ASSIGNMENT OF WEEK 30

1.      Introduction

In the year 2002 Faslane which was previously managed jointly by the MOD and the Royal Navy decided to partner with Babcock Marine, a private sector company. The main aim of such partnering agreement was for the purpose of reducing cost and improving their services. Babcock Marine was given the responsibility to save the cost as well as to improve their operational effectiveness. They were given a target of £76 million saving within five years. With a significant change Faslane was able to achieve the target and was considered best.

In this report, in order to analyze the change process and impacts of change has been analyzed. Mainly, Balogun and Hope Hailey’s Change Kaleidoscope and Lewin’s Forcefield Analysis was conducted in order to measure the impacts of changes. In addition, Johnson’s Cultural Web and McKinsey’s Seven S Model are used in order to analyze the internal features of Faslane. In addition research based view and competency analysis has been conducted.

Further, Lynch Model and strategic leadership model was used in order to identify the strategic leadership style. At last conclusion has been given to summarize the report.

2.      Analysis

In the year 2002, the HM Naval Base Clyde (Faslane) submarine base which was previously managed by Ministry of Defence (MOD) was transited to Babcock Marine which is a part of Babcock International.  With the transfer of control and management, it was important for the management team of Babcock to improve performance as well as to reduce the cost of operation.

2.1  Strategic Change Context of Faslane in 2002

From the figure 2.1, we can see that Change Kaleidoscope has been used to analyze the change process in Faslane. We can clearly observe that change process was revolutionary because the main objective was to change the mindset of staffs. There was a huge participation due to participative programs like “the event in the tent”.

New management team was given the target to deliver £76 million cost saving in five years. Within such a short period of time it was very difficult to achieve. The management team required the transfer of skilled employees who has already faced changes. With such transfers the time for adaption was reduced and Babcock was able to achieve its goals. In addition, changes started from the low levels which make it easy to implement. Talking about the scope the way of working as well as the structure of the management team was totally different. Before the change process, staffs were only focused to infrastructures and facilities rather than people. During the change context, new management team emphasized the importance of inward looking.

During the change period, Babcock tried to increase the efficiency without affecting the quality of services being provided. This was done through changing the mindset of people and bringing in skilled employees in the Faslane. Management announced that employees will be able to form their own team and prepare plans and maintain themselves. In other words, they were given flexibility in the work. On the diversity factor, management teams were diversified and reduced. On the capability side, staffs were not fully ready for change because of lack of experience. Previously it was managed by MOD and Royal Navy and they did not feel the need of change. 

The capacity of Faslane was positive because the budget was fixed. People were highly skilled by which they can overcome the impact of change. On the other hand, managerial time was less as it has to deliver £76 million in just five years. The management was ready for change because of the previous experience and unique skills and capabilities. On the other hand, employees were not ready for change because they have never gone through change. They were having fear that change will not benefit them.

 

Figure 2.1 Balogun and Hope Hailey’s Change Kaleidoscope of Faslane

 

From the figure 2.2 we can observe the Force Field Analysis where there are factors which are for and against change. On the pull factors, MOD was in the need to reduce the cost and improve operational efficiency with better quality services. There was a great support from the top level as well as customer were expecting better quality services. Due to vision for the future, the change was essential.

However, there were resisting factors against changes. The first factor was traditional ways of thinking and working. Previously they were just making money and passing time and change would be very difficult for them. In addition, staffs did not felt to save money. Management structure was also huge by which large amount of money was being spent. In addition existence of bureaucracy was the main problem in that public sector organization. Overall, the need for change was very necessary to cut over spending. Hence, change process was conducted and it was done for improve the operational efficiency as well as to save money.

Thus, the change process at Faslane was a revolutionary change strategic as well as cultural change. According to G. Johnson(2011), “Revolution is change which requires rapid and major strategic but also culture change”. Here we have seen the change in the mindset of people and working pattern. So, it was a revolutionary change at Faslane.

