Master thesis by:
Guro Løwén Heradstveit (Can. Soc. Human Resource Management).
Research area/problemområde:
“The impacts of changes on leadership-style and behavior”
“Hvordan endringsprosesser kan påvirke ledere og deres atferd”
Department of:
Organization
Supervisor:
Majbritt Krogh, institut for afsætningsøkonomi
Copenhagen Business School, 2015 Number of estimates: 175 273
Date: 21.09.2015
i I denne oppgaven har fokuset vært rettet mot de enorme endringene som den norske olje- og gassindustrien gjennomgår, som omfatter lavere aktivitet og store nedskjæringer. I denne sammenheng, har jeg ønsket å undersøke hvordan denne kritiske situasjonen har påvirket ledere, og videre hvordan ledere har evnet å utnytte sine egenskaper som nettopp ledere gjennom prosesser denne krisen har ført til. Det argumenteres i oppgaven for at endringene i oljeindustrien har ført til at ulike barrierer for ledere har blitt revet ned. Dette har ført til et større fokus på at ansatte skal være mer informerte og ha større makt. I tillegg har endringene medbragt et skifte hvor de ansattes fleksibilitet og deltakelse i beslutningstaking har endret seg til en ovenfra-og-ned tilnærming, karakterisert av mindre fleksibilitet for de ansatte.
Jeg har med dette studiet ønsket å undersøke graden av usikkerhet i forbindelse med de utfordringene og mulighetene krisesituasjonen i oljeindustrien har medbragt. For å kunne undersøke dette, har jeg valgt å rette fokuset på ett bestemt selskap, nemlig Scanoil. I forbindelse med endringsbehovet i organisasjonen spesielt, og industrien generelt, har selskapet igangsatt et endrings- og effektiviseringsprogram som i denne oppgaven omtales som ”PACE”. Med dette som bakteppe, har målet dermed vært å undersøke hvordan krisesituasjonen i industrien, samt implementeringen av ”PACE”, har påvirket ledernes adferd, og om prosessen har ført til at ledere har måttet endre/tilpasse sine roller som ledere.
Ved å gjennomføre en slik analyse av ledere i et olje- og gasselskap i Norge, har det blitt mulig for meg å identifisere forskjeller i måten å håndtere endringsprosesser. Læringen tatt fra denne forskningen har dermed dannet grunnlaget for de endelige konklusjoner som tas, og for de anbefalinger som tilbys for hvordan endringsledelse kan utøves på best mulig måte
gjennom en organisatorisk og industriell krisesituasjon.
Søkeord: Endringsledelse, Lede endringer, Kommunikasjon, Transformativ lederskap, Situasjons ledelse, Systemisk ledelse, Organisatorisk endring
ii This thesis symbolizes the end of two years of studies at Copenhagen Business School on MSc in Human Resource Management. Several months of demanding and inspiring work has given rise to a substantial learning process, and I am proud of the final result. I did not believe that writing a thesis within such large proportions would generate so much satisfaction and curiosity during the process. I wish to express a sincere appreciation to my supervisor, Majbritt Krogh, for her support throughout this process. She has provided me with guidance, valuable suggestions, and ideas. Further, I will also like to express an appreciation to
Scanoil’s cooperativeness, it has been great working with them, and they have provided me with good and valuable information. I hope that the best practices identified in this paper will provide the reader with some ideas and suggestions to support and encourage them during a potential change process.
I hope you will enjoy the reading!
Copenhagen Business School, 22.09.2015
__________________________
iii
ACKNOWLEDGEMENTS ii
Chapter 1. Introduction 1
1.0 Introduction 1
1.1 Background and research problem 2
1.2 Research question 3
1.3 Case company 4
1.4 Rational behind the thesis 6
1.5 Scope and delimitations 7
1.6 Thesis structure 8
Chapter 2. Theoretical framework 10
2.0 Introduction 10
2.1 Leading change 11
2.1.1 Definition of leadership & leading change 11
2.2 Organizational change 13
2.2.1 Lewin’s force-field model 14
2.2.2 Kotter’s eight steps to change 15
2.2.3 William Bridges, managing the transition 16
2.2.4 Carnall, change management model 17
2.2.5 Resistance to change 17
2.3 Leadership- style & Change leadership 19
2.3.1 What characterize good change leadership? 20
2.3.2 Change-oriented behavior 21
2.3.3 Leadership style 21
2.3.4. Change leadership development 26
2.5 Summary 26
Chapter 3. METHODOLOGY 27
3.0 Introduction 27
3.1 Choice of paradigm and research approach 27
3.1.1 Choice of research approach 28
3.2 Research Design 29
3.2.1 The research design 30
3.2.2 Collection of data 32
3.2.2 A) Sampling 32
3.2.2 B) Designing an interview guide 33
iv
3.3 Analysing the data 35
3.4 Assessment for qualitative research 37
3.5 Methodological reflections 38
CHAPTER 4. ANALYSIS 41
4.0 Analysis 41
4.1 The Norwegian Petroleum activity 41
4.1.2 Radical changes in the oil-sector 42
4.2 Empirical Findings 43
4.3 “What leaders do during change” 59
CHAPTER 5. DISCUSSION 61
5.0 Discussion 61
5.1 Identifying the main challenges 61
5.2 Traditional approaches for change leadership 64
5.2.1 Managing transitions effectively 64
5.2.2 Dealing with organizational cultures 65
5.2.3 Managing organizational politics 66
5.2.4 Balestracci’s five essential skills when managing a change process 66
5.3 Summary 67
Chapter 6 -CONCLUSION, MANAGERIAL RECOMMENDATIONS &
LIMITATIONS 69
6.0 Conclusion, managerial recommendations & limitations 69
6.1 Conclusion of results 70
6.2 Managerial recommendations – how to survive as a leader during transformation 74
6.3 Limitations 76
REFERENCES 79
Appendix 1. 83
Appendix 2. 85
1
Chapter 1. Introduction
“If you want to create incremental change, focus on behaviour. But if you want a real breakthrough, change the paradigm.”
S.R. Covey 1.0 Introduction
Change is said to be the only constant. Everyone claims to be in so-called change mode.
