Change Readiness in a Lean change program: A case study in the logistics sector

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Change Readiness in a Lean change program:

A case study in the logistics sector

By

Joël de Haan

University of Groningen

Faculty of Economics and Business

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University of Groningen Abstract:

This study has investigated how readiness for change is being influenced by communication, participation, leadership, management commitment, reward systems and autonomy. A qualitative research has been conducted at an organization in the logistics sector implementing a lean change program. Although much is written about these predictors of employee readiness to change, this study combines these variables in a lean change implementation, which is a relatively unknown research setting regarding change readiness. From this research, it can be concluded that communication, participation, change leadership and extrinsic rewards are the most important factors influencing change readiness in this lean change implementation. Autonomy, perceived management commitment and intrinsic rewards appear to have less influence.

Keywords:

Change readiness, lean, communication, participation, leadership

Supervisors university:

Dr. J. Rupert Dr. C. Reezigt

Supervisor field of study:

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University of Groningen TABLE OF CONTENT INTRODUCTION ... 4 THEORY ... 8 RESEARCH DESIGN ... 13 METHODOLOGY ... 28 RESULTS ... 36

CONCLUSION & DISCUSSION ... 45

APPENDICES ... 55

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University of Groningen INTRODUCTION

In the last decades, the economic environment has changed drastically. Costs are never too low and quality needs continuous improvement. Consequently, the changing environments lead to the growing need to implement changes in strategy, structure, process and culture (Armenakis, Harris and Mossholder, 1993) and leads to an increasing amount of change projects. In spite of the presence of a large amount of existing literature on change management, most significant change initiatives fail to meet expectations. According to Beer and Nohria (2000), seven out of ten change efforts that are critical to organizational success fail to achieve their intended results. Moreover, studies show that in most organizations, two out of three transformation initiatives fail (Soumyaja, 2011).

Organizational change is concerned with facilitating the process of change through modification of strategies, structures, and processes, with many authors emphasizing that the support of employees is essential to determining whether change initiatives will be successful or not

(Cummings and Worley, 2005). Since organizations consist of people and are made by people, organizational change is assumed to be mediated through individual changes (Schein, 1980). Thus, people in an organization must be the key focus for organizational change processes, since their commitment and involvement are crucial factors implementing successful organizational changes. Regardless whether a change initiative is planned or emergent, short-term or long-term, cultural or technical, without the support and cooperation of employees, most change projects are most likely to fail. One of the most difficult things employees experience when confronted with change is the uncertainty, the ambiguity, the complexity and stressfulness associated with the process and outcomes (Difonzo and Bordia, 1998). Their attitudes towards the change event needs to be positive in order to make change programmes successful (Jones et al, 2005). These attitudes can also be referred to as change resistance, which are negative attitudes, and readiness, which are positive.

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University of Groningen

the subject in the specific change context studied in this paper. Namely, this research will focus on the readiness for change of the employees of an organization, which is implementing a form of ‘Lean production’ into their business activities. More specifically, this paper is written in order to determine which factors could have an impact on the change readiness of employees in a lean change initiative. Resistance to change or a low level of change readiness at all levels in an organization surrounding lean and Six Sigma improvement projects can be extremely high, which can be a large obstacle to a transformation of an organization (Burge, 2008). As the economy fluctuates, prices rise and fall, operating costs increase and products and processes become more complex, change projects such as lean are proven to be great tools to increase the well-being of an organization, since these projects could establish better process quality and short- and long-term financial results (Womack and Jones, 1994; Smeds, 1994).

One factor that may be of influence to change readiness is communication. According to existing literature, communication delivers the nature of the change to the employees and subsequently influences for a large part the sentiments that determine the level of readiness for the change (Armenakis et al., 2002). Moreover, when change communication is not managed properly, it most likely will result in rumors and resistance to change, which puts the focus on the negative aspects of the change and logically influences the level of change readiness (DiFonzo et al., 1994). Taking this into account, it is assumed that communication will have a large influence on change readiness and is thus being included into this research.

Another variable that can have an influence on readiness for change is participation. Many authors have written about the level of participation in an organizational change context (Kotter & Schlesinger, 1979; Eby, 2000). One of the more cited papers is the one from Wanberg and Banas (2000), who state that if employees of an organization are encouraged to participate and their inputs are consistently and genuinely taken into account, it is expected to increase commitment and performance of these employees. Hence, participation will also be included as a variable.

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It has been established that readiness for change will be strongly undermined when the behavior by important role models (i.e. leaders) is inconsistent with their words (Kotter, 1995). Moreover, one of the top criteria that constitute the readiness index in a six sigma change environment, which is very similar to lean, was proven to be leadership (Kumar et al. 2011). In this line of reasoning, the variable management commitment is also included in this research. Although many similarities exist with the leadership variable, it is assumed that management commitment will have an independent impact on change readiness. More specifically, according to Albert (2009), the top leadership in an organization must not only support the lean transformation enthusiastically, but also they must be actively involved in it. These concepts will be explained more thoroughly later in this research, but it can be stated that it is more than interesting to find out whether leadership and management commitment are going to be important factors in this change initiative with regard to the level of readiness for change.

This paper has also chosen put a focus on the reward system in order to determine whether this will have an impact on readiness for change. Although not much has been written about reward systems and change readiness, especially in this specific lean change context, it is assumed that this will be of influence to the level of change readiness of the employees. Namely, according to Shani and Docherty (2003), reward systems are integral components of a successful total quality program. If, on the other hand, employees perceive that the rewards of this change program primarily benefit the organization, the program may be negatively perceived by the employees and thus could be of influence to change readiness.