Figure 2.2 Lewin’s Force field Analysis of Faslane

  2.2 Internal Features of Faslane

From the figure 3.3 and figure 3.4 we can see the Johnson’s Cultural web up to 2001 and from 2002 to 2010 respectively and figure3.5 and figure 3.6 represent the McKinsey’s Seven S Model. If we observe the cultural web of these two different years we can see that positive changes in the management style can really help to succeed any organization. Babcock managed loyalty, commitment and welfare which come from the employees’ side. Infrastructures were seen as the assets before and after people were considered as the most important elements of organization. When the Faslane was managed by MOD and the Royal Navy it was working whether it is bad or good. The management structure was huge and complex. People used to just do their job and creativity and business plans were not considered important. Organizational structure was also huge with seven layers and they were having traditional management and organizational structure. Perception of change as a negative or unimportant factor can also be considered.  Although Faslane was customer oriented it was not delivering good services due to time consuming decision making styles. In addition, unclear roles and responsibilities were also obstacles. Late adaption to change was seen from the management to employee level. Leaders were experienced but were bureaucratic so only some people were getting benefit from this. Ethnocentricity behaviors were seen in most of the employees as well as the management level that they know better than others

After Babcock Marine, a private sector company was given the management the face of Faslane changed. Babcock was able to transfer or change the mindset of people. Management brought new employees who have already dealt with changes and used them to successfully implement the change.  The change process became successful because of the active participation of employees. They were asked to collaborate and emphasized the importance of change. Now management became strong and staffs were given the power to choose their own team and make business plan. Now peoples were considered and they were having common objectives. With this flexibility there was a low power distance and there were unique management teams having different skills. In the same time, cost was reduced by reducing the management structure from 7 to 4. In addition, reduction of review period from 56 days to 6 days was a significant decisions made by the management. Reappointment of all jobs and cut off in jobs were also the major factor which helped the company to achieve its goals year by year. 

But on the other hand, reducing the cost may hamper the quality of services being provided. Management is formal but individuals can create their own ideas and implement it. However such flexibility may damage hierarchy of organization and can be a serious problem.But due to this change process there has been a huge loss of jobs. This may affect the employees’ performance because of fear.

To sum up with, Faslane has gone through change process and it has totally changed its management as well as organizational structure. It has been able to achieve organizational goods within time limits. So, change is in favor of Faslane.  

Figure 2.3 Johnson’s Cultural Web (up to 2001)

 

 

 

Figure. 2.4 Johnson’s Cultural Web (2002-2010)

Figure 2.5 McKinsey’s Seven S Model (up to 2001)

McKinsey’s Seven S Model
SEVEN	STRENGTH	WEAKNESS
HARD ELEMENTS
STRATEGY	Progressive and customer oriented.	Time consuming in decision making.
STRUCTURE	Clear chain of command	Unclear roles and responsibilities.
SYSTEM	Good management and improvement in manpower.	Problems in handling customer complaints and late adaption to change.
SOFT ELEMENTS
SKILLS	As most of the staffs are civil servants they are experienced.	Unfamiliar with modern management styles and change process.
STYLE	Leaders are experienced.	Leaders are bureaucratic but only some people will be benefited.
STAFF	Over 1700 civil service staffs were engaged in Faslane.	Not ready for change. Focused more on infrastructure and facilities than people.
SHARED VALUES	Commitment to provide quality services to Navy.	Ethnocentricity beliefs and resistance to change.

  

Figure 2.6 McKinsey’s Seven S Model (2002-2010)

McKinsey’s Seven S Model
SEVEN	STRENGTH	WEAKNESS
HARD ELEMENTS
STRATEGY	Cost saving and good quality services.	Cost saving may lead to poor quality of services.
STRUCTURE	Structure is formal but each individual are able to form team and can present business plans. Clear roles and responsibilities. Layers of management reduced to 4 from 7.	Excessive freedom may damage the hierarchy of the organization. Can arise serious problems.
SYSTEM	Expert management teams. Change the mindset of people.	Problems in handling customer complaints. Immediate change process.
SOFT ELEMENTS
SKILLS	Most of the staffs have experience of change.	Unfamiliar with the operation of naval base.
STYLE	Leaders are experienced with change process.	There are risks associated with the change process in such industry.
STAFF	Over 2000 civil service staffs were engaged in Faslane. Staffs are focused more on people than infrastructure and facilities. More involvement of staffs..	Reducing the management layers means loss of job and it may not motivate staffs to work effectively.
SHARED VALUES	Commitment to reduce cost without damaging the quality of services.	As a private company, Babcock Marine may seek more profit which may hamper the its strategy.

  

In addition, to provide clear picture of Faslane I have conducted Resource based view analysis and competence analysis.

Figure 2.7 Resource Based View of Faslane (2002-2010)

Resource based View (VRIN) at Faslane
	Before 2001	After 2002
Valuable	Buildings, infrastructures and facilities were valuable. Resources could be easily copied.	Human resources, flexibility and achieving goals are more valuable. Resources are hard to copy such as management skills and change management.
Rare	Lack of rarity in human skills.	Employees were brought who already faced changes. Heterogeneous management skills.
Inimitable	Lack of inimitable resources	Unique management skills. Knowledge about change and adaption.
Non-substitutable	Infrastructures and facilities were non-substitutable because the organization was a Naval based industry.	Employees were substituted by Babcok with skilled human resources. Human resources and infrastructure are non-substitutable.

  

Figure 2.8 Competence Analysis of Faslane (2002-2010)

Competence Analysis
	Up to 2001	After 2002
Physical resources (Tangible)	Infrastructures and facilities were seen more important.	After the reconstruction, improvement in the infrastructure. Capacity has increased.
Financial resources (Tangible)	Government budget (taxpayer’s money) Over spending	Government budget. Able to minimize spending.
Human resources (Tangible)	Knowledge about running naval base.	Expert of change management. Heterogeneous management skills.
Intellectual capital (Intangible)	Buildings and infrastructures. Stakeholder relationship.	Unique management and organizational structure. Home base for entire UK submarines fleet.

  

2.3  Strategic Leadership Style at Faslane

From 2002 to 2006 the Babcock marine managing Director was John Howie and from 2006 the Managing Director was Craig Lockhart. From the period 2002 there has been a significant change process. The main aim of giving away the management to Babcock was because it was more competitive, different targets, experienced management skills which are totally different from that of service sector.With the help of figure 2.9 we can compare the organization against the Five Elements of Successful and Effective Strategic Model. Further, figure 2.10 represents Transcendent Leadership at Faslane (2002-2010).and figure 2.11 represents Figure 2.11 Strategic Leadership at Faslane (2002-2010).

In this section, let’s examine each elements of successful and effective strategic leadership model.   

·         Developing and communicating the organizations’ purpose:

According to this element the first and basic task of leader is to decide on the purpose of the organization and then communicate it each and every part of the organization. Management of Faslane allowed employees to make their own teams and come up with unique business plans. In addition they encouraged and motivated their employees with open discussion by organizing several events like “the event in the tent.

For example, employees were given clear instruction to help the management team towards saving cost and improving quality of service.

On the other hand, most of the employees lost their job because of the change process. The reduction of management structure layer to level 4 and reduction of 400 full time posts has discouraged employees to work efficiently.

·         Sustaining Competitive Advantage over time

Another factor that is important is sustainable competitive advantage over time. Leaders and managers are considered to be responsible for maintaining as well as preserving organizational competitive advantage. In the case of Faslane, management team was able to £100 million in five years. This saving is a great competitive advantage of management team. In addition, small and unique teams and quick decision making are the competitive advantage of people. Further, Babcock employed those people who have already faced change process. The best evidence is that Babcock being private company has been successful in transferring culture of private organization to publically owned organization. With this competitive advantage, Faslane is expected to become home base for the entire UK submarines fleet.

On the other hand, such competitive advantage may not sustain for a long time. Babcock being private company can withdraw its management team anytime. And if that happens then MOD may not be able to sustain competitive advantage.

·         Managing human resources & organizational decisions

Leaders are the most important person for managing, motivating, and developing key talents and skills of employees.

Babcock was able to manage human resource by reducing cost with the help of cutting off the jobs. The management team also reduced the number of review period from 56 days to 6 days which saved a lot of time as well as money.

On the other hand, due to the fear of losing job employees were not motivated to work. Additionally, more training means more cost which may impact the main goal of the organization.

·         Setting ethical standards

According to Lynch model, leaders are responsible for setting and monitoring ethical standards and corporate social responsibility (CSR) of the organization. In the case of Faselane, the MOD made a five years contract with Babcock in order to minimize the spending by restructuring the organization. As it will be unethical to spend tax payers’ money it has maintained the standard of ethics. In addition, the management team was able to convince employs that they are for developing them.

On the contrary, Faslane corporate social responsibility may increase the budget and may hamper the objectives of the organization.

·         Defining and delivering to Stakeholders 

     According to Lynch Model, leaders need to maintain good relation with stakeholder inside and outside  the organization. Faslane was able to deliver the best quality services. To the Navy, the service was better than before. For MOD, Babcock was able to meet the target by which it has satisfied both the stakeholders.

On the other hand, due to the numerous job losses it was not able to satisfy its employees. 

Hence, it can be said that they have used the Lynch Model properly and Faselane was very successful by utilizing all its resources to achieve its goals and objectives that is cost saving. It has been found that with its good performance, it was able to meet its target and was able to manage the entire UK submarines fleet.

