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Financial Aspects for Change Management Plan

Table of Contents

Introduction.

Financial implications of change management

Funding to implement and sustain the change.

Public sources of finance.

Private sources of finance.

Competency of change management

Impact of change management on financial performance.

Significance of timing in change management

Accountability and regulatory issues.

Conclusion.

References.

Introduction to Change Management Models

Change management is concerned with methods and procedures to effectively manage the people side of change to accomplish the desired business objectives and goals. The drivers of change may comprise of ongoing evolution of technology, crisis response, changes in customer demand, internal reviews of processes, competitive pressure, organizational restructuring, acquisitions and mergers (Galli, 2018). This includes methods that effectively redefine the usage of resources, budget allocations, business processes and several modes of operations that will led to a substantial change in the business organization. The change management plan of Alhariq PHC will follow Kotter’s theoretical model of change. This healthcare organization has intended to redesign its services that will enable it to effectively distribute its workload that will help in achieving both staff and patient satisfaction. It has proposed to initiate change in the skills of hospital staff and other medical practitioners by providing them in house training through conducting seminars and programmes. Also, it is planning to recruit more health workers to cope up with the rise in needs of patients and add value to the existing staff. It has analysed that it is essential to move away from manual files to electronic health record. Through new recommendations in combating Covid-19, Alhariq PHC is planning to construct new rooms in line with the recommendation posted by WHO related to increasing capacity. It considers community engagement as an important element to foster long term benefits. Implementation of change requires funds and various physical and human resources, facilities and others (Stouten et al., 2018). Therefore, it is regarded as essential to take into consideration the cumulative costs of change management in order to obtain understanding about the net benefits of change management plan.

Financial Implications of Change Management

For modernising the business, change is not only considered as healthy but also essential for accomplishing success. However, implementation of change requires funds and various physical and human resources, facilities and others. This may also require to retrench some staff members or undertake disinvestment in equipment or various other items. All these are counted as financial implications that is required to be considered by the Alhariq PHC. The majority of the costs that are associated with the change management plan of Alhariq PHC is related to:

  • Information system – Alhariq PHC is intending to move from manual system to electronic system for maintaining health records. An electronic information system will help in keeping a local database that will store patient history, medication, diagnosis and other medical records (Dubovitskaya et al., 2017).
  • Resources – It has to incur cost on building new rooms to increase its capacity, refurbishing of roofs to enhance its infrastructure. With regard to human resources, it has to recruit new staff members in order to satisfy the needs of all its patients and add value to the existing staff.
  • Community engagement – Alhariq PHC has to undertake expenditure for the betterment of the community like spending on education and other CSR related activities. This will help in fostering long term benefits.
  • Training – The existing healthcare staff is not skilled enough to look after the modern health problems. It has to establish training programmes for the nurses and other medical practitioners in order to develop adequate amount of skills to handle the pandemic situations like recent COVID – 19.

Alhariq PHC may also have to incur additional costs such as for expert advice, consultancy, general and recognition expenses. Therefore, it is regarded as essential to take into consideration the cumulative costs of change management in order to obtain understanding about the net benefits of change management plan. A cost benefit analysis will provide methodical structure to evaluate the actual costs for change against the benefits of the desired results. Ineffective and inefficient change management may lead to the risk of incurring substantial costs at the organization level (Gabutti et al., 2017). For instance, loss of investment if the particular change does not deliver the correct results, loss of cash required to address staff related problems, unable to realise the value needed from change management, wastage of time and human resources.

Funding to Implement and Sustain the Change

Change management plan requires adequate amount of resources and funding to achieve the desired objectives. Appropriate access to various sources of funding is needed in order to implement and sustain the change. Sources of finance can be categorised into public and private sources of finance which are as follows -

Public Sources of Finance

  • General tax revenues – To finance various components of healthcare, general tax revenue general tax revenue is regarded as an important source of funding. Although, tax ratios tend to rise in line with development, this largely depends on political will of the country to raise the tax burden (Cobham & Jansky, 2018). This source of financing is better for countries where the tax system is progressive, falling more heavily on rich people than poor and therefore, considered as equitable.
  • Deficit financing – Deficit finance can be raised both nationally and internationally through several mechanisms like issuing of bonds, long term low interest loans, etc. The organization have to incur the interest cost on these loans and has to repay the principal amount on maturity (Hasan, 2018). This can also be raised from abroad in the form of multilateral or bilateral aid loans. This will help in expanding and developing health care infrastructure.
  • Earmarked taxes – Mostly tax revenues are paid into a national pool and is then divided across distinct areas of government expenditure. The government may earmark a specific tax for specified purpose. The major advantage of this source is that a tax can be visibly allocated to priority funding of programmes and selected activities.
  • Social insurance – This source can finance health care institutions along with old age support and invalidity for the entire population or part of it. It is financed by imposing compulsory payments of insurance on employed workers as a percentage of their wages and by charging higher payroll tax on their employers. This may act as a better means for channelling spare funds into organized health services.

