Organizational Behavior and HR in Sony Corporation - Assignment Example

? Organisational behaviour and change at Sony BY YOU YOUR SCHOOL INFO HERE HERE Organisational behaviour and change at Sony Change as the only constant Sony has experienced a need for immediate change due to increasing domestic and global competition in all of the different business segments in which Sony operates and performs marketing. Primarily, changes had to be developed for the firm due to new innovations being introduced into the market by competition, especially as it relates to Apple (the iPod) and Samsung that introduced the LCD television before Sony. Kalyanaram and Gurumurthy (2008) offer that businesses that are the first to market in certain industries have a significant competitive advantage over competitors. Theory indicates that when buyers perceive a satisfactory product or achievement of effective customer service, risk averse customers often develop attachments to the pioneering product or brand; therefore they are unwilling to switch to new late movers’ products. Oftentimes, these buyers assess the late entrant against the first mover with adverse assessments in favour of the pioneer (Kalyanaram and Gurumurthy 2008). Sony was not able to launch innovative products (such as the LCD television) before competition, therefore the market had established brands with positive consumer sentiment about the brands that is difficult to undo for a late mover. The presence of competitive product offerings and new innovative products is what served as the first catalyst for change at the firm that required restructuring to meet and adapt to market needs more rapidly. Slocum and Lei (2005) reinforce the dangers of increased globalisation that make change a constant phenomenon, especially for businesses that operate in multiple business divisions and product categories, such as the conglomerate Sony. Industries are defined in theory as “ecosystems through which businesses compete for customers and are significantly inter-dependent based on changes in local or international markets” (Slocum and Lei 2005, p.35). Globalisation opens new markets for new competitive entrants into a market, breaking down the political barriers or improving supply networks that facilitate more rapid and cost-effective production with competition. Sony was witnessing many new market entrants offering unique products that were gaining attention and recognition from important revenue-building markets, essentially shortening the product life cycle of many of its previously-profitable products such as the PlayStation gaming console and older cathode ray tube television sets. Sony was now facing competition that sustained the resources and talents needed to produce innovative products. This challenge of competitive innovations was built through increased globalisation, thus Sony could no longer sustain the growth of existing Sony products, forcing the business to be more adaptable and flexible in providing similar competitive products. Consumer markets were favouring competitive products which continued to erode market share from Sony, making change driven by competitive product introductions forcing the need for continuous change practices to be developed in order to remain relevant in its technology markets. As market circumstances continue to evolve, contingency theory states that the organisation’s internal structure must adapt in order to remain competitively relevant (Buchanan and Huczynski 2010). It was not until the new CEO Howard Stringer joined Sony that the business became aware that continuous change in the external market was causing a need for rapid internal restructuring in order to adapt properly to market conditions and more prevalent competitive practices in manufacturing and marketing. Sony relied heavily on its electronics division to generate profitability, therefore the business was forced to centralise decision-making so that the electronics division maintained authority over key areas of business. The business could no longer respond quickly enough to meet competitive actions in the market, thus creating a holistic business unit with streamlined HR functions, sales and finance would produce the type of adaptability required to find market success. In this case, change was largely driven by the acknowledgement that Sony must be faster to respond to changing market conditions, something the business was not prepared to do effectively under its decentralised business structure with self-managed units responsible for certain product or service categories. Finch (2006) offers that success within a manufacturing company is dependent upon effective management of operational activities including supply chain, technologies, strategy development and internal processes. Again, globalisation provides competition with more effective distribution networks, can decrease costs when new suppliers can be identified in countries with low pricing structures or low-paid labour, and provide access to affordable business technologies that facilitate inter-dependent business function. Globalisation was a significant catalyst that made change a constant concern at Sony, with competition finding unique advantages provided by improvements in the market provided by globalisation. Even though Sony was not initially responsive to these threats, change required re-examination of the value chain to create relevant competitive products. Internal and external forces driving change Thompson, Gamble and Strickland (2005) describe the work of Michael Porter which identifies five paramount external market forces that impact competitive positioning and prospects for future success. These include threats of new entrants, competitive rivalry, buyer and supplier power in the market, and threat of substitutes. All of these factors impact whether business like Sony will be able to maintain competitive presence and achieve revenue growth. The most significant to Sony was the threat of substitutes. Sony had made history when it introduced the Sony Walkman into the market during a period where no other competitors had a similar product. With the advent of the Apple iPod into the market, it turned the Walkman into a product that had finally met its decline stage. Customers now had many options in the sales market for securing their needs for music enjoyment, making Sony’s once-profitable product a relic for consumers. Globalisation increases market transparency amongst competition, showing consumers that they now have viable substitutes available. This lowers the switching costs for consumers to defect to competing brands and the transparency