Change Management and Disruption: A Case Study of the Inland Revenue Department NZ
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Executive SummaryThe aim of this paper is to present a case of change management and disruption. It uses the The Inland Revenue Department (IRD), or Te Tari Taake, as a public department to base its argument. A successful change management is important for IRD to achieve their vision statement, as there is no empirical nor similar situation that the department are facing compared to other organizations. The IRD platform contributes to efficient collection of the country’s revenue which is redistributed inform of infrastructure development and other project developments in the country. Most of the aspects of the IRD model offer positive results and benefits to the society and the government in general. However, there are a few setbacks that come with the system including; the challenge of usage of the platform by the visually impaired group. In terms of change management, three models are discussed including the ADKAR change model, the engage and learn model, and the McKinsey 7S model. The three apply to the IRD’s current situation and can be implemented to manoeuvre the entire process of implementing change. As a result, IRD has a unique challenge in its attempt to implement and manage the change towards a better IT system. The proposed overhaul of the entire system may mean a change in the way the organization works, including a reshuffle of various structures as some processes are automated, restructuring of employee roles, and introduction of a different reporting pattern in line with the demands of a change of system. To combat resistance, the Kotter’s 8 step model is proposed to be the best model to anchor change at IRD.
Keywords: IRD, change, change management, ADKAR change model, the engage and learn model, and the McKinsey 7S model, Kotter’s 8 step model, Total quality management, six change model.
Table of Contents
TOC o “1-3” h z u Executive Summary PAGEREF _Toc84547435 h 2Introduction PAGEREF _Toc84547436 h 4IRD key roles PAGEREF _Toc84547437 h 41. Organization and Change Issues PAGEREF _Toc84547438 h 61.1 The triple bottom analysis PAGEREF _Toc84547439 h 61.1.1 Social Bottom Line PAGEREF _Toc84547440 h 71.1.2 Ecological Bottom Line PAGEREF _Toc84547441 h 71.1.3 Economic Bottom Line PAGEREF _Toc84547442 h 81.2 SWOT Analysis PAGEREF _Toc84547443 h 81.3 Main issues identified by the analysis tools PAGEREF _Toc84547444 h 92. Change management models PAGEREF _Toc84547445 h 92.1 ADKAR Model PAGEREF _Toc84547446 h 102.1.1 Model applied to the issues Transformation program in IRD PAGEREF _Toc84547447 h 112.2 Engage and Learn Model PAGEREF _Toc84547448 h 112.2.1 Model Application to the Issue of Automated System Update / IT System Update in IRD PAGEREF _Toc84547449 h 122.3 The McKinsey 7-S Change Model PAGEREF _Toc84547450 h 132.3.1 Model Application to the Issue of Automated System Update / IT System Update in IRD PAGEREF _Toc84547451 h 143. Change Management Strategies to Overcome Resistance PAGEREF _Toc84547452 h 153.1 Overcoming Resistance using the Kotter’s 8 Step Change Model PAGEREF _Toc84547453 h 153.2 Overcoming Resistance using Total Quality Management Approach PAGEREF _Toc84547454 h 163.3 Overcoming Resistance using Six Change Approach PAGEREF _Toc84547455 h 174. Recommendations and Conclusion PAGEREF _Toc84547456 h 18References PAGEREF _Toc84547457 h 19
IntroductionA successful change management is important for IRD to achieve their vision statement, as there is no empirical nor similar situation that the department are facing compared to other organization. Organizations need an integrated approach to drive systematic, effective change and conquer the resistance and obstacles to change, also, the consequences after making the change.
IRD key roles
Name Inland Revenue Department
Website https://www.ird.govt.nz/
Year Established 1878
Mission Contribute to the economic and social wellbeing of New Zealand by collecting and distributing revenue.
Vision A world-class revenue organization recognised for service and excellence.
Objectives ·Grow voluntary compliance by making it easier for people to get it right
·Reduce customer compliance costs
·Make government policy changes faster and more cost-effectively
Culture ·Customer-centric: practice with customer to make desirable outcomes
·Intelligence-led: through continuously research and analysis to make good decisions
·Agile: work with professional people to get work done neatly
Values ·Trust and integrity
·Valuing people
·Innovation
·Working together
Strategies focus
The Inland Revenue Department, or Te Tari Taake, as a public department, was established in 1878, following in 1892 by moving to its central office to Wellington. The department provides professional services for both individuals and organizations to fulfil their entitlement and obligations (Inland Revenue Department, 2021). It aims to grow voluntary compliance to revenue collection through making it easier for people, reducing the costs associated with customer compliance, and making government policy changes faster and more cost effective. Moreover, the significant responsibilities for IRD are to collect money and pay for other public services (Inland Revenue Department, 2021). The social support programs include Working for families, paid parental leave, child support, student loan debt, and KiwiSaver.