Private Sources of Finance

  • Private health insurance – This insurance is different from social insurance in two ways. Firstly, private health insurance does not include pensions for old age or invalidity. Secondly, the premium charged for this type of insurance is based on likelihood of illness in individual and personal risk characteristics and not on pooled risk of large population. This source of finance is not subject to political sharing process and may route spare funds to health care sector.
  • Charity and voluntary contributions – Voluntary contributions or contributions made in the form of charity may acts as a form of financial support or donation in kind. For example – physical facilities, supplies, equipment and personal services (Salido – Andres et al., 2020). These donations or contributions may originate from wealthy families, religious organizations, business enterprises or private individuals. These charitable contributions play an essential role in health care provision.
  • Community financing and self-help – Recent initiatives related to primary health care in developing countries laid emphasis on the significance of community participation and national self reliance in the delivering the health care services. Basic healthcare may become universally accessible by effectively mobilising the under utilized local and national resources like manpower, cash and organizational skills and by establishing culturally appropriate and feasible delivery systems. This can a make substantial; contribution to undertake the change management plan in the health care sector.
  • Direct household expenditure – The income of households is considered as the major source of finance for the health care sector. This category may include payments made by the consumers to the providers of health care in the form of fees for services or prices paid for supplies and goods. Increasing the level of direct household expenditure meant for health care, for instance by raising the fees will definitely have an unfavourable influence on equity. This inequity may be mitigated by introduction an exemption mechanism for the poor people.

Competency of Change Management

Change competency is regarded as the ability of the leader or manager to efficiently lead people through change. Competency of change management for senior leaders indicates the ability to being an effective sponsor of change and signifying obligation to change both organizationally and individually. Competency in case of front -line or operational management related to guiding direct reports via their own journey of change (Kakemam et al., 2019). Change management is not only confined to training and communication or managing resistance. It is more than that. Effective and efficient change management follows an organized process and undertake set of tools to accomplish desired outcomes in an organization. Change management matters as poor management of change can be a costly affair for the firm and on the other hand, effective change management will raise the likelihood of success.

Impact of Change Management on Financial Performance

When the initiatives and projects are not properly managed from the people side of change, then it becomes nearly impossible for the organization to accomplish desired outcomes. The cost of ineffectively managing change are concerned with decline in the productivity of employees on large scale for longer span of time than required. This decline will lead to fall in revenue and therefore, may significantly impact the profitability of the firm. The organization have to incur interest expense on the amount borrowed for bringing change in the organization. This will lead to the reduction in profitability of the firm as interest payment will raise the expenses for the firm. Major stakeholders of Alhariq PHC may not show up for the meetings if the change is not managed properly. Projects may greatly suffer from budget overruns from setting up of new rooms and recruitment of additional staff members (Burdon et al., 2020). These consequences may heavily impact the surplus of the firm. On the other hand, effective change management will increase the chances of success. Adequate training of health care providers will help in raising their skills and thereby leading to the increment in productivity. Electronic information system for maintaining of health records will help in saving lot of time and space required for maintaining the files manually. Redesign of services will help in improving the customer image as it will promote the quality of health care and increase the staff and customer satisfaction. Construction of new rooms and recruitment of new staff members will help in serving a greater number of patients and thereby raise the revenue of the firm. The engagement of the firm in the community related programmes will help in fostering long term benefits and improves public image of the firm. Stakeholders will feel motivated to being the part of such organization who takes care of the development of the community as a whole. Change will be considered successful when the individuals associated with the organization are completely aware about the need for change and have a strong desire to actively participate and support the change (Oreg et al., 2018). When the staff and the management have the capability to obtain adequate skills and knowledge required for bringing change, then it becomes possible to achieve success. Therefore, it can be claimed that change management has both positive and negative impacts on financial performance of the firm for which the organization has to undertake suitable measures.

