Page 2: Reasons for change
Organisational change is a planned and ongoing process and follows clearly structured elements.
- Identify the key drivers for change. These are forces outside and within the organisation, for example, the growing strength of competitors (external) or health and safety issues within the organisation (internal). Corus employees were encouraged to understand what was happening in the business (the “As Is”) and identify any flaws in the existing way of working.
- Identify the barriers to change. This often involves people”s attitudes. They may want to continue to work as before or cannot see the need for change.
- Create and implement a planfor change. This focuses on winning the commitment of all employees, identifying specific solutions to problem areas (for example, cutting staff or investing in new systems) and setting out ways of measuring improvement. Employees were encouraged to envision what the “To Be” position for CSP UK looked like and make plans to bring it about.
- Measure the effectiveness of the change. CSP UK is prepared to make further changes based on the outcomes of the actions.
Examples of internal drivers for change (inefficiencies within the business) at CSP UK included:
- Poor delivery - rather than delivering steel to customers on time there were delays, leading to loss of business.
- Competitiveness - steel produced in the UK could be more expensive than from some other countries.
- High wastage - failing to make products right first time meant that they had to be reworked or scrapped.
- Low staff morale employees were committed but were not motivated by the environment in which they were carrying out their jobs.
External drivers (pressures for change outside the business) came from:
- New competitors low cost producers in Eastern Europe and the Far East were taking business. This could lead to reduced demand with higher costs.
- Changing customer requirements for example, the fall in demand for steel for the automotive industry meant that Corus needed to find different types of customers or develop different products.
- New technology meant customers expected higher specifications.
- Perceptions of the steelmaking industry within the community tended to be negative for example, the industry was seen as having a poor record on environmental issues.
Total Quality Management (TQM) initiatives had previously been implemented to great effect at CSP UK to improve productivity and improve competitiveness. CSP UK had also previously reduced manpower for the same purpose.
However, Corus Strip Products is a business with deeply committed people and a relatively low staff turnover. Total payroll costs are low compared with its other costs such as energy and raw materials. Labour costs at CSP UK account for around only 13% of total costs. This is considerably less than, for example, an assembly line process where they might be around 40-50% of total costs. It therefore made better sense to enable employees to work more efficiently rather than cut the number of staff.