Change Management Strategies for SAR Health Services Report

This report examines the case of change management at SAR Health Services (SARHS), a company specializing in medical equipment supply. It investigates the implementation of structural and operational cost-reduction changes. The report delves into crucial factors to consider before implementing change, including motivation theories such as Herzberg’s two-factor theory, Maslow’s hierarchy of needs, and expectancy theory. It identifies and discusses people management issues, such as the impact of strategic change types (adaptation, reconstruction, revolution, evolution) and the need for transformational leadership. The analysis also covers the application of Lewin's change management model (unfreezing, moving, refreezing) and the importance of trust in management during change. The report provides strategic recommendations and considers factors for building change capability within the organization, emphasizing the importance of communication, employee commitment, and addressing resistance to change. The report highlights the challenges of change management, particularly in the context of cost-cutting measures, and stresses the need for effective leadership and employee engagement to ensure successful outcomes.

Change management in SARHS
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Executive Summary
This report investigates the case of change management in SAR Health Services (SARHS). It is a
company specialized in supplying medical equipment to hospitals across Europe and Asia.
SARHS has implemented a structural change and currently, it is implementing a new change that
involves a reduction of operating costs. The report discusses the factors to be considered before
implementing change. It provides an identification and discussion of people management issues.
Strategic recommendations and factors to be considered before implementation are also
discussed.

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Table of Contents
Introduction......................................................................................................................................3
1. Identification of the factors that the management team might wish to consider before going
ahead with their plan........................................................................................................................3
2. Identification and discussion the people management issues that the management team are
likely to face in implementing the plan with reasons......................................................................6
3. Develop and justify recommendations as to how to proceed with this project...........................9
3.2 Implementing a communication plan......................................................................................10
4. The factors that the organization may need to consider in order to build its change capability12
Conclusions....................................................................................................................................13
References......................................................................................................................................15

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Introduction
Contemporary organizations strive to achieve sustainable changes that require significant effort
to manage change effectively. They tend to rely on change management models that introduce
clear ways of managing change and the expected obstacles that commonly occur. Organizations
need to manage planned organizational change to minimize risk (Stouten, Rousseau and De
Cremer, 2018). Organizational growth involves changes that vary in their depth and range. Also,
the change could be implemented in the short run or it could take place over a long period. Every
type of change has its requirements and challenges that should be carefully managed.
Organizations should effectively communicate the benefits of change and involve all the
stakeholders in the change process in order to gain their support (Skalik, 2016).
This report investigates the case of change management in SARHS, the specialized company in
supplying sophisticated diagnostic equipment to hospitals across Europe and Asia. The company
has implemented a structural change and currently, it is implementing a new change that
involves a reduction of operating costs. The following section discusses the factors to be
considered by the management team before implementing change, identification and discussion
of people management issues, strategic recommendations and factors to be considered before
implementation.
1. Identification of the factors that the management team might wish to consider before
going ahead with their plan
1.1 Motivation theories
SARHS management is required to understand and apply the motivation related theory to be able
to implement the best fitting ones to its employees. Motivation is very important for its

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contribution to employees’ performance and organizational success. Motivation depends on the
employees’ level of satisfaction and engagement in the workplace. Motivated employees are
likely to show a positive attitude towards their work and customers. Effective leaders can create
a culture of trust within the organization that increases the level of confidence in them by their
followers. SARHS leaders should devote attention to creating a supportive environment that
empowers employees (Hur, Moon and Jun, 2016; Ruck, Welch & Menara 2017; Wojtaszek,
2016). The different theories that should be considered by managers and leaders to help them in
influencing the employees' satisfaction and performance in SARHS are discussed according to
Alshmemri, Shahwan-Akl and Maude (2017), Dias et al. (2016), Cook and Artino (2016),
Baumeister (2016) and Kiatkawsin and Han (2017), as follows:
 Herzberg’s two-factor theory: The theory provides an analysis of the employees’ job
satisfaction that incorporates two types of motivators. These motivators are intrinsic and
extrinsic or hygiene. The intrinsic factors represent the basis of the employees' durable jobs
for their significant contribution to the employees' job satisfaction. They stem from the
internal feelings of the employees and direct their actions toward more engagement to work
and fulfilling their goals. On the other hand, extrinsic factors have a lower contribution to
employee job satisfaction compared to internal factors. They involve external motivators, like
salary, employees’ relations, promotion, and work conditions. Their existence prevents the
occurrence of job dissatisfaction, but do not eliminate them. This theory is disadvantaged for
being biased to the intrinsic factors over the intrinsic factors, while the employees might
prefer the extrinsic factors over the intrinsic motivations.
 Maslow’s hierarchy of needs: The theory assumes that individuals are capable of deciding
their needs according to five consecutive levels. Every level represents a higher need than the