Significance of Timing in Change Management

There is a need to obtain clear understanding by the employees with regard to the purpose of changes required to be made in the organization as well as about their roles played by them. They must be cleared about what is being expected from them throughout the implementation of change management plan. Employees must be provided with sufficient amount of time to process changes in the organization before beginning with its implementation. Through this way, the employee will feel motivated and realise their value. There will be a time lag before the complete financial impact of the change is realised. Training of health care workers through programmes and seminars take time to adequately develop required skills to manage modern health care problems. There will be a time lag in acquiring adequate amount of finance from various sources available to the firm (Fowowe, 2017). The organization will evaluate different sources and then select the best and suitable sources from where it can raise finance for implementing changes in the organization. as the organization is considering to implement new technology for maintaining the health records of different patients, the team will be requiring time to learn how to operate that new system.

Accountability and Regulatory Issues

There are several issues that are faced by the organization while implementing the change management plan. The plan may fail because of the resistance from employees. Also, employees may lack particular behavioural characteristics required to adapt to the changing conditions in the external environment that may decrease the engagement of employees and may put productivity if employees at risk. Communication is considered as an important factor while implementing change. Ineffective communication may hinder the change management efforts in the organization. Effective communication process helps in promoting the awareness and raise understanding why the particular changes are required in Alhariq PHC. Other issues may involve insufficient time dedicated towards training of health care staff members regarding the changes, high employee turnover during the transition period, etc. Human resource management is responsible to keep leadership informed about the employment laws and various legal implications of several forms of change. Various laws that may apply to initiatives of organizational change includes Age Discrimination in Employment Act, Health Insurance Portability and Accountability Act, etc. (Kim et al., 2019). The organization has to effectively address these issues in order to successfully implement required changes in the organization.

Conclusion on Change Management Models

It can be concluded that Alhariq healthcare organization has intended to redesign its services that will enable it to effectively distribute its workload that will help in achieving both staff and patient satisfaction. Implementation of change requires funds and various physical and human resources, facilities and others. It has been analysed that ineffective and inefficient change management may lead to the risk of incurring substantial costs at the organization level. Deficit finance can be raised both nationally and internationally through several mechanisms like issuing of bonds, long term low interest loans, etc. in order to finance this change management plan. Voluntary contributions or contributions made in the form of charity may acts as a form of financial support or donation in kind. These donations or contributions may originate from wealthy families, religious organizations, business enterprises or private individuals. These charitable contributions play an essential role in health care provision. Electronic information system for maintaining of health records will help in saving lot of time and space required for maintaining the files manually. Various issues have been identified that may affect the implement of change management. Ineffective communication and resistance from employees may hinder the change management efforts in the organization. Therefore, Alhariq PHC is required to undertake suitable actions to address these issues.

References for Change Management Models

Burdon, S., Clegg, S., Clay, J., & Smithers, J. (2020). Setting up Projects for Success.

Cobham, A., & Janský, P. (2018). Global distribution of revenue loss from corporate tax avoidance: re‐estimation and country results. Journal of International Development30(2), 206-232.

Dubovitskaya, A., Xu, Z., Ryu, S., Schumacher, M., & Wang, F. (2017). Secure and trustable electronic medical records sharing using blockchain. In AMIA annual symposium proceedings (Vol. 2017, p. 650). American Medical Informatics Association.

Fowowe, B. (2017). Access to finance and firm performance: Evidence from African countries. Review of development finance7(1), 6-17.

Gabutti, I., Mascia, D., & Cicchetti, A. (2017). Exploring “patient-centered” hospitals: a systematic review to understand change. BMC health services research17(1), 364.

Galli, B. J. (2018). Change management models: A comparative analysis and concerns. IEEE Engineering Management Review46(3), 124-132.

Hasan, Z. (2018). Deficit finance and developing economies Implications and results. Turkish Economic Review5(4), 338-349.

Kakemam, E., Liang, Z., Janati, A., Morteza, A. Z., Mohaghegh, B., & Gholizadeh, M. (2019). Management and leadership competence for hospital managers: a systematic review and best fit framework synthesis.

Kim, G., Molina, U. S., & Saadi, A. (2019). Should immigration status information be included in a patient’s health record?. AMA Journal of Ethics21(1), 8-16.

Oreg, S., Bartunek, J. M., Lee, G., & Do, B. (2018). An affect-based model of recipients’ responses to organizational change events. Academy of Management Review43(1), 65-86.

Salido-Andres, N., Rey-Garcia, M., Alvarez-Gonzalez, L. I., & Vazquez-Casielles, R. (2020). Mapping the field of donation-based crowdfunding for charitable causes: systematic review and conceptual framework. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 1-15.

Stouten, J., Rousseau, D. M., & De Cremer, D. (2018). Successful organizational change: Integrating the management practice and scholarly literatures. Academy of Management Annals12(2), 752-788.

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