Change Management Report - David Jones

Case Study Final Report:
Change Management Issues, Interventions and Processes within
David Jones
Adrian Petrie
MMH356
Change Management
Unit Chair: Jan Fermelis
Tutor: Jan Fermelis
Trimester 2, 2012
Submitted: 3 September 2012

Adrian Petrie
MMH356 Case Study Final Report
ii
TABLE OF CONTENTS
TABLE OF CONTENTS………………………………………………………………………………………………………………………….ii
EXECUTIVE SUMMARY………………………………………………………………………………………………………………………iii
BACKGROUND .............................................................................................................................. 1
I. INTRODUCTION ..................................................................................................................... 2
II. DAVID JONES AND ITS ENVIRONMENTAL FRAMEWORK ........................................................... 3
III. KEY CHANGE-RELATED ISSUES AND INTERVENTIONS ........................................................... 4
A. Management Restructure .................................................................................................. 4
B. Technological Investment .................................................................................................. 5
C. Physical Presence .............................................................................................................. 5
IV. ADOPTED CHANGE PROCESSES AND STRATEGIES ................................................................ 6
A. Management Restructure .................................................................................................. 6
B. Technological Investment .................................................................................................. 8
C. Physical Presence .............................................................................................................. 9
V. CONSEQUENCES.................................................................................................................. 10
VI. CONCLUSION................................................................................................................... 12
VII. RECOMMENDATIONS ...................................................................................................... 13
A. Management Restructure ................................................................................................ 13
B. Technological Investment ................................................................................................ 13
C. Physical Presence ............................................................................................................ 13
REFERENCES…………………………………………………………………………………………………………………………………….14

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EXECUTIVE SUMMARY
This report aims to analyse key organisational changes within David Jones, by evaluating
change interventions, the issues behind these interventions, and the strategies and the
processes adopted by the company. Consequences associated with the organisational
changes are discussed, followed by recommendations for each observed change.
Organisations must continually adapt their business practices to retain a competitive
advantage and avoid becoming stagnant in an increasingly competitive market. An
organisations ability to adapt to environmental pressures, and alter strategic plans
accordingly, will ultimately determine the success or failure of change initiatives.
The three key change initiatives analysed for David Jones are concerned with managerial
restructures, technological investments and the expansion of the company’s physical
presence. Management within the company has been restructured to combat a decline in
sales (Durie 2012) and more accurately reflect various functions within the business (David
Jones 2012a). David Jones is heavily investing in improvements to online services, including
website functionality and mobile applications, in addition to constructing new stores across
Australia to allow for greater customer engagement (David Jones 2012a).
To implement the various changes more effectively, it is recommended that David Jones
strategise ways to differentiate itself from its competition. These recommendations
include:
 Managerial involvement with employees at ‘shop floor’ level, enabling interaction
and a more horizontal flow of communication.
 Fast distribution channels for online purchases, with options available to customers
for further improved delivery efficiency.
 Provide an unprecedented level of commitment to customer service through the use
of fashion stylists, with expert knowledge and fashion ideas that can be shared with
customers should they choose to have this interaction.

Adrian Petrie
1
BACKGROUND
David Jones is an Australian department store which operates in the retail industry, selling a
wide range of fashion, beauty and home products of national and international brands
(David Jones 2012b). Located nation-wide, except for in the Northern Territory, customer
satisfaction and engagement are of top priority for an organisation founded on its original
mission ‘to sell "the best and most exclusive goods" and to carry "a stock that embraces the
everyday wants of mankind at large"’ (David Jones 2012b). Services are also an integral
aspect of the organisation, with various incentive programs, gift cards and personal services
such as bra fitting offered to enhance customers’ experiences (David Jones 2012c).

