ORGANIZATIONAL CHANGE WITHIN A CUSTOMER SERVICE DEPARTMENT MASTER THESIS

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August 2013 Master thesis: Determinants of change management 2

MASTER THESIS

TECHNOLOGY AND OPERATIONS MANAGEMENT

ORGANIZATIONAL CHANGE WITHIN A CUSTOMER

SERVICE DEPARTMENT

NAME: P.M. Bashengezi

STUDENT NUMBER: S1825860

SUBJECT: Decision Criteria and Implementation methods of change

COMPANY: Groupon Benelux

COMPANY SUPERVISOR: X

UNIVERSITY SUPERVISOR: Drs. Ing. H.L. Faber UNIVERSITY SUPERVISOR: Prof. Dr. D.P. van Donk

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PREFACE

This project is carried out as the final step of the Master Program of Technology and Operations Management at the University of Groningen. This is really a memorable time for me! After spending five years at the University, I can say that I am finally ready to start contributing to the society by building a professional life. Besides this, it is intended to finish my internship at Groupon Benelux, office based in Amsterdam. This internship is my first attempt of conducting a research on my own. The very beginning of the research was as difficult as the beginning of my student life. But after getting the working pace and finalizing my Master Thesis, I guess that I will work in the consultancy sector at the end of my professional career.

From the University of Groningen I would like to thank my supervisors, Drs. Ing. H.L. Faber and Prof. Dr. D.P. van Donk for the feedback, motivation and support during the research period. The feedback has greatly assisted me in understanding and developing the basis methodology in order to conduct this research and ultimately achieving a successful and worthy Master Thesis. Furthermore, I would like to use this opportunity to thank my ‘colleagues at Groupon Benelux’ for their willingness to take interviews and provide information and material about the company’s organization. Specifically, I would like to thank the company supervisor, Mr. X (Groupon Benelux Customer Service Department Director) for allowing me to guide my internship in his department and assisting me during the writing of my research plan.

I would like to thank everybody who has advised me and supported me during my student life period and those who have provided a social atmosphere and positive emotions.

Finally, let me take this opportunity to thank my parents, families, friends, student mates and roommates for their support during my student life and graduation project.

Remain blessed and enjoy reading this Master Thesis! Patrick Bashengezi

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MANAGEMENT SUMMARY

“Today, the ability to manage change is fast becoming a top priority for leaders and managers of

companies. In practice, organizational change appears to be a complex and difficult process to implement. It is no longer an optional extra in the managerial toolkit”.

The purpose of this research is to provide Groupon Benelux (GB) Company with an advice on how to manage change within their Customer Service Department (CSD). This CSD is characterized as responsible for correctly handling all customer requests in such a way that it can meet the quantitative and qualitative international standards in terms of the Key Performance Indicators (KPIs). In the current situation, GB is in the growth phase. All other departments within this company are changing and reshaping their businesses in order to meet their standard performance. The CSD however, is still lagging behind, struggling to meet their standards and commitments “word of mouth” to the customer (80% Service Level is not reached, 4 days backlog Refund team, etc).

While the CSD is practically carrying out organizational change, a model of change wherein changes will be formally introduced and approved is still lacking. For this reason, the management has called for consultancy to provide decision criteria of change and advice on their implementation methods within the department.

The Main Research Question that is underpinning this research is formulated as followed:

“How can Groupon Benelux improve organizational change decisions and

implementation methods within their Customer Service Departments?”

To provide an answer to this question, this research presents a research strategy that tackles the issues of change management within Groupon Benelux Customer Service Departments (GB CSD). A triangulation approach assists to conduct the research by collecting different data through interviews, observations, gathering company information and scientific literature to increase reliability and validity of the research.

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transitioning individuals and/or organizations from the current state to the desired state. This process of taking the individual and/or organization from the current to the desired future state is central in this research.

First, in the diagnosis phase, GB CSD is mapped and illustrated as the department that satisfies customers at target SL by providing accurate and complete answers to their request (both telephone calls and emails). However in their current situation, managers and team leaders are implementing changes without considering change methods, change models, decision criteria, or clear KPIs to improve their departments’ performance. An anticipated or proactive organizational change is therefore needed and can be beneficial by helping the department meet their objectives.

Second, at the end of the diagnosis phase, the empirical causal model makes clear what the most significant problem areas are and these problems are carried out in the design and change phases to develop the results of this research, the so-called “BASH model of change” to tackle the issues of change management within GB CSD as illustrated in this model.

Figure 0. The BASH model of change MOBILIZE

Clearing the ground-Choosing a strategy-Reassessment MOVEMENT Development - Experimentation SUSTAIN Implementation - Review (A) Current State

Where are we now?

(B) Future state Where do we want to get to? (C) Transition State How can we get there? Decision criteria 3 GO/ NO-GO Selection criteria 2 Design criteria 1 Diagnosis

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This decision making process starts by designing some alternative solutions based on the design criteria. From these alternative solutions, the most suitable solution will be selected based on the selection criteria. This decision making process ends with the decision criteria to decide whether to Go/No-Go through the intended change project.

By using this quality management tool/table, “CAFEQUES” (Customer–Aesthetics–Function– Ergonomics–Quality–Usability–Environement–Safety in table 4.2.1), design criteria will be established and will help generate some design alternative solutions. From these alternative solutions, the most suitable design alternative solution will be selected based on the Deming Cycle, “PDSA” (Plan–Do–Study–Act) which is used to determine the total score of each alternative solution. When the most appropriate solution is selected, the manager or change agents can pass to the decision process in order to Go/No-Go to the intended change process. The Go/No-Go decision criteria of change are criteria that manage the risks of organizational change and allow management to allocate responsibility and exercise control that reflects managerial fairness and justice through the intended change process.

These Go/No-Go decision criteria are grouped into five vehicles: - Strategic fit: Go/No-Go

- Technical feasibility: Go/No-Go

- The usage of Customer Acceptance: Go/No-Go - Market opportunity: Go/No-Go

- Financial performance: Go/No-Go

If one of these decision criteria is not fulfilled, the Manager or Change agent may come up to a No-Go decision; if these decision criteria approve to go through change, the Managers or Change agents may move to the next process step, the change management and implementation methods in the change phase.