“Products and processes are being revised, revamped, and re-engineered to respond to change. New industries are emerging, new types of companies are being created; new partnerships forged; new territories “invaded”; new departments established; and newly skilled employees hired. Evidence of rapid and radical changes is everywhere” (Beerel, 2009;
4). Then why is it, that human beings normally resist changes? Further, can leaders in an organization undergo a change process without having to adapt to such resistance, and hence shift/adjust their leadership-style and behavior in order to ensure that employees obtain their motivation and engagement even though the only constant is change?
After decades characterized by a booming oil industry, with seemingly ever-growing revenues and jobs created, a new reality has presented itself within the golden Norwegian industry.
Several factors have influenced the Norwegian economy during the past years since the financial crisis, and that will continue to have futuristic repercussions. In addition to lower activity within the oil industry, the oil price have almost halved since the summer of 2014.
The steep fall in oil prices have forced oil companies to focus on reducing costs. These issues have impacts on several investment projects, which results in projects being postponed and as a consequence of this employees get laid of. August 2015, Aftenbladet claimed that
approximately 22 000 jobs related to the oil-industry were absent with a likelihood of even more jobs disappearing (aftenbladet.no1). Given that the Norwegian economy is so heavily based upon the oil and energy sector, the laid-off workers experience difficulties in finding
1 http://www.aftenbladet.no/energi/arbeidsliv/702-oljejobber-forsvant-i-sommer-3748222.html
2 new jobs suitable for their previous experience, and therefore the massive layoffs has
increased the unemployment rate.
In addition to the high amount of workers who have lost their jobs, communities and cities closely associated with the industry are also affected by the downturn, with lower activity within other sectors such as the hotel and restaurant industry, and lower demands has also resulted in red figures for the private transportation industry. Another severe consequence has been a drop in real estate prices, resulting in difficulties for a large group of families servicing their loans.
When such a large crisis strikes an entire industry, there is no getting around, companies will suffer, and things might never be the same post-crisis. However, it is important that
companies recognize this change process as an opportunity to find better solutions for the future, rather then looking at the crisis as a defeat. Therefore knowing how to lead during change and how to communicate with employees could be crucial for a corporation struck by a crisis, no matter how severe the situation might be.
1.1 Background and research problem
The problem area for the thesis derived from an interest in leadership. When exploring the existing literature on leading change and change leadership, I discovered that much of this literature was highly applicable for the on-going crisis within the Norwegian oil- and gas industry. This resulted in a desire to dig deeper into to this crisis within a field highly relevant for future experiences.
Much research has been done within the field of change leadership and how to best deal with changes, especially after downsizing activities. Hence, waves of scientific journals are produced to emphasize the importance of good leadership during changes, and how these incidents affects employees trust, motivation, and lack of commitment to the corporation.
Media are looking for opportunities to front corporations focusing on horrible work-
environment, employee’s dissatisfaction etc. However, knowing how to deal with a crisis and plan for it in advance has become a vital part of organizations’ strategy plans.
3 Aitken & Higgs (2012) argues that much of the dysfunctional behavior seen in working environments during change are caused by change leaders in relation to not practicing what they advise and/or personal values that conflicts between managers, employees, suppliers, customers and stakeholders (Ibid.). Thus, change leaders need to recognize the necessity for being consistent during the change process.
Due to the recognition of leaders as a source of successful transformation and the growing necessity for leading change, the purpose of this thesis is to contribute to the understanding of leading change. According to John P. Kotter, “leadership defines what the future look like, aligns people with that vision, and inspires them to make it happen, despite the obstacles.
Successful transformation is 70-90% leadership, and 10-30% management”(Kotter, 2012;
26).
Hence, the emphasis of this thesis will be to look into the situation that a Norwegian oil- company is forced to deal with in the wake of the industrial downturn in 2014. Changes in the industry has forced management to utilize a change program, and I want to look at how this process has affected leaders in the organization. In order to do this, there are several key questions that have to be raised, and these will be further elaborated in section 1.2.
1.2 Research question
Based on the problem area just discussed, I have formulated the following research question, which will serve as the basis for this thesis:
“Have leaders in Scanoil been forced to adjust their leadership-style and behavior as a consequence of the on-going ‘crisis’ within the Norwegian oil- and gas industry? And further, how has the process of implementing PACE influenced the way leaders lead?”
In order to answer this research question, I have conducted semi-structured interviews with different leaders in Scanoil, a company I will introduce further later in the thesis. By doing this, I hope to reveal some common traits and, based on those, find answers that might help me towards a conclusion. Additionally, there will also be presented several more tangible research questions, in order to concretize the overarching research question.
4 Research questions
- Have leaders been forced to adjust their work-style when implementing PACE?
- What were the critical deliveries for leaders during the change process with regards to elements such as, flexibility and availability?
- To which extent is the leader left to develop his/her own leadership style when leading PACE, and how much is influenced by guidance from top management?
- Have leaders been forced to adjust their information/communication flow in order to obtain motivation among employees?
- Are leaders aware of the degree of severity the changes have on the company?
- Have leaders been through training in relation to leading change? And if so, has this training been affective for further work?
- Does leaders differ in type of style when leading the change? With regards to which considerations each leader takes.
- What leadership behaviours tend to be associated with effective change management among leaders in Scanoil?
- What approach to change management is likely most effective in Scanoil?
1.3 Case company
The company I have been researching during my thesis wanted to stay anonymous due to pressure from government and media. I will therefore be referring to the company as
“Scanoil”. In addition to this, I have developed a fictive name for their change program in order to keep their anonymity, which will be referred to as “PACE”.
Scanoil is an international energy-corporation with offices in 25 countries. The company has more than 40 years of experience within the oil- and gas production. Their main office is placed in Stavanger, where there are approximately 4569 employees. Scanoil has grown with the Norwegian oil-industry, which started at the end of 1960, and today the company is one of the world’s largest suppliers of oil and gas.
5 Scanoil’s Leading Change Program “PACE”
LEAD CHANGE
COMMUNICATE CHANGE
“Driving sustainable change through leadership and culture
PACE is Scanoil’s response to the industry challenges and is developed as an overall
efficiency program with several under-projects. One of the main goals with the program is to ensure an efficiency-gain of 25% by each well within the end of 2015. PACE was
implemented before the actual crisis hit the industry, as a strategy plan for decreasing expenses and increasing efficiency level. The efficiency program is developed to ensure that change processes drive business objectives and performance, and provides practical support on how to drive change and improvement.