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2
I. INTRODUCTION
Competing in an ever-growing global market, organisations must continually improve their
operations in order to secure or maintain a competitive advantage. One such aspect is
change, which involves adapting business practices to align with altering values and
expectations within society.
Implementing appropriate interventions to align with strategic plans and manage
environmental factors is key. Waddell, Cummings & Worley (2011) describe an intervention
as a set of ‘planned actions or events that…help an organisation increase its effectiveness’.
This report analyses key change processes within David Jones, and implements change
management theory into the case study. In addition it aims to highlight the opportunities
available for growth and development when organisations ‘get change right’.

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II. DAVID JONES AND ITS ENVIRONMENTAL FRAMEWORK
There are numerous factors which affect how an organisation operates within its market.
Forces which are external to an organisation’s control, that affect how it makes decisions
and adapts to changing needs, are known as environments (Waddell, Cummings & Worley
2011, p. 275). Mason (2008, pp. 48-49) describes environments as ‘complex adaptive
systems’ that are unpredictable by nature but provide opportunities for an organisation if
managed and accepted appropriately. The environmental framework can be broken down
into the general, task and enacted environment. Waddell, Cummings and Worley (2011, pp.
275-276) explain the three environments as follows:
 General environment – external forces that influence an organisation, such as legal,
3
technological, and economic forces.
 Task environment – groups that have a direct interaction with an organisation and
affect its success/failure, such as customers, competitors or suppliers.
 Enacted environment - the perception management has of its organisation’s
standing in the environment, such as customer satisfaction for certain products.
Whilst David Jones has no control over the general environment at all, it can certainly
influence how it operates within the task environment. Declining profit margins and recent
reductions in company performance (Durie 2012) have resulted in the various management
changes, and more varied avenues for customers to interact with the business. The
organisation cannot control the number of customers who shop with them, but it can
attract a larger number if more avenues to do so are given to consumers.
Whilst David Jones must compete with large scale rivals such as Myer in an online
marketplace, it also faces challenges from other existing competitors. David Jones has been
relatively slow in promoting online shopping, compared to other organisations. For the
most part, online customers already have preferred shops and websites to spend their
money, such as ASOS or Amazon (Stafford 2012). Appealing to customers is an easy task
when a need exists, but no solution is currently available. However when other online

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options have already been available and proven successful, attracting these customers
towards the online methods of David Jones may be more difficult.
III. KEY CHANGE-RELATED ISSUES AND INTERVENTIONS
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A. Management Restructure
A major change related issue currently observed within David Jones surrounds the
restructuring of its management. Following accusations of sexual harassment in 2010,
former chief executive officer, Mark McInnes, resigned from his position in response to legal
action being taken by a company employee (Fife-Yeomans & Byrnes 2010). McInnes was
accused of making ‘unwelcome[d] comments of a sexual nature and unwelcome[d] sexual
advances’ (Kontominas 2012). The immediate resignation and subsequent legal battle lead
to the appointment of Paul Zahra to the position of Chief Executive Officer (Fife-Yeomans &
Byrnes 2010).
Whilst his actions were both inappropriate and illegal, it can be argued that McInnes
handled the situation in a positive manner. Fife-Yeomans and Byrnes (2010) report McInnes
as acting proactively after learning of the legal complaint, informing the David Jones board
of his actions and resigning immediately. Whilst nothing short of a resignation would have
been accepted by the public or media, McInnes did not wait to be told his time at the
company was up – he initiated and accepted a punishment in a manner that deserves to
restore a level of credibility to him and to David Jones.
More recently, David Jones has undergone a restructure across all senior management in
addition to the change in chief executive officer. A decline in sales over the past year is a
major factor leading to the managerial changes (Durie 2012). The earnings of 2012 are
down from those in 2011. The first half saw a 20% reduction in profits, with a staggering
expected drop of up to 40% by the completion of 2012 (Williams 2012). Profits for 2011
reached $160m, and are expected to only arrive at $100m for 2012, after earning $85m in
the first half (Durie 2012). This significant decline in sales sparks a need for immediate
action, with one such intervention being a managerial restructure.

