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Managing Change
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Teaching Business
Kotter and Schlesinger
A clear guide to Kotter and Schlesinger’s four reasons for resistance to change and how managers can diagnose employee concerns.
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Created by an experienced Head of Business and examiner
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KEY POINTS
Kotter and Schlesinger identify four reasons why employees may resist change.
Self-interest occurs when people think change will damage their pay, status, job security or workload.
Fear and misunderstanding arise when employees lack information or do not trust managers.
Different assessments occur when employees understand the change but disagree with the diagnosis or solution.
Low tolerance for change reflects discomfort with uncertainty, new routines or previous bad experiences.
KEY DEFINITION
Resistance to change
Resistance to change is opposition to new ways of working, often caused by self-interest, misunderstanding, different assessments or low tolerance for change.
Main Explanation
Kotter and Schlesinger’s four reasons for resistance to change help managers diagnose why people push back against new ways of working. The model is useful because resistance is not always irrational or negative. Employees may resist change for different reasons, and the best management response depends on the cause of that resistance.
Self-interest occurs when employees believe the change will make them personally worse off. They may fear redundancy, lower pay, loss of status, reduced influence, harder work or less secure working patterns. For example, if a business introduces automation, production workers may resist because they believe the new technology threatens their jobs. In this case, the resistance is driven by perceived personal cost rather than by a detailed disagreement with the business strategy.
Fear and misunderstanding happen when employees do not understand why change is needed, how it will work, or what managers are really trying to achieve. Rumours can quickly fill the information gap. Staff may assume that a new system is designed to monitor them, cut jobs or reduce autonomy, even if the actual aim is to improve efficiency and customer service. This type of resistance is especially likely when communication is weak, trust is low or managers announce change without explaining the evidence behind it.
Different assessments occur when employees understand the proposed change but disagree with it. This is not simply fear or selfishness. Staff may believe managers have diagnosed the problem incorrectly, underestimated the risks or chosen the wrong solution. For example, sales employees may resist a new online ordering system because they believe customers still value personal relationships. This type of resistance can be valuable if employees have information managers have missed.
Low tolerance for change means some employees struggle with uncertainty, new routines or the need to learn unfamiliar skills. They may prefer predictable working patterns, especially if previous changes were poorly managed. Resistance may be strongest among employees who lack confidence, feel overwhelmed by training demands or fear losing competence in a job they previously understood well.
The key A Level judgement is that managers should not treat all resistance in the same way. Self-interest may require reassurance, negotiation or clear incentives. Fear and misunderstanding may require education and communication. Different assessments may require participation and genuine discussion. Low tolerance may require support, training and time. A strong answer identifies the reason for resistance and then explains how that specific cause affects the success of change.
✎ EXAMINER TIP
Do not just state that employees resist change. Diagnose which of Kotter and Schlesinger’s four reasons applies, then link it to the best management response.
KEY FORMULAS(s)
Profit and Profitability Formulas
These key formulas help you calculate different profit measures and profitability ratios used in business.
Gross Profit
Gross profit = Revenue − Cost of sales
The profit made after deducting direct costs.
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Remember: profit shows how much money has been made, while profitability shows how efficiently revenue is being turned into profit.
DATA TABLE
Income Statement for North Coast Coffee Ltd
This statement shows how revenue is converted into gross profit, operating profit and net profit.
Revenue
£250,000
Output
Fixed Costs
Variable Costs
Total Costs
Revenue
Profit / Loss
0 candles £1,200 £0 £1,200 £0 -£1,200
Net profit is the final profit remaining after all costs and expenses have been deducted from revenue.
Kotter and Schlesinger: Match the Cause to the Response
This chart helps students match each reason for resistance with likely warning signs and a suitable management response.
WORKED EXAMPLE
Worked Example: North Coast Coffee
How many coffees must be sold to break even?
Fixed Costs
£1,800
equity + long-term debt
Break-even output = Fixed costs ÷ Contribution per unit
Contribution per unit = Selling price − Variable cost
£3.50 − £1.10 = £2.40
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Step 1: Calculate contribution
£3.50 − £1.10 = £2.40
Contribution per unit is the amount each coffee contributes towards fixed costs.
BREAK-EVEN OUTPUT:
750 coffees per month
EXAM TIP
Always explain what the number means for the business. Do not just calculate the break-even point.
Kotter and Schlesinger: Four Reasons for Resistance
This diagram shows the four main reasons employees may resist change: self-interest, fear and misunderstanding, different assessments and low tolerance for change.