aforementioned (such as pricing structures and competitive advertisements) only fuels higher buying power with consumers in the market (Porter 2011). Therefore, it became necessary, in order to combat threat of substitutes, for Sony to reconsider operational strategy in order to provide products that can achieve brand loyalty or otherwise satisfy complex and dynamic market needs. If substitute products continued to flood the market, Sony would be unable to recapture market share until the business provided innovative products or, at least, similar products as that of competitors. This was some of the basis for what drove a centralisation strategy at Sony to meet the threat of substitutes on the market. Injecting a more contemporary-minded Chief Executive as leader of the business also influenced the need for internal change. The goal of Sony was a transformational overhaul of business operations and processes in order to meet changing market conditions. Fairholm (2009) describes the benefits of a transformational leader, which involves building a shared mission and vision as well as opening lines of communication within the organisational model to facilitate better knowledge exchange. Executive leadership desiring to take an autonomous business model (decentralised) and restructure to a centralised model reflected that leadership ideology drove internal changes. Stringer was the first executive who did not hail from Japan, thus Japanese business culture and philosophy was injected into the business throughout its history. Stringer, a Western manager, likely maintained values and beliefs that differed from Japanese cultural values. Wu (2006) offers that Japanese firms often deem bottom-up decision-making to be appropriate, with an emphasis on participative management philosophy. This was present in the case study which indicated that many units operated autonomously of a centralised hierarchy, which was likely a product of historical Japanese executive leadership and ideology. By providing Western management to serve as strategy developer, change was driven by new cultural values within the business which served as a significant catalyst for operational and process changes. Yet another internalised force that drove change was cost considerations. In order to provide unique and innovative products to consumers, the business had to recognise opportunities to streamline business divisions so that more investment could be put into the research and development process. However, with profit losses occurring with declining product life cycles and inability to become a first mover with innovative branded products, Sony did not have the capital resources necessary for more intensive product development strategies. This is why the business decided to close 11 different plants (which provide very high costs of facilities management) and reduce the workforce by 10,000. This decision opened the doors for more investment in product development and research, which would be necessary in a market environment where speed to market of new products is critical to maintaining a competitive edge and ensuring profitability. Businesses must be aware of the accounting function, usually strategic management accounting, that assesses profitable and non-profitable business divisions to determine how to better allocate capital and labour resources to a new business strategy (Wu 2007; Banker, Chang and Majumdar 1993). Sony was aware that current operational strategy and business structure could not support cost controls and competitive strategies, thus the tangible internal organisational structure and divisional inter-dependency drove the need for change at Sony as part of management accounting and other cost control methods necessary to allocate resources properly to profitable business activities. Consulting Sony on effective change implementation It was aforesaid that Japanese cultural values had driven internal organisational culture and business ideologies until the emergence of Stringer as CEO. Japanese culture scores highly on Geert Hofstede’s Cultural Dimensions framework as being highly risk averse (Hofstede and Hofstede 2005). This means that cultural characteristics influenced by Japanese business values have workers and managers attempting to rationalise all business strategies or testing their viability before making the decision to accept a new set of business objectives or mission. Bridges (1991) highlights that change is influenced significantly by psychological dimensions of human behaviour, mental representations that serve as catalysts for how individuals cope or otherwise come to grips with newly introduced business situations. Long-standing organisational culture built on recurring risk evaluations and contingency planning to remove risk influenced by Japanese leadership would require deconstruction and reshaping (framing) to get organisational commitment to risk-potential situations. John Kotter, considered by some to be one of the foremost experts in change, highlights an eight step program to ensure that attitudes are changed from resistant to motivated. The first step is establishing a sense of urgency among the organisational population, deemed an unfreezing process to change their pre-existing values and make them more flexible to new business ideologies (Kotter 1996). As aligned with Fairholm’s (2009) assessment of transformational leadership, another step in the change process is to establish a mission and vision and consistently iterate this to gain support (Kotter 1996). The willingness to gain a new type of enthusiasm of the organisational culture to start making risk-centric decisions is to set short-term wins that reward individuals for coming up with strategies or solutions that accept a certain amount of risk (Kotter 1996). This new Western set of values injected into the business model by Stringer requires a step-by-step methodology of attempting to deconstruct old risk-averse behaviours by appealing to the psychology of change leadership. Sony can motivate with rewards for innovative and risk-accepting behaviours which has fundamental psychological impacts on those accustomed to more rigid and contemplative Japanese-inspired business decision-making. Introduction of a change agent into the organisational culture is yet another strategy that is viable for Sony management. Change agents serve as consultants, researcher and trainer. As trainer, the change agent teaches members of the organisation how to effectively utilise external market data and assist in building a new set of skills required for implementing continuous change practices (Dawson 2010). As