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5
B. Technological Investment
David Jones has found itself lagging behind competitors of late, in particular rival Myer,
‘falling behind…both in terms of ideas and sales growth’ (Durie 2012). Arguably the largest
area for growth and development for David Jones is in the field of technology, in regards to
sales methods for employees and online/mobile shopping resources for customers.
Sabherwal et al (cited in Guillemette & Paré 2012, p.530) explains how information
technology processes must correlate with business objectives, and be constantly adapted to
reflect changing environments and technological advancements. An inability to attract new
customers and satisfy existing ones through online avenues partially contributes to the
organisation’s declining sales and need for investment in technology. Online sales for 2011
in Australia accounted for merely 4.9% of total sales (David Jones 2012a p. 4). Despite this
being an extremely low rate, considering the possibilities of conducting business online, this
does allow for room for improvement. If this opportunity for growth is capital ised on,
revenue can dramatically increase going forward.
To intervene the poor performance, management plan to transform David Jones into an
Omni Channel Retailing (OCR) organisation, a concept described as ‘integrating the shopping
experience across all…marketing channels…and…sales channels’ (David Jones 2012a, p. 3).
The aim of this process is to provide customers with greater flexibility and avenues to
purchase goods at David Jones – including mobile applications to shop ‘on the go’, improved
website functionality and accessibility, and an improved customer service experience in
stores (David Jones 2012a).
Customers are satisfied in many different ways and shop according to certain needs and
wants. Providing a greater range of options for David Jones to appeal to customers through
the use of technology will assist the ease of interaction between business and customers.
C. Physical Presence
By comparison to other large scale organisations, David Jones imposes a relatively small
physical presence in terms of number of stores across Australia, totalling 36 department
stores nation-wide (David Jones 2012a, p.8). In an effort to align with the Omni Channel
Retailing strategy, David Jones explains that additional stores provides greater opportunities

Adrian Petrie
for customer interaction with the organisation, as it enables ‘customers to choose where,
how and when they wish to shop’ (David Jones 2012a, p. 8).
The intervention planned to increase store numbers and in turn, raise profits, is to construct
an additional six full-line department stores in growing regions, and also add ‘smaller format
stores’ to again increase opportunities for customer dealings (David Jones 2012a, p.8). The
smaller format stores are designed to complement the larger department stores and reach
‘demographics which do not have major shopping centres’ (Harper 2012). The creation of
these smaller sores is described as ‘making progress in the implementation of our…future
strategic direction plan’ by chief executive officer, Paul Zahra (Harper 2012) .
Consideration for smaller demographics highlights a well-rounded strategic plan for growing
the business. It demonstrates management’s understanding that in order to attract more
customers and increase market share, it must also provide physical locations to aid new
technological avenues. These locations enable consumers to experience the level of service
and commitment to customer satisfaction that David Jones emphasises.
Whilst they sell goods, retailers fundamentally operate in a service industry (Konti & Devi
2011, p. 80). Konti and Devi (2011) further explain that in order to compete with global
standards, offering high quality services to customers is essential to increase profitability
and customer loyalty. Without this face-to-face interaction, attracting and retaining new
customers is far more difficult, as customer satisfaction is often built upon in store
experiences.
IV. ADOPTED CHANGE PROCESSES AND STRATEGIES
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In order to restructure the management team, a number of steps have been implemented
to align management with the future strategic direction of the organisation. The first step
involved recruiting new candidates to fill seven new executive positions within the company
(Williams 2012). To improve their performance and regain a competitive advantage within
the market, David Jones employed new executives with a variety of different experiences in
other organisations. These were executives ‘who have held senior positions at a wide range

