7th MU Conference abstracts. Change management effects on organizational performance of selected hotels in Nairobi Authors: Korir J.

, Mukolwe E. and Korir J.K. Department of Hotel and Hospitality Management, School of Business and Economics, Moi University, Eldoret, Kenya Abstract The hotel industry is an integral segment of the hospitality sector that is sensitive to external environmental changes. In order to remain competitive hotels must be flexible to quickly react and adapt to external environment challenges. Due to the close interactions and relationships between employees and managers, there can be direct effects on a hotels performance when internal and external change occurs. The main purpose of the study was to investigate the effects of change management on organizational performance. The specific objectives were, first to establish the effects of change management strategies on organizational performance, secondly, to investigate how resistance to change effects organizational performance and lastly, to find out the impacts of change implementation on organizational performance. The study was carried out in Nairobi, using descriptive survey research design. It targeted a population of 549 respondents comprising of 17 managers, 57 supervisors and 457 employees of purposively selected hotels in Nairobi with different star ratings. A sample size of 55 was selected using stratified sampling technique and random sampling techniques. Questionnaires were used to collect data which was validated through a pilot study. Quantitative data from the study was analysed through descriptive statistics by the help of scientific packages for social scientists (SPSS). The data was presented by use of graphs, charts and tables. The results indicated that empirical-rational strategy was effective while power coercive was ineffective in change management as it imposed change on employees leading to declined productivity hence affects organizational performance. The findings also showed that change implementation negatively affects organizational Performance if it is not done in a participative style and that resistance to change was higher in radical changes than incremental changes. The researcher recommends staff training related to the change, effective communication between managers and employees on issues pertaining to change and application of participatory style of management. This study may benefit the hotel industry in effectively formulating strategies of change management that will enhance the performance of hotels and enable them to gain competitive advantage in Kenya. It will also help managers to manage change hence improving organizational performance, by involving and openly communicating to employees during change implementation, by demonstrating strong leadership and using participative management styles that will enable them to motivate employees to embrace change, gain competitive advantage and increase the levels of productivity and efficiency thus improving overall organizational performance. Introduction Go and Pine (1995), stated that rapid and unpredictable changes in customer attitudes and information technology make the need to manage change inevitable and that the ability to manage change was the key to the long-term survival of hotel companies. Mullins (1995) also claims that factors such as uncertain economic and political conditions, changes in social attitudes, fierce competition, take-overs, acquisitions, technological developments and governmental interventions create an increasingly volatile environment for hotels and consequently they can only perform effectively through flexibility and responsiveness to change. Most of the literature on managing change, however, has been related to manufacturing industries and fails to address the specific issues associated with service industries. As Kaiser (1999)and Wood (1994)point out, the hospitality industry has particular characteristics which have implications for the adaptation of generic management principles. Furthermore, there has been very little research into managing change in the hotel industry. According to Nzuve (1999), organization is a system whose survival depends on its ability to adopt to changes in an environment. Cole (2000), states that to change something implies altering it varying or modifying it in some way. Management change is mainly a response to external circumstances which are reactive to change. Changes normally present challenges to an organization and the managers which requires them to adapt to the emerging changes. According to Mullins (1991), Organizations usually introduce changes through people unless people are willing to accept the need for organizational change, the intended change cannot change the individuals attitudes and their behavioral patterns to match the adopting changes. Although it is argued by Carnal (1995) and Vandermerwe and Vandermerwe (1991) that there is no universal formula for managing change authors such as Burnes (2004), Hill and Jones (1992)and Kotter (1995)recommended that change programmes should be planned against a set of objectives ,strategies and a clear process and that the use of frameworks or models helps managers to address issues in a logical order. In addition, Nadler and Tushman (1999)claimed that it is essential to identify and evaluate the type and characteristics of any change situation if the case and its implications are to be understood clearly.