consultant, the change agent seeks consultation with employees, identifying the rationale for why they are resistant to change, including psychological, sociological, or work position-related concerns. The change agent essentially becomes an advocate for the needs and concerns of employees and attempts to address them competently so that trust in the change processes is developed and more commitment generated to proceed forward in the change strategy. Sony could benefit from assigning a leader for the change agent role that worked directly with Japanese leadership philosophy, thereby gaining trust of the followers that change will be progressive rather than sudden and abrupt. Pre-existing cultural values stemming from Japanese historical leadership will likely drive many distorted cognitions and emotions under the new modelling provided by the CEO Stringer. Having a liaison between executive management and the lower-level population of employees will assist the business in building better human resources strategies to focus on the intangible needs of workers that will create commitment and less resistance. The CEO was attempting, in the new restructuring, to facilitate more rapid and effective communication between different business divisions. Stover (2004) indicates that in order for innovations to be produced, members cannot work autonomously, but must work in harmony with one another to transform tacit knowledge to explicit knowledge. Grieves (2010) supports interaction as being a vital component to a change process, in which change becomes a negotiated dimension and not wholly-controlled by a centralised hierarchy. The CEO and other managerial members of the organisation should be facilitating more cooperative working, allowing employees to be actively engaged in decision-making processes and to reinforce their value to the organisation as contributors. This is paramount to building a positive emotional sentiment about change practices and workers’ roles within the strategy. Even though the tangible operational components of the business are centralised, the company can still draw on pre-existing notions of Japanese-style leadership that promote participative learning and management. Sony will benefit psycho-socially and in terms of providing innovative product or service solutions by engaging others to be interactive and perceiving that they have negotiated some dimensions of the change strategies. Likely sources of resistance and combating strategies As identified, comfortableness with older Japanese business management strategies would serve as the most likely catalyst for change resistance. There is a way for management to balance these preconceptions without having to completely alter the method by which interaction occurs between different organisational actors. Edwards and Ewen (1996) offer that when a 360-degree feedback system is implemented, one that provides multi-source ratings from peers and colleagues (rather than only a single supervisor), it instils trust, a sense of fairness, and even higher self-esteem by those being assessed for performance. Work habits are more likely to be motivated to accept change practices when the esteem of co-workers is received (Edwards and Ewen 1996). As such, the managerial team at Sony can work with human resources in order to set up a new type of performance reporting process that includes multi-ratings that occur regularly rather than only annually. The goal is to unfreeze old behaviours that were risk-averse, which is no longer relevant to achieve competitive and market successes, therefore Sony leadership can build confidence in change practices and in the new structure that facilitates open communication between centralised divisions; which is a new method of interactivity at the firm and something workers are not accustomed to as Sony has not always been a pioneering and innovative company. If employees have it reinforced by supervision and their colleagues, who now must work cooperatively to build new innovative products, they will feel more valued in the organisation and be likely more motivated to participate in many change processes. Resistance is also likely to occur at the psycho-social level when the business begins the process of laying-off or terminating employees as part of important downsizing for cost controls. When members of the organisation witness their colleagues being furloughed, there are complex relationships that are sometimes developed between workers, sometimes over a long period of dependent working experience with one another. Ford, Ford and D’Amelio (2008) indicate that sometimes resistance from employees is irrational and even dysfunctional. Those who are not terminated are considered to now be biased observers of the staffing downsizing effort, subject to irrational responses to the terminations that include irrational perceptions of management incompetence or even proposing that managers are ignorant in their decision-making prowess. The complexity of emotions that occur when workers have built trusting and sometimes close-knit relationships with peers can subject the change leadership to these dysfunctional viewpoints. To combat this, the business should assign a member of human resources with knowledge of sociology and psychology to serve as a change champion. The change champion can become an HR-supported counsellor that works individually or collectively with others to discuss their fears about potential job security or their depression (or other psychological symptoms) about the rationale for letting their favourite colleagues be dismissed from the business. In psychological theory, concerns over potential job security and diminished social belonging have long-term consequences on self-esteem development and can even impact intrinsic motivation. The assigned change champion would reinforce a collective vision that justifies the reason for why employees were let go. By being open and transparent about the financial condition of the business, it will reinforce that those left behind to support the business were fortunate and the vision statement aligns strategy with rationale for terminating employees. Effective HR strategy must “speak to the hearts and minds of employees” which builds high-commitment cultures (Armstrong 2007, p.58). The change champion turns into an advocate for the psychological and sociological needs of employees in order to reduce resistance associated with job losses of valued co-workers. Genuine worker satisfaction is strongly tied to their perceptions of business leadership (Emery and Barker 2007). 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