Adrian Petrie
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of retail outlets’ (Williams 2012).
Furthermore, Williams (2012) explains how successful executives were sought to fill new
roles and restore a forward-moving culture, derived from strategic planning. Whilst some
positions have become redundant, new positions have also been created, such as the roles
of General Manager for marketing, promotions and publicity; Group Executive for marketing
and financial services; and Executive for strategic planning (Williams 2012).
It can be argued that by definition, this is not a restructure, but rather a reshuffle within the
organisation – an arrangement of new faces and ideas appointed to more strategy-specific
roles; and to clear out some of the ‘dead wood’ that had not seen David Jones progress in
recent years. Waddell, Jones and George (2011, p. 15) describe restructuring as the
downsizing of an organisation to assist in cost reduction and improve efficiency. Whilst
some management positions at David Jones have been discarded, others have also been
created.
A more accurate description of the change process undertaken would be that of re-engineering.
Waddell, Cummings & Worley (2011, p. 287) explain re-engineering as the
radical redesign of an organisation’s core work processes, which improves the cohesiveness
of different tasks to increase productivity and efficiency. It involves dramatically changing
the way work is done, and motivating the change.
Transparency and open communication channels across all levels of the organisation are
vital when such a dramatic change to management is the response to a redirection of
strategic targets. Communicating the reasons for decisions to stakeholders, particularly
employees, helps to create more understanding and acceptance of the change (Merrell
2012, p.20). In turn, this leaves employees feeling more valued within the organisation than
if they had been left in ‘in the dark’. Merrell (2012, p. 20) argues that open communication
can subsequently motivate employees and create a more positive culture than if changes
are thrust upon workers without their understanding for the need for changes.

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8
Technology is continually advancing, changing the way organisations perform and execute
business activities on a daily basis.
Basing its new Omni Channel Retailing strategy on the success of leading international
department stores, David Jones is implementing a variety of different steps to enhance
technological systems and allow for greater flexibility and customer engagement (David
Jones 2012a, pp. 3-4).
To add to the customer experience, David Jones (2012a, pp. 4-5) outlines the key
transformation stages for the organisation, including the following:
 The launch and update of a user friendly mobile site and mobile application, which
provides an avenue for people to shop ‘on the go’.
 Appointing IBM to integrate Omni Channel Retailing resources and update systems.
 Increasing the number of online SKUs available (providing a greater range of online
products).
 Introducing a new Point of Sales system. This will aid employee efficiency, therefore
providing better customer service which often results in greater customer
satisfaction.
In order to manage the change effectively, David Jones must perform activities that will give
the implemented changes the best chances for success. Waddell, Cummings and Worley
(2011, p. 163) set out activities for managing change in 5 stages - motivating the change,
creating a vision, developing political support, managing the transition and sustaining
momentum.
In terms of technology, managing the change is a key activity, ‘transition[ing] from the
current state to the desired future state’ (Waddell, Cummings & Worley 2011, p. 162).
Bechkard and Harris (cited in Waddell, Cummings & Worley 2011, p. 172) explain that the
transition stage to implement change requires setting tasks linked to the goals of change
(activity planning); gaining the commitment and support of the change from key

Adrian Petrie
stakeholders (commitment planning); and creating organisational structures that help to
promote the change (management structures).
David Jones has put in place strategies to assist the administration of this change. Its
structural changes to management have not only aligned managerial roles to specific task-related
areas within the organisation, but have also provided an avenue to assist in the
introduction of new technology. Information Technology structures are continually
adapting to align with the Omni Channel Retaining strategy, via the addition of new staff
and experts to improve digital and online functions (David Jones 2012a, p.8).
9
In order for further stores to be created and operate effectively, additional human
resources are required within the organisation. David Jones will be employing 200 new staff
to work across the new stores and transition into a more technologically advanced
organisation (David Jones 2012a, p. 8). As business needs lead to the emergence of more
staff, David Jones must consider the need for motivating new employees who have not
previously worked within the organisation, or perhaps even the retail industry.
Merely increasing the number of stores does not automatically increase revenue, unless
those working within them are committed to achieving organisational goals. Initial
enthusiasm for work might be self-motivating for some, however in order to maintain this
commitment to goals and tasks, employees must see a value or purpose in the activities
they are performing for the business. This ‘purpose’ is often rewards for work. Waddell,
Cummings and Worley (2011, p. 236) describe the relationship between rewards and
performance via the value expectancy theory, which explains that employees exert more
effort in achieving goals when they perceive the outcomes of work to be valuable.
According to Waddell, Cummings and Worley (2011, p. 236-237), rewards that motivate
employees are the ones that include the following features:
 Availability – sufficient reward for work done
 Timeliness – rewards given after work is complete, not having a large time distance
between task completion and reward

