Understanding and Leading Change: A Sainsbury's Case Study

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Understanding and Leading Change
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Table of Contents
Introduction...................................................................................................................... 2
LO1.................................................................................................................................. 3
LO2.................................................................................................................................. 6
LO3................................................................................................................................ 10
LO4................................................................................................................................ 13
Conclusion..................................................................................................................... 18
Reference List................................................................................................................19
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Introduction
Organisational change refers to revolutionising of culture, business model, and
strategies, working practices, procedures or overall systems of a firm. It is a complex
and essential concept in modern business world, as change is necessary to discover
new opportunities, exploit resources to gain benefits, and ensure sustainability of the
business. Strong leadership is vital to manage organisational change to ensure
transformational systematically without any interruption. The study on leading changes
will be done by considering changes occurred in Sainsbury’s, UK. The chosen firm is
the third largest supermarket located in Holborn, London. It has 16.9% of share in
supermarket industry. Operating income and revenue of the firm is £518 million and
£28.456 billion as of 2018 (About.sainsburys.co.uk, 2019). In order to understand the
effect of chance on Sainsbury, the study shall discuss accelerators of change and their
relationship with individual and team behaviour. It shall demonstrate barriers of change
by entitling Force field analysis. Some leadership approaches will be cited to deal with
internal or external changes within Sainsbury’s.
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LO1
Compare different organisational examples where there has been an impact of
change on an organisation’s strategy and operations.
Assess the different drivers for change in each of the given examples and the
types of organisational change they have affected
The drivers of change are considered to be the forces that affect the workings of
accompany. They are as follows:
INTERNAL DRIVERS
 Capabilities: The capabilities of a company’s administrative department are
considered to be one the most important drivers of change. The greater the
capabilities of the workforce and the administrators, the bigger and better change
they can bring about in the strategies and operations of the company. For
example, Sainsbury’s CEO David Sainsbury, who was the CEO during the
1990’s, was not as competent as the previous CEO John Sainsbury. This led to
the downfall of the brand due to mistakes in their marketing strategies. The CEO
of Tesco, Terry Leahy, was a very competent CEO and his expansion strategies
helped Tesco to become the largest retailer of groceries in the UK and become
the world’s biggest supermarket chain, a feat previously owned by Sainsbury’s.
Thus, the capability of the administrators plays a large role in the strategy and
management of a company (Jalagat, 2016).
 Resources: The resources of a company - namely the finances, suppliers and
employees of a company affect the way the company makes strategies. For
example, Sainsbury’s downfall during the 1990’s was in part due to a very
controversial advertising campaign and poor treatment of their suppliers that
caused many of them to prefer Tesco over them. This caused Sainsbury’s stock
resources to drop considerably and Tesco’s stock resources to be abundant
(Fogg, 2014).
 Inventions: The inventions of a company drive their sales and revenue as new
inventions become the forerunners of their marketing operations. New inventions
mean an increase in the range of products available for sale. For example, both
Sainsbury’s and Tesco constantly invented new products to compete against
each other in the market (Samuel, 2013).
 Dissatisfaction: Dissatisfactions in a brand by its employees and consumers
also change the way the company makes strategies. For example, suppliers
were dissatisfied by Sainsbury’s treatment of them. This caused them to stop
supplying materials to Sainsbury’s and instead supply them to Tesco (Nwagbara,
2010).
 Desire: The desire of a company also influences a brand’s operations. For
example, the founder of Sainsbury’s John James Sainsbury opened his first shop
in London with the motto “Quality Perfect, Prices Lower”. Tesco’s founder Jack
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Cohen opened his first shop with the motto “Pile it High, Sell it Cheap”
(About.Sainsbury’s.co.uk, 2018).
EXTERNAL DRIVERS
 Customers: Customers are the most important external drivers of change as all
companies produce their goods and services in order to satisfy their customers’
demands. Without customers, there would not have been any sales and
companies would not be able to earn revenue. Both Sainsbury’s and Tesco keep
their customers in mind while designing new products and services.
 Competitors: Competitors play an important role in operations of a company as
each company wishes to outperform their consumers and dominate the market.
Sainsbury’s and Tesco have been competitors in the supermarket sector and are
always trying to outperform each other in the market. Tesco managed to become
the supermarket leader in the world by toppling Sainsbury’s in 1995 (Olaghere,
2014).
 Investors: A company needs proper financial investment to function. The capital
required in running a business is gained from investors who invest their
resources for a share of the company’s profits and shares. Sainsbury’s did not
gain much investors during the 1950’s, thus it started its own self service shops.
Tesco on the other hand gained many investors and instead opted to buy chains
of retail outlets instead of self service shops (Aluko and Knight, 2017).
 Technology: Technology plays a vital role in the growth and development of a
company. Technology is constantly evolving, which requires the employees of a
company to constantly upgrade their machinery and equipment. For example,
Tesco introduced the concept of loyalty cards, which allowed customers to avail
their products in a discounted price. This allowed Tesco to gain the upper hand in
the consumer base as Sainsbury’s was unwilling to introduce this concept, which
caused them heavy losses (Beck, 2019).