The change phase, the final stage of this organizational change process will assist in “turning

the thinking into action” by advising on the management of organizational change and the

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The BASH model of change illustrates the three stages that have to be carried out in the management of change or transition state. These three stages are split in 3 steps:

*First, Mobilizing: making people and stakeholders of GB CSD ready for change by making them aware of the need for change.

*Second, Movement: the implementation of the needed changes through the range of objectives, selection criteria and decision criteria of change within GB CSD.

*Third, Sustain: involves empowering the changes throughout GB CSD to ensure that members and, users or employees do not backslide into patterns of old behavior.

At all, the Lewin’s three stages of change are in turn broken down into clear stages, the “implementation paths” to make change more intelligible as illustrated in the BASH model of change. These implementation paths/stages are:

1. Clearing the ground,

2. Choosing the Implementation Strategy, 3. Reassessment,

4. Development, 5. Experimentation, 6. Implementation and 7. Review and evaluation.

However, the BASH model of change is not implementing organizational change but, guides on how to manage change right from the idea conception phase till the implementation. The advice on this implementation process ends with a review and evaluation process to assess whether the change intervention has been implemented as intended and if so, is it giving the desired results. In case the change process is not successful, this research suggests restarting the process by searching for alternatives or, otherwise for the restoration of the status quo.

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LIST OF ABBREVIATIONS

BPR Business Process Reengineering CCM Central Change Model of this research CS Customer Service

CSD Customer Service Department CSM Customer Service Management CSF Critical Success Factor

CPI Critical Performance Indicator

GB Groupon Benelux

GB CSD Groupon Benelux Customer Service Department HSMC Hard Systems Model of Change

KPI Key Performance Indicator MRQ Main Research Question PI Performance Indicator QoS Quality of Service

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August 2013 Master thesis: Determinants of change management 9 Table of Contents PREFACE ... 3 MANAGEMENT SUMMARY ... 4 LIST OF ABBREVIATIONS ... 8 1 INTRODUCTION ... 11 1.1 COMPANY BACKGROUND ... 12

1.2 OBJECTIVES OF THE RESEARCH... 14

1.3 SCOPE AND LIMITATIONS OF THE RESEARCH ... 14

1.4 ACADEMIC AND BUSINESS RELEVANCY ... 15

1.5 OUTLINE OF THE RESEARCH ... 15

2 RESEARCH STRATEGY ... 16

2.1 MAIN RESEARCH QUESTION ... 16

2.2 KEY DEFINITIONS OF THE RESEARCH ... 17

2.3 METHODOLOGY OF THE RESEARCH ... 19

2.4 RELIABILITY AND VALIDITY ... 22

2.5 SUB - QUESTIONS... 23

3 DIAGNOSIS ... 24

3.1 MAPPING THE CUSTOMER SERVICE DEPARTMENT (CSD) ... 24

CONCLUSION ON THE DIAGNOSIS PHASE ... 29

4 DESIGN... 31

4.1 PROBLEM STATEMENT DESIGN PHASE ... 31

4.2 RELEVANT DECISION CRITERIA OF CHANGE WITHIN GB CSD ... 32

CONCLUSION OF THE DECISION CRITERIA OF CHANGE ... 42

5 CHANGE... 44

5.1 MANAGING CHANGE WITHIN GB CSD ... 44

CONCLUSION OF CHANGE MANAGEMENT WITHIN GB CSD ... 50

5.2 IMPLEMENTATION METHODS OF CHANGE WITHIN GB CSD ... 51

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6 DISCUSSION AND REFLECTION... 58

6.1 RESULTS’ INTERPRETATION ... 58

6.2 CONTRIBUTIONS TO THEORY ... 59

6.3 CONTRIBUTIONS TO PRACTICE ... 60

6.4 REFLECTION ... 61

7 CONCLUSION ... 63

8 LIMITATIONS AND FUTURE RESEARCH ... 66

REFERENCES ... 67

APPENDIX 1: CONCEPTUAL MODEL ... 75

APPENDIX 2: GENERAL MODELS AND CHANGE STRATEGIES ... 79

APPENDIX 3: STAKEHOLDER ANALYSIS ... 86

APPENDIX 4: MAPPING GROUPON BENELUX ... 88

APPENDIX 5: CHANGE KALEIDOSCOPE MODEL WITHIN GB CSD... 92

APPENDIX 6: GROUPON BENELUX, A YOUNG COMPANY ... 94

APPENDIX 7: CSD EMPLOYEES’ ROLES AND TASKS ... 95

Organogram of GB CSD ... 97

APPENDIX 8: THE INFORMATION SYSTEM OF CSD ... 98

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1 INTRODUCTION

For the last two decades, the pace of change experienced by customer service centers and those who work in them has increased (Balogun & Hailey, 2008). Due to the rapid increase of duties of customer service centers and the more dynamic competitive environment, no customer service center can stand still. Change has become a way of life, as companies are experiencing many different types of change. The content of change (what is actually changed), and the process or the way change is implemented, need to be determined. According to Steven (2004), when change within a company is looked at, there are certain questions that need to be asked: Why change? What is wrong with the current situation? What brought the company/organization or department to this point? Do all the stakeholders see the need? Which one does not see the need? What issues need to be addressed to? How will the future state look like?

Managing organizational change explains the extent to which change happens in different areas of the business as well as the extent to which the external environment changes (Palmer et al., 2006). Several authors have written literature on change but with different interpretations and applications (Weick & Quin (1999), Beer & Nohira (2000), Chrisman et al. (2009)). Burnes (2004) defines change as a paradigm which has a variety of theories and approaches. The Oxford Dictionary (2007) defines change as the process of making one state different from the next.

A very important challenge of change is to determine the “gap” that will support the company’s organization in formulating the future strategies and assessing the need for change. The gap analysis of Ambrosini (1998) and Balogun & Hailey (2008) revolves around a “simple” but very powerful approach of the following three questions as shown in figure 1: (A) Where are we now? (B) Where do we want to get to? (C) How can we get there?

(A)

Current State Where are we now?

(B)

Future state Where do we want to get to?