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Thus, the factors that are being integrated in this case study in order to determine whether they could have an impact on the change readiness of employees are communication, leadership, participation, management commitment, reward systems and autonomy. Since not much has been written about factors influencing change readiness in a lean change context, this paper aims to fill this gap. Especially the variable reward systems is relatively unexplored compared to other variables. The main research question in this thesis then is going to be the following:

Which factors are most influential to the change readiness of employees in the logistics sector when implementing a lean work method?

The sub-questions are going to be the following:

- How does communication influence the level of change readiness? - How does participation influence the level of change readiness?

- How does transformational leadership influence the level of change readiness? - How does change leadership influence the level of change readiness?

- How does perceived management commitment influence the level of change readiness? - How do intrinsic rewards influence the level of change readiness?

- How do extrinsic rewards influence the level of change readiness? - How does autonomy influence the level of change readiness?

Organizational setting / case study

This research is focused on a Dutch company in the logistics sector. Consisting of over 50 employees and with a long working history, the organization is a relatively small but known company in the industry. This firm is planning to adapt a form of lean production into their business activities. More specifically, the change project is called ‘Lean and Green’ and is also specially aimed towards changes that also make an environmental impact to reduce the CO2 emissions of the entire logistics sector.

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driving routes and freight handling will be changed drastically because of the fact that return freights are being implemented more structurally. Furthermore, other equipment and operating systems are going to be used in order to improve the efficiency of the organization. Concluding, many changes will be implemented the coming years throughout the entire organization in order to become more lean.

First, the theory and variables will be discussed using existing literature. Subsequently, the research methods will be explained, followed by a discussion of the results.

THEORY

Lean

The rise of the lean enterprise as an organizational form is an approach that distinguishes itself from previous approaches mentioned in existing literature. This approach focuses on bottom-up, worker-led improvements and a process-wide approach to production that has drastically reduced costs and improved quality across a range of industries and countries (Womack et al., 1990). The Toyota Production System (TPS) is the most famous example of lean processes in action. It has become a model for competitive manufacturing throughout the world (Womack and Jones, 1996).

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capability, which is a critical factor in meeting customer expectations and sustaining competitive advantage and growth. Fast, capable and efficient operations enable any business, whether it is a service company or a manufacturer, to meet strategic objectives (Allway and Corbett, 2002).

The Toyota Production System (TPS) basically shifted the focus on the factory floor from individual machines and their utilization, to the flow of the product (or service) through the whole production process. Womack and Jones (1990, 1996, 2002) concluded that by right-sizing machines for the actual volume needed, introducing self-monitoring machines to improve and insure quality, lining the machines up in process sequence, pioneering quick setups so each machine could make small volumes of many part numbers, and having each process step notify the previous step of its current needs for materials, Toyota made it possible to achieve low cost, high variety, high quality and very rapid throughput times to respond to changing customer desires and thus enhancing the customer value. Subsequently, they developed five principles for the implementation of a lean approach, which will be discussed in the following section.

In existing literature, lean is often accompanied with the term Six Sigma. As mentioned before, while lean manufacturing is about reducing and removing ‘muda’ to enhance effectiveness, Six Sigma is focused on reducing variation in the work and production processes to increase quality (Nave, 2002). In other words, it is Lean that identifies the value and non-value-added steps in order to remove the non-value-added steps, whereas Six Sigma adds value to the value-added steps (Kiemele, 2004). Furthermore, authors argue that while the six sigma method measures statistical processes and adopts a five-step continuous change cycle, which are both replicated from lean production approaches, the concept fails to address the wider cultural and managerial systems. As a result, the significance of change is limited (Slack et al., 2006).

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They examine the same thing, which is the need to provide the customer more value with less waste, but from a different entry point. The approaches focus on establishing a perfect process of customer value creation in the development of products and day-to-day operations, along with the supporting processes within the companies (Womack and Jones, 2002). Hence, in this paper both concepts will be used interchangeably.

Understanding lean

A lean approach was a term that was used to describe the new management techniques used by the Japanese automotive industry which use less of everything, compared to mass production. However, more than ten years after lean production was first widely publicized, discussion about ‘lean’ still continues (Womack et al., 1990). The discussion has moved from best practice production techniques in the automotive sector to other techniques/approaches in other sectors, such as the service sector in this case study.

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Lean manufacturing is more accurately described as a intensive redirection of the company’s focus (Albert, 2009). The principles and techniques of lean manufacturing are well-established and refined, which will be discussed below. Several handbooks, training resources, websites and qualified lean leaders are accessible to companies that are serious about implementing lean manufacturing. However, it should be noted that there is no one absolutely right way to implement lean. How a production plant implements lean may be very different from how a job shop implements lean. Not to mention when the principles are implemented in a completely different sector. These lean principles will be discussed in the following section.

However, although the scientific part of the lean implementation is very important, it should be noted that the cultural changes that are accompanied in the lean transformation are even more important. Everyone in an organization is on the lean journey together and no one can be left behind or stand aside and watch (Albert, 2009). Thus, the top leadership in an organization must not only support the lean transformation enthusiastically, but also they must be actively involved in it. The top management has to be a believer and a participant. Many authors agree that ‘it is a true systems approach that effectively integrates people, processes, and technology. One that must be adopted as a continual, comprehensive, and coordinated effort for change and learning across the organization’ (Liker & Morgan, 2006).

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Lean manufacturing in the logistics/transport sector (service industry)

Originally, lean manufacturing is associated with goods and not services. However, this case study is about the transport sector, which can be viewed as a service. The lean movement recently has gone beyond the manufacturing floor and is even spreading to service industries. For example, most of the hospitals in the United States are aware of lean principles and/or are considering some sort of lean program (Liker & Morgan, 2006). Applying lean concepts to technical and service operations, where work is much less repetitive than the factory floor and the product less tangible, is not straightforward, however. Some of the most challenging aspects of implementing the lean approach to service operations are overcoming the perception that manufacturing concepts do not apply to non-manufacturing operations, establishing a metric-driven environment and building a culture that embraces rather than resists change (Allway and Corbett, 2002).