Through an information booklet provided by Scanoil, the company outlines some strategies for leading a team, called “What leaders do during change”. In accordance to the topic of the thesis and my research, I have found it both necessary and highly relevant to present these strategies, as they are manifestations of the company’s expectation towards their own leaders.
Thus, I will use these approaches later in the analysis.
Leaders create energy
Leaders should work actively to involve employees by giving them responsibilities and challenges during the change process.
Develop change case Organise and plan Develop solutions Implement and evaluate change
6 Leaders reduce uncertainty
Leaders should prioritize critical change activities and reduce uncertainty by communicating what is important with the team and individually.
Leaders create presence
Leaders should ensure that the individual employee is seen in the process. They are both accessible and highly visible.
Leaders pass on information
Leaders should use information actively to establish a common knowledge and understanding of why and how the process should be accomplished. They should “translate” and facilitate corporate information into practical information for the individual.
As a basis for my research, I have conducted interviews with 8 leaders in Scanoil from different organizational levels, but within the same business unit. This is illustrated below:
1.4 Rational behind the thesis
The main goal of this research paper is to investigate the leadership-role in accordance with changing conditions in the oil- and gas industry, and look at how these changes affect the leadership-role. I have argued that the emergence of the oil-crisis we have witnessed in recent time has brought new challenges as well as possibilities for change leadership. The thesis thus aims to examine how change affects the leadership role.
Drilling & Well
HR mananger
HR Leader
Drilling & Well Mobile Units
Drilling & Well Manager HPHT
Drilling & Well Manager Mobile
Stavanger
Exploration Drilling
Leader - International
Exploration
Leader Plan- Drilling Norway
Engineering
Leader Operational Support Center -
Drilling & Well
Drilling & Well- Interventions Vice President
7 The objective for choosing this subject is that it is contemporary and highly relevant in
society today. The subject of change leadership in relation to the oil crisis is fairly new, although there has been much research upon the subject of change leadership earlier.
However, the on-going crisis has had a high-speed development and there has not been much time for proper research upon the topic, therefore I find it quite interesting. I will base my assumptions and claims on existing theories on the topics of change leadership, situational leadership, systemic leadership, transformational leadership and organizational change in particular, together with other related theories. For my analysis I will examine one company within the oil-and gas industry in Norway. By assessing leaders response and efforts to change, I hope to reveal differences in the way leaders have approached these issues in their company, which eventually will be used for my final proposition on; in what way leaders have been forced to adjust their role during changes.
1.5 Scope and delimitations
The aim of the thesis is to investigate how leaders cope with changes surrounding their organization by dealing with crisis in the right way, from a corporate point-of-view. The research is delimited to one specific Norwegian oil-company and one single industry, in order to get as much homogenous as possible for comparison of leaders, aiming to make the
research more reliable. The reasoning for choosing this specific industry was that the oil- and gas industry in Norway is enormous, and Norwegians build much of their economy upon this industry. Therefore, a crisis like this one will have consequences not only for the entire industry; it inflicts enormous consequences on several other industries, and on the entire Norwegian society as well. In addition, the Norwegian oil- and gas industry is quite
distinctive compared to other key industries, characterized by a high degree of regulation and power, closely linked to the governments, but with a somewhat low degree of transparency, which in sum opens up for some types of issues other industries might not experience.
Further, the industry can also be said to be under a high degree of scrutiny, both from the public, by governments and by other stakeholders. This tends to make companies work to protect their image and presume a positive corporate reputation, and avoid unfortunate activities such as downsizing.
8 Hence, I understand that by narrowing my research down to one industry in one country will make it difficult to generalize the findings to other industries in other parts of the world.
Nonetheless, I hope my research will contribute to a deeper understanding towards the challenges and possibilities concerned with leading change, and open up for further investigation and emphasis on the subject.
1.6 Thesis structure
Chapter 1 is designed to establish a broad understanding of the research field. The thesis thus starts by introducing the overarched topic and research question, which lead to the
subordinate research questions, and functions as the basis from which the structural
framework is built. This section will also clarify the background and justification of the topic leading change.
Chapter 2 presents the theoretical framework selected in relation to my topic. The chapter emphasizes to clarify the leadership role, as well as elaborating on existing literature on change leadership and leading change, while justifying my research. The chapter is divided into three different parts. First, I will start by looking into the phenomenon leading change, and what this term actually means. Further, I will look into the evolution of organizational change, in order to get a better understanding of how organizational changes affects employees, and consequently distresses leadership. Lastly, I will clarify and assess change leadership as well as different forms of leadership, building the basis for my discussion.
Chapter 3 introduces the methodology chosen for the thesis. Further, I will also present the methodological design, hence how the collection of samples and data was collected and further processed. Additionally, I will critically justify the reasoning and theory used for my analysis and case study approach.
Chapter 4 consists of the analysis and empirical findings. First I will present a description of the oil-industry in Norway. Thereafter I will start by presenting the empirical findings
depicted from the discourse analysis. The aim of the analysis is to highlight leaders role during the crisis situation, and how this process has affected their role as leaders.
9 Chapter 5 will comprehend a discussion of the analysis and key findings in relation to the literature review. First, I will present the main challenges leaders have been struggling with during the crisis. Second, there will be a discussion of the companies’ effort in accordance to the existing theory on change leadership by Carnall (1990) & Balestracci (2002).
Chapter 6 concludes my main findings before answering the research question by presenting some further recommendations on how leaders can survive and benefit from organizational changes, based on my main findings. Lastly, I will emphasize the limitations I have identified during my research, and thereby suggest futuristic research on the topic.
10
Chapter 2. Theoretical framework
2.0 Introduction
The theory presented in this chapter will be the basis for the analysis, which will finally help me answering the research question. The main theory of this thesis is linked to leading change, organizational change models and change leadership. However, I have also used other sub-theories to increase my understanding of the industry I am investigating and to get a more holistic picture of the phenomena.
Given that the research question alludes in how leaders in Scanoil are influenced by the need for change and a seemingly critical oil-crisis, I have chosen to call attention to theories that circle around leading change as a phenomenon and changes in general, in addition to theories regarding leadership. One of the reasons for this choice is that I will gather a large amount of information about how leaders perceive the challenges and surrounding issues in the industry, in addition to the general organizational situation they are situated within through the in-depth interviews. This leads to a need to obtain and use more general information about the other key topic of the research, namely the concept and characteristics of change. In order to know what leading change is, what the need for it implies, where it originates, and how it can be utilized in a healthy and positive way for organizations, I will need to review theories about the topic before more information can be employed. In this manner I will be capable of understanding the backdrop for the situational need leaders in Scanoil are facing, and how they can exploit these changes in the best way possible. The knowledge is of great
importance, when to answer the overarching research question of whether leaders in Scanoil are forced to change their leadership style, and if the implementation of PACE have changed the way leaders lead.