(C)

Transition State How can we get

there?

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This model is central in this research, will be called the “Central Change Model” of this research (CCM) and will be further developed throughout the research. The following section introduces the company in which the research has been conducted and provides a global relevance of the project underlined by giving a meaningful look to the assignment, the background, the objectives and the structure of the research.

1.1 COMPANY BACKGROUND

GROUPON is an e-commerce marketplace that connects merchants to consumers by offering goods and services at a discount – usually 50-90 % off – with popular businesses merchants (known as “partners” at Groupon) and consumers or subscribers (called “customers” at Groupon) as illustrated in figure 2. Each day the Company e-mails “deals” to its subscribers in their free daily email that are targeted by location and personal

preferences, and sends the business partners a particular

amount of (new) customers (www.groupon.com). Launched in November 2008 in Chicago, the company

features a daily deal on the best product/activity to do, see, eat, and buy at local or national level in more than 46 countries. The philosophy around the all enterprise is simple: “treat customers the way you would like to be

treated”. The company counts 70 million registered

users (subscribers) by November 2012 and 6000 employees around the world. It is called the fastest-growing company ever (Anderson, 2011) with a revenue increase of 45 %year-over year to $ 2.33 billion in 2012, compared with $ 1.61 billion in 2011 (Groupon-Announces-Fourth-Quarter-Fiscal-Year-2012).

The fiscal year 2012 results show that the company is still in the growth phase but at the beginning of the maturity phase of the life cycle as illustrated in figure 3 below. The life cycle of a company states that a company can go through four stages in its life cycle: *start-up phase, growth phase, maturity phase and decline phase. The idea is that each stage requires different strategies and a different leadership style since a poor match can lead to dysfunction, decline and ultimately extinction (Wigder, 2013).

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Groupon Benelux (GB) exists since 2010 (head offices in Brussels & Amsterdam) and this subsidiary of the company Groupon continues also to grow in terms of its revenue and popularity.

GB is also said to be in the growth phase but at the beginning of the maturity phase characterized by a slow growth, increased completion, and the signal from the headquarter to focus more on customer

relations and cost control.

Typical for GB is the particularity of employing young workers and young professional. Around 80 % of all workers are younger than 28 years old (GB statistical board report). This is known as “Generation Y” (people whose dates of birth are from the latter 1970s or the early 1980s to the early 2000s). According to Childs & Donovan (2012), Generation Y is the first group to grow up with the personal-technology era. This technology era has changed the way members of this generation think, react to their environment, and deal with personal interactions. Generation Y

workers are characterized as used to getting things done quickly, using various technological

devices, very self-sufficient, turning to self-help options first, rather than requesting help from a colleague employee. They are more self-confident and more likely tend to question the status quo, look for self-development but usually agree with change (Childs &Donovan, 2012). One of their particularities is that they are willing to reinvent themselves as needed to move onto the next opportunity. They are quick to leave if they are unhappy in their current position, although they are bright, sharp and eager to learn.

Other GB workers (almost 20 %) are older than 28 years old. These are employees in the middle or senior career with position in GB. They are more experienced, patient, in need for stability, love, tolerance and human rights for all.

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1.2 OBJECTIVES OF THE RESEARCH

The purpose of this research is essentially to provide GB CSD with decision criteria of change and advise the department on how to manage and implement the methods of change within their CSD. Based on facts rather than thoughts or opinions, this paragraph makes clear what the added values of this research for GB should be.

 The main objective is to determine decision criteria on which GB should base its choices in order to improve organizationalchange within their CSD.

 The second objective is to give the management more in-depth insight on the way GB can improve change management by determining appropriate implementation methods within their CSD.

The Management or Main Research Question (MRQ) of this research is then defined as:

“How can Groupon Benelux improve organizational change decisions and

implementation methods within their Customer Service Department?”

This MRQ is further explained within the research strategy chapter in section 2.1 to show the opportunities and constraints that it represents for this research.

1.3 SCOPE AND LIMITATIONS OF THE RESEARCH

This research studies the decision criteria and the implementation methods of organizational change within a company. The study takes place at GB and focuses on the overall change management within their CSD. Hence, there are still fields that are beyond this research:

 The effect of change on the customers or subscribers will not be investigated. However it is assumed that the change approach is not to deteriorate customer satisfaction.

 The attitude of customers or subscribers will not be taken into consideration.

 The attitude of employees towards the customers or subscribers after the change implementation will not be investigated.

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1.4 ACADEMIC AND BUSINESS RELEVANCY

This research consists of the organizational change decision criteria and implementation methods on which a company or a department can base on to go through change. This will be specifically applied to the case of GB CSD. The value of this research is to assist GB to better apply methods of organizational changes based on decision criteria that will help for correct implementation of change. This research adds value and originality to the topic of change management by studying “the decision criteria of change”. From the business perspective, changing an organization is a difficult challenge to meet as employees may face resistance to change (Kubr, 1996). This study develops methods that can lead GB to make better decisions of change in order to improve their CSD.

Furthermore, this study provides support to organizations to incorporate change when necessary.

1.5 OUTLINE OF THE RESEARCH

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2 RESEARCH STRATEGY

The content of this chapter provides the methodology of the research. First, the research strategy is formulated in terms of the MRQ. Thereafter, the methodology used to conduct this research is described by involving the necessary steps to take in order to answer the MRQ. Finally, the sub questions are determined in order to provide an answer to the MRQ.

2.1 MAIN RESEARCH QUESTION

During the consultation interview of 6th December 2012 at GB with the Supervisor from the University of Groningen, the CSD top manager has expressed the need for the research: “the company Groupon is said to be one of the rapid growing companies in the world. Their CSD is struggling to meet the standards and commitments “word of mouth” to the customer. Managers and team leaders daily implement changes within the department but changes based on “gut feeling”. GB CSD is therefore interested in determining decision criteria of change and the implementation methods on which the department should base organizational change by giving managers and change agents more in-depth insight on how to improve organizational change within the company”.

The following question is thus formulated as the central question of this research: How can an organization improve organizational change decisions and implementation methods within a CSD? In other words:

“How can Groupon Benelux improve organizational change decisions and implementation methods within their Customer Service Departments?”