There is no single or universal way for a company to implement lean (Sharma, 2003). Moreover, how does this work in a service environment? According to several authors, the lean principles need to be taken into account (Womack & Jones, 1996). These principles are: specify value by

service; identify the value stream; make the steps flow; supply at the pull of the customer; pursuit of perfection. Some companies train all of their employees in lean principles and then follow a

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Figure 1 The Lean Service Model (Abdi et al., 2006)

This model demonstrates how the lean approach can overcome the difficulties to implementing the principles that exist due to the differences between manufacturing and service sectors. For example, the difficulty of inventory services has been viewed as making it difficult to adequately staff for demand, thereby creating situations in which service will be poor. However, in the lean approach, the elimination of relatively non-value adding activities frees up employees to meet the fluctuating and diverse customer demand. The need to recover from service failures is also facilitated by this streamlining of activities, as well as by the emphasis on employee empowerment true of the lean approach (Abdi et al., 2006). In other words, the human element is a very important factor in the services sector.

RESEARCH DESIGN

Variables

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and following sections, a couple of important factors have been derived that should be considered when researching readiness of change in a lean change environment. These factors are communication, participation, leadership, management commitment, reward systems and autonomy and control.

Readiness for change

There are many factors that are important when a company aims to implement organizational changes successfully. Many authors emphasize that the support of employees towards the change iniatitive is essential to determining whether change initiatives will succeed or fail (Cummings and Worley, 2005). Readiness for change can be defined as the organizational members’ beliefs, attitudes and intentions regarding the extent to which changes are needed and the organization’s capacity to successfully make those changes, as well as the extent to which employees believe that such changes are likely to have positive implications for themselves and the wider organization (Armenakis et al., 1993, p.683). There is also existing literature that has moved from the relatively positive view of change readiness to a more negative point of view, where they have put more focus on the fact how resistance to change could be reduced (Kotter, 1995; Kotter & Schlesinger, 1979). In this paper however, the more positive view of change readiness has been adopted.

The term readiness for change can be traced back to the concept of ‘unfreezing’ by Lewin (1947), who argued that during an individual’s progression through change, the three stages of unfreezing, moving, and refreezing are experienced by that individual. Schein (1987) further explored Lewin’s three-stage process model and considered the unfreezing stage as a process of creating readiness for change and motivation (disconfirmation, introduction of guilt or anxiety and creation of psychological safety). The second step for Schein’s change process, which he refers to as cognitive restructuring, is the process of helping people to see things differently and react differently in the future. The third step involves integrating the process through personal refreezing and relational refreezing.

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imply that in the case of a low level of change readiness, change will not occur. But the chance of success is considerably reduced when low readiness leads to low motivation or even active resistance (Backer, 1995). Indeed, several authors have found that favorable and positive views about the need for organizational change, as well as the extent to which employees believe that such changes are likely to have benefits and positive implications for themselves and the wider organization, lead to better change reactions from the employees (Armenakis et al., 1993; Miller, Johnson, & Grau, 1994). In effect, readiness for change will be used as the dependent variable in this study, because the higher the level of change readiness, the more likely the organization is going to embracechange and subsequently reduce resistance.

Conceptualization of readiness for change

Since it has been established that readiness for change is an important factor when determining whether change initiatives turn out to be successful, different views of the concept are being explained and discussed in order to determine how change readiness is being conceptualized in this paper.

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Similarly, Piderit (2000) mentioned that research should focus on assessing reactions to change with regard to attitudes, whereby researchers distinguish among cognitions, emotions, and intentions (and/or behaviors). First, employee reactions to organizational change constitute cognitions, in terms of the beliefs and thoughts (either positive or negative) that employees may have about a specific change event at work. Second, arising from defensive routines, employees may experience a variety of emotions during organizational change (such as, anxiety or excitement). Third, Piderit noted that some authors tend to think of readiness for change in behavioral terms.

Lastly, Oreg (2006) looked on a similar note at the opposite and negative side of change attitudes, which is resistance to change. He also developed a three-dimensional construct, which includes affective, behavioural, and cognitive components. These components reflect three different aspects of people’s attitudes towards an object or a situation (McGuire, 1985). The affective component explains how somebody feels about the change (e.g., angry, anxious), while the cognitive component involves what one thinks about the change (e.g., is it necessary or beneficial?). The behavioural component involves actions or intention to act in response to the change (e.g., complaining about the change, trying to convince others that the change is bad). According to these authors, these components are interrelated, since what people feel about a change will often correspond with what they think about it and subsequently influences their behavioural intentions (Oreg, 2006). Nevertheless, the components are separate from each other and each highlights a different aspect of employees’ attitudes towards a change initiative.

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Communication

In this section the concept of communication is going to be discussed, which is an independent variable in this case study. Communication can be defined as ‘the central means by which individual activity is coordinated to devise, disseminate, and pursue organizational goals’ (Gardner et al., 2001). The level and quality of communication can be a very important factor before, during and after a change process (Armenakis, 1999). More specifically, authors even argue that communication is vital to the effective implementation of organizational change (Lewis and Seibold, 1998). They state that change success depends on the ability of the business to change the individual behavior of their employees. When the organizational change is concerned about the individual tasks of employees, communication about these changes is essential. The employees need to obtain the necessary information about the changes in the organization. Communication with these employees should be an important and integrative part of the change efforts and strategies (Robertson et al., 1993). However, past ﬁndings regarding communication and change need to be nuanced (Russ, 2008). In some cases communication can also work as an extra stressor or demand factor amplifying the negative eﬀects of organizational politics.