Though all members of an organization rationally recognize that progress means change, and that they all need to progress, but not even the prospect of attaining benefits from change would make everyone ready and willing, or indeed able, to embrace change. On the contrary, it is widely believed that most would resist change. Duck (1993) bluntly points that change is intensely personal and Pietersen (2002) reckons that for many people, the specter of change produces what is sometimes called the Factor- Fear. Hotels in Nairobi are assuming a new shape in terms of the ways they carry out their hotel activities and in terms of the overall structure of the functions of different hotels. The management therefore must devise appropriate change management strategies to confront the current trend in the market. Statement of the problem Change in an organization cannot be stopped; it can only be directed through appropriate strategies to be compliant with the objectives of the organization. Hotel firms in fast growing cities such as Nairobi are facing dynamic changes in organizational activities, structuring, customer handling and product portfolio. Managers and other stakeholders are forced back to the drawing boards to devise strategies which will accommodate both short term and long term changes and at the same time minimizes the costs of change implementation (Dennis, 1991). Aspects of change management such as the strategies employed, and implementation of change can greatly affect the performance of an organization. However, the strategies and implementation may be good but if the employees do not embrace the same and resist them, these can impact negatively on the organisations performance. According to Warrilow (2010), Organizational change is increasing, yet the high levels of failure indicate that effective management of these changes seems to be lacking. Such a gap indicated that there is much to learn about how to manage change more effectively using the right strategies. It is on the basis of the unpredictable changes in the hotel industry that the current study is being carried out. Change is inevitable with the ever changing needs of customers and business trends, hence utmost care in the choice of strategies, and ways of implementation need to be considered in order to improve the organizational performance and maintain competitive advantage. Ineffective management of change may have negative effects on the performance of an organization resulting to loss of valued employees, productivity loss, active and passive resistance, reduced proficiency, slower speed of change adoption, failure to meet financial objectives of the hotels, finishing of projects behind schedule and over budget and eventually dissatisfied customers may also move to other competitors, hence affecting the overall organizational performance Purpose of the study The purpose of the study was to establish the effects of change management on organizational performance of selected hotels in Nairobi. Research Objectives The main objective of the study was to find out the effects of change management on organizational performance. The specific objectives were the following: a) To find out the areas of change experienced in hotels. b) To investigate how resistance to change affects organizational performance of hotels. c) To establish the effects of Change Management Strategies on the performance of selected hotels in Nairobi. d) To find out the impacts of change implementation on organizational performance. Research Questions To answer the above objectives the following research questions were formulated: a) b) c) d) What areas of change are experienced in the selected hotels in Nairobi? How does resistance to change affect organizational performance of hotels? What are the effects of Change Management Strategies on the performance of selected hotels in Nairobi? What are the impacts of change implementation on organizational performance of hotels?

Conceptual Framework This study adopted a conceptual framework where change management strategies, resistance to change, and implementation of change were itemized as independent variables and organizational performance is itemized as dependent variable. LITERATURE REVIEW Change in organization. Change management is the effective management of a business change such that executive leaders, managers and front line employees work in concert to successfully implement the needed process, technology or organizational changes. The goal of change management is to implement these business changes quickly in an attempt to improve organizational performance through minimizing the impact on productivity, avoiding unnecessary turnover or loss of valued employees, eliminating any adverse impact on their customers and achieving the desired business outcomes as soon as possible. The characteristics of organizational change are mainly categorized along the following two dimensions; radical versus incremental change and reactive versus proactive change. Nadler and Tushman (1999) refer to radical changes as changes that have an impact on the whole system of the organization and fundamentally redefine what the organization is or change its basic framework, including strategy, structure, people, processes, and (in some cases) core values. On the other hand, they interpret incremental changes as changes that happen all the time in organisations, and they need not to be small. Such things as changes in organization structure, the introduction of new technology, and significant modifications of personnel practices are all large and significant changes, but ones which usually occur within the existing definition and frame of reference of the organization. Johnson (1998) claim that the incremental approach to change is more common and this type of change is commonly used to maximize short term performance. The logic behind the incremental view is that the environment is constantly changing and incremental change being a continuous process is the only way to secure the future of the company and improve organizational performance. However, in some situations, such as after a period of flux or unexpected rapid change in the environment, a radical approach to change may be necessary to address more fundamental problems (Johnson and Scholes, 1997). In terms of the proactive/reactive nature of change, Nadler and Tushman (1999) characterise reactive change as that implemented in response to some external event and or serious internal operational and managerial problems. They see proactive change as that where the company is not currently experiencing any serious problems but managers anticipate the need for change to put the company in a better position or avert potential future problems. Though this anticipatory approach to change is generally preferable, in practice most companies tend to take a reactive approach, usually as a consequence of the commonly held view that there is no need for change if current performance is satisfactory. Additionally, the hotel industry has been heavily criticized for being reactive largely as a result of its strong operational orientation and a tendency to focus on short-term results. Resistance to change Many authors (Maurer, 1996; Strebel, 1994; Waddell and Sohal, 1998, among others) stress that the reasons for the failure of many change initiatives can be found in resistance to change.Resistance is a phenomenon that affects the change process, delaying or slowing down its beginning, obstructing or hindering its implementation, and increasing its costs and generally reducing organizational performance (Ansoff, 1990). On the other hand, resistance is any conduct that tries to keep the status quo, and thus avoid change (Maurer, 1996; Rumelt, 1995). Resistance has also been considered as a source of information; being useful in learning how to develop a more successful change process therefore its not a negative concept as it could show change managers certain aspects that are not properly considered in the change process (Waddell and Sohal, 1998). Change management strategies. Warrilow, (2010) refers to change management strategies as the techniques adopted to effectively manage change in an environment experiencing change dynamics so as to embrace change and direct it towards positive contribution of a given organization. Before any strategy is adopted the organization must know its strength and weaknesses, their customers needs and the nature of the environment in which they operate. A SWOT analysis can be used to benchmark an organizations performance against a range of internal and external comparators (Camp, 1999). Change implementation. According to Okumus (2003), one key reason why implementation fails is that hotel managers and supervisors do not have practical, yet theoretically sound models to guide their actions during implementation. Without adequate models, they try to implement strategies without a good understanding of the multiple factors that must be addressed, often simultaneously, to make implementation work.