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 Performance contingency – rewards that are suitable, depending on the level of
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achievement
 Durability – the length of time a reward last for
 Equity – rewards that are perceived as fair amongst all employees
 Visibility – rewards to one employee must be made known to others also. This
demonstrates that rewards are available and highlights the positive consequences
associated with high performance.
It will be essential for David Jones to effectively motivate employees through rewards
systems, in order for them to deliver the service and work that is required for the
organisation to achieve its strategic objectives.
V. CONSEQUENCES
Careful consideration of how changes are to be implemented is vital. Without such in-depth
analysis of potential outcomes, inappropriate implementation of changes may result, which
can adversely affect the success of that proposed change. Beer and Nohria (2000, p.133)
explain that vast amounts of information and available advice complicate change initiatives,
with this confusion leading to an alarming 70% failure rate for the changes. Put simply,
there are real consequences for organisations who fail to implement change successfully.
Managerial restructures affect the whole organisation and everyone working within it. As
new positions emerge and others are made redundant, confusion surrounding hierarchies
and whom to report to may result. Staff may disapprove of their new management, and
whilst this decision is largely out of their hands, their performance may decline as a result of
their dissatisfaction towards changes.
However, based on David Jones’ commitment to customer satisfaction through flexibility
and customer engagement (David Jones 2012a), it is likely that the new structural
hierarchies will be clearly explained to employees, so that they understand any new roles or
responsibilities that will affect how they serve customers. Communication between
employees and management should flow more smoothly, as positions have been aligned
with specific functions within the organisation (David Jones 2012a).

Adrian Petrie
Similarly, introducing new stores requires a period of adjustment as both the business and
consumers adjust to one another in a new demographic setting. Excitement and interest in
a new store may bring about high sales immediately, or there may be ‘settling in’ period
where sales are low to begin with. However, the planned stores are to be constructed in
‘high value, high growth areas’ (David Jones 2012a, p. 8), so regardless of speed, it is likely
that the new stores will be profitable.
The introduction of new technology systems, such as Point of Sales systems and additional
online services (David Jones 2012a) may confuse employees and reduce productivity whilst
they learn how to operate these resources. However, past successes of international stores
with similar Omni Channel Retailing models (David Jones 2012a, p. 4) would suggest that as
the changes in technology are completely implemented and understood by all employees,
productivity and efficiency should increase.
11

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12
VI. CONCLUSION
David Jones is currently undergoing change in three key areas. Management has been
restructured to realign business functions to strategic plans (David Jones 2012a).
Development in technology is observed in online shopping methods, via improved
functionality and layout for the company website (David Jones 2012a). In addition, mobile
applications allow for engagement with the business whilst customers are busy in their
everyday lives (David Jones 2012a). Finally, the physical presence of the company is
undergoing expansion, with six new stores and additional smaller format stores being
constructed across Australian communities to grow the business profile and further
enhance opportunity for customer engagement (David Jones 2012a).

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VII. RECOMMENDATIONS
Managerial positions have been restructured to better correlate with functions within the
organisation (David Jones 2012a). To continue to develop these positions that represent
sub-sections within the company, David Jones could require all managers spend one day a
month working on the floor with salespersons. This could allow for more open
communication channels between employees and management, and for more ideas to be
voiced – ideas that can be taken to executives and potentially influence further decisions.
To compete in a competitive online market, David Jones must differentiate itself from
competitors. The company will need to ensure that its distribution channels are efficient
and can offer prompt delivery of goods to consumers (Stafford 2012). A competitive
timeframe for deliveries would be 2-3 days, comparing to Myer’s delivery time which is
usually 4-7 days (Stafford 2012). To aid the implementation of technological strategies,
David Jones could offer priority shipping options, whereby customers can pay an additional
fee for faster delivery.
Emphasis is placed upon customer engagement and satisfaction (David Jones 2012a),
therefore David Jones could attract customers by offering a unique service in its new stores.
Stylists with expert fashion knowledge may be employed to assist customers. Appointments
with stylists can be made, with no appointment fee charged after $500 is spent. This
demonstrates a higher level of service to the organisation’s customers and may attract
people to its new stores to ‘test’ this unique offering.