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change. On the other hand however, Zhu et al. (2004) concluded that information adequacy is not always positively related to work attitudes and information should be carefully designed and purposefully delivered to employees.

However, there are also authors who have made an attempt to conceptualize and categorize other aspects of the concept of communication. Armenakis and Harris have focused on how to develop messages and distinguish five different message domains within change communication (Armenakis and Harris, 2002). These five domains are discrepancy, efficacy, appropriateness, principal support and personal valence. The resulting effects that are created by these message domains are combined to form the motivation of an individual towards the change initiative, which is either positive (change readiness and support) or negative (resistance) (Armenakis and Harris, 2002). In other words, these different domains of the change message have a large influence on the feelings of employees towards the change itself. Subsequently, these feelings have an impact on the reaction of the employees towards the change. Through this relationship between the change message and organizational members’ reactions towards the change process, it is important to ensure that the change message sent during the change initiative encourages employees to embrace and support the change initiative (Armenakis et al., 2007).

This paper is going to focus on the quality of communication. More specifically, both constructs of Bordia et al. (2004) and Wanberg & Banas (2000) are used to conceptualize this variable. Quality of communication is high, when the communication is timely, accurate, useful and trustworthy. Thus, when looking at the literature mentioned about quality of information and readiness for change, it is assumed that employees have a higher level of readiness for change when the quality of information provided about the change initiative is high. In other words, when communication is timely, accurate, useful and trustworthy, it is assumed that employees have a higher level of readiness for change. Therefore, the sub-question is going to be as follows: ‘How does communication influence the level of change readiness?’

Participation

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since they demonstrated the effect of various forms of employee participation on productivity and satisfaction during times of change. They found that the greater the extent of participation (no participation, participation by representation and total participation), the more satisfied the employees were and the quicker they met new production goals. Through many experiments at the Harwood Manufacturing Plant, they concluded that groups who were allowed to participate in the design and development of change, had much lower change resistance than those who did not (Coch and French, 1948).

Wanberg and Banas (2000) state that if employees of an organization are encouraged to participate and their inputs are consistently and genuinely taken into account, it is expected to increase commitment and performance of these employees. Subsequently, this could reduce resistance to change and sometimes even enhance the acceptance of relatively unfavorable decisions (Wanberg and Banas, 2000). The main reason for this is that employees have to believe that their opinions are being heard and are given respect and careful consideration (Reichers et al., 1997). Furthermore, considerable research has demonstrated that, in general, a high level of participation leads to commitment (Kotter & Schlesinger, 2008; Marrow et al. 1967). From existing research, it can be concluded that a higher level of commitment leads to a higher level of change readiness (Soumyaya et al, 2011), because organizational commitment was proven to have a mediating role in the change process between change readiness and the success of the change implementation (Iverson, 1996; Yousef, 2000).

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Furthermore, Eby et al. (2000) concluded that when employees participate in change activities, they are more likely to reflect higher levels of change readiness. The reasons for this is that employees who perceive a working environment as highly participative are more likely to be involved in decision making involving the particular change initiative (Eby et al., 2000). It can therefore be assumed that a high level of participation amongst employees in decision making with regard to the change initiative will be positively related to employee’s readiness for change. Thus, the sub-question is going to be as follows: ‘How does participation influence the level of

change readiness?’

Leadership

Another factor that has shown to be an important factor to influence readiness for change is leadership, which is the process of establishing goals and motivating others to pursue and achieve these goals. Given the challenges that organizations face presently, researchers and consultants have argued extensively how to best facilitate the ability to change in organizations. Issues of leadership rise to the forefront, since these issues are of large importance and influence during organizational changes.

Transformational leadership

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When looking at this contextual approach to effective leadership, one can identify many leadership styles and behaviors that can be found in existing literature. The concepts of transformational and transactional leadership were originally developed by Burns (1978), who was primarily concerned with management and leadership in a political context. Bass (1985) later refined these concepts and applied them to situations in organizations. Burns made the distinction between transactional management, which focuses on maintaining the status quo and transformational leadership, which focuses on overthrowing the status quo. The compatibility between the state and situation of the organization and leadership style is seen as critical for successful leadership (Burnes, 2008).

Since the case study in this paper is concerned with a major change initiative and is thus concerned with overthrowing the status quo, transformational leadership is going to be discussed. Transformational leadership can be defined as ‘influencing followers by broadening and elevating followers’ goals and providing them with confidence to perform beyond the expectations specified in the implicit or explicit exchange agreement’ (Dvir et al., 2002, p. 735). Bass and Avolio (1994) stated that transformational leadership consists out of four dimensions: intellectual stimulation, individualized consideration, idealized influence and inspirational motivation. Intellectual stimulation involves challenging followers to re-examine some of their assumptions and the status quo, encouraging problem reformulation, imagination, intellectual curiosity and novel approaches. Individualized consideration focuses on followers’ development and showing respect and concern about their personal feelings, needs, initiatives, and viewpoints. Idealized influence involves setting an example that employees should follow. It can be regarded in terms of behaviors and attributions (Avolio and Bass, 1995). Inspirational motivation refers to identifying new opportunities, and developing, articulating, and inspiring followers of a vision of the future. These definitions suggest that transformational leadership is positively related to followers’ innovation implementation behavior because it can increase commitment to change (Michaelis, 2010).

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cynicism about organizational change Another study demonstrated the relationship between transformational leadership and the success of mergers (Nemanich & Keller, 2007). Furthermore, other research has demonstrated the positive relationship between the extent of transformational leadership and employees’ commitment to the organization (Bass & Riggio, 2006; Koh, Steers, & Terborg, 1995). Therefore, it is assumed that a higher level of transformational leadership leads to a higher level of change readiness and the sub-question is going to be as follows: ‘How

does transformational leadership influence the level of change readiness?’