Organizational performance According to Richard et al. (2009) organizational performance should be related to factors such as profitability, improved service delivery, customer satisfaction, market share growth, and improved productivity and sales. Organization performance is therefore affected by a multiplicity of individuals, group, task, technological, structural, managerial and environmental factors. He claims that there can be no change management without a modicum of information as to performance information in basis period and, ideally, a targeted performance in a future time period. He refers to four dimensions of evaluating performance in hotels; the customer dimension, employee dimension, internal process dimension, and the financial dimension. Different approaches used in managing change will result in either a decrease or increase in the variables under each dimension. Hotels should therefore aim to ensure the effective management of change so as to improve the overall organizational performance. Effects of ineffective change management. According to Prosci (2010), poorly managing change has costs and risks. There are countless consequences of ignoring the people side of a change. Productivity declines become much larger and longer in duration than they could have been. Managers are unwilling to devote the time or resources needed to support the change. Necessary people do not show up to meetings. Suppliers begin to feel the impact and see the disruption caused by the change. Customers are negatively impacted by a change that should have been invisible to them. Employee morale suffers and divisions between us and them begin to emerge in the organization. Stress, confusion and fatigue all increase. Valued employees leave the organization. Projects also suffer as deadlines are missed, budgets are overrun and rework is required to get the effort back on track. In some cases, the project itself is completely abandoned after large investments of capital and time. All of these consequences have tangible and real financial impact on the health of the organization and the project. And, each of these consequences can be addressed and mitigated if a structured approach to the people side of change is utilized. RESEARCH METHODOLOGY The study was carried out in Nairobi, using descriptive survey research design. It targeted a population of 549 respondents comprising of 17 managers, 57 supervisors and 457 employees of purposively selected hotels in Nairobi with different star ratings. A sample size of 55 was selected using stratified sampling technique and random sampling technique. Questionnaires and interview schedules were used to collect data which was validated through a pilot study. Quantitative data from the study was analysed through descriptive statistics by the help of scientific packages for social scientists (SPSS). Results of the study Personal information of the respondents Data analysis of the questionnaires revealed that 48.57% of the respondents were male and female respectively and most of the respondents 82% were below 40 years. There was a high percentage of college and university level education while most of the respondents (43%) had worked in the establishment for a period of less than 5years.

This implies that there is a high rate of employee turnover in hotels which could be due to ineffective change management and ignoring the people side of change thus forcing employees to look for better work conditions elsewhere.
Change in organization. Consistent with the literature (Carnall, 1995; Mullins, 1995; Sadler, 1995), the research indicated that changes and developments particularly in technology and customer attitudes in the external environment and problems concerning cost and operational inconsistencies in the internal environment forced the participant hotels to consider change on an on-going basis. It was difficult, however, to attribute change specifically to either external or internal environmental forces alone. For example, in the cases of changing the menu, repositioning, re-branding, restructuring the hotel, installing computers and opening or expanding a new department, it was certain that both the external and internal environments came together to force hotel firms to consider the need for change. On the change cases currently undertaken in the hotels, most of them were incremental changes and few such as (rebranding and re-positioning) were identified as radical change. All the respondents stated that incremental changes are more common than radical changes, that they are easier to implement and that they are preferable in terms of overcoming resistance. This is also consistent with the literature (Johnson1998). Based upon the definitions given by Nadler and Tushman (1999), only one case in the sample could be clearly defined as proactive, that is creating a new managerial position of duty manager. In this case, the hotel implemented this change despite the fact that there