11 2.1 Leading change
Leadership is about change. It is about taking people from where they are now to where they need to be. The best way to get people to venture into unknown terrain is to make it desirable
by taking them there in their imagination – “FIRST.”
Noel M. Tichy, The Leadership Engine
2.1.1 Definition of leadership & leading change
In order to understand the tasks and challenges leaders are facing as a consequence of the turbulence within the oil-industry, it is essential to start by looking into the evolution and increased importance of leading change and change leadership. First I will start by
introducing the concept of leadership and leading change, before clarifying the concept of change.
Gary Yukl (2006) defines leadership as “the process of influencing others to understand and agree about what needs to be done and how to do it, and the process of facilitating individual and collective efforts to accomplish shared objectives”. However, I would like to refer to Paglis & Green (2002) definition of leadership, since it specifically pertains to managers’
driving change and continuous improvement at work: “Leadership is the process of diagnosing where the work group is now and where it needs to be in the future, and formulating a strategy for getting there. Leadership also involves implementing change through developing a base of influence with followers, motivating them to commit to and work hard in pursuit of change goals, and working with them to overcome obstacles to change
.
In order to successfully initiate a change process one is dependent on good leadership. Paglis &Green (2002) explains this by illustrating the importance of leaders driving change, and working closely with employees in order to motivate them. I find this definition highly important in relation to the oil crisis, since employee’s reactions to the changes is of a
particular interest, when looking at how leaders adjust under crisis situation. In this manner, it is extremely important for leaders to identify a driving change as well as to follow their employees, and make them commit to their jobs during this crisis situation.
In contrast, change may vary in degree of severity, where one can distinguish between radical and incremental changes. Radical changes are often characterized as difficult to apprehend,
12 and resistance towards the change is often stronger. In order to create willingness to
relinquish old styles of working in favour of new ones, radical changes requires a certain level of acceptance (Reardon 1998; Baesu & Bejinaru, 2013). Incremental changes on the other hand, are easier to accept and implement, as these are applied more gradually and informally.
Thus, when people get used to these kinds of changes they become more like a routine. In regards to the backdrop of this thesis, which is linked to the difficulties leaders in the Norwegian oil- and gas industry are facing, it is natural to consider the changes needed as radical, rather than incremental, at least in most cases.
2.1.2 The basis for leading change
“Leading change occurs when organizations anticipate, respond to, or adapt to challenges and opportunities in their internal or external environment” (Hickman, 2010; 25-26). In this manner, leading change is to bring about a “difference in form, quality, or state of the
organization, so that the organization survives and achieves its mission and goals” (Ibid.) Kotter (2012) argued that the concept of leading change “was to interpret the necessity for transformation and change, and to accept the fact that organisations can function better if leaders defines a clear strategy linked to the future of the company, and if employees are aligned with that strategy and inspired to make that necessary change happen” (Kotter, 2012;
26).
Over the last decades there has been a significant rise in the focus on leading change and change leadership among companies. Increased globalization, changing social expectations and huge technological developments among other things, which may surface the need for changes and renewal, have largely contributed to this trend in organizations. Gary Yukl (2013) argues that leading change in an organization is one of the most important and difficult responsibilities for managers and administrators. “It involves guiding, encouraging, and facilitating the collective efforts of members to adapt and survive in an uncertain and
sometimes hostile environment” (Yukl, 2013; 86) Many theorist connect leadership to change as well. Burns (1978) argues that “leadership manifest most in the change context”, Linsky &
Heifetz (2002) introduces leadership as “facilitating adaptive change”, and Yukl (2002) argue that “change is the essence of leadership and everything else is secondary”(Andrews, McConnell & Wescott, 2010; 13). Additionally, there is a broad specter of theories
13 concerning change leadership, including theories on leadership behavior, transformational-, situational-and systemic leadership. Therefore, in order to identify which theories that can be linked to the theme of this thesis, it is necessary to develop a comprehensive understanding of the importance of leadership in a change process.
Today, companies that fail to meet society’s expectations will mostly be criticized or receive negative publicity from environmental organization, general public, governments, as well as the media, which consequently increases the public focus on these companies, especially during challenging times. Hence, the last year has been difficult for most organizations operating within the oil industry, companies struggling to obtain their position, and at the same time save costs. These difficulties have affected their corporate image, and forced many companies to face the fact that there is a need for change. With more information available, several corporate scandals have been revealed publicly, and media is exaggerating the industry’s future, which has provoked companies to increase their focus on leadership.
Jody Spiro (2009) argues that “change can be a dynamic and positive force for creating new strategies and putting them into action, stimulating creativity, diversity, learning and
growth”. Thus, leaders need to convince their employees that changes are not necessarily all negative, it can also stimulate learning and growth, and furthermore establish a sustainable future. Nonetheless, the changes described in this thesis are about a deliberate disruption of the status quo, hence, it will be harder for leaders to actually encourage employees to accept and agree with the changes.
2.2 Organizational change
Organizations are influenced by a multitude of factors, which are affected by both the internal and the external environment. Hence, companies are forced to deal with changes every day, however, these changes differs in characterization. Baesu & Bejinaru (2013) describes changes as “to alter the present shape/estate in order to become a better one”. Change management is defined as “the coordination of a structured period of transition from
situation A to situation B in order to achieve lasting change within an organization” (Barktus, 1997; Baesu & Bejinaru, 2013). “In general, individuals focus more on what they have to give up when change occurs and not on what they could gain”. Theorists argue that resistance is
14 the norm when changing an organization, however, this is rather paradoxical as any change is completed in order to ensure the company’s survival. Generally we do not like changes, we resist them if we can, change frightens and inconveniences us (Beerel, 2009; 4). However, adapting to changes requires transformation. Transformative change results from learning, since we live in a world were the only constant is change, the only way to survive is to strengthen our adaptive capacity (Ibid.).