Change leadership

However, because of the importance of change in modern work situations, the more recent leadership researchers have distinguished these traditional leadership behaviors from a term called change leadership. According to Herold (2008) change leadership behavior refers to leaders ‘who take effort and are able to create and communicate a change-related vision, promote the change in a fair and supportive manner and inspire participants to contribute to the change’. Change leadership represents behaviors that support organizational change initiatives (Herold et al., 2008). The concept of change leadership was developed through other perspectives of leadership during organizational changes and emphasizes a change management perspective, while including actions such as visioning, creating a sense of urgency around the change and showing support for the change (Kotter, 1996). The main differences between the more traditional transformational leadership behaviors and change leadership behaviors are that transformational leadership refers to a longer term relationship established between the leader and followers, built up over many interactions and having a more organizational or strategic orientation (Herold et al. 2008). Change leadership on the other hand, refers to the present, focusing on the specific change at hand (House & Adita, 1997).

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unique predictor of change readiness. More specifically, these behaviors are referred to as framing change and building capacity. Framing change is concerned with establishing ‘starting points’ for change, designing and managing the change journey and communicating guiding principles. Building capacity is more concerned with creating individual and organizational capabilities and communicating and creating connections (Higgs and Rowland, 2005). On the other hand, shaping behavior, which conveys more what leaders actually say and do, seems less important. Thus, more facilitating and enabling styles are more likely to be associated with success than the more leader-centric and directive behaviours (Higgs and Rowland, 2005; Higgs, 2003; Kouzes and Posner, 1998; Gill, 2002). Therefore, it is assumed that a higher level of change leadership leads to a higher level of change readiness and the sub-question is going to be as follows: ‘How does change leadership influence the level of change readiness?’

In this paper, the leadership variable includes both transformational and change leadership, since it is believed that these two highly related, but different concepts, could have different effects on readiness for change. For example, whereas transformational leadership theory talks of being able to articulate a compelling future vision for the entire organization, or for a more distant future, change leadership talks of articulating a vision for the change at hand (Herold et al., 2008). In other words, how will things look like when the change is completed. Both are important, since the change initiative in this particular case study conveys multiple organizational changes over a longer period of time. Hence both transformational and change leadership are being included as variables.

Management Commitment

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specifically, management commitment (or senior leadership support) refers to the extent to which one feels that the organization’s leadership and management are or are not committed to and support or do not support implementation of the prospective change (Holt et al., 2007). Holt et al. (2007) have identified in their paper that one of the main themes to affect an individual’s readiness for change is the recognition that the organization’s leadership and management supports the change.

It has been established that readiness for change will be strongly undermined when the behavior by important role models (i.e. leaders) is inconsistent with their words (Kotter, 1995). Moreover, according to Albert (2009), the top leadership in an organization must not only support the lean transformation enthusiastically, but also they must be actively involved in it. The top management has to be a believer and a participant. It can therefore be assumed that a higher level of management commitment leads to a higher level of change readiness. Thus, the sub-question is going to be as follows: ‘How does management commitment influence the level of change

readiness?’

Reward Systems

This section will cover the independent variable reward systems. This variable is chosen, since it is believed that it is very likely that this will have influence on change readiness in this case study, because it is assumed that reward systems are of great significance for the employees in this case study and sector. Although not much has been written about the effect of reward systems on readiness for change, especially in a lean change context, there are some sources that are useful in this respect.

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reward systems. Similarly, Larson (2003) describes the elements necessary for a successful six sigma program: vision, skills, resources, action plans, and incentives. As mentioned earlier in this paper, this would also be applicable to this case study, since both lean and six sigma are part of the total quality movement. If, on the other hand, employees perceive that the rewards of the change initiative primarily benefit the organization, the program may be perceived as exploitation and its sustainability would be threatened (Shani and Docherty, 2003). Based on the information available, it is clear that reward systems could be important components of a successful change program.

Types of rewards:

There are four categories of rewards most frequently associated with change programs such as lean and six sigma: intrinsic, extrinsic, social, and organizational rewards (Buch & Tolentino, 2006). Intrinsic rewards are those that an individual employee receives internally as a result of their involvement in activities that enhance feelings of self competence, growth, satisfaction, responsibility and autonomy (Buch & Tolentino, 2006). Intrinsic rewards that are most frequently associated with similar programs include the development and use of new skills and competencies, increased levels of responsibility, discretion, and control over work, and the feelings of satisfaction that accompany these changes (Allen and Lucero, 1997). Furthermore, Hackman and Oldham (1976) also mention that intrinsic rewards such as job autonomy have a large influence on employee’s acceptance to change.

Extrinsic rewards are those rewards that employees receive from their organization or

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organization. Lawler (2000) state that “Just as pay system can contribute to resistance to change, it can also potentially foster a willingness to consider change” (p.327). In other words, pay and pay raise system can influence an employee’s reaction toward change. Although the extrinsic rewards are not going to be changed because of this change initiative, it is assumed that this could have an influence on the change readiness of the employees.

However, employees may also perceive that they receive other, less direct pay-offs as a result of the change program, including enhanced job security, new opportunities for promotion, and better performance appraisals. And although organizations do not directly link pay to six sigma for most employees (with the common exception of senior managers), employees may see six sigma as an avenue to higher pay through better performance appraisals and eventual promotions (Buch & Tolentino, 2006). In this line of reasoning, it is assumed that the higher the level of intrinsic and extrinsic rewards, the higher the level of employee’s readiness for change will be. Therefore, the sub-questions are going to be as follows: ‘How do intrinsic rewards influence the

level of change readiness?’ and ‘How do extrinsic rewards influence the level of change readiness?’.