APPLICATION
Northshore Kitchens Ltd
Northshore Kitchens Ltd is a fictional UK manufacturer of fitted kitchen units with 220 employees across design, production, sales and installation. The business has grown quickly, but customer complaints have increased because orders are sometimes entered twice, delivery dates are missed and production teams do not always receive updated design changes. Senior managers decide to introduce a new ERP system and automated cutting equipment so orders, stock, production schedules and installation dates can be coordinated through one system.
The change creates several types of resistance. Some production employees fear that the automated cutter will reduce overtime and eventually lead to fewer jobs. This is self-interest because employees are concerned about what they may personally lose. Some office staff misunderstand the ERP system and believe managers will use it mainly to track individual mistakes, creating fear and mistrust. The sales team accepts that order errors are a problem but argues that the proposed system is too rigid and will reduce the flexibility customers value; this is a different assessment of the situation. A group of long-serving installers simply dislike the idea of using tablets to update jobs on site because they are comfortable with paper forms and worry about making errors in front of customers, showing low tolerance for change.
This case shows why Kotter and Schlesinger’s model is useful. If Northshore Kitchens only gives a general speech about “embracing change”, it may not address the real causes of resistance. The business needs targeted action: reassurance and retraining for production workers, clearer communication for office staff, genuine consultation with the sales team, and practical support for installers who feel anxious about new technology.
This independent educational case study is not affiliated with, endorsed by or sponsored by Greggs plc. Any financial figures used alongside this example should be treated as simplified or hypothetical estimates created for teaching purposes.
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ANALYSIS
EXAM FOCUS
Analysis questions require you to examine a business concept or issue in detail, breaking it down into its component parts. You should explain how and why something happens and consider its impact on the business.
How to Approach Analysis Questions
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Identify the key issue or concept
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Break it down
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Explain how and why
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Reach a reasoned conclusion
Read the question carefully and highlight the focus of the analysis.
Consider the different factors, causes or impacts related to the issue.
Provide clear explanations using business terms and links points to context.
Evaluate the overall implications for the business.
Example Analysis Question
North Coast Coffee is considering using break-even analysis before opening a second café.
Advantages
• Sales forecasts may be inaccurate.
• Assumes costs and revenue remain constant.
• External factors may reduce reliability.
• Ignores qualitative business factors.
Disadvantages
• Sales forecasts may be inaccurate.
• Assumes costs and revenue remain constant.
• External factors may reduce reliability.
• Ignores qualitative business factors.
Key Exam Tip
If you find it difficult to expand your answer and show the type of depth that an examiner is looking for in a top response, consider using the 'so what' approach.
Tesco carry out market research - so what? - this allows them to better understand customer needs - so what? as a result Tesco can provide goods more likely to sell - so what? - this will increase Tesco profit and ensure higher levels of customer satisfaction - so what? this means that customers are likely to become more loyal to Tesco.
Avoid These Exam Traps
Students often lose marks on calculation and analysis questions by making these mistakes. Watch out for them in your exam!
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Tip:
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2
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Tip:
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3
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Tip:
Helvetica Light is an easy-to-read font, with tall and narrow letters, that works well on almost every site.
Be precise. Read the question carefully. Show your working.
Small mistakes can cost big marks.
EXAM PRACTICE
Practice Question
Apply your knowledge of profit and profitability to answer this exam-style question.
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MINI CASE STUDY
North Coast Coffee Ltd is a premium coffee business which sells freshly roasted coffee beans through its online store and a small chain of independent cafés. The business has experienced strong sales growth due to increasing demand for high-quality speciality coffee products.
The business generates annual revenue of £250,000. Its cost of sales, including coffee beans, packaging and direct production costs, totals £100,000. North Coast Coffee Ltd also faces operating expenses of £80,000, including marketing, employee wages, rent and administration costs. In addition, the business pays £20,000 in interest and taxation each year.
The owner, Mia Thompson, is reviewing the company’s profitability because rising wage costs and increased competition in the premium coffee market have started to place pressure on operating profit margins. She is considering increasing prices slightly in order to protect profitability while still maintaining customer demand.
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EXAM QUESTION
Analyse the possible reasons for BrightBite’s falling profit margins and evaluate strategies it could use to improve profitability.
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HOW TO ANSWER
P
Point
E
Explain
A
Apply
C
Consequence
H
However...
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MODEL ANSWER
P
Point
Increasing prices could improve the profitability of North Coast Coffee Ltd because each sale would generate a larger amount of revenue and potentially increase profit margins.
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EXAMINER TIP
For full marks, make sure you analyse causes rather than just listing them, and evaluate realistic strategies with clear judgement. THINK: Which strategy would have the biggest impact and why?
CALCULATOR
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