Organizational change refers to a set of actions that come to amend previous methods, procedures and organizational behaviors through assigning some directions. Typically
theories suggest distinct phases in the change process, stages in the reaction of individuals, or effects of repeated changes on people. In this section there will be presented different change processes, which I consider essential in order to be able to answer the research question. The reason I find this important, is that the models for the different change processes can help understand and identify where Scanoil is in the process of change, and which kind of challenges the different leaders in the company may be facing.
2.2.1 Lewin’s force-field model
Lewin’s force-field model was one of the earliest change models developed. He proposed that the change process could be divided into three phases: unfreezing, changing, and refreezing (Yukl, 2013; 90). This model is relevant for my research in order to identify the need for an actual change within the organization, and thus to understand the process of actually changing an organization, and how people tend to act during transitions.
In the unfreezing phase, people come to realize that the old ways of doing things are no longer adequate. This recognition may occur as a result of an obvious crisis, or from an effort to describe threats or opportunities that were not evident to most people in the organization.
In the changing phase however, people look for new ways of doing things and select a promising approach. A critical part during this phase is the training session, where one is supposed to develop new ways of thinking and handling.
In the refreezing process, the new approach is implemented and it becomes established (Ibid.).
15 Lewin argues that two types of action may attain changes. One approach is to increase the driving forces towards change (increase incentives and use position power to force change).
The other approach is to reduce restraining forces that create resistance to change (reduce fear of failure or economic loss, co-opt, or remove opponents) (Ibid). I will get further back to this model in the analysis, where I will look at Scanoil in relation to Lewin’s three-phased force field model, and their approach towards “unfreezing”, “changing” and “refreezing”. The model has potential of helping us understand attitudes towards the need for change, both from leaders and their employees, in the light of Lewin’s unfreezing step. Further, the model can also be applied to investigate how the company has dealt with the actual process of changing, be it through training, preparations or adaptions.
2.2.2 Kotter’s eight steps to change
Kotter can be looked at as a “father figure” when it comes to leading change. Therefore I find it highly relevant for my thesis to mention his eight-step model developed to transform an organization. His model derives from analysis completed within 100 different organizations going through change. Where Lewin’s model categorizes the stages of change into three, quite general phases, Kotter presents eight-steps where he addresses some of the power issues in making change happen. He highlights the importance of a “felt need” for change in the organization, and emphasizes the need to communicate the vision and keep communication levels extremely high throughout the process (Cameron & Green, 2012; 126). Even though the model presented is fairly general, it can work as a framework for understanding how a change process works in an organization, and additionally how leaders can respond and adjust to these changes. Such a framework will also serve as a good backdrop for my research, as I evaluate the change process that Scanoil is undergoing and how it affects their leaders, given that Kotter both explains the basic steps of a change process, as well as the normative need of good and strong communication throughout the process.
Kotter has been criticized for not really emphasizing the need for managers to follow through with as much “energy” on the last steps in his model. “The model peaks early, using powerful concepts such as “urgency”, “power”, and “vision”. However, after Step 5, it seems that he emphasizes that the process that can be managed by others, lower down the hierarchy”
(Cameron & Green, 2012; 127). Even though Kotter is seen as a father figure within the field,
16 I understand and support the criticism that has been raised. Leaders have responsibilities and certain unique roles within their units, and it appears as quite necessary that they remain visible, open and present during the whole change process.
2.2.3 William Bridges, managing the transition
Bridges (1991) developed “managing the transition” to make a distinction between planned change and transition. Bridges model has some similarities with Lewin’s force field model, in their explanation of a change process. Bridges argues that transitions are highly complex, and therefore requires a deeper understanding of what goes on during transition and how can we manage the process more effectively (Cameron & Green, 2012; 134). “Transition is about letting go of the past and taking up new behaviors or ways of thinking”.
Transition consists of three phases:
Ending Neutral zone New beginning
Bridges argues that before a corporation can start something new, one has to end “what used to be”. The corporation has to mark the endings for everyone to understand. In the neutral
1. Establish a sense of urgency; Discussing today’s competitive realities, looking at potential future scenarios. Increasing the ”felt-need” for change.
2. Form a powerful guiding coalition; Assembling a powerful group of people who can work well together
3. Create a vision; Building a vision to guide the change effort together with strategies for achieving this.
4. Communicate the vision; Kotter emphasizes the need to communicate at least 10 times the amount you expect to communicate. The vision and accompanying strategies and new behaviors need to be communicated in a variety of different ways. The guiding coalition should be the first to role model new behaviors.
5. Empower others to act on the vision; This step includes getting rid of obstacles to change such as unhelpful structures or systems. Allow people to experiment.
6. Plan for and create short-term wins; Look for and advertise short-term visible improvements.
Plan these in and reward people publicity for improvements.
7. Consolidate improvements and produce still more change; Promote and reward those able to promote and work towards the vision. Energize the process of change with new projects, resources, and change agents.
8. Institutionalize new approaches; Ensure that everyone understands that the new behaviors lead to corporate success.
Kotter (2012); Cameron & Green (2012).
17 zone, people feel disoriented, motivation falls and anxiety rises. The manager’s job is to ensure that people recognize the neutral zone and treats it as part of the process (Cameron &
Green, 2012; 136). Bridges argues that “new beginnings need to be developed carefully, and one should encourage, support and reinforce in order for the change to be successful” (Ibid).
If leaders are to motivate and engage employees during times of transition, like leaders in Scanoil are, it is highly important for them to actually understand the degree of severity, as well as what the transition actually means. Thereby, it is essential for leaders to understand the transition in order to actually encourage and reinforce the company.
2.2.4 Carnall, change management model
Lastly, I would like to highlight Carnall’s model for effective change management, as this model can be utilized when looking at how the change process has influenced leaders in Scanoil, in addition to comparing leaders’ utilization of effective change management, similar to Carnall’s idea. Carnall (1990) argues that the effective management of change depends on the level of management skills in the following areas:
- Managing transitions effectively - Dealing with organizational cultures - Managing organizational politics
In this manner, the manager will be able to utilize these characteristics and thereby help people to learn as they change and create a work-environment of openness and risk-taking.
On the other hand, “the manager can also focus on the organization’s current culture, and develop “a more adaptable culture”. Thereby the manager/leader has the possibility to develop skills within utilizing and recognizing various political tactics such as building coalitions, using outside experts and controlling” (Cameron & Green, 2012; 139). Carnall (2002) argues “that only by synthesizing the management of transition, dealing with
organizational cultures and handling organizational politics can we create an environment, which fosters creativity, risk taking, self-esteem and performance” (Ibid.).