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previous level. The physiological needs represent the elementary level that involves the need
for food. The second level reflects people’s need for safety and security. The third level
concerns the need for belonging and love. The fourth level represents the need for self-esteem.
The fifth level reflects people's need for self-actualization.
 Expectancy theory: According to this theory, people realize the causal relationship between
an action and its results. This assumption is translated into people's choice of specific action is
developed according to the expected outcomes. People's preferences are controlled by the gains
they will achieve from taking the action. This leads employees to take actions based on their
satisfaction level of the motivator. This theory is criticized for its reliance on many factors.
Therefore it should be linked to other theories, like the hierarchy of needs to identify the
employee their satisfaction level.
1.2 Motivation factors
Motivating employees to accept change management should consider the following factor to
ensure the success of the change process. The main factors of employees’ motivation are
discussed according to Ilcuic (2016), as follows:
 Intrinsic reward: They have a great influence on the employees’ satisfaction level.
 Extrinsic rewards: They help the employees to keep a minimum level of satisfaction. The
strategy of rewarding employees should consider achieving the organizational goals and at the
same time, they should satisfy the employees’ needs.
 Commitment of employees: The employees perceived organizational support identifies their
level of commitment. Organizations are capable of increasing employees’ resistance to change
by increasing their commitment to the workplace.

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 The position of the employees: Every career level is associated with different needs according
to Maslow hierarchy of needs. The high autonomy and delegation affect the satisfaction level.
2. Identification and discussion the people management issues that the management team
are likely to face in implementing the plan with reasons
2.1 Types of strategic change
Change management is a function of the challenges that face the organization. They identify the
required type of change. Accordingly, SARHS is required to consider the type of strategic
change to be able to manage it effectively. The types of change are discussed according to
Johnson, Scholes and Whittington (2008), as follows:
 Adaptation: It refers to the type of change that could be embedded in the current
organizational culture. It represents a common type that increments over time.
 Reconstruction: It involves rapid change that does not result in cultural change. It represents a
turnaround situation that requires significant structural changes and cost-cutting programs.
 Revolution: This type of change is rapid and requires major strategic changes and cultural
change. Organizations might fail in managing this type of change for the extreme pressure of
the change requirements.
 Evolution: This change requires the strategy to be changed. Also, culture should be changed
over time due to the necessity of transformational changes.
According to the previous analysis, SARHS faces a reconstruction strategic change that put
pressure on its budget and led it to cut costs. In this regard, SARHS planned to cut costs by
recycling the used materials and providing recycling bins to the customers. Also, it provided its
drivers to reduce fuel consumption. In addition, SARHS encouraged working from home to the

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sales team. The major negative impact of change is represented in the reduction of the production
staff by 5 -8%, the matter that caused their outrage.
2.2 Change management theories
There are two theories that explain change management represented in theory E and theory O.
According to Johnson, Scholes and Whittington (2008), theory E assumes that change is
associated with the economic value and related to the top-down approach. This involves changes
in structures and systems, reduction in financial incentives due to downsizing and layoffs. While
the theory O assumes that change is based on the development of organizational capabilities. It
involves cultural change, and learning and development. According to the provided analysis,
SARHS follows theory E. People tend to questions the need for further changes that impact their
job security and involves traveling to distanced places or working remotely. These changes result
in major cultural changes that impact employees’ morals and performance. Change management
could lead the organization to lose its flexibility to adjust its processes. The newly added
restrictions because of the change can result in the prevention of innovation (Porter, 1998).
Therefore, SARHS is required to eliminate barriers to adjustment. Leaders should possess the
appropriate leadership style to effectively manage transformational changes.
2.3 Transformational leadership
The case of SARHS requires suitable leadership to manage the change process effectively. The
recommended is transformational leadership. Burns has developed this leadership style as cited
in (Feng, Huang and Zhang, 2016). This leadership style aims to fulfil the higher needs of the
employees by using various motivational tools. The employees can perform beyond the leader’s
expectations if he succeeded in creating an environment of trust. Therefore, the transformational