The Inland Revenue Department is a government organisation that is involved in the general collection of the crown’s revenue of New Zealand. The organisation is also responsible for collection and disbursing of payments for the social support programmes (Inland Revenue Department, 2021). This organization is involved in data collection during their revenue-related process. The data obtained provides information used to advice the government on tax policies and other tax related issues. This platform strives to ensure the taxation process is made easier amongst the citizens of New Zealand. This is done by provision of an easy-to-use interface on the online platform with explanations on every step and situation for the users to have an easy and understandable procedure in their tax payment procedures (Inland Revenue Department, 2021). The IRD main roles includes ensuring the revenue collection in New Zealand is able to meet the expectations of the government and that of the society, giving customers a simple platform for tax payment to prevent possible errors, prevention of tax evasion by some of the citizens, encouraging the public to pay tax and providing a professional, effective and efficient system.
1. Organization and Change Issues1.1 The triple bottom analysisThe triple bottom line analysis is a vital tool in looking the external position of an organization (Goel, 2010; Kucukvar & Tatari, 2013). The effect of the IRD platform on the environment is almost unnoticeable because the services of this platform are made online and the customers interact with the support team through online means. The impact the system has to the community is mostly positive with easy access to tax payment services, it also helps mitigate the tendency of tax evasion ensuring that all citizens equally contribute to the total country’s revenue (Hussain, Rigoni, & Orij, 2018). IRD provides an efficient system for the government to collect the country’s revenue. The platform has an ability to collect up to 80% of the total crown’s revenue of New Zealand.
Image 1: A graphical representation of the triple bottom line model (source: Hussain, Rigoni, & Orij, 2018)
1.1.1 Social Bottom LineIn the functionality of the platform is not affected directly by the impact of COVID-19 pandemic and therefore continues to function during the pandemic. The organisation is also responsible for collection and disbursing of payments for the social support programmes. IRD system provides the customers with easy to use interface which is able to give specific direction and clarification of the rules involved in the tax payment process. The platform runs in accordance to the inland social policy in the country. People approved for payment for certain benefits offered by the government receive their payments efficiently and can participate in in the society without a problem
1.1.2 Ecological Bottom LineThe ecological bottom line looks at the interaction with the ecology (Onat, Kucukvar, & Tatari, 2014; Lock & Araujo, 2020). The IRD system operates in the online platform hence have no impact or interaction with the environment. The revenue collected through the platform is used in the development of major sectors of the economy which include the protection of the country’s environment and reclamation of already polluted areas.
1.1.3 Economic Bottom LineThe economic bottom line is one of the most important for companies (Jennifer Ho, & Taylor, 2007). The IRD platform contributes to efficient collection of the country’s revenue which is redistributed inform of infrastructure development and other project developments in the country. Collects and redistributes payments for social programmes in the country. It also gives advice to the government on the tax policies in the country. Revenue is available to fund the government through flexible payments from the citizens
1.2 SWOT AnalysisSTRENGTHS WEAKNESSES OPPORTUNITIES THREATS
Easy to use
Effective revenue collection method
Enhance payments of social programmes
Can be accessed from any part of the country (Karyono & Agustina, 2019)
Less physical contact with customers hence no pandemic restrictions
Instructions on usage
Government adviser.
Promotes tax compliance
Efficient and fast payment method to individuals Limited to the internet literate
Impractical to the visually impaired.
Can be used in financial data collection for future planning and prospecting.
Can be used as a measure of the economic situation in a country (Karyono & Agustina, 2019). Continuous development of new and more sophisticated systems that can replace the IRD system (Karyono & Agustina, 2019).
1.3 Main issues identified by the analysis toolsMost of the aspects of the IRD model offer positive results and benefits to the society and the government in general. However, there are a few setbacks that come with the system including; the challenge of usage of the platform by the visually impaired group. Since it is works on a self-service basis then the visually impaired are cut off from basic usage of the platform unless they are helped out by third parties. The platform is also limited in usage to the internet group only posing challenges to the group of people that lacks internet literacy. +Internet literacy isn’t a common thing a mong the elderly and this may result to hardships during usage of this platform.