were no immediate problems in this area. It was also observed that in the case of opening a new reservation department, although the change was initially planned in anticipation of future needs, the rate of change was such that by the time the change was being implemented it had actually become a necessity. This illustrates the point that the rapid rate of environmental and organizational change can often lead to what had originally been proactive proposals being over-taken or even superseded by events during planning and implementation. From these findings therefore hotels still tend to take a reactive approach rather than a proactive approach to change. Resistance to change On the objective of investigating how resistance to change affects organizational performance of hotels, consistent with the literature (Cole 2006) most of the respondents strongly agreed that all the listed ways of managing resistance help in improving organizational performance . The results also indicated that different employees prefer their resistance to change to be managed in different ways ,for instance training employees on the new changes was ranked first as the most preferred option of managing resistance to change that can help improve organizational performance. This is because training employees ensures that the employees master the new ways of doing things and thus they will not resist change on the grounds of it being a threat to their expertise or jobs. Fully involving employees in the change process was ranked second because employees should be engaged and involved in order for change to work as it helps them embrace and be committed to the change. Most of the respondents also agreed that open communication about the change was important as it helped them to adjust effectively by informing them why the change is needed. It can also help prevent unfounded fears and potentially damaging rumours from developing. Giving employees support to deal with the change was ranked last because although emotional support and encouragement is important to help deal with anxiety that is a natural response to change most hotel managers do not fully support their employees and instead impose change on them, which consequently affects the hotels performance. It is evident from the research findings that if not well managed resistance affects the change process, delaying or slowing down its beginning, obstructing or hindering its implementation, and increasing its costs. Employees reaction to emotional stress affects their morale and productivity which in turn leads to poor customer service delivery and customer dissatisfaction. Dissatisfied customers may therefore move to other competitors and valued employees may leave the organization, thus negatively affecting organizational performance. Managers should therefore realize that some resistance is inevitable, however, and should plan ways to deal with resistance early in the change process. Change management strategies On the objective of establishing the effects of change management strategies on organizational performance, most of the respondents agreed that one strategy is not sufficient for managing change as different change cases need to be managed differently for positive improvement in performance to be seen. Accordingly, most of the respondents chose Empirical-rational as the best strategy that can be used to manage change and improve the hotels performance. This could be because successful change is based on the communication of information and the proffering of incentives. Many employees fully embrace and implement change when given rewards hence leading to improvement in their work performance. Environmental adaptive was ranked second because many of the respondents preferred this strategy as it sought to shift the burden of change from management and the organization to the people. It exploits their natural adaptive nature and avoids the many complications associated with trying to change people or their culture. According to Nickols (2006) Successful change is based on the exercise of authority and the imposition of sanctions. The basic aim of power- coercive strategy is to decrease peoples options, and not increase them. Most of the respondents therefore do not prefer this strategy as it imposes change on them leading to declined productivity and increased employee turnover thus reducing the hotels overall performance. Change implementation. According to Okumus (2003), one key reason why implementation fails is that hotel managers and supervisors do not have practical, yet theoretically sound models to guide their actions during implementation. Without adequate models, they try to implement strategies without a good understanding of the multiple factors that must be addressed, often simultaneously, to make implementation work. It can be noted from the research findings that, the main aspect of implementing change that assisted in improving the hotels performance was training employees on the changes during change implementation with 58%, of the employees strongly agreeing. This was because training gives them knowledge, skills and expertise needed when implementing the changes hence fostering quick implementation of the change. Another aspect was fully involving employees in the change process during implementation, as a result the employees embrace and are committed to the change and work hard to make it happen thus improving the hotels performance. The third aspect was open