Autonomy / Control

Autonomy can be defined as ‘the degree to which the job provides substantial freedom, independence, and discretion to the individual in scheduling the work and in determining the procedures to be used in carrying it out’ (Hackman and Oldham, 1976). In other words, when a job has high autonomy, the work depends increasingly on the individual's own efforts, initiatives and decisions rather than on the adequacy of instructions from the boss or on a manual of job procedures. In such circumstances, the individual should feel strong personal responsibility for the success and failures that occur on the job.

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rewards, this variable is being included as a separate variable, because it is assumed that this specific variable will have an individual influence on the readiness for change.

Based on existing literature, it can be stated that workers in active jobs with higher decision power and control over challenging tasks reported a higher readiness for organizational change scores (Cunningham et al., 2002; Karasek, 1979). Workers with an active approach to job problem-solving with higher job change self-efficacy scores reported a higher readiness for change. Although work is often not very challenging in this particular case study, it does give some insights about the relationship between autonomy and change readiness. Furthermore, Hackman and Oldham (1976) also mention that job autonomy has a large influence on employee’s acceptance to change. It can therefore be assumed that a higher level of autonomy leads to a higher level of change readiness. Thus, the sub-question is going to be as follows: ‘How does autonomy influence the level of change readiness?’

Conceptual Model

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Figure 2 Conceptual Model

METHODOLOGY

The following section will describe the methodology of this research by going into detail how the data is gathered and analyzed.

Methods and sample

The research method of this research is qualitative. Qualitative research is focused on discovering the why and how of factors. Theorists suggests that in order to study a change approach effectively, one has to understand how those involved view and experience these changes (Kanter et al., 1994). Moreover, qualitative methods provide incredibly rich change-specific information (e.g., Isabella, 1990).

The main reason why a qualitative research is being conducted, is that this research is focused on determining what the mechanisms are behind the interrelations of the variables chosen in this paper. For example, this paper aims to determine why readiness for change would be influenced

Change Readiness - Cognitive - Emotional - Intentional Leadership - Transformational

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by the level of communication in a lean change initiative, instead of only concluding that there is a relationship between these variables.

A total of 14 employees have been interviewed in order to come up with a sound and conclusive view on the interrelationships between the variables and change readiness in a lean change initiative. These variables are communication, participation, leadership, management commitment, reward systems and autonomy. These variables formed the basis for the interviews that were held with the employees. The goal of these interviews was to get in-depth information on how the interviewees experienced the organizational change and especially their experience regarding the included variables in relation to their readiness for the lean change initiative. To achieve this, a semi structured approach was chosen where interview questions were formulated to bring up a subject, followed by follow-up questions in order to get more in-depth information on specific variables. All the interviews were taped and stored, enabling it to be transcribed into text.

Measurements

Next, the interviews and the questions are explored. The content and structure of the interviews is based on constructs from existing relevant literature about readiness for change and the other variables that are included in this research. Since the questions asked in these studies are often of quantitative nature, these need to be altered into more open questions which would make them suitable for this research. From these quantitative researches, only the most applicable statements have been chosen to be incorporated into this paper.

Readiness for Change

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Bouckenooghe (2009) Open questions for interviews

Cognitive Readiness

 Most change projects that are supposed to solve problems around here will not do much good

 What do you think about the change initiative? Will it solve problems around here?

 Plans for future improvement will not come too much

 To what extent do you think you and your work will improve from this change initiative?

 The change will improve work Emotional Readiness

 I have a good feeling about the change project

 How do you feel about the change initiative?

 I experience the change as a positive process

 I am quite reluctant to accommodate and incorporate changes into my work

Intentional Readiness

 I am willing to make a significant contribution to the change

 To what extent are you willing to support the change initiative? Do you have specific intentions?

 I am willing to put energy into the process of change

Table 1 Change Readiness

Communication

The research of Wanberg and Banas (2000) has been used to generate interview questions for the communication variable. This paper examined individual differences and context-specific predictors such as provision of information and participation regarding employee openness (i.e. change acceptance and positive view of changes) toward changes in the workplace. Parts of this quantitative research are being transformed into qualitative statements so that they are useful for this research. In Table 2 both the original statements and the altered statements can be found.

Participation

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Wanberg & Banas (2000) Open questions for interviews

Communication

 The information I have received about the changes has been timely.

 How has the information received about the lean change initiative been communicated?  The information I have received about the

changes has been useful.

 What did you think was good about it and what could be improved? How did this influence you?

 The information I have received has adequately answered my questions about the changes.

 To what extent has the information received been timely, useful and did it answer your questions?

 I have received adequate information about the forthcoming changes.

Table 2 Communication

Wanberg & Banas (2000) Open questions for interviews

Participation

 I have been able to participate in the implementation of the changes that have been proposed and that are occurring.

 How was your involvement in the implementation of the lean change program? Were you given the opportunity to participate, provide input, ask questions etc?

 I have some control over the changes that have been proposed and that are occurring.

 Did you have any control or influence about the decisions?

 If I wanted to, I could have input into the decisions being made about the future of the change program.

 What effect did the (lack of) participation had on you?

 I have been able to ask questions about the changes that have been proposed and that are occurring.

 Why do you think you were of weren’t involved?

Table 3 Participation

Leadership

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(2005) has been used in order to come up with suitable questions for the interviews. These original statements and the altered statements can be found in Table 4.

Herold et al. (2008) Higgs and Rowland (2005)

Open questions for interviews Transformational leadership

I believe my leader …

 seeks new opportunities for our organization.