2. Change management modelsA model of change management describes theories, concepts and methodologies used in a deep analysation of the organizational change processes (Janićijević, 2017; Kobylkin et al., 2020). They provide researched methods that are meant to facilitate the change of management in an organization, provide different expected behaviours from the employees and the methods to deal with these resultant behaviours therefore ensuring the changes introduced are accepted by the workforce in place and adopted as their new methods of carrying out business activities in the organization.
2.1 ADKAR Model
The ADKAR model was created by Jeffery Hiatt (founder of Prosci) as a change management model which uses five outcomes from an organization as the necessities needed to attain a successful change implementation process (Houben et al., 2020). The five outcomes are Awareness, desire, knowledge and reinforcement.
Image 2: A picture showing the outline of the ADKAR model of change management
Awareness in this model of change management takes the role of introducing the need of the organization or the company to bring in a change to the employees. This is meant to obtain an outcome of urge from the employee, which creates the desire for the change. Desire comes as the second outcome in this model. Desire is generated when the employees completely understands the essence of the change and its urgency and are therefore set to welcome the change. The third outcome is the knowledge, this is basically the know-how on how to adopt and implement the change (Ali et al., 2021). It involves communication of strategy from the management which presents details on how the change is supposed to take place. Ability to take up the change comes as the fourth outcome. This outcome stresses on the intellectual and physical capacity of the business together with its employees to be able to implement the proposed change. The last outcome for a successful change implementation is reinforcement. At this point the leader is expected to ensure they constantly assess and stress on adoption of the change by employees until the workforce fully incorporates the new system in their activities as the new norm to the workflow.
2.1.1 Model applied to the issues Transformation program in IRDADKAR model maybe applied in IRD to assess the transformational program introduced. This will be carried out by testing the employees of IRD in accordance to Hiatt’s five outcomes. The first step is checking out the level of awareness of the change to the employees (Jaaron, Hijazi, & Musleh, 2021). This involves determining the extent to which the employees can identify themselves with then change. This step is followed by testing willingness of the employees to continue with the change implemented. This rest reveals the desire and contentment of the employees with regard to the change. The knowledge about the change process is tested for assertiveness test followed by checking for IRD ability and that of its employees to receive and implement the change. The IRD management then takes the responsibility for reinforcement of the change among employees and the business.
2.2 Engage and Learn ModelAs far as change is concerned, the engage and learn model is a new enterprise that is effective in guiding complex changes. Engaging is an awareness routine (Worely & Mohrman, 2016), one that depends on competencies within the process of information gathering relating to the current as well as future environments, the business, organization, and its people. It also looks at the disruptive trends as well as organizational strategies that provide possible solutions and respond to threats. Continual transformations are key to organizational practices (Worely & Mohrman, 2016). Practitioners in organizational development have to deal with insufficient experiences and expertise in the process of managing change. In order to act and engage change, practitioners must first understand the strengths and successes of the organization, identify the problem, scan for solutions, and institute ways to provide help in the management of change.
Learning, in the model, motivates the awareness creation routine. Worely & Mohrman (2016) note that organizational development practitioners are required to reflect, challenge, and add intelligence in the overall understanding of the external environmental changes, shifts in business strategy, talent changes, and remain conversant with the dynamics of change relevant to an organization. Further, Suryani & Soedarso (2021) and Worely & Mohrman (2016) present that the objective of learning in the engage and learn model is to continually assimilate fresh awareness and be accommodative of changes to one’s practice. Therefore, the engage and learn model is a process that is simultaneously occurring in the organizational level where a company is required to shift from mere scanning of the of the external environment to absorptive capacity, acquiring and assimilating information, and exploiting it to facilitate change. For example, it is not enough for a company in New Zealand to understand the changing dynamics of interactions with consumers on social media. The organization must prepare itself, using this understanding, for disruptions by seeking change and implementing the same in the business model. The organization must learn new strategies that will help in incorporating awareness and solutions into the proposed changes in an organizational practice.
Combined, engaging and learning involves the understanding of the internal strengths and weaknesses of an organization and creating alternatives for considerations in the process of change. Every time an organization initiates an evaluation of its systems, structure, and operations, it is engaging in a change management initiative. According to Worely & Mohrman (2016), the extent of conceptualization required in the engage and learn model far outweighs any other traditional change management model. The engage and learn model focuses on an entire system, not just a singular subsystem or a piece of it, despite the occurrence of changes in multiple avenues within an organization. By observing the entire system as a whole, an organization is able to learn and engage with the changes that occur faster than in any other approach to change management.