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2.2 KEY DEFINITIONS OF THE RESEARCH

*The word “Customer Service Department” (CSD) is widely defined in the literature and strongly related to similar concepts such as call center, customer relationship marketing and customer management. To make distinctions and differences from the other concepts, a CSD can be defined as ‘any back-up a firm gives to customers to maintain their custom or secure a sale’. Oxenfeldt (1966) defines CSD as including “… all offerings of value to a firm’s customers beyond the product or service itself”. It refers to the processes and actions that make it easier for customers to do business with the company (Spencer-Matthews & Lawley, 2006). It is all the added value benefits such as availability, reliability or risk reduction, performance enhancement, convenience, status and so on a company incorporates into product or service.

* “Customer Service Management” (CSM) refers to how well a company manages its customer service in terms of effectiveness, productivity and quality (Khong, 2005). It is the way companies manage their customer services activities to create value and satisfaction (Bee & Kok, 2006). The need for good CSM is essential for both the company and customers. Specifically for the company, benefits of a pro-active CSD may include business performance improvement, greater existing customer loyalty and inertia, attracting new business by reputation or word-of-mouth (Donaldson, 1986; Bee & Kok, 2006). As competition increases, customers find themselves attracted by the options and alternatives other companies can offer them. If they are not satisfied with the current products or services, they can easily switch to others. It is therefore important to apply appropriate CSM in order to ensure customers continue to re-buy products and services and keep in touch with the company (Khong, 2005).

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that assists the company or department in rebuilding the internal structures, strategy and culture to adapt and shape new circumstances. This wide change refers change to an organizational transformation (Steven, 2004).

* “Implementation methods” present the (human) resources change management models, which can be useful in managing change within companies, by starting on the fact that human resources are active, productive and creative; people are the engine of economic results (Bold o, 2011; Nastaze et al., 2012). These are actions that must follow any preliminary thinking in order for organizational change to actually happen. They include installation or implementation, configuration, running, testing, and making necessary changes.

*The word “criteria” is the plural word of criterion. Criterion is defined as an indicator or an accepted standard of rules used in making a decision/evaluation about something. A set of those rules is called “criteria” (Dicos Encarta, 2012).

* “Design criteria” are criteria that a company organization and change agents should meet in designing systems organizations or devices. They are the explicit goals that a project must achieve in order to be successful (www.mhhe.com). Managers use these criteria as their basic tool in designing a change project potential for success and the extent to which this tool fits into the goals of the company’s organization.

* “Selection criteria” are criteria that describe the qualifications, knowledge, skills, abilities and experience required in doing something. In this case, it is about selection criteria in order to select the most suitable design alternative solution from the developed concepts. These criteria are placed in a screening matrix and help to determine from the developed concept, the one scoring the best.

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2.3 METHODOLOGY OF THE RESEARCH

The basis methodology of this research is the DDC model of De Leeuw (1996) as illustrated in figure 4. This basis methodology is used to assist in answering the objectives that are set up for this study.

DDC: “Diagnosis of the current problem situation, Design for solution and

Change of the situation”.

Change phase

 Lewin’s transition change model

 Implementation methods Design phase

 Design criteria

 Selection criteia

 Decision criteria of change

Diagnose phase Five stage model of Stuart et al. (2002)

Figure 4. DDC model of De Leeuw (1996) A

B

C

First, the Diagnosis phase: The objective of this phase is to describe the problem situation and support it with the conceptual model of the current situation. One of the important aspects of this phase is to view the problem situation in multiform (viewing it from different points of view). The diagnosis phase determines therefore the gaps between the current and the desired situation and provides the basis for the overall improvements.

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Second, the Design phase: this phase consists of the actual proposed improvements (design, selection and decision criteria) of organizational change. This phase will provide an answer to the research question and will end up by analyzing the potential improvements.

Third, the Change phase: This phase is about the management and implementation of the proposed changes. It is the implementation of the measurement instruments. However, this research is not going to implement organizational change but is providing an advice on how to manage and implement the decision criteria of organizational change. The fulfillment of the advice will be carried over to GB CSD managers and/or change agents.

To support this basis methodology, the research applies an own methodology focusing on the specific context related to GB CSD. This aims to investigate the influencing factors of change, and to explore causation in order to find underlying principles. For this reason, the preliminary diagnosis begins with the five stage research process model of Stuart et al. (2002) in figure 5.

Fig. 5 The five stage research process model of Stuart et al. (2002)

The first stage of this model is to define the research question. It is about building a body of knowledge and developing theory. Eventually, good theory is testable and logically coherent, and can result in new insights (Schmenner & Swink, 1998). This enhances understanding, mapping variables and theory validation. The MRQ is already defined together with its key term definitions (see §2.1 & §2.2). The section (see §2.5) will define the research questions or sub-questions in order to answer the MRQ.

The second stage is the development of a research instrument and selection of the appropriate field sites. After defining the research questions, it is useful to develop measurement instruments to collect data for the coming analysis.

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First, the management and the employees are interviewed to get acknowledge with the current state of the department, the way change is carried out and the overall organization culture. Second, the literature is observed and studied in order to sustain the change study.

This study uses two types of interviews to gather information: a preliminary interview whereby a general interview guide approach is used in order to ensure that general information can be collected from the employees by providing more focus on the department and freedom to each interviewee. For the confirmation of the problem statement, a standardized, open-ended interview is used by asking the same open-ended questions to all interviewees in order to facilitate analysis and comparison in the interviewee’s points of view. According to Stuart et al. (2002), quickly building an interviewee’s trust can be crucial for the success of the research and important to determine true causal relationships. This can provide validity and reliability of the research (see section 2.4).

Interviews and target population:

The interviewees of this research are the Head of GB CSD, the five team leaders of GB CSD and two employees/agents. The Head of GB CSD and the team leaders are currently responsible for analyzing the overall information within their department.

