Introduction
On June 23, 2016, UK held a referendum in which 52% of the voters chose to leave the European Union (EU) against 48% who chose to stay (Taub, 2016). The Brexit presents a massive change. Without a doubt, the Brexit will strongly influence how project managers will run their projects. Hillary and Allen (2016) observe that all sectors and organization will have to review the risks and opportunities that will emanate from Brexit. Unfortunately, project managers, like everyone else, have limited information that would help them to assess the risks and opportunities associated with the Brexit. Notwithstanding the lack of sufficient information, management teams must develop a strategy to deal with the change. Hillary and Allen (2016) highlights some of the risks that firms may face to include currency fluctuations, the decline in trade prospects, currency fluctuations, availability of skilled labor, and availability of funding especially for projects that were financed by the EU.
Change theorists
Change theorists provide various theoretical frameworks on how to implement change. The Kotter 8-step change model provides a practical approach that an organization can employ to effect change (Bourda, 2013). Lewin’s 3-stage model argues that organization can effect change in three stages unfreeze, change, refreeze (Bourda, 2013). The change curve that was proposed by Elisabeth Kubler-Ross offers insights on individual transition and organizational change (Bourda, 2013).
Kotter 8-Step change model
Kotter (1995) argued that the process of change occurs in a series of steps. Kotter (1995) argued that for an organization to successfully effect change it must go through eight steps. Kotter (1995) warns that skipping any of the eight steps does not hasten the change process; instead, skipping any of the eight steps leads to substandard results.
Step 1: establishing a sense of urgency, this involves evaluating the market and competitive realities (Kotter, 1995). Changes in the competitive landscape will present both new opportunities and threats. For instance, some of the positive things that might result from Brexit include:
UK will no longer be tied to the EU legal and tax structure and this means that the UK may be able to provide incentives in terms of lower taxes or favorable regulations to support certain industries or projects (Hillary and Allen, 2016).
A weaker pound may improve the competitiveness of UK exports
UK may be in a better position to negotiate bilateral trade agreements with other countries without the rules of EU getting in the way
However, on the downside, Brexit might lead to new threats and problems that include:
Immigration rules may change and companies with projects or offices across Europe may find it more difficult to work and travel in other European countries
Foreign exchange fluctuations will increase the foreign currency risk faced by organizations that have foreign currency receipts or payments
Projects that were funded by the EU may have difficulties securing funding
Step 2: forming a powerful guiding coalition, Kotter (1996) argues that organizations cannot achieve major transformation unless top leadership and another critical mass that is committed to excellence through change support the change. The top management including program managers must act in concerted effort to implement the necessary changes. However, the guiding coalition in most cases operates outside the formal hierarchy and may include members who may not be part of the management team (Kotter, 1995).
Step 3: Creating a vision, the guiding coalition should create a powerful picture of the future that should be easy to communicate to shareholders, employees, and other stakeholders (Kotter, 1995). A compelling vision helps to communicate the strategic direction the organization is taking. The guiding coalition should also develop the strategies of achieving the vision. Kotter (1995) warns that without a compelling the transformation efforts can get lost in scattered incompatible programs and projects.
Step 4: Communicating the vision, Kotter (1996) observes that while organizations may be able to develop a compelling vision most of them fail to communicate the vision effectively to the employees. Most of the organizations fail to communicate the vision because they send the communication rarely such as in the monthly newsletters, or in annual general meetings. Kotter (1995) advises that management should incorporate the communication of the vision in their routine activities such as in the routine Q&A sessions, and make use of all existing communication channels.
Step 5: Empowering others to act on the vision, after communicating the vision the organization needs to eliminate obstacles that would hinder the change. This would include empowering employees so that they are able to take the actions that are necessary to effect the changes. Kotter (1995) observes that some of the obstacles are in the minds of the employees who feel disfranchised and the only needed in such cases is to empower the employees. However, in some cases, the obstacles might be the organization structure such as a boss who thwarts the change efforts. In such cases, the organization has to deal with such individuals fairly and in a manner consistent with the attainment of the vision (Kotter, 1995).
Step 6: planning for and creating short-term wins, transformational change may take a long time to realize. Therefore, it is important for the management to create short-term wins that the team can celebrate and keep morale high. Kotter (1995) advises that the short-terms wins must not be subjective such that they can easily be dismissed by the change skeptics, but rather objective. Some of the short-term wins that the management can consider using include, an increase in sales, reduction in defects, improved turnaround, and the development of a new process or product.