Figure 2.9Five Elements of Successful and Effective Strategic Leadership Model

Sources: Lynch, R., (2009) Strategic Management, 5th Edition, Prentice Hall, chapter 16, pp619

Due to the huge spending Faslane was seeking for strategy that might help to save cost. At that time, Faslane signed a contract with Babcock Marine to meet the target of £76 million with improvement in the services. Babcock adopted emergent strategy by changing the organizational as well as management pattern of the organization. This was mainly achieved through accumulated experience and heterogeneous management skills. Hence, emergent strategy also needs a lot of planning and experience. With the implementation of such strategies, management was able to change the mindset of employees, change the management and organizational structure and was able to meet the target easily. I think the strategic leadership at Faslane comes under level 3: Competent Manager. The two leaders were able to manage people and bring people from outside who already faced such change situation. They were able to meet their target and utilized maximum resources of the organization.

Figure 2.10 Transcendent Leadership at Faslane (2002-2010)

 

Figure 2.11 Strategic Leadership at Faslane (2002-2010)

Strategic Leadership
Six Skills	From 2002 to 2010
Anticipate	Leaders were constantly seeking for change mainly changing behavior of people and management structure.
Challenge	Set and exceed big targets. Management of entire UK submarines fleet.
Interpret	As the management has already faced changes, the accumulated experience might help them to interpret strategies.
Decide	Target was met before the deadline. Short term goals such as meeting targets was achieved and long term goals like changing the management and organizational structure was also achieved.
Align	Flexible environment motivates employees to share their plans. Employment opportunities to local people as a trust building activity.
Learn	Leaders of Faslane have got accumulated experience for change management. With their experience, leaders were able to successfully implement change.

  

3        Conclusions

From the above analysis, it has been clear that Faslane has been successful in implementing change process. With the change in the mindset of people it has been able to perform well as well as meeting its goals and objectives. Allowing freedom and flexibility to the staffs has helped to transform Faslane into a successful organization. It has been an evolutionary transformation because a public sector organization was managed by private sector.

It has been seen that there were some negative aspects that were restricting the change process in Faslane but management was strong and experienced. Hence, change process was conducted with the help of employees.

When the internal features were compared then it was clear that previously when Faslane was managed by the MOD and the Royal Navy there was no proper services and management structure was unnecessarily huge. There was no creativity. Employees were just following the routines. But after 2002, employees were given a chance to explore themselves. Babcock has made it clear that the most important assets of an organization are human capital. Further, it was having clear roles and responsibilities and management structure was also reduced. With this change process, the cost burden of the organization was reduced.

Faslane has been able to comply with all the five elements of Successful and effective strategic leadership. It was able to communicate organization’s purpose to all the stakeholders. It was also successful in maintaining ethical standard as well as managing human resources. With its good performance, it was able to meet its target and was able to manage the entire UK submarines fleet.

At last, Faslane has been able to perform well because of its unique management styles and adaption of change process. Rather than cutting the job of employees of Faslane, the management can provide job opportunities in other sector so that it will motivate employees toward achieving organizational goals and objectives.

4        References 

F. Ostroff, ‘Change management in government’, Harvard Business Review, vol. 84, no. 5 (May 2006), pp. 141–147. 



 G. Johnson and K. Scholes (eds), Exploring Techniques of Analysis and Evaluation inStrategic Management, Prentice Hall, 1998.


J. Balogun, ‘Managing change: steering a course between intended strategies and unanticipated    outcomes’, Long Range Planning, vol. 39 (2006), pp. 29–49.


J. Balogun and V. Hope Hailey, Exploring Strategic Change, 3^rd edition, Prentice Hall, 2009.


Johnson, G. Whittington, R. & Scholes. K. (2011) „Exploring Strategy‟, 9^thedition, Prentice Hall.


J. Kotter, ‘What leaders really do’, Harvard Business Review, December (2001), pp. 85–96.


Lynch, R., (2009) Strategic Management, 5^th Edition, Prentice Hall, chapter 16.


Schoemaker. P., Krupp, S., and Howland, S. (2013) Strategic Leadership: The Essential Skills, Harvard Business Review, January-February, pp131-134.

Babcock International Group PLC (2009), Interim Management Statement Feb 2009. Available at:

http://www.babcockinternational.com/media/13448/interim_management_statement_feb_20099.pdf

[Accessed on 14^th May 2013]