Different appointments are made with the interviewees. A date and time are set to interview them. First a preliminary interview is conducted to identify the problems, limitations and bottlenecks within the department. Thereafter, a short interview is conducted for the confirmation of the need of the current research: ‘change management, change decision criteria and the implementation methods’. This is done in order to identify implementation methods and procedures to be followed within GB CSD. The questions of the interview are set in the form of an interview guide that is used to assist the interviewer during the interviews (Mansis, 2003). The fourth stage is analyzing and interpreting the data. Most of the important data of this research are qualitative data, coming from analysis and interpretations of what interviewees are ‘trying to utter’ during the interview.

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in order to put in place right procedures to conduct change. This is done to determine how a CSD can put procedures in place that can monitor change.

The fifth stage is dissemination of the research findings. Dissemination takes place by spreading this master thesis and by presenting the findings at GB CSD and the University of Groningen. The model of Stuart et al. (2002) in figure 5 helps to map the current situation of GB and their CSD in the diagnosis phase (section 3.1) of this research.

In the Design phase, this research applies the theory of the design – selection – decision criteria in order to decide on the intended change project (section 4.2). These models will provide an answer to the MRQ of this research by determining decision criteria of change within GB CSD. The Change phase is not implementing the intended change project but, uses the transition model of Lewin (section 5.1 of the change phase) to give an advice on the way of managing change by providing the implementation methods of change within GB CSD (section 5.2). The fulfillment of this advice will be carried over to GB CSD change agents/managers.

2.4 RELIABILITY AND VALIDITY

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2.5 SUB - QUESTIONS

To provide an answer to the MRQ of this study, different sub - questions are defined. By providing answers to these questions, the subject on decision criteria and implementation methods of organizational change within GB CSD will be made evident. The sub questions that will subsequently lead to answer the MRQ are:

Diagnosis

1. How can the current (change) situation of GB CSD be mapped? Design

2. Which actions need to be taken into consideration in order to improve the factors that are concluded in the diagnosis phase?

Change

3. How should organizational change be managed within GB and their CSD? 4. What are the implementation methods of organizational change within GB CSD?

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3 DIAGNOSIS

In this chapter, the first set of sub-questions is answered. To gain insight in GB CSD, the first part of this chapter describes the overall organization, information flow and performance measurement of GB and their CSD. This diagnosis starts with GB and subsequently elaborating on their CSD and the way change takes place in this company organization. In the conclusions of this phase, the (supporting) factors of the conceptual model (appendix 1) are analyzed in an empirical causal model to prepare the design phase.

3.1 MAPPING THE CUSTOMER SERVICE DEPARTMENT (CSD)

GB CSD is the department responsible for correctly handling all GB customer contacts, in such a way that it can meet quantitative and qualitative Groupon international standards in terms of its Key Performance Indicators (KPIs).

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The goal of these CPIs is to enhance the Quality of Service (QoS) of handling customer’s requests given the budget. The QoS is defined as the degree of satisfaction of customers with the offered service. QoS can be divided into two groups, namely qualitative and quantitative QoS. The quantitative QoS are all the CPIs already defined such as SL, Average Wrap up time, abandon rate, etc) whereas the qualitative QoS are hard to measure, sometimes a short survey at the end of a phone conversation provides input to this matter (friendliness, speed for solution, customer satisfaction, etc).

The costs of GB CSD are mainly personnel costs. Approximately 70 % of the total operating costs are the personnel costs located in the internal as well as the external centers.

By implementing organizational change within the CSD, GB is also willing to maximize QoS such that the budget constraints can be satisfied.

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As stated in the introduction of this research, a (proactive) change or organizational change can be very important to allow the company to cope with the new technology and new ways of doing a task to make the process more efficient and cost effective, by making the company/department programs and activities stronger and more knowledgeable in the long run. A proactive change will make things easier, more beneficial and will help employees in general to gain more education and adapt to the competitive environments.

CONCLUSION ON THE DIAGNOSIS PHASE

To answer the first sub question of this research (“How can the current (change) situation of GB CSD be mapped?”), GB CSD has been defined as the department responsible for correctly handling all customer requests in such a way that they can meet quantitative and qualitative Groupon international standards in terms of their KPIs, CPIs and SL.

However, the company improvement processes are based on “gut feeling”, regardless of change methods, change models, selection, and decision criteria to develop an appropriate change process. An anticipated or proactive organizational change can make things easier, more beneficial and in general help employees to gain more education and be able to adapt to the competitive environments.

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August 2013 Master thesis: Determinants of change management 30 Tr an sit io n st at e

Groupon Benelux Customer Service Department

Organizational change

Figure 6 Empirical causal model from the conceptual model of organizational change within GB CSD

Im p le m e n ta ti o n m e th o d s o f ch an ge Design Criteria Selection Criteria Decision Criteria A via C B NOW AFTER

The design phase will start with developing actions for the design, selection and decision criteria of change as presented in figure 6. In the diagnosis phase, it is clear that these aspects are not considered within GB CSD change process. The design phase will focus on these factors in order to improve the current (change) situation within GB CSD according to the following preliminary sub question, already stated in section 2.5 of this research:

“Which actions need to be taken into consideration in order to improve the factors that are concluded in the diagnosis phase?”

With the integration of the empirical causal model, this preliminary sub question can be formulated as:

“What are the relevant decision criteria of change within GB CSD?”

The factors that influence the decision criteria are investigated in order to provide the Manager or Change agents with vehicles of formulating change policies.

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4 DESIGN

Based on information gathered in the diagnosis phase, this chapter describes the design phase. As already mentioned in the conclusion of the diagnosis, the design phase raises the questions of the decision, design and selection criteria to consider during GB CSD organizational change. Design, selection and decision criteria of change are discussed independently because they are executed independently. First, the problem statement which is stated in the conclusion of the diagnosis phase is described for the design phase.

4.1 PROBLEM STATEMENT DESIGN PHASE

The conclusions of the diagnosis phase have introduced the most significant problem areas of GB CSD in the empirical causal model. However, figure 1 of this research in chapter 1 has established the “gap” that will support the company’s department in formulating the future strategies and assessing the need for organizational change, from the current state to the desire

future state through the transition state. Since the diagnosis phase maps the current (change)

situation within GB CSD, this mapping stage can be considered as the first step to consider in this organizational change process. Figure 7 illustrates the place of the diagnosis phase and the design phase in the Central Change Model of this research (CCM). This model will continue to evolve along this research by presenting the place of the range of design- selection and decision criteria a change agent or managers will need to apply during GB CSD organizational change.