 Government: The government of a country influences a company’s operations
because it introduces many laws and rules which a company must abide by. If a
company fails to abide the governments laws, that company can get their trading
licenses seized by the authorities. Also, government officials can comment about
a company or brand, which has the capability to negatively or positively affect
their brand image. For example, during the second half of the 20th century,
Sainsbury’s was against the concept of using trading and retail stamps to
increase customer loyalty. They believed it was of no value to both consumers
and the company as it only helped in increasing production costs. Tesco applied
this concept to increase consumer loyalty. Due to this, Sainsbury’s CEO Alan
Sainsbury launched a campaign against the concept of using trading and retail
stamps, which negatively affected their performance as the government officials
considered the campaign “Unethical”. This negatively affected their brand image
and caused them to deplete their sources on the campaign (Karim et al, 2012).
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Thus it can be seen that many organizational; and strategic changes are due to change
in organizational structure (internal force) and also to overcome competitors (external).
Though most changes are usually born from internal changes like the change in
management, external forces also impact an organizations strategy and operations. In
the case of Sainsbury’s, internal changes that impacted their operations and strategies
include the change in management staff and change in CEO’s. Internal changes that
brought about a change in Sainsbury’s strategies include competitors (Tesco) and
foreign market strategies (Walmart) along with customer demands and trends.
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LO2
Evaluate the ways in which internal and external drivers of change affect
leadership, team and individual behaviours within an organisation.
External and internal drivers of change shall be identified through SWOT analysis.
SWOT analysis
Strengths
 Third largest supermarket chain
with an experienced leadership
team
 Great employee strength with
higher experience and advanced
skills
 Excellent advertisement and
branding strategies
 Training and development facility
for employees
Weakness
 Competition from Tesco, Morrison,
and other retailers
 Rising in supply chain cost
 Increase in labour cost
Opportunity
 Opportunity to enter in emerging
nations through joint venture and
partnership
 Advancement in information and
technology
 Shifting in needs of retail
consumers
Threats
 Increased pressure to generate
products from ethical sources
 Challenge from the small and
medium retail firm
Table 1: SWOT analysis
(Source: Created by the learner)
Internal drivers or accelerators of change affecting individual, team, and leadership
behaviour of Sainsbury are mission, resources, leadership, organisational structure and
capabilities (Burke, 2017). Mission states the organisation’s purpose and enables
everyone to fulfil that purpose through developments and changes. Mission of
Sainsbury is to give great service to consumers by harnessing diversity, talent and
creativity. A detailed and purposeful mission can bring positive and quick changes
within the supermarket, whereas an unclear and generalised mission may take long
time to bring successful changes. Similarly, great leaders inspire, guide and direct
people how to work and utilise perceived skills to gain achievement (Millar et al., 2012).
They use effective communication style and motivational approach to bring people
together for fulfilling organisational dreams. If leaders will not use their power and
ability, followers cannot get right support to facilitate change. This shall hamper the
effectiveness of change management within Sainsbury and increase fear of obtaining
failure.
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Sainsbury has a hierarchical organisational structure in which management, leadership,
and authority are defined from top to bottom. This allows employees to understand their
roles, and report problems directly to top managers. Managers and their subordinates
are specialised in specific areas and employees get proper guidance and knowledge to
engage in the change process. If managers will not guide team members working under
them, organisational change cannot be applied successfully. Resources and capabilities
accelerate change within the organisation and enable individuals to thrive towards
change. For example, employees with higher business intelligence and creativity are
enablers of organisational change. They support the management with new ideas and
approaches to implement change successfully. Similarly, financial and material
resources act as strengths for the organisation during change management. However,
with the lower capability and fewer resources, it is challenging to introduce and apply
change.
External drivers influencing change within Sainsbury are customers, technology,
competitors and others (Jacobs et al., 2013). Recently, customers’ demand in terms of
producing financially viable and quality products has increased. This enables individuals
to work cohesively to improve quality of retail products by adopting ethical business
practices. Leaders are encouraging retail innovation by adopting advanced technology
and modifying business practices. Retail industry is facing immense competition from
large players including Tesco, Asda, Morrison and others. This forces Sainsbury to hire
intelligent people, who can manage and develop business to bring competitive edges.
Teamwork and collaborative working practices are given importance to attain
effectiveness in the retail business. Additionally, SMEs are dominating the retail market
by offering low-priced products to consumers. Sainsbury is facing the challenge to offer
higher discounts, offers, and coupons to attract customers; thereby reduces profit
margin.
Evaluate measures that can be taken to minimise negative impacts of change on
organisational behaviour
Organisational change has several negative impacts on organisational behaviour
including increased mental stress, increased turnover, loss of loyalty and motivation,
increased absenteeism, lower productivity, and reduced performance. Measurers to
reduce negative impacts can be identified from Burke-Litwin change model.