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leadership style represents a system of mutual motivation between the leader and the followers.
The leaders can effectively impact the followers’ commitment to the workplace by influencing
their morals. Also, the employees who can achieve the agreed-upon performance level are
rewarded for their commitment.
2.4 Trust in management and transformational change at my workplace
Employees' trust in management reflects the aggregate output of individual characteristics and
group interdependence. Trust equilibrium is sensitive to threatening factors. Transformational
change is considered a threat to trust in management according to the severity and degree of
change (Lipsky, Avgar & Lamare 2016). Accordingly, change represents a big challenge to
employees' trust in management.
2.5 Applying Lewin's change management model in SARHS
There are various approaches and models for change management that could be applied by
SARHS to ensure a successful transformation that gains the management employees' acceptance
and support. Lewin's change management model could be applied to SARHS. It involves three
levels of unfreezing, moving and refreezing (Cummings, Bridgman and Brown, 2016). They are
discussed as follows:
 Stage one 'unfreeze': This stage involves the assessment of the change and presentation of its
opportunities. The new vision is developed and the organizational strategy is created to achieve
the vision. The new settings and performance measures should be identified. The action plan
and communication plans should be created. Every team should know his new role and the
expected performance level (Malmstrom, 2016). SARHS has provided the staff members the
required training to develop their skills and increase their awareness about sustainable
development. The matter that prepared them for the new vision that involves reducing the

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company’s carbon footprint by a third by 2022. Also, the new strategy is set, the budget is
prepared for reduction, and the corresponding reduction by 5 -8% of office and production staff
is set.
 Stage two 'Moving': This stage involves change implementation. Management should take the
necessary actions for implementation. The employees should adapt to the requirements of
change and business processes. This stage is highly challenging because employees are
required to adapt to the new system and implement the change strategy (Ybema and Horvers,
2017). Accordingly, SARHS should start with its resisting managers who still refuse the last
structural change to gain their support. The advantages of the change should be communicated
with managers first then with employees to lower the severity of resistance to change.
 Stage three 'Refreezing': This stage involves the employees’ acceptance to change. They
become part of the new system by implementing it in their daily work activities. Managers and
leaders should create a work environment that supports the change process (Schwalbe,
McTague and Parrotta, 2016). SARHS’ managers and leaders are required to think of the best
ways of achieving the change objectives. This could be done by designing a new motivational
system that influences the employees' commitment to the workplace.
3. Develop and justify recommendations as to how to proceed with this project
3.1 Developing a guiding team
SARHS change management quires the formulation of a guiding team that supports the change
and ready to communicate its advantages with resisting employees. The guiding team should
have specific qualities that are discussed according to Caputo, Evangelista, & Russo (2016) and
Butt, Naaranoja and Savolainen (2016), as follows

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 The behavioral qualities: The team should be fully supportive of the change process. It
should be united and have the power, capabilities and expertise to manage the transformational
process. This team could involve transformational leaders, change agent employees and
supporting managers.
 The ethical considerations: Communicating change with the employees should be factual and
characterized by honesty in sharing the change information. The selected team members should
respect others and appreciate their feedback. Also, they should respect the organizational
standards and law and provide a positive attitude towards the environment.
 The cultural considerations: The organizational culture should be considered when
communicating change by the selected team. They should have shared values when
communicating change with the stakeholders. They are required to ensure customer
satisfaction.
 Stakeholders’ engagement: The process of engaging stakeholders represents an opportunity
for the organization to share its values. It can exploit the opportunity to disseminate the
expected performance information and maintain strong collaboration.
3.2 Implementing a communication plan
SARHS is recommended to implement a communication plan to engage its stakeholders and gain
their acceptance of the change process. Effective communication acts as a driver to
organizational success by enhancing the staff members to cooperate in achieving the new goals
of the organization after implementing change. SARHS is recommended to implement formal
and informal communication styles to attract different stakeholders groups. Communicating the
organization's vision, mission and values is essential to engage stakeholders and gain their
support (Ruck, Welch and Menara, 2017). The informal communication involves sharing

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information spontaneously with employees in an unofficial way. It is advantaged for keeping
communication away from formalities. It is recommended to take place within the organization.
Formal communication involves sharing information in the form of holding official meetings,
sending formal documents and emails to the stakeholders (Polat et al., 2018; Luo et al., 2016).
Accordingly, SARHS should lead by example in terms of adapting to the new changes for
decreasing the company footprint and supporting sustainability. Developing a communication
plan by SARHS should involve sequential steps that are discussed according to Baston-Pitt
(2016) and Caputo, Evangelista and Russo (2016), as follows:
 Establish a clear vision and objectives: The change objectives should be set in light of the
organizational vision. They should reflect the organizational culture and identify the future
statement. SARHS aim is to decrease its carbon footprint by a third by 2022.
 Divide the change management into phases: SARHS witnessed two waves of change, where
the first phase involved shifting from a functional to a matrix organization structure. Managers
are dissatisfied with the change for its negative consequences on power distribution and
relationships. The second phase involves a reduction of the operating costs. SARHS should
divide the change into 3 phases according to Lewin’s model.
 Confirm key milestones for each phase: The unfreezing stage should involve the
communication of the vision and changes in strategy. The moving stage should involve change
implementation and the third phase of refreezing should witness change stabilization.