(A) Current State

(B) Future state Where do we want to get to? (C) Transition State How can we get there?

Figure 7. The decision criteria of change in the CCM

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4.2 RELEVANT DECISION CRITERIA OF CHANGE WITHIN GB CSD

According to Metcalfe (2013), decisions making requires a set of criteria drafted to assist in the decision process. This process of making a decision starts by designing some alternative solutions based on the design criteria to emphasize requirements that managers and change agents should meet in order to be successful. This process of decision making develops with the selection of the suitable alternative solution based on the selection criteria of change which presents the criteria that are necessary to improve in, in order to achieve the intended organizational change. This decision making process ends with determining the Go/No-Go decision criteria of change, which will be used to assess anything considered prior to the decision to be made to proceed with or abandon the intended change project.

4.2.1 Design Alternative solutions

Design alternative solution is a part of the abstraction process whereby managers and change agents use models to develop and analyze their ideas based on design criteria. These are criteria that the company organization, Managers and Change agents should meet in designing systems organizations or devices. They are the explicit goals that a project must achieve in order to be successful (www.mhhe.com). Sometimes called “specifications”, they list all the things that the product or service needs to feature to satisfy the objectives. Managers use these criteria as their basic tool in designing a change project potential for success and the extent to which this tool fits into the goals of the company’s organization.

At an early stage in product/service development, design criteria are an aid to creative thinking because they focus the Change agents’ mind on what the company/department needs and can be a spur to thinking of option, alternative, creative ways of meeting these needs. They are helpful during the process of developing design alternative solutions because they are an agreed starting point from which new ideas can be evaluated.

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However, it is important to distinguish between design criteria and design alternative solutions. According to the definition, design criteria say what a product or service must do while design alternative solutions say how it will do it.

Design criteria should specify:

 Who it is for

 What its main benefits are or what it must do for the company/department

 What is special about it

 What it needs to sense (input), and what it needs to do (output)

 An acceptable target cost to the company/department.

CAFEQUES, HOUSE OF QUALITY and ACCESSFM are mnemonics often used to help undertake product/service analysis activities and also be used to help formulate design criteria (Quality Management). Taking CAFEQUES as the example would produce a grid or table such shown here:

CAFEQUES Questions to spark ideas Design

criteria

Customer Who is the product/service intended for? 1

Aesthetics What appealing features would it have? 2

Function What are its functions? 2,3,4

Ergonomics How will the product/service relate to company/users? 4 Quality What design and manufacturing features will ensure a quality product/service? 5,7 Usability How easy is the product/service to use? Will a user guide be needed? 6 Environment How will the product/service relate to the environment? 7

Safety How will the product/service be ensured to be safe? 8,9

Table 4.2.1 Design criteria within the CAFEQUES

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1. Identify the target customers: According to Spencer-Matthews & Lawley (2005), the more a company/department knows about its customers, the better it will be able to meet their needs. In general, it seems that GB CSD needs a clear customer profiles. Who are they? What they need from Groupon? How, and at what times/places do they interact with the company- what are the “points of service delivery”?

2. Determine the customer’s needs: GB CSD must identify what is most important to its customers. GB CSD must determine what target customers want, not just what they need right now but on long terms. GB CSD has to weigh how important the customer- identified “needs” are to the company. GB CSD must determine how well the company can meet the customers’ needs in comparison with the competitors.

3. Create a culture of customer service: GB CSD management must ensure that agents/employees at all levels understand the customers and serve them well. The management must communicate the importance of CSD and ensure that all employees understand how their work serves customers. And most importantly, the first-line agents must be empowered to actually solve problems on the spot.

4. Clearly communicate service standards and expectations: GB CSD has to set service standards, such as the KPIs & CPIs, clearly define the standards and make them publicly available to motivate agents and help manage customer expectations.

5. Provide consistent service across channels: GB CSD should continuously collect comprehensive customer feedback across the whole customer experience in order to adapt the services to interact with customers, when and how they prefer.

6. Establish a vision for Customer Service excellence: GB CSD must establish a vision using all information in these design criteria. The vision statement should be simple and continually reflecting on the vision and goals and the way services are delivered. Be willing to change existing practices to integrate improvements and deliver new services.

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of the reasons why GB CSD employs young workers and young professional (almost 80 %) since these are bright, sharp and eager to learn, used to getting things done quickly and easy to use various technological devices and gadgets. GB CSD must learn how targeted agents/employees perceive the proposed improvements. “An organization cannot change without the participation of its employees”.

8. Empower employees to resolve customer service problems: GB CSD must empower first line agents to do what it takes to satisfy the customer requests by clearly defining the boundaries of the empowerment, while remaining flexible with those boundaries to encourage flexibility. In addition to skills and empowerment, agents must be equipped with the technology, information and internal resources to do what it takes to satisfy the customers. Technology is merely one of the enabling and supporting change in GB CSD’s program but cannot by itself cure other shortcomings. The used technology and the process of CSD are one of the most important areas of design criteria of change. Technology will enhance employees’ capacity to satisfy customers when this technology is reliable, fast and contains the functionality required to deal with. Increasing transparency of the work processes can also generate customer satisfaction within GB CSD.

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Alternative design solutions

Here some alternative design solutions are developed. They are explained in the next section 4.2.2 (selection of the alternative design solutions).

Required Statements/ Identify needs Bridge to CSD Benefits of additional Products/ Services

Alternative design solution 1

Close the CSD required statements Paint the benefits Picture Overcoming any Objectives Build rapport

CSD Identify needs Analyse issues Demonstrate solutions Manage Objectives Close rapport

Customer and other stakeholders needs Mission Vision Values

Strategy Processes Culture Results

Aims and drivers CSD

Service

Design Enablers Results Close proces

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After developing these alternative design solutions, there are two fundamental questions that can be continuously asked:

*Is the alternative design solution now useful relative to the purpose for which it was developed? If the answer is no, then the alternative design solution shortcomings can be identified.