2.2.5 Resistance to change
Regardless of the extensive literature providing guidance to change, and how to best initiate and manage change, there is still difficulties when analyzing how changes actually appears
18 and how reactions towards these changes differs from person to person. A major common difficulty when working with changing conditions is the challenge of dealing with resistance.
Generally, theories argue that employees react differently in relation to the changes. However, it is essential to acknowledge that leaders will have the same characteristics as any other employee. Leaders are also “people”, and reactions will therefore differ among leaders as well during transformation. Nonetheless, their reactions are harder to manage since they do not have the possibility to react “publicly”, or in meetings like employees might do. Further, leadership is about being a figurehead for the company. A leader needs to demonstrate that he or she sees the need for change, and that changes are a natural part of the game. When dealing with transformations, leaders are the ones that are supposed to encourage, follow-up and lead their employees during the changes, regardless of what they agree with.
Higgs & Aitken (2012) outlines a framework for key factors determining reactions to changes. Mainly, they express concern for the feeling of ambiguity that might occur during changes, which can trigger negative reactions. Additionally, when information is withheld or lacking before changing an organization, similar reactions can be triggered. Furthermore, people are creatures of habits, and therefore they do not like when changes threaten to modify already established patterns. Lastly, it is negative when the change threatens jobs, power and status in an organization (p. 28).
Based on the figure above, many organizations establish a strategy for how to manage
employees during change in relation to how they may act. Typically people experience shock, anger and resistance in the beginning of the change initiative. However, when the changes are
19 communicated well, and followers experiences a sense of being a part of “the game” they start accepting the changes, and looking forward. In order to develop strategies for handling
different forms of reactions, it is helpful to consider how people in an organization experience changes, cf. figure 2.4. These forms of reactions will be taken under consideration during my analysis, nonetheless, it will be the reaction described as “in response” that is relevant for leaders and employees in Scanoil. In response, is about resistance where we see ourselves as
“victimized”. Typically this concerns top-down restructuring.
Further, leaders have to consider that their behavior will affect how employees react to changes. The likeliness of having employees who commit to support changes increase when leaders are trusted, and convincing in their effort to explain why the change is necessary and effective. However, resistance to change is still normal within organizations, and it may occur for several reasons that are not mutually exclusive (Connor, 1995; Fedor, Caldwell & Herold, 2006; Yukl, 2013; 91). Hence, resistance to changes can occur when leaders who propose it are disrupted, and this distrust can have a spillover-effect on other sources of resistance. Lack of trust may encourage a leader to be reserved in regards of the real reasons for change or some of the risks, and thereby further increasing suspicion or resistance (Ibid.).
2.3 Leadership- style & Change leadership
Change processes are complex and it requires leaders that have the ability to change their own and others behavior. “Leaders need to express a deeper understanding for their peers and connect with their motivational drivers, which engage heart as well, as minds” (Aitken &
Higgs, 2012; 57). Leadership is compound and they differ much in how they act and behave as leaders, and therefore it is natural that some leaders are better as change leaders than others. Theories argues “that generally people are more likely to accept and connect with changes if leaders provide actions that are authentic with their work (where actions match words) and where messages communicated, resonates with their vision, purpose and values”
(Ibid.). Aitken & Higgs (2012) argues that much of the dysfunctional behavior seen in working environments during change are caused by change leaders in relation to not practicing what they advise and/or personal values that conflicts between managers, employees, suppliers, customers and stakeholders (Ibid.). Thus, change leaders need to recognize the necessity for being consistent during the change process.
20 Caldwell (2002) identified leaders as change agents. “A change agent is the facilitator of the change. He/she helps the sponsor and the implementers stay aligned with each other. The change agent acts as data gatherer, educator, advisor, meeting facilitator and coach”
(O’Neill’s, 2002; Cameron & Green, 2012; 202). He argued that since many change initiatives derives as a top-down approach, leaders needs to identify themselves as change agents who can represent the “voices from below”. Thereby, change agents have two alternatives, either by aligning with the current culture, or by deliberating a new behavior in order to succeed with the change process. During the process a key aspect for each individual is to establish some sort of individual freedom. Scheein argues that a key task is to balance the anxiety people feel about surviving the change with the paralyzing effect of the anxiety felt about being able to learn new ways of doing things (Ibid; 216.).
2.3.1 What characterize good change leadership?
Increasing globalization, rapid technological development, growing knowledge and shifting trends makes change leadership a primary task. The leadership role has been through a large- scale development, from its hierarchical structure with typically top-down control, to a more flatter and flexible leadership role. The emphasis is now more directed to collaboration, communication, and openness. Graetz (2000) argues that change leadership involves two roles;
1. Instrumental 2. Charismatic
“Charismatic leadership is personalized leadership and is underpinned by strong
interpersonal skills”(Graetz, 2000). Those characteristics are necessary in order to empower and energize followers. Instrumental leadership on the other hand, “involves managing environments to create conditions that motivate desired behavior” (Ibid.). Caldwell (2003) argues that “as new flatter and more dynamic organizations have emerged, managers and functional specialists are now expected to embrace the change-oriented attributes or
behaviors that will allow them to cope with uncertainty and become leaders, innovators and risk takers”. I will come further back to these types of role later in the analysis.
21 2.3.2 Change-oriented behavior
Earlier theory on leadership paid little attention to behavior in relation to encouraging and facilitating for change. However, recent research diverges between different meta-categories on effective leadership behavior. When researching Scanoil’s leaders behavior during the crisis situation, it is natural to take these categories into consideration. Yukl (2013) describes three different meta-categories;
Task-oriented behavior, is primarily concerned with accomplishing the task in an efficient and reliable way.
Relations-oriented behavior, is primarily concerned with increasing mutual trust, cooperation, job satisfaction, and identification with the team or organization.
Change-oriented behavior, is primarily concerned with understanding the environment, finding innovative ways to adapt to it, and implementing major changes in strategies,
products, or processes (Yukl, 2013; 65). I will elaborate relation-oriented and change-oriented behavior furthermore, later in the thesis.
