recognizes the successful change to be successful and take corrective action is
required (Calder 2013). Rolls Royce remained stick with the position that job cuts of the
engineers, formulating additional divisions and remove top management layer.
Justification for the implementation of successful change initiatives
By using ADKAR model the business expert of Rolls Royce has decided to implement
change initiatives. In the stage of awareness Rolls Royce had chosen to use the platform of news
media rather than communicating with the employees. After receiving three times warning
regarding profit the organization had to take an immediate action for rendering an innovation
with the business process (Shah 2014). Direct communication could have hampered the entire
decision of the business authority. Employees may not show their positive outlook in following
the new implemented rules and business strategies. As a result, business expert had to take an
autocratic decision by using the news media tool.
In the second stage of desire the company took the decision of management hierarchy for
diminishing labor cost. As a result, organization did not have to struggle in meeting the
organizational profit. In the third part of knowledge, business authority has decided to give an

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effective training and development session to the employees based on which they can enhance
their technological skill and competency (Pugh 2016). Without giving a training and
development session the organization would never be able to operate advanced technological
devices. As a result, the employees would fail to deliver the services within proper time to the
customers. In order to overcome these risk factors, the business authority of Rolls Royce has
decided to provide professional training to the employees in order to develop their technological
competency (Calder 2013). In addition the ability shows that behind diminishing management
hierarchy removing 600 of the managers out of which 50 are among top managers the business
authority wanted to make the entire communication method flexible.
After reducing managerial hierarchy the employees were easily able to communicate
with the higher authority easily (Bradley 2016). They got the scope to make effective
interpersonal communication with each other. In this kind of situation, employees could resolve
their personal issues more effectively by discussing with the higher authority. In the very last
phase of reinforcement Rolls Royce remained stick with the position that job cuts of the
engineers, formulating additional divisions and remove top management layer (Chang 2016). As
per the prediction conducted by Mr. East these specific change management would ultimately
beneficial for the rendering success of Rolls Royce. As a result, the business expert decided to
make proper communication with the employees so that the barriers can be overcome. On the
other hand, this implementation of innovative business strategy would render more profit in the
industry of vehicle manufacturing and design.
2.3 Explanation for overcoming the most significant barriers
As opined by Hayes (2014) change management is an experimental method that the
business experts have to follow for rendering innovation within business services. While

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implementing change management the business experts of Rolls Royce have faced several
challenges which have already evaluated above. This very specific part has focused to make
detailed analysis on how Rolls Royce should implement some of the most effective ways based
on which they can overcome the barriers occurred at the time of implementing the changes
(Jadhav et al. 2014). In this very specific part a detailed overview of barriers is portrayed based
on which business experts have implemented effective plans for overcoming the challenges.
 Psychological barrier that is conflict among the employees
 Barrier in operational method
Primary ways of overcoming the barriers of implanted plans are as follows:
 Conducting a group discussion by involving the existing employees:
Warren East while implementing change management within the business process has not
received any support from the existing employees. Employees are from different cultural
backgrounds as well as attitudes associated within the same project. Whenever East has decided
to reduce the management hierarchy employees intended to show their rebellious attitudes for
not implementing this strategy (Kuipers et al. 2014). As a result, the employees lost their interest
in providing their best services towards meeting the business goal. In order to overcome this kind
of static situation, East has implemented some of the most effective initiatives. By conducting a
group discussion session Mr. East has invited all existing employees. The primary purpose of
this group discussion session was to communicate with the employees for giving them a detailed
clarification about the reason of change management. The most significant reason of reducing
management hierarchy is rendering communication flexibility among the organizational
employees (Appelbaum et al. 2012). Employees had to follow a huge managerial structure before
highlighting any issue related to business services. As a result, employees had to wait for a long

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time for getting its approval due to large management hierarchy. In order to make the entire
communication method transparent and less time consuming Mr. East has decided to reduce
managerial hierarchy.
On the other hand, manager had to be answerable after making the decision of job cuts of
2,600 in the next 18 months. It has been observed that engineering group employed in the
organization did not provide clear idea on the projects that left investors unclear about its
direction due to which the company faces much loss in profits and business partnerships
(Sonenshein and Dholakia 2012). Due to the maintenance of fog data the business experts were
unable to evaluate the overall performance of business and a clear forecast about the profit and
loss. In this kind of situation, the company has received profit warning for three times
(Cummings and Worley 2014). In order to overcome the crisis and to render business success
Mr. East ad to take the decision of job cuts. Reducing the number of employees would help the
organization in reducing labor cost. As a result, organization would not have to face challenges
in meeting business profit (Wittig 2012). After conducting an effective group discussion session
existing employees have showed their positive outlook towards company’s decision.
Implementing technological devices to make a substitute of human resources
Rolls Royce had to face serious barrier in maintaining the entire operation flow
systematically after reducing numerous employees from the process of business. As a result, the
entire service method became delayed. Customers had to wait for a long time in receiving
services. Employees were unable to get their remuneration properly due to the lack of
maintaining proper data. In order to overcome this kind of crisis Mr. East has stated that Rolls
Royce would emerge technological devices for becoming a substitute of human resources. Stead
and Stead (2015) stated that technology can maintain a chronological data record based on which

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the company would get clear and systematic data about business profitability. In addition, the
business experts would have to give one time investment for technological devices based on
which the company would maintain clear database about profit and loss. Employee remuneration
would be properly calculated at the same time (Fernandes et al. 2015). In addition, technology
would deliver the entire services more quickly than a human resource. As a result, the entire flow
of business would be more systematic. In addition, the business authority has decided to give an
effective training and development session to the employees based on which they can enhance
their technological skill and competency (Smith 2013). With the help of good technological skill
employees would be able to overcome any kind of sudden technological barrier occurred at the
workplace.
In order to overcome the barriers East has implemented those plans within business
process of Rolls Royce. As a result, the organization has faced a positive result from the
employees end. They have provided their support in implementing change management so that
organization can reach the peak of success.
3.0 Conclusion
The entire study has focused to make in-depth overview about the significance of change
management in rendering organizational success. Rolls Royce is an aerospace and motor
vehicle manufacturing and design company that formulates civil and military aero engines,
automobiles, power generation equipment and marine propulsion system. Numerous eminent
scholars have provided their own opinion regarding this concept. A group of personality believes
that change management brings organizational success. On the other hand, another group of
scholars have differed previous opinion by highlighting the facts that organizations have to face
immense barriers while implementing change management at the workplace. In this very specific

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part a detailed overview of barriers is portrayed based on which business experts have
implemented effective plans for overcoming the challenges of implemented change management.
On the very specific part the study has given detailed overview about the drivers of changes for
Rolls Royce, and its necessity for implementing change management within the workplace.
While evaluating various aspects change managements the business experts had to face
psychological barrier as well as barrier within the workflow. By implementing Lewin Change
Model and ADKAR model the organizational managers have implemented effective plans for
change management. In addition, the organization based on identified barriers has provided
major recommendations on how to overcome challenges of change management. Conducting a
group discussion by involving the existing employees and implementing technological devices
are the most effective solutions based on which barriers for change management can be
overcome.

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Fernandes, J., Henriques, E., Silva, A. and Moss, M.A., 2015. Requirements change in complex
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