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14
REFERENCES
Beer, M & Nohria, N 2000, ‘Cracking the Code of Change’, Harvard Business Review, vol. 78,
no. 3, pp. 133-141.
David Jones 2012a, David Jones announces its future strategic direction, retrieved 4 August
2012, <http://www.davidjones.com.au/files/ASX-Release-Strategic-Directions-21-March-
12>
David Jones 2012b, 'About David Jones' retrieved 5 August 2012
<http://www.davidjones.com.au/About-David-Jones>
David Jones 2012c, 'Services' retrieved 5 August 2012
<http://www.davidjones.com.au/services/Our-Promise>
David Jones 2012d, 'Stores', retrieved 5 August 2012
<http://www.davidjones.com.au/stores>
Durie, J 2012, ‘Devil’s in the retail at David Jones’, The Australian, 22 March, retrieved 29
August, <http://www.theaustralian.com.au/business/opinion/devils-in-the-retail-at-davidjones/
story-e6frg9io-1226306621207>
Fife-Yeomans, J & Byrnes, H 2010, ‘David Jones scandal: Mark McInnes a playboy brought
down by lust’, The Daily Telegraph, 19 June, retrieved 29 August 2012,
<http://www.news.com.au/business/worklife/david-jones-scandal-mark-mcinnes-a-playboy-
bought-down-by-lust/story-e6frfm9r-1225881568718>
Guillemette, M & Paré 2012, 'Toward a new theory of the contribution of the IT function in
organizations' MIS Quarterly, vol. 36, no. 2, pp. 529-551.
Harper, J 2012, ‘New-look David Jones to open in Malvern Central shopping centre’, Herald
Sun, 29 August, retrieved 1 September 2012, <http://www.heraldsun.com.au/news/new-look-
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1226460602342>
Konti, P & Devi, V 2011, ‘Impact of retail services on retail sales’, Journal of Business & Retail
Management Research, vol. 6, no. 1, pp. 73-81.
Kontominas, B 2010, ‘David Jones sex harassment case: publicist sues for $37m’, Sydney
Morning Herald, 2 August, retrieved 29 August 2012,
<http://www.smh.com.au/business/david-jones-sex-harassment-case-publicist-sues-for-
37m-20100802-112iw.html>
Mason, R 2008, ‘Management actions, attitudes to change and perceptions of the external
environment: A complexity theory approach’, Journal of General Management, vol. 34, no.
1, pp. 37-53.

Adrian Petrie
Merrell, P 2012, ‘Effective Change Management: The Simple Truth’, Management Services,
vol. 56, no. 2, pp.20-23.
Stafford, P 2012, Myer, ‘David Jones start targeting web competitors – three of the biggest
challenges they’ll have to overcome’, Smart Company, 1 June 2012, retrieved 31 August
2012, <http://www.smartcompany.com.au/retail/050003-myer-david-jones-start-targeting-web-
competitors-three-of-the-biggest-challenges-they-ll-have-to-overcome/2.html>
Waddell, D, Cummings, T & Worley, C 2011, Organisational Change: Development and
Transformation, Cengage Learning, Victoria.
Waddell, D, Jones, G, George, J 2011, Contemporary Management, McGraw-Hill, NSW
Williams, K 2012 ‘David Jones in management restructure’, Herald Sun, 9 May, retrieved 29
August 2012, <http://www.heraldsun.com.au/business/david-jones-in-management-restructure/
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story-fn7j19iv-1226351060417>

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