2.3.3 Leadership style
Roughly spoken, there are two explanations for why change efforts often fail. “First, employees often get ignored in the process, second, inadequate leadership style assessed by change agents”(Suada & Dzevad, 2014). Leadership behavior that is supportive and
facilitative has a stronger link to success. Beerel (2009) argues that leadership is influenced by time. In times of rapid globalization and change we want leaders who can reconcile the old with the new. Additionally cultures diverge in how they envision leadership. Some cultures values leaders that are patriarchal and authoritarian, while others values leaders that are coaches or facilitators (Ibid; 63).
In order to fully understand the process of leading change, its important to acknowledge that there are differences in leadership-style, and thus in their way of assessing change processes.
In this manner the emphasis is to identify whether leaders have to change their behavior during crisis situations. In order to fully understand this phenomenon, we shall further approach the relation between different styles of leadership linked to organizational change.
22 2.3.3.1 Transformational leadership
Transformational leadership is one of the most prevalent forms of leadership. Within the overall theory of leadership, transformational leadership is considered particularly relevant in the context of organizational change (Suada & Dzevad, 2014), which makes it highly relevant when researching if and how leaders in Scanoil are affected by the change
process.“Transformational leaders stimulate and inspire followers to both achieve
extraordinary outcomes and, in the process, develop their own leadership capacity” (Bass, 2006). “Transformational leaders empower their followers by aligning the entire
organization’s objectives and goals” (Ibid.). Nonetheless, “transformational leaders are pursuing to satisfy their followers’ higher needs. Thereby they wish to engage and develop a team with a higher moral ground” (Burns, 1979; Beerel, 2009; 11).
“Transformational leadership involves inspiring followers to commit to a shared vision and goals for an organization or unit, challenging them to be innovative problem solvers, and developing followers’ leadership capacity via coaching, mentoring, and provision of both challenge and support” (Ibid.).
Bass (2006) argues that transformational leadership can be characterized by four critical components of transformational leadership. These will be assessed furthermore in the analysis, when looking at how leaders in Scanoil have utilized these characteristics when leading change.
- Idealized Influence; this category is characterized by the leaders as an admired, respected and trustworthy person. Followers will therefore seek to identify with their leaders.
- Inspirational Motivation, argues that leaders behave in ways that motivate and inspire those around them by providing meaning and challenge to their followers’ work.
- Intellectual Stimulation, leaders stimulate their followers’ efforts to be innovative and creative by questioning assumptions, reframing problems, and approaching old situations in new ways.
23 - Individualized consideration, leaders pay special attention to each individual follower’s needs for achievement and growth by acting as a coach or mentor. Individualized
consideration is practiced when new learning opportunities are created along with a supportive climate.
Beerel (2009) differs from some of the key components Bass (2006) describes with
transformational leadership. Beerel argues that leaders do not necessarily have to do “all the work”. Thereby, she argues that the leader cannot solve the entire administration, however, they can work as an inspiration and motivation. Conversely, it is highly dangerous to idealize or idolize leaders. Therefore Beerel (2009) points at the importance of not creating a vision alone. Visions need to be co-created in light of new realities (Beerel, 2009; 13). Nevertheless, critics argue that transformational leadership can be elitist and antidemocratic. Particularly there has been concern around the potential for abuse of power. Consequently
transformational leaders motivate their followers by appealing to strong emotions, however, they do not consider how this will affect followers moral values. Further, transformational leaders are criticized for not balancing countervailing interests, and at the same time avoid dictatorship and oppression of a minority by a majority (Ibid.).
2.3.3.3 Situational leadership
The description of situational leadership is also applicable in regards of leading change, as top-tier leaders can encourage subordinate leaders to develop different leadership styles to manage diverse situations (Paterson, 2013). “The core competencies of situational leaders are the ability to identify the performance, competence and commitment of others, and to be flexible “(Ibid.). Situational leadership can be crucial during a change process, since situational leaders have the ability to adapt to new situations that demands new approaches towards how to lead each individual, with regards to communication, openness, flexibility and authority.
Higgs & Aitken (2012) proposes in their book Developing Change Leaders that we initiate different leadership styles depending on the situational impact. These leadership-styles are interesting when looking at the possibility of leaders in Scanoil adjusting their leadership-
24 behavior due to changes in the organization. These leadership-styles will be assessed
furthermore in the analysis.
- Coercive/commanding, this type of leadership style work best in a crisis, to kick-start a turnaround, or with problematic employees.
- Authoritative/Visionary, works best when changes requires a new vision, or when a clear direction is needed
- Affiliate, is effective when healing rifts in a team or to motivate people during stressful circumstances
- Democratic, to build buy-in or consensus, or to get input from valuable employees - Pacesetting, to get quick results from a highly motivated and competent team (High &
Aitken, 2012; 121).
2.3.3.4 Systemic leadership
“Systemic leaders seek to mobilize people to handle challenging issues that arise during the change process, and enhance their adaptive capacity” (Beerel, 2009; 6). The general idea behind this approach is that leaders wish to make their employees see the need for why they must act as they do. Thereby they stimulate employee’s self-motivation based on the action required. I have chosen to describe this leadership-style more broadly, due to the recognition that this leadership-style is particularly relevant for leaders in Scanoil, when trying to make PACE something that employees see the need for, and additionally act by the new goals. As Scanoil has been a company that has been struck harder by the crisis in Norway, there is a distinct degree of ambiguity and resistance among the employees, especially due to factors such as high rates of layoffs and turbulence. Further, this adds more ingredients into the bowl of resistance towards change that exists permanently and also in non-crisis situations, which makes it even harder for leaders to mobilize and demonstrate why changes are necessary.
This leadership approach is based on the recognition that people generally resists changes.
Therefore leaders “need to reprioritize employees values, change their perspective or world view, and establish new behaviors or form a new relationship” (Ibid.). Equally, people who resist changes tend to demonstrate their resistance by acting out. “They deny, avoid, get angry, find someone else to blame, are preoccupied with other issues, lose motivation, rebel,
25 disappear, or sabotage change efforts” (Ibid). At the same time, others might prefer to be told what to do during change processes. This is due to the fact that they do not have the same personal engagement to the process, and as a consequence to this they can blame someone else for their actions. “Thereby, systemic leadership is build up to deal with these
psychological and emotional issues, and at the same time deal with strategic, technical, procedural and structural issues around the change process” (Ibid). Nonetheless, for a systemic leader to succeed, one has to be sharp, energetic, persevere. Finally, in order to deal with resistance and ambivalence towards change, self-confidence is also required.