*Does the alternative design solution accurately describe the system or process under consideration? Again, if the answer is no, those characteristics in the process that are either not included in the alternative solution can be identified. However, these alternative design solutions are approximations, just reflecting simplifying assumptions of the solution to be selected. This is the next section (selection criteria and

selection of the most appropriate design solution).

4.2.2 Selection of the alternative design solutions

Concept selection is an integral part of product and service development process. It is the process of evaluating alternative solutions with respect to the selection criteria of change, comparing the relative strengths and weaknesses of the alternative solutions and selecting the best concept for

organizational change. The Deming cycle of improvement model, also called PDSA Cycle (Plan, Do, Study and Act) in figure 8 can be used to determine selection criteria and select the suitable alternative solution.

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August 2013 Master thesis: Determinants of change management 38 Selection criteria Alternative solution 1 Alternative solution 2 Alternative solution 3 Alternative solution 4 Plan 1 1 1 1 Do 1 1 1 0 Study 1 1 1 1 Act 1 0 0 0 Total score 4 3 3 2

Table 4.2.2 Selection criteria total score (screening matrix)

From this approach, Alternative solution 1 scores higher than other alternative solutions and therefore can be selected as the design concept to be used in this research.

Alternative solution 1 (Objective model): the first alternative solution is the most suitable for this research. It is objective and simple to use. It consists of determining the requirements of change (statement, identifying the needs), bridging these needs to the CSD and the organization, analyzing the benefits of the new proposed improvements and then study the consequences (advantage and disadvantage of the implementation). This model is the closest to the PDSA Cycle. It scores 4 points in the screening matrix.

Alternative solution 2 (Management model): this second model is also a good approach of the PDSA Cycle. It builds itself in the analysis of the change and the provision of the improvements but does not define the steps to manage the objectives in order to reach the requirements. It scores 3 points in the screening matrix.

Alternative concept 3 (Strategic model): this third model is more on the core value and the vision of the business. It is on the strategic plan but forget the operational plan. It also scores 3 points in the screening matrix.

Alternative concept 4 (Design model): this fourth model is an approach of the objectives and the drivers of the process in order to get results. It does not define the way to get to those results. It scores therefore 2 points in the screening matrix.

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4.2.3 Go/No-Go decision criteria

According to Carbonell-Foulquié et al. (2004), a change process involves risk, and one of the means for managing the risks of organizational change is to introduce Go/No-Go decision criteria throughout the change process.

The significance of having well-defined decision criteria will allow GB CSD management and change agents to allocate responsibility and exercise control that reflects managerial fairness and justice. The well-defined decision criteria will also ensure an understanding of the intent and expectations of data that must be supplied and will increase the quality of communication among stakeholders and other parts involved into the change process.

Carbonell-Foulquié et al. (2004) state that companies should use more than one or two criteria to monitor (ongoing) change projects. From Carbonell-Foulquié et al. (2004), these Go/No-Go decision criteria result into five different vehicles as illustrated in figure 9, ensuring that the company does the right changes and does them correctly.

Strategic Fit Technical Feasibility Customer Acceptance Market Opportunity Financial Performance 1 2 3 4 5

Fig.9 The 5 Go/No-Go decision criteria (Carbonell-Foulquié, 2004)

Go/No-Go

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1. The first vehicle consists of the strategic fit which is mainly applied in assessing whether the intended change project fit within the company organization by defining the strategic arenas for the business to focus on, i.e., the type of market, applications, technologies and products. The strategic fit within GB CSD will consist of the degree to which the change project fits within the market or technology area of their CSD defined by the business and whether the change projects are consistent with the corporate strategy and the alignment of the project with other development projects as stated in the diagnosis phase (programs and activities of GB CSD). The most frequent criteria to approve the strategic fit of the intended change project are the quality or the added value of the intended project, market share, market growth, project total cost, alignment with firm strategy and the window of opportunity. If the intended change project fits with these criteria, then it is a Go, otherwise a No-Go decision. 2. The second vehicle consists of the technical feasibility which is crucial in assessing whether

the changing company contains the necessary resources to perform the intended change project. Within GB CSD, this vehicle will consist of the technical considerations such as technology availability and firm/department’s technical capability to organizational change. The easy accessibility to the required technology within the changing company is a vital issue to be addressed to at the decision making stage. On the other hand, technical capability to handle the complexity of the change project is as important as the resource accessibility already mentioned. To approve the technical feasibility, criteria that GB CSD will frequently employ are the project total cost, the added value of the project, the availability of resources and leverage of firm’s research and development, engineering, manufacturing skills and customer satisfaction. These are the most determining Go/No-Go criteria during the feasibility approval of the change idea. If the intended change project satisfies these criteria, then it is a Go, otherwise a No-Go decision.

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launch. The frequent approval criteria of the customer acceptance vehicle are the added value of the change project (reliability and performance), the market share, market growth, availability of resources and customer satisfaction. If the intended change project satisfies these criteria, then it is a Go, otherwise a No-Go decision.

4. The fourth vehicle consists of the market opportunity which is mostly employed to approve the intended change project especially on the market (external environment). According to Hart et al. (2003), criteria indicating the probable market opportunity such as market size, market share, and market growth are decisive aspects of Go/No-Go decisions in this stage of the project. Morone (1993) states that sales measures and share measures are the most frequently used criteria to measure organizational change after launch. For GB CSD to maintain change through the market opportunity, the following criteria need to be used: customer satisfaction, market acceptance, added value of the intended change, market share and market growth. If the intended change project satisfies these criteria, then it is a Go, otherwise a No-Go decision.

5. The fifth vehicle consists of the financial performance which is to assess whether the intended change project is financially healthy for the company. According to Carbonell-Foulquié et al. (2004), financial criteria are rarely used to assess the intended change. The reason is the refusal of companies to work with financials simply to avoid the disputes about the quality of the analysis based on data guessed on projected financial magnitudes. The most popular financial criteria that GB CSD should use for change approval are the expected margin rate, expected internal rate of return, and expected market share and market growth. If the intended change project satisfies these financial criteria, then it is a Go, otherwise a No-Go decision.