 How do you think your leader is preparing the organization for the future?

 paints an interesting picture of the future for the organization and our work group.

 How are you being inspired and motivated by your leader/manager?

 has a clear understanding of where we are going.

 Do you think your leader seeks new opportunities, sets clear goals and inspires others with his ideas?

 inspires others with his/her plans for the future.

 has ideas that have forced individuals to rethink some of their own ideas.

Change Leadership

Related to the specific change being studied, my leader..

 developed a clear vision for what was going to be achieved by our work unit.

 How did the leader made clear what was going to happen regarding the change program? What effect did this have on you?  made it clear up front to those in our unit

why the change was necessary. He communicated guiding principles and created connections.

 How did the leader explain why the change was necessary? What effect did this have on you?

 empowered people to implement the change.

 How do you think you and the organization will improve from this change program?  established ‘starting points’ for the change  How did the leader made you excited for

the change program? If not, why?  creates individual and organizational

capabilities.

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Management Commitment

The research of Holt and Armenakis et al. (2007) has been used in order to come up with interview questions for the independent variable management commitment. More specifically, the contruct of principal support has been used, since this construct is identical to the management commitment variable in this paper. The statements can be found in Table 5.

Reward Systems

The research of Buch and Tolentino (2006) has been used as a basis in order to come up with interview questions for the independent variable regarding reward systems. Specific characteristics of both intrinsic and extrinsic rewards serve as guidelines for the formulation of the open questions that are being used in the interviews. The statements can be found in Table 6.

Holt and Armenakis (2007) Open questions for interviews

Management Commitment

 The organization’s senior leader has not been personally involved with the implementation of this change.

 To what extent does the management support the change implementation?

 I believe management has done a great job in bringing about this change.

 How do you notice this? How does this influence you?

 The senior leaders have served as role models for this change.

 Our organization’s top decision makers have put all their support behind this change effort.

 Our senior leaders have encouraged all of us to embrace this change.

 I think we are spending a lot of time on this change when the senior managers don’t even want it implemented.

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Holt and Armenakis (2007) Open questions for interviews

Intrinsic Rewards

 Enhanced job satisfaction  How is this change initiative influencing your job satisfaction, skills development and job responsibility? What effect did this have on you?

 New skill development  New job responsibility Extrinsic Rewards

 Better performance reviews  How would you think/feel/act if this change program would improve your performance reviews,

 Pay raise or bonus  pay raise/ bonus,  Enhanced job security  job security,

 Recognition from management  recognition from management,  Improved chance of promotion  and chance of promotion?

Table 6 Reward System

Autonomy and Control

The research of Hackman and Oldham (1976) has been used as a basis in order to come up with interview questions for the independent variable regarding autonomy and control. As was the case with the previous variable, specific characteristics of jobs with a high level of autonomy and control serve as guidelines for the formulation of the open questions that are being used in the interviews. The statements about the variable and the derived open questions can be found in Table 7.

Hackman and Oldham (1976) Open questions for interviews

Autonomy and Control

 The individual should feel strong personal responsibility for the success and failures that occur on the job.

 Are you given tight instructions about procedures regarding your job? How would you feel/act when this would be changed because of the change program?

 The job depends increasingly on the individual’s own efforts, initiatives and decisions rather than on the adequacy of instructions from the boss or on a manual of job procedures.

 How free are you in the way you get your job done? How does this influence you? How would you feel/act when this would be changed because of the change program?

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University of Groningen Data Analysis

Cresswell (2007) mentioned that there is no universal recipe for success when analyzing qualitative data, which tends to mean that data analysis can be a confusing and daunting process. Nevertheless, there is a general agreement that there are a number of key components of data analysis, which are: organizing the data set, getting acquainted with the data, classifying, coding, and interpreting the data, and presenting and writing up the data (Rowley, 2012). The latter two components are found in the next chapter.

During the interviews at the organization, employees were asked about their points of view with regard to organizational change and more specifically, the implementation of the lean change initiative. In order to analyze the interviews, all information concerning the variables included in this study was written down in order to come up with sound answers on the research questions. All quotes related to a particular variable were combined into a document, where the transcripts from the interviews are organized into an appropriate structure based on the variables and research questions. Although the structure of each interview was slightly different due to the answers being given, and the fact that some variables have certain overlap, information relating to a specific variable is easily distinguished. These themes or categories are the main areas in which insights have been generated. Further, all the text relating to the answers to a specific interview question and variable are put in one place, whilst using a specific code or number for each interviewee. These interviewee codes are important for keeping track of everything and not losing sight of who said what during the interviews. Since the data set is quite small in this research, no qualitative data software has been used.

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University of Groningen RESULTS

This section will provide an analysis of the answers given during these interview sessions. A selection of quotes from employees can be found in Appendix B.

Change Readiness

In this paper, change readiness is defined as the organizational members’ beliefs, attitudes and intentions regarding the extent to which changes are needed and the organization’s capacity to successfully make those changes, as well as the extent to which employees believe that such changes are likely to have positive implications for themselves and the wider organization. Moreover, change readiness can be subcategorized in cognitive, emotional and intentional readiness. From the interviews, it has become clear that there are different levels of readiness for change amongst employees. There is a strong tendency towards a positive attitude regarding the change initiative, but there are also people who are either negative or ignorant towards the change. This has several reasons, which will be discussed later.

Twelve out of fourteen interviewees acknowledge that this change initiative is good for the wider organization. One employee mentioned: "The implementation of this lean program will be

successful, because it is better for the future and sustainability of this company. I believe it is important for businesses to be prepared to change and people should be willing to embrace these changes. I think most employees over here do". This also became clear during another interview

with an employee, who described it as follows: "My attitude and feelings towards the lean

change program are pretty positive, because changes in organizations do not always have to be negatively charged. I'm always quite susceptible to change, as long as they make a good case for the change and do it for the right reasons".