According to Pinnow (2011), “systemic leadership means individual leadership, having a flexible, personal style and being able to adapt that style to the organization and the people of the current leadership situation rather than working with schematic standard tools” (Pinnow, 2011; 119). Throughout a change process, systemic leaders should aim their focus towards what happens between two actors, instead of focusing on just one parameter.
From his work with leaders, Pinnow (2011) emphasizes structures and forms of
communication within the organization, as well as the readiness and ability to communicate at the individual level, and says that “communication is interaction, it is listening and speaking and comprehending – in exactly this order” (Ibid.).
Lastly, Ghosal (2004) argues that there has been a shift in how the leadership-role is exercised, and that the maintenance and building of relationships are the key elements that leaders need to comprehend and master (Pinnow, 2011; 123). Further, he portrays a reality where leaders have to spend more and more time dedicated to customers, products, and markets. Consequently, less time is left for being visible and present, leading and training employees, and giving feedback, and this can contribute to complicate the conditions for leaders in times of change. These issues are interesting when looking at how leaders in Scanoil have been able to utilize their resources when leading PACE.
26 2.3.4. Change leadership development
Change leadership is variously and depends much on the situation. In order to develop conscious and effective leaders during change, it demands developing flexibility in leadership-style in order to match the current business conditions and culture.
Baesu & Bejinaru (2013) describes in their article “Leadership Approaches Regarding the Organizational Change”, the importance of depersonalization. Hence, they argue that in order to overcome immediate resistance to change, one has to depersonalize the change.
Depersonalization is described as “decreasing the emotional reactivity to the situation, which allows for, and even encourages, change”. Conversely, if you remove the emotional side of the change process, the firm and employees are more adaptable to move into the change mode. Thus, in order to respond appropriately to the changes there’s a need for five essential skills:
1. Self-awareness 2. Emotional maturity 3. Self-motivation
4. The ability to show empathy
5. The ability to develop and maintain positive relationships (Balestracci, 2003; Baesu &
Bejinaru, 2013). These skills will be further processes in the analysis, when looking at how leaders in Scanoil have managed to assess these skills when leading change.
2.5 Summary
Rooted in my research question, I chose to divide the theoretical framework into three
overarching sections, namely ‘leading change’, ‘organizational change’ and ‘leadership-styles and change-leadership’. The purpose of doing this was first of all to portray an understanding of the theories linked to these sections. Additionally, this setup helped me to differentiate between different theories linked to various aspects of the thesis, as well as it simultaneously made it possible to create a form of informal categorization that consequently will make it possible to analyze and discuss my findings. By examining theories linked to widespread themes such as ‘leadership’ and ‘change’, it is difficult not to “get lost” in seemingly large jungle of different approaches to different issues. Thus, by dividing the framework into three very specific sections, I feel that both the reader and I have a more concrete and specific theoretical backdrop before setting out into the following chapters.
27
Chapter 3. METHODOLOGY
3.0 Introduction
The purpose of the following chapter is to outline the methodological reflections and research design selected for this research. The objective of the chapter is to critically reflect upon the methodology chosen, and attempt to justify it in the light of other alternatives.
Throughout this section, I will offer a presentation and discussion of the method I have employed in this research. The chapter is organized into three sections, I will begin by exploring the scientific direction I have chosen to examine in my research. Further, I will offer an elaboration of the research process and research design, where the data collection and the analysis of the data will be embedded. Conclusively, I will also offer an evaluation of limitations and assessment of research criteria, which alludes in reliability and validity, in order to provide a more profound insight into my approach towards the conduction of the study.
3.1 Choice of paradigm and research approach
Kuhn (1962) defines paradigms as “an entire constellation of beliefs, values, techniques, and so on, shared by the members of a given community”(Dalby & Holloway, 2010; 101). Thus, the research paradigm can define how we can attain and assess information. Even though there are several different paradigms, I will only call attention to positivist and interpretive paradigms, which underlie qualitative research designs.
Positivistic approach
“Positivism is an approach to science which is rooted in the ontological belief that an objective reality exists. The aim of research which is grounded in a positivist epistemology is to uncover universal laws and give an objective picture of the world” (Dalby & Holloway, 2010; 101). Dalby & Holloway (2010) argues that “the aim of research which is grounded in a positivist epistemology is to uncover universal laws and give an objective picture of the world”.
28 Interpretive approach
The interpretive approach on the other hand, “expresses an ontological belief in the existence of multiple realities and truths which are open to change because the social world, not having a separate existence from the individual, is socially constructed” (Dalby & Holloway, 2010;
102). The interpretive approach tries to undercover meaning of how people understand their own experiences, behaviors and communication.
With regards to my research question, I find the interpretive paradigm more suitable for my research, which aims at uncovering the challenges leaders are facing in an already critical situation. Human behavior can, as a phenomenon, be characterized as driven by beliefs, feelings, mindsets, rationales and actions. In times of changes, it is therefore almost impossible to predict employees’ actions, as they are driven by such guidelines, more than any rational attributes or general “laws”. In accordance to the interpretive approach, the researchers prioritize understanding over scientific explanation (Dalby & Holloway, 2010;
102). In order to understand the rationales and reasoning of the people involved in the case;
i.e. leaders and the company overall, one has to get an understanding of how leaders are affected and influenced during a change process, and how these consequences affect them as leaders. The aim of the thesis, is as mentioned above to discover to which degree the
implementation of PACE is influencing the leaders is Scanoil, and whether their style of leadership have been forced to change as a consequence of this. As I will dive into this by doing in-depth interviews with 8 leaders, I seek to discover how leaders review this particular
“issue”, their own type of leadership, and eventually how they reflect upon the topic I am investigating. By doing this, I am not seeking to, or in the position to, offer a “universal law”
rooted in a certain reality or objective truth. In addition, the thesis is heavily based upon a specific downturn in the industry, a factor that has a tremendous impact on both the leaders and how they review their role. Such impacts are influencing the situation and field this research is investigating, and since this is emphasized in the research, it will be more suitable to characterize the approach as more interpretive than positivistic.
3.1.1 Choice of research approach
We distinguish between two general approaches to reasoning, inductive and deductive reasoning, which may result in the acquisition of new knowledge.