2.2.1 Model Application to the Issue of Automated System Update / IT System Update in IRDThe engage and learn model looks at the organizational design, strategic awareness in the external environment, tailoring design elements, error detection and corrections, and developing new competencies. In IRD, the main issue requiring change is the problem with automated systems and a requirement for an IT system overhaul. Based on the engage and learn model, the main requirement is for IRD to first study the organization as a whole in order to establish a need for change, and to study it against the external environment in the industry and market in New Zealand. The engage and learn model avails a new approach to change management, driving a set of proposed solutions based on the organizational competencies and an evaluation of the external environment (Worely & Mohrman, 2016). The engage and learn model expresses that the pace and scale of change in the modern world can only be dealt with if change routines become a part of the organization, and that key roles of the organization include ensuring that the employees are active and vibrant in relation to change. In IRD, two motivators, engaging and learning, will drive the activities towards change routines including awareness of the need to update the IT system, designing a new system, tailoring it to the emerging issues, and monitoring it for successful implementation.
2.3 The McKinsey 7-S Change ModelMcKinsey 7S model developed by Tom Peters and Robert Waterman in the 80s is an effective tool for analysing and assessing changes in the in an organization’s internal situation. The model is based on 7 major elements that determine the success of a firm that should be aligned and interdependent in the production of synergistic outcomes (Salvarli & Kayiskan, 2018). The model applies widely in several situations especially when alignment is required. For example, it can be used to improve the performance of an organization, in the analysis and evaluation of the effects of changes in the future of an organization, and may also be used as a framework in situations where major changes are necessary in an organization to align business processes. The McKinsey 7S model offers a framework for recommending implementing strategic plans of action. Singh (2013) outlines the core elements of the model include: strategy, structure, systems, shared values, style, staff, and skills.
Image 3: The McKinsey 7S model depicting the hard and soft elements of the model (Source: Salvarli & Kayiskan, 2018)
Image 3 above shows the McKinsey 7S model with the elements divided into hard and soft elements. The hard elements include strategy, structure, and systems. Strategy, in the model, depicts a plan of action, a framework, or roadmap showing how an organization gains leadership edge or competitive advantage. The structure is the reporting pattern in the organization that provides a framework to ensure continuity (Paquibut, 2017). The systems include daily activities where employees involve themselves to ensure completion of assigned tasks. As depicted in image 3, the hard elements are in the direct control of the organization’s management and are easily identified and defined.
Shared values are the core values and the superordinate objectives that are reflected in the culture of the organization and influence the organization’s code of ethics (Alam, 2017). The style in the model places emphasis on leadership styles and its influence on the people, their motivation, organizational performance, and strategic decisions. The staff are representative of the capabilities and capacities of the employee. Skills define the core competencies and the key skills of employees and the vital role and position they hold in the definition of organizational success. These are the soft elements in the McKinsey 7S model and are not as tangible as the hard elements. They are more difficult to define and identify because they are governed by culture. As per the proponents of the model, Alam (2017) found that the soft elements are as important as the previously mentioned elements in the determination of the success of an organization as well as the industry growth.
2.3.1 Model Application to the Issue of Automated System Update / IT System Update in IRD
The model focuses on the interconnectedness of elements categorized as 7s. as per the said elements, there is a domino effect as far as changing one element so as to maintain a more effective balance. The model applies to all situations that need a company to be aligned to its processes, goals, objectives, and any other sphere of general wellbeing (Baishya, 2015). For IRD, the McKinsey 7S model applies in its change management proposal to automate its IT system and to align it to modern processes that would increase efficiency. The McKinsey 7S model best applies to the IRD case as it calls an inwards look of the organization’s internal mechanism to ensure that change is aligned to all other workings of the organization. The present wellbeing of the IRD would be analyzed in order to gauge the future success of the company in relation to the issue of automating its IT system to cater for the increasing needs of the users. As a revenue collection organization, the sensitivity of the IT system cannot be understated. The entire organization’s survival is hinged on effective revenue collection and therefore overhauling the IT system would be a positive step towards the attainment of current and future success. The McKinsey 7S model also applies in the management of the required changes towards the attainment of a successful transition from the old IT framework to a new and more versatile system. By looking at the 7 internal factors including strategy, structure, systems, shared values, style, staff, and skills, the IRD can better understand whether it has the capacity and the structural support to attain success in performing the required IT overhaul to address the issue of an automated system update.