Step 7: Consolidating improvements and producing still more change, Kotter (1995) observes that one of the common mistakes that organization make is to declare victory early possibly after achieving a few milestones. Kotter (1995) warns that while celebrating small wins is important to keep the team motivated, declaring an early victory is disastrous to transformational change because it kills the momentum for change. The change agents instead should use the small wins as a basis of implementing even more changes such as bring on more new programs, being keen on who is hired and promoted, and tackling any problems that might not have been solved before (Kotter, 1996).
Step 8: Institutionalizing new approaches: Institutionalizing changes means that the organization incorporates the new approaches in its organization culture. Kotter (1995) argues that change becomes institutionalized when the new approaches become ‘the way we do things around here’ i.e. the new approaches are part of the organization culture. There are two critical factors in institutionalizing change. First is creating explicit links between the new approaches, behaviors, processes, and performance. When individuals are left to themselves, they make inaccurate links such as attributing the improved performance to their charismatic boss (Kotter, 1995). Second is ensuring that the next group of top leaders is able to sustain the change. A poor succession can undo all the gains achieved by the change initiative. Kotter (1995) observes that poor succession may arise in instances when the board of directors was not an integral part of the change initiative.
Lewin’s 3-step Change process: unfreezing, change, refreezing
Kurt Lewin (1951) as cited by Kritsonis (2005) view change as a dynamic balance of forces that are in support of the change and those that are opposed to the change. Lewin (1951) postulated that there are forces that seek to maintain the status quo, and other forces that are against the status quo (Burnes, 2004). Lewins (1951) proposed three steps for a successful change project:
Step 1: Unfreezing, this involves challenging the status quo or the existing situation (Kritsonis, 2005). The management can unfreeze the status quo in three ways. One is increasing the forces of change. Management can increase the driving forces for change by disconfirming the validity of the status quo and creating a survival anxiety (Burnes, 2004). Two is reducing the forces against change (Kritsonis, 2005). Management can reduce the forces against change by creating psychological safety that calms the individual anxiety about the change (Burnes, 2004). Three is a combination of the two methods. In this step, the management needs to identify the issues presented by the change and communicate to all the stakeholders the details of the change.
Step 2: Change, in this step the management moves the employees to the desired equilibrium. During the transition period, the management must keep the employees motivated to transition to the new equilibrium. Without reinforcement, the organization would slip back to the status quo. Kristsonis (2005) advises that management can keep the change momentum alive by persuading employees that the status quo is no longer tenable, encouraging teamwork, and seeking new approaches to solving problems (Pathak, 2010).
Step 3: refreezing, after the organization has implemented the change it then refreezes at the new equilibrium. The objective of refreezing is to create a new equilibrium in which the new behavior is congruent with the new status quo. Without refreezing, the organization cannot sustain the change because the new status quo would lead to another round of disconfirmation (Pathak, 2010). Refreezing means that the organization develops new norms, culture, practices, and policies (Burnes, 2004). Characteristics of a successful change include consistent job descriptions and a stable organization chart (Bourda, 2013).
The Change Curve
The change curve identifies five stages that an individual goes through when they are faced with change.
Source: Anastasia
Shock/denial – This is the first stage when an individual receives news about change. The person may set up a temporary defense by denying the new reality (Anastasia, 2015). After the Brexit, it took UK two weeks to appoint a new Prime Minister and this may indicate that people were still in shock or denial of the referendum results.
Frustration/anger – when the reality finally sinks, employees may begin to experience fear or anxiety of the changes that are about to come, this may lead employees to feel frustrated or angry (Anastasia, 2015). In the first two stages, management should communicate to the employees and other stakeholders details of the change (Orridge, 2009).
Bargaining – once the employees are past the stage of anger, they may start negotiating or bargaining for a less drastic change hoping that it can be business as usual. For instance, in the Brexit case, project managers may hope that UK does not drastically change its immigration rules, or hope that the government will continue providing funding to projects that were being financed by the EU. In this phase, it is important for the management to provide appropriate training and emotional support to help them to cope with the change.