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Figure 1: Burke-Litwin change model
(Source: Spangenberg and Theron, 2013)
The model defines cause-effect relationship among twelve organisational dimensions
that are crucial to organisational change and reduce negative influences (Spangenberg
and Theron, 2013). Sainsbury may take following measures to minimise negative
impacts.
 It should identify key external forces and review their direct or indirect influence
on change management
 Strategy and mission of Sainsbury should be established and examined from
perspectives of employees
 A clear leadership structure should be established to make employees
understand importance of change management and increase preparedness
through development support
 Sainsbury should perform a detailed study on organisational culture to seek
information on values, customs, and principles of organisational behaviour
 The study of organisational structure should not be confined to hierarchical
structure; it should concentrate on communication, responsibility, authority, and
decision-making between individuals from all levels and departments
 Employees should understand policies and procedures thoroughly to stay
prepared for inconveniences
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 The management should conform to organisational strategies while dealing with
resources and capabilities of the organisation
 Job requirements and employees’ skills should be matched to fulfil situational
demands posed from change management
 Leaders and managers should measure individual motivation level to
demonstrate how willingly they will put effort to match organisational goals
 Individual and organisational performance should be considered from key areas
including customer satisfaction, efficiency, budget, productivity, and quality
 Sainsbury should manage work unit climate by determining what employees feel
and expect from the management
These measures shall ensure an effective change management practice in which
employees and the management understand their roles and work cohesively to solve
each other’s problems.
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LO3
Explain different barriers to change and determine how they influence leadership
decision-making in a given organisational context.
Force Field Analysis will support to explain barriers of change occurred within
Sainsbury. This decision-making tool demonstrates driving and restraining forces that
work with or against organisational change (Swanson and Creed, 2014).
Figure 2: Force Field Analysis
(Source: Swanson and Creed, 2014)
Driving forces are positive forces that encourage an organisation to carry forward
changes and take necessary steps (Al-Haddad and Kotnour, 2015). Restraining forces
are negative forces that act as obstacles for organisational changes. Firstly, vision or
goal of Sainsbury has been noted. The firm aims to achieve top position in retail
industry by utilising employee skill and giving customers with excellent supermarket
experience. After setting a goal, it will draw a mind map denoting favourable and
unfavourable aspects of change. Evaluating restraining and driving forces, the
organisation shall identify forces having the flexibility for change. With implication of this
model and performing a baseline assessment, following barriers of change and their
impact on Sainsbury’s decision-making.
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Organisational Complexity: It occurs, when employees and the management find a
product, system or process bit difficult or challenging (Cummings and Worley, 2014).
Organisational members do not understand how to operate and manage such difficult
aspects. For instance, Sainsbury introduced new digital technology to provide
customers with automated checkout systems. Store operators found it difficult to
manage and track because of a large number of customers visiting for shopping. In
such complex cases, the change process prevents leading to competitive
disadvantages.
Unknown current state: Change is impossible to implement if Sainsbury has no idea
regarding its current operation. For example, it introduced a new training program
without assessing employees’ current capabilities. This may lead to failure due to
uncertainty regarding its outcomes. Sainsbury cannot earn desired return on investment
if it continues to initiate changes without in-depth analysis or assessment of current
situations.
Lack of appropriate communication strategy: Sometimes, top leaders of Sainsbury
believe that introducing a change and passing it to employees would be enough to
attain better result. They do not convey business objectives to staff before announcing a
change process. For instance, Sainsbury is going to introduce a social media campaign
for its cafe. Front-line employees cannot execute this campaign without two-way
communication. The entire change may fail due to presence of communication gap
among organisational members present working at different levels.
Lack of employee involvement: The organisation will always have a fear of failure
unless employee involvement is less. Employees do not show a willingness to
contribute in change process due to fear of unknown, lack of experience to handle
change, and lack of motive to enhance current culture (Brunsson and Olsen, 2018).
Culture shifting planning: Sainsbury’s planning team is accountable for formulating a
plan that can support and sustain a change. If planning team fails to concentrate on
individual work responsibilities, management structure, required resources, and other
aspects, the supermarket cannot embrace a change. This leads to failure in taking
corrective decisions and gain success.
Failed change initiatives: Failure in change initiatives adopted in the past is a major
barrier to change, as the business fears to take the same step again. The business
undergoes uncertainties regarding improper utilisation of resources and time.
Lack of management commitment and support to change: Support and
commitment from top managers are required to carry out changes successfully.
Employees may have less experience or skills to take actions but with the help of
managers and leaders, they can assure a better change implementation.
Influence of change barriers on Leadership decision making
Leaders take a skilful and keen approach to handle complexity and fast growth of
Sainsbury. Barriers posed from organisational complexity enable leaders to employ
highly effective, qualified, and diligent change management approaches so that
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