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that their job is not related to the changes and that their work is not being altered by the change program. One employee described it like this: "My attitude towards the change is quite positive,

although I have no idea what the program is about and what exactly is going to happen. They do not call my attention towards the change and it is not clear whether the change is affecting our jobs and what we should do about it. I believe we should be involved, not excluded." Because of

this obscurity, eight employees already drew their own conclusions by saying that their own jobs remain the same and are not being affected by the change program, resulting in a certain level of ignorance: "I'm not involved in all this, the change is more directed towards other activities

throughout the organization. It is probably a good thing that these changes are being implemented, but it does not relate to me and my work will not be changed whatsoever." This

positive attitude is thus not based on improvements on their own job level, but more on the organization as a whole.

On the other hand, there are also four employees who are fully aware of the program and what changes are being brought about, but who disagree with the way the change initiative is going to be shaped and implemented. "I think a lot more should happen, because the whole change

program is going to be incomplete as it is. The changes should be brought about throughout the entire organization and the focus should not be on a couple of core business activities. My attitude towards the change program is basically quite positive, but I have my doubts about the realization of the project." One employee had other concerns about the realization of the lean

change initiative: "I do not believe the change is going to be very successful, because I do not

think that the plans can always be accomplished in practice. Firstly, we are not sufficiently equipped and secondly, normal circumstances on a regular working day do not always allow us to follow the new working methods that these changes bring about."

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would support the change for 100%, because when the company is doing well, I am doing well too. However, the goals that are being set have to be clear, realistic and within my possibilities and capabilities". Furthermore, this obscurity is highly related with the level of communication

and participation, which is discussed next.

Communication

The variable communication is often crucial with regard to organizational changes (Armenakis, 1999). In this paper, the focus is on the quality of communication and how this affects employees' readiness for change. In other words, when communication is timely, accurate, useful and trustworthy, it is assumed that employees have a higher level of readiness for change. During the interviews, it became clear that communication is a very important factor in this organizational setting regarding the change program included in this research.

Eleven interviewees have indicated that the level of communication regarding the change initiative thus far was insufficient to them. The information received was especially criticized for not being useful and timely, if communication was received by employees in the first place. Nine employees acknowledged that the information that was being given about the organizational changes did not answer all their questions, nor was it timely and useful. One interviewee explains: "At first I was quite susceptive to the whole idea. This faded away, since almost no

attention was given to the employees and how to inform them properly. If you don't hear or see anything about the changes, my interest and support for the program declined rapidly". This

quality of communication has different effects on the employees. There are employees who are not pleased with the lack of communication about the change: "Me and many colleagues didn't

know anything about the change effort. The management has just decided that they are going to implement it, without any announcements beforehand. If we were properly informed, we would be much more cooperative and interested in the whole initiative". Employees do not know much

about the lean change initiative and what impact this will have on the organization and on their own jobs.

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change program. "I don't think me nor my work has got a lot to do with the change program.

Moreover, I don't have any influence on the decisions made by the management of this company. I'm just doing my job, nothing more and nothing less". Or as another employee explains:

“Although I hardly knew anything about the change, I did find out a couple of things. I don’t

think if my attitude, emotions or intentions would have been different when communication about the change was better, since I believe that work remains the same regardless”. In other words,

people do not see how the changes will influence them and their work. The fact that some employees feel this way, is also a direct result from the way of communicating with regard to the change program. However, there are also three employees who perceived the communication thus far as adequate. None of these three employees indicated that this had an effect on their cognitive, emotional or intentional readiness for the change.

Concluding, it can be stated that communication is very important to the readiness for change of employees when implementing a lean change program in the logistics sector. Many employees do not know what they can expect from the change and what is expected from them. Moreover, it has become apparent from the interviews that employees appreciate when they are being properly informed and included in the change process. As two interviewees described: "You are

faced with a 'done deal' and you just have to accept this. I don't really like this approach". This

results in a indolent attitude amongst employees, which does not benefit the overall implementation of the organizational change.

Participation

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One interviewee made the following comments about his/her involvement or participation in the lean change initiative: “People are absolutely not involved in change projects like this. For this

project, I even have made a couple of suggestions where the management should also pay attention to, but not much is done with those suggestions. Moreover, nothing is being communicated about the change. My attitude towards the change would definitely be better if I was more involved, but it do not care as much as I used to. I believe these changes should be done together throughout the company and not only by management. I really think this is a pity”.

Or as someone else explains: "The management has just decided that they are going to

implement it, without any consultation from employees. I believe the whole company should be included, since the whole organization is being changed." Employees often made similar

remarks, with the addition that this was often normal procedure throughout the company: "It is

just the way things are done around here. You just do your work and if you want to know or change something, you need to take matter into your own hands." In other words, it was not part

of the culture of the organization to be actively involved in decision making processes. This has had different effects on the employees that have been interviewed for this study. Eight interviewees indicated that the lack of participation had to a certain degree influence on their attitude towards the change, as one interviewee described: “My attitude towards the change

program would probably be different when I was more involved in the change process. If you are more involved, you are doing more with the project and you are much more interested. I would appreciate additional variation in my job, since working days are pretty much the same every day. Moreover, I would pay more attention to my working activities with respect to the change.”

Moreover, as one employee indicated: "Some of the best ideas can come from employees whom

you least expect it".

Employees also answered that they value when their ideas and suggestions are being heard. “I

am very motivated to become part of the change program, because it is really fulfilling when my ideas would be taken seriously. My working behavior would definitely be different if this was the case. At the moment, I do not really care how things are going, I’m just doing my job”.