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CONCLUSION OF THE DECISION CRITERIA OF CHANGE

To provide an answer to the question of the design phase (“What are the relevant decision criteria of change within GB CSD?”), a set of criteria drafted to assist in the decision process is required. This process of decision making has differentiated the design criteria from the selection and decision criteria of change. It starts by designing some alternative solutions based on the design criteria, then from the alternative design solutions, the most suitable solution is selected based on the selection criteria from the reference concept and ends with the decision criteria to decide whether to go or not to go through the intended change project.

Thanks to the CAFEQUES (table 4.2.1), design criteria within a CSD are established and help generate some alternative design solutions. From these alternative solutions, the most suitable alternative design solution is selected based on the Deming Cycle (PDSA: Plan-Do-Study-Act) after determining the total score of each alternative solution in the screening matrix. When the most appropriate solution is selected, the Manager or Change agents can pass to the decision process in order to go or not to go with the intended change process.

The Go/No-Go decision criteria of change are criteria that manage the risks of organizational change by allowing management to allocate responsibility and exercise control that reflects managerial fairness and justice through the intended change process.

These Go/No-Go criteria are grouped into five vehicles:

- Strategic fit vehicle mainly applied to assess whether the intended change project fits or does not fit with the company organization strategy;

- Technical feasibility vehicle crucial in assessing whether the company contains the necessary resources to go through the intended change project;

- The usage of Customer Acceptance notably to determine whether the intended change project fits with the customers’ needs and preferences;

- Market opportunity mostly employed to approve the intended change project in the external environment;

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If one of these criteria is not fulfilled, the manager or change agent may come to a No-Go decision or otherwise, a Go decision.

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5 CHANGE

This chapter elaborates on the change phase based on information gathered in the diagnosis and design phases. The change phase raises the questions of how organizational change should be managed within GB CSD and the implementation methods within their CSD. First, the change phase will provide an advice on how to manage organizational change within GB CSD. Secondly, the change phase will give an advice on the implementation paths to be taken into consideration when managing organizational change within GB CSD. Thus, the change phase consists of the change management of the actual transition state (C) as illustrated in figure 10 from the CCM of this research.

(A) Current State

(B) Future state Where do we want to get to? (C) Transition State How can we get there?

Figure 10. The decision criteria of change in the CCM

Decision criteria 3 GO/ NO-GO Selection criteria 2 Design criteria 1 Diagnosis

5.1 MANAGING CHANGE WITHIN GB CSD: “TURNING THINKING INTO ACTION”

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Mobilize Movement Sustain

Figure 11. Lewin’s three step change model

5.1.1 Mobilizing: “Getting GB CSD ready for Change”

Creating mobilization within GB CSD or developing readiness for change is discussed along with a series of techniques for achieving this. This change process of mobilization starts well before a specific change vision actually sees the light of day. In particular, Pugh (2007) finds necessary to give consideration to relationship (healthy work environment), communications, HRM, management styles, structures and strategy in this stage of the process. These elements can also be specifically applied to GB CSD as illustrated in figure 12 as elements that GB CSD must have in good shape for a change initiative to stand.

Mobilizing GB CSD’s organization

Healthy work environment

Recognizing the need for change

Persuasion and confidence

Manage multiple Expactations Change agent involvement

Identifying Stakeholders

Communication

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August 2013 Master thesis: Determinants of change management 46 5.1.1.1 Creating a healthy work environment within GB CSD

A healthy work environment is the outcome that GB CSD has to ensure by going through the mobilizing process before change can start. This factor is also discussed in the conceptual model of this research (Appendix 1). A healthy work environment can be developed in GB CSD by enhancing rich communication, developing strong relationships within the organization and with the customers, developing appropriate management styles and unrestrictive structures that can enhance the change process in action and also most obviously by affecting the environment health and the way in which people and employees regard the company (Pugh, 2007). This is an issue that can influence motivation as well as the implementation of the organizational change. These two issues are discussed later in this chapter.

However, there are different characteristics that can influence healthy work environment (the roles of personnel employees, the deployed management style, bureaucracy, etc.). Mobilizing is the phase of the process within which GB CSD has to attempt to convince the stakeholders and other people that change is necessary (Stakeholders Analysis in appendix 3). Therefore the company should also ensure that it is capable to go through change or equipped for change (see decision criteria of change in section 4.2). Providing all stakeholders with the sense of being properly involved, benefiting from change and that change fits in their view of where the company wants to go, is an essential prerequisite. These characteristics will help GB CSD and their stakeholders to consider objectively the possibility to profit from doing things differently. Healthy work environment will secure GB CSD behavioral change and will contribute to achieve the difficult attitude of organizational change by engendering a belief in the need for change. This stage will furthermore support the form the organizational change will take within the CSD and the process that will deliver it.

5.1.1.2 Recognizing the need for change

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can make it harder or difficult to prepare the foundations for change. GB CSD organizes with the team leaders about two meetings per week to keep up with the program and activities within their department and to discuss the need for change or improvement. These meetings are really necessary to regularly assess the need for change.

5.1.1.3 Persuasion and confidence

Mobilization within GB CSD should be a matter of persuasion rather than compulsion, or winning value of change. As stated in the literature of resistance to change (appendix 2), there is substantial evidence of resistance to imposed and non-consensual change as a process in which people play an inadequate part and have no sense of influence or sharing. The key point here is again involvement. If involvement is present, it is more likely that stakeholders and users will not only accept change as essential, but feel confident to perform under new circumstances. GB CSD should not only involve their team leaders in the change initiative but also the users or employees within the department. It is expected that all stakeholders are included in the change process.

5.1.1.4 Managing multiple expectations

Within GB CSD, organizational change is viewed from a number of different perspectives. Top manager, team leaders and staff/employees in operational areas need different things from a change process and approach it with different expectations. Communication, involvement, sharing information and participation go a long way towards creating similar ground out of the various expectations, emotions, worries and objectives that confuse or disrupt change. Within this young company, the uncertainty beyond the estimation or expectation is greater as it goes further out in time (see GB young company in appendix 6). The suggestion is to focus more on the short run in order to provide revenue and asset since most startups or young companies don’t resist the test of time (Aswath, 2009).

5.1.1.5 Positive management or change agent input from the Start