3. Change Management Strategies to Overcome ResistanceIt is important to note that the IRD, just like every other modern workplace, is made up of a number of different generations and people who perceive changes and their management differently. For some employees, traditional values are deeply rooted in their perception of life (Rafferty & Jimmieson, 2017). Others value work ethics while others are a product of a hybrid amalgamation of both outlooks. For other employees, the technological revolution has deeply influenced their worldview and perceptions on change and its management. As a result, IRD has a unique challenge in its attempt to implement and manage the change towards a better IT system. The proposed overhaul of the entire system may mean a change in the way the organization works, including a reshuffle of various structures as some processes are automated, restructuring of employee roles, and introduction of a different reporting pattern in line with the demands of a change of system. The following strategies apply in ensuring that change management are employed while reducing or eliminating the chances of resistance from the employees.
3.1 Overcoming Resistance using the Kotter’s 8 Step Change ModelThe model calls for creating urgency, forming strong guiding coalitions, development of a vision and strategy/formula, communicating vision, eliminating obstacles and allowing employees to act, making short-term wins, combining gains, and solidifying change through anchoring changes to the culture (Laig & Abocejo, 2021). It is applicable in ensuring that employees adhere to proposed change sin an organization.
Image 4: Kotter’s 8 Step Change Model
As shown in image 3 above, the 8 steps will reduce resistance to change because the organization involves employees in every stage of change implementation. At IRD, involving employees and communicating the vision as well as factoring in their views and opinions will have a key role in ensuring that the resistance to change is minimal.
3.2 Overcoming Resistance using Total Quality Management ApproachTotal quality management is a model in management that is based on a belief that the organization is able to build long term success by involving every member from the lower-level employees to the high-ranking executives, and other major stakeholders, by focusing on improving quality and delivering overall customer satisfaction. TQM is based on continuous improvement (Cao and Clarke, 2000).
Image 5: A summary of the requirements of the TQM approach in reducing resistance
At IRD, TQM will be used to reduce the occurrence of resistance by ensuring that every employee knows their role and is made a part of the organization’s decision making structure. TQM requires the participation of every department and employee in order to execute the high demands of continuous improvement. In relation to overhauling the IT system and automating it, TQM will ensure reduced resistance as employees will view the proposed change as a method to become better in their job.
3.3 Overcoming Resistance using Six Change ApproachResistance to change is a phenomenon that is rather unavoidable, in line with the nature of change as a constantly occurring concept in any workplace. From this line of thought, Kotter and Schlesinger developed the six change approaches as a model to overcome resistance to change from employees (Kwak and Anbari, 2006).
Image 6: Six Change Approach model of overcoming resistance
In education and communication, the IRD team would undergo training regarding the proposed IT automation issue before it is implemented. This would help the employees to get the logic behind the change. Participation and involvement as a step applies in ensuring that vocal members of an organization advocating for resistance are brought on board when designing changes. Through participation in the process of designing changes, employees would feel appreciated and help to push acceptance amongst their peers and in their departments. Facilitation and support ensure that various tools such as training and education are offered to support employees in accepting change. Negotiation and agreement is availed to potential resistors, a strategy that IRD can apply to ensure that a maximum number of people join the movement to support change. Manipulation and co-optation are also available to IRD in terms of ensuring that the workforce supports change. For example, the management of IRD can use negative incentives such as demotions for managers opposed to the changes proposed. Lastly, explicit and implicit coercion can be used as a last result.
4. Recommendations and ConclusionThe Inland Revenue Department, or Te Tari Taake, as a public department, was established in 1878, following in 1892 by moving to its central office to Wellington. A successful change management is important for IRD to achieve their vision statement, as there is no empirical nor similar situation that the department are facing compared to other organizations. The IRD platform contributes to efficient collection of the country’s revenue which is redistributed inform of infrastructure development and other project developments in the country. Most of the aspects of the IRD model offer positive results and benefits to the society and the government in general. However, there are a few setbacks that come with the system including; the challenge of usage of the platform by the visually impaired group.
In terms of change management, the three models discussed include the ADKAR change model, the engage and learn model, and the McKinsey 7S model. The three apply to the IRD’s current situation and can be implemented to manoeuvre the entire process of implementing change. Despite their applicability, the McKinsey 7S model best applies to the IRD case as it calls an inwards look of the organization’s internal mechanism to ensure that change is aligned to all other workings of the organization. It is recommended that the McKinsey 7S model be used by the IRD to control and manage change and ensure that IT automation and all related changes are aligned to the workings of the organization. As a result, IRD has a unique challenge in its attempt to implement and manage the change towards a better IT system. The proposed overhaul of the entire system may mean a change in the way the organization works, including a reshuffle of various structures as some processes are automated, restructuring of employee roles, and introduction of a different reporting pattern in line with the demands of a change of system. To combat resistance, the Kotter’s 8 step model is proposed to be the best compared to the TQM approach and the 6-Change approach.
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