communication during change implementation, it can be noted from the research findings that effective communication is important during implementation to enable employees to know the reason and accurate information about the change; it also helps to connect each step of the change implementation process to each other. As a result the change project will be completed on time, on budget and on schedule thus improving the hotels performance. The fourth aspect was awareness on the need for change by the employees, from the research it can be noted that people have to understand the logic for the change before they can process the information and get on board to support and advocate the change. They should also be aware of the outcome from the change that the hotel seeks for them to be able to achieve it and improve its performance. Aspects of change management such as the strategies employed, and implementation of change can greatly affect the performance of an organization. However, the strategies and implementation may be good but if the employees do not embrace the same and resist them, these can impact negatively on the organisations performance. Change implementers must display absolute integrity, reliability, openness, and fairness--always behaving in ethically and socially responsible ways. Likewise, they must communicate that they care about both the people and the organization as active coordination, cooperation and communication between managers and employees is a key factor in developing and implementing successful change in hotel firms. Hotel managers should ensure that their employees are well trained, informed, and aware on the need for change and have a plan for change, if performance improvement is to be expected from them. Organizational performance Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives).According to Richard et al. (2009) organizational performance should be related to factors such as profitability, improved service delivery, customer satisfaction, market share growth, and improved productivity and sales. Consistent with the literature, findings from the research indicate that food and beverage cost efficiency is a dimension of performance that is experienced in hotels as a result of effectively managing change. This is because when change is well managed it will lead to increased productivity and reduced wastages thus leading to F&B cost efficiency. Other dimensions were increase in market share and no customer complaints, this happens as a result of effectively managing change leading to customer satisfaction. Satisfied customers will have no complaints and through repeat visits and word of mouth advertisement will market the hotel to others leading to increased market share. The last dimension was reduced staff turnover. Managing the people side of change ensures that employees issues during change are handled thus reducing staff turnover. The responses from the interview carried out on top management indicated that none of the managers mentioned using any analytical tools such as force-field analysis or the ADKAR model when dealing with change. It was also noted that none of the managers had any training on managing change and that the majority of the managers found the implementation stage the most difficult, risky and time-consuming part of a change process. Perhaps, this was because the majority of them appeared to have spent less time in the analysis and planning stages than in the implementation stage. Finally, the findings of this research indicate that managing change is a learning process both for the organization and for the individual. Almost every manager stated that they had gained experience and knowledge of the change process which has helped them to cope with the continuously changing nature of hotels. This confirms the arguments of Carnall (1995)and Grundy (1993). It was not clear, however, how this knowledge and experience could be kept within the organization shared and used for further changes.

CONCLUSION This research focused on the effects of change management on organizational performance. The study established that resistance to change affects organizational performance of hotels. This can be supported by the fact that resistance introduces costs and delays into the change process, hindering its implementation. Training employees on the new changes, open communication, participation, and emotional support can go a long way towards managing resistance to change. Change management strategy employed affects organizational performance. Specifically, empirical-rational is the most effective, followed by environmental adaptive, normative- Reeducative, and power-coercive strategy respectively. Power coercive is not effective as it imposed change on employees leading to declined productivity and increased employee turnover thus reducing the hotels overall performance. Change implementation negatively affects organizational Performance. Implementation is the most difficult step because it involves moving from the known to the unknown and is therefore risky, stressful and complex. However, it can be effective with a participative style of management. Training employees on changes during implementing change assisted in improving hotels performance. This was because training gives them knowledge, skills and expertise needed when implementing the changes hence fostering quick implementation of the change. The research findings indicate that reactive and incremental changes are more common in hotel firms and that resistance is higher in radical changes than in incremental changes. Organizations undertake change in order to improve performance through reduced costs, improved efficiencies, increased revenue, better utilized employees, reduced risk exposure, efficiently meeting the needs and wants of customers etc. To improve performance, changes must be made to the processes, systems organization structures or job roles and ultimately these changes impact how people do their jobs. Effective change management strategies should be used to implement changes and reduce resistance to change.

RECOMMENDATIONS. On the basis of this research, the following recommendations were adopted: 1. Staff training related to the change. Hotels should train their staff on the new areas of change to ensure that they gain the knowledge, skills and expertise needed when planning managing and implementing the changes hence fostering quick implementation of the change and reduce resistance to change. 2. Effective communication between managers and employees impacted by the changes. Hotels should communicate to employees details of the change including reasons why the change is important and the potential consequences of the change. Open communication reduces resistance and fosters change implementation as it increases awareness on the need for change and free flow of information between employees and managers. 3. Capability and resources allocation in the hotels. Hotels should ensure that their employees have the full resources and capabilities they need to support them through the change process especially when implementing strategies for managing change. 4. Documentation of the change process. In order for the hotel to develop and implement successful changes, managers should define and document each of the specific benefits to be achieved through the change and how it will be measured, this will help employees have a sense of direction on the action to be taken in order for them to achieve the intended benefits. 5. Application of participatory style of management. Hotels should use a participatory style of management as it allows employees to fully participate in the change process, as a result the employees embrace and are more committed to the change; they become fully involved in the change and establish a feeling of ownership in the process thus reducing resistance and improving the hotels performance. 6. Managers should demonstrate Strong leadership throughout the Organization.

Spreading leadership and decision-making responsibilities inspires and motivates everyone to take a role in implementing change thus improving the hotels performance. 5.4 Suggestions for further study Further research interests should consider the following: The impacts of management styles on the implementation of organizational change. Managers role in implementing organizational change. .

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