Learning– In this phase the employee resigns to the fact that change is inevitable. The employee realizes that it is not going to be business as usual and that it is necessary to adapt to the changes (Orridge, 2009). The employee may feel sadness, guilt, regret, and low morale (Anastasia, 2015). In this phase, management should provide employees with appropriate training to equip them with the requisite skills to transition to a new order.
Acceptance – in the final stage people embrace change and start developing new plans based on the new order (Orridge, 2009). The management develops new plans and strategies to achieve those plans. Employee morale and productivity rises. At this stage, the management has effectively instituted change.
The future of project management Post-Brexit
Organizations have up to 2018 to prepare for the eventual technical exit of UK from the EU. While the status quo will remain until UK reaches an exit agreement with EU, it is important that the top management and program managers review the potential risks and benefits that will precipitate once the UK finally exits EU. The change theoretical frameworks provide managers with strategies that they can employ to implement changes in their organization to cope with the exit of UK from EU. Aspire Europe (2016) highlights the expected outcomes of Brexit to include:
Higher economic growth rate increasing people’s disposable incomes
UK will save £350 million per week from EU membership fees and spend it on NHS
Better control on immigration through a point based entry system
No effect on UK membership to the common market
The actual outcomes of Brexit may differ or be more than the outcomes listed above. For this reason, program managers and top leaders face a lot of uncertainty on the effects Brexit will have on their projects and organizations. Some of the effects of Brexit may only be known in years to come.
Samphire (2016) offers important features that should be designed into the future P3 management program in order to help directors, program managers, and project managers to implement changes after Brexit to include:
The program should help program managers and leaders to evaluate the strategic objectives and the reset project objectives to ensure that they are consistent with the new vision. This would help the organization to initiate, vary, or close certain projects that are no longer feasible post-Brexit.
The program should have a feature of evaluating an organization business portfolio and identifying changes in the risks and opportunities. Particular risks that should be incorporated in the program include supply chain problems, change in employment laws, and changes in tariffs (Samphire, 2016). In addition, for projects that are being carried out with partners, the program should provide a tool for assessing the project sponsors their attitude towards the Brexit decision and their commitment to continue (Samphire, 2016).
The program should have a tool for stakeholder mapping in order to identify any changes such as the emergence of new stakeholders and the disappearance of others especially for projects that are likely to have a major change in scope post-Brexit.
The program should help managers to evaluate the possibility of the disruption of funds and the alternative source of finance. This will be an important tool especially if the project is financed by the EU or from another source that will be adversely affected by the Brexit (Samphire, 2016).
The program should also provide managers with a tool for assigning people to projects given that the Brexit may affect the supply of labor especially if the project relied on workers from other parts of Europe.
The program should have a tool that would enable an independent scrutiny of projects to ensure that the plans incorporate all necessary information in developing a business case (Samphire, 2016).
The program should facilitate easy collaboration and learning among team members. Because Brexit is an unprecedented change, there will be a lot of learning that will take place and it is important that such a program be capable of facilitating fast and easy collaboration and learning.
The program should have the capabilities of quick and easy communication with all stakeholders involved in the change. Kotter (1995) argued that it is important that people cannot move towards a vision unless the vision is communicated effectively. Therefore, the program should provide various communication platforms that can be used to communicate not just the vision but also the challenges encountered during the change process.
Certainly, the list above is not exhaustive of the features of future project management programs should possess but rather, a list of the bare minimum features that such a program must possess.
Conclusion
Brexit is the biggest change program and will have a profound effect on many aspects of business and project management. While some outcomes of Brexit are explicitly stated such as control of immigration, saving money spent on UK membership to EU, and higher economic growth rate. There is still much uncertainty about the actual effects of Brexit. Change theories such as the Kotter 8-step process, Lewin’s 3-step change model, and the change curve provide managers with important insights about how they can effectively implement change in their organization now that major change is on the way.
The future design of project management programs must possess tools that will help directors, project managers, and program managers to be able to evaluate the changes taking place and the risks and opportunities they present. Disruption of funding, supply chain problems, currency fluctuations risks, and supply of people are some of the risks that such a program should be able to monitor. Some of the opportunities may arise from increased exports, fabourable government regulation, and more spending on certain projects. In addition, the program should support learning, collaboration, and communication among the various stakeholders. Chances are mistakes will be made in the course of transitioning, and it is important that corrective action is taken quickly and lessons taken from such mistakes.
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