Cia Part 2 - Summary

Changes:

External forces:

• General Environmental

• International
• Economic
• Technology
• Socio-cultural
• Political legal forces

• Task environmental:

• Shareholders.
• Customer
• Suppliers
• Regulators
• Trade unions
• Strategic allies

Internal forces: when the top management revising their strategy.

Types of change:

1. Cultural change: changes in the attitudes and mindset including perception of how best to do business.
2. Product change: changes in the product’s attributes and its usefulness to the customers.
3. Structural change:  changes in the structure of the company.
4. Organisational change: planned or unplanned alteration which affect the company structure, technology, or personnel.  

Classification of change:

• Radical change: change to alter overall structure or direction.
• Incremental change: change needed to align the direction with establishing objectives.
• Adaptation change: incremental reactive changes.
• Tuning change: incremental anticipatory changes such as changes under Kaizan.
• Reorientation change: radical anticipatory changes such as stores creating online market.
• Recreation change: radical reactive change such as Tourism Company changing to become internet service provider.

Reasons for resistance of change:

• Risk and uncertainty.
• Different in perceptions or threatened self interest.
• Social or feeling of loss. (Break of social network - friends)

Methods to reduce resistance:

• Negotiations: small highly educated group.
• Manipulation: Giving employee’s symbolic role in the change process. Used when management is able to excerpt significant influence to change employee’s behaviour.
• Coercion: used when there are significant time constrains.
• Employee education: increase awareness and effective communication.
• Increase communication: should be used with all changes. Provide complete information about the change.
• Participation: participating in decision making process. And should be used with all changes.

Guidelines for managing the change and for reducing the employee resistance:

• Involve employees in planning for change - let them participate -.
• Giving them opportunity to talk about their objections.
• Taking into consideration the group norms and habits.
• Make only essential change. Frequent change will make employees less receptive for major change.
• Force field analysis: removing the forces acting against the change.
• Provide accurate and complete information.
• Provide adequate motivation such as reward, opportunity to grow and participating in the process of decision making.

Internal auditors need to be aware of managing change in order to recommend viable solutions that would be positively accepted by the affected individuals. Auditors are concern with:

• Fear: auditors need to describe the impact of the recommended change on operations, including potential advantages and potential risk exposure.
• Ego: auditors should allow employees to participate in the recommendation for the need to change.
• Change: auditors should explain the positive impact of the change and highlight its benefits.
• Bureaucratic issues: allow all affected parties to participate to ensure the change is accepted and implemented.

The change should be:

• Achievable.
• Reasonable.
• In the best interest of the company.
• Cost beneficial – cost should not exceed its benefits.
• In line with the company’s values.
• In accordance with good business practice.

Professional Scepticism: an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud.