Morgan Motor Company and the Key Challenges - Essay Example

Morgan Motor Company and the Key Challenges Part One 1.1 Introduction The management of change within any organization internationally is considered to be a challenging task. Most commonly change is imposed by the conditions related with the daily entrepreneurial activities and is based on the firm’s needs but also the potential of the market for growth. Regarding this issue it is noticed by Greve (1998, 59) that change within any modern firm should be considered to be ‘an outcome jointly determined by motivation to change, opportunity to change, and capability to change’. One of the most difficult tasks when implementing change within a particular organization is to identify the areas of the firm’s operational activity that need to be reviewed and possibly restructured. The above assumption is also supported by Poole (1998, 45) who noticed that ‘when change is needed in an organization it is likely the culture or identity of the organization will be targeted for change; the transformed organization, whether it be minor (first-order change) or major (second-order change), will not be the same as its predecessor’. In other words, change within a particular organization is often related with conditions of work and the skills of employees (possible thought of replacement should be identify in the relevant research). Moreover, other operational weaknesses should be identified at this stage. The responsibility for the identification and the evaluation of the problem belongs to firm’s central strategic management unit (in the specific case to Peter and his son Charles). Current paper examines the advantages and the disadvantages of implementing a plan of change to Morgan Motor. Moreover, the changes already applied on the above firm are going to be examined thoroughly and criticized as of their effectiveness in the firm’s performance especially in the long term. Part Two – Main Body 2.1 The reasons that led to the recommendation of changes in Morgan Motor Changes were necessary in Morgan Motor. The production had been limited to a specific number of cars on an annual basis while the systems used for this production could be characterized as inappropriate in terms of the level of production (cars prepared on an annual basis). In accordance with the case study (pg. 3) ‘the factory gives the impression of being run by a bunch of enthusiastic amateurs … There is no logical flow of production through the factory, & very little production planning’. In other words, the workload is not appropriately distributed while it seems that there is no plan of the required level of production in a pre-defined (week or month) period. On the other hand, the firm’s leaders (i.e. Peter Morgan and his son Charles) support the continuation of existing operational practices (despite the fact that Charles tends to think also the alternatives available in order to improve current level of production). The firm also has a serious problem regarding the flow of sales. It is noticeable that after the observation of the company by Sir John Harvey-Jones (in 1989) it is noticed that ‘the company has absolutely no idea what the demand for the car is’ (pg. 4). The term ‘demand’ above refers not only to the level of sales of the car but also its presence within the market (preferable choice of customers around the world). Another operational problem that led to the introduction of changes within the company has been the IT systems used throughout the organization. More specifically, in accordance with the report of Sir John Harvey-Jones ‘there is no computer in the stockroom (or the company) & the average stock level is between three & four month’s supply… Stock levels are probably higher than they need to be, with the result that the company has far too much money tied up in stock’ (pg. 4). In other words, the firm faces severe difficulties in order to evaluate the stock available. If this problem is combined with the fact that there is no specific plan of production, we could be led to the assumption that a thorough examination of all firm’s existing practices is necessary in order for the firm to manage to survive in the future. The fact that until now the firm has not faced severe problems of liquidity can be explained by the fact that the demand remains at high levels. But after the continuous delays in the production it could be expected that the demand would be reduced and then the firm’s profits would be also decreased. At a next level, there is no specific HR management policy. There are no incentives given to employees in order to improve the time required for the production of each car. The provision of limited monetary amount (as a bonus) did not lead to the required target, i.e. did not result the reduction of time required for the preparation of each car. Regarding this issue, in the report of Sir Jones it is mentioned that ‘however, the bonus doesn’t work as an incentive, as hiccups in the production flow often slow things up somewhere else in the process of making the completed car’ (pg. 4). No other HR policy is mentioned. It is clear that there are no specific provisions for the firm’s employees. This could lead to the continuous limitation of rate of production in the future; a fact that would result to the decrease of the firm’s profitability. 2.2 Difficulties in overcoming the defensive routines – issues for consideration All firms within the international market have to continuously review their policies in order to identify any potential error that could lead to the limitation of the organizational performance. The review of corporate strategies and the identification of the appropriate plans of change at a particular time period belong to the firm’s leaders and the managers of the HR department. Towards this direction it is suggested that ‘managing organizational change remains one of the most important challenges facing HR professionals today; the roles and responsibilities of HR professionals are swiftly evolving from a more traditional administrative or ‘operational’ focus to one in which HR is seen as a strategic partner with management and a ‘change agent’’ (Anson, 2000, 21). The above researcher refers especially to the HR department because the role of the specific sector is crucial within any organization. In fact because this department handles all issues related with employees – which are considered to be the most valuable ‘asset’ of the firm – it is considered to have a significant importance among all organizational sectors. In the case of Morgan Motors, the main obstacles toward the implementation of change policies should be considered to be the thoughts related with the current position of the firm in its market. More specifically, because currently the level of demand regarding the particular product is high, any potential change is not considered as necessary. It should be noticed that in accordance with the case study ‘from a Harvard business school point of view, the company has done almost nothing right in its 83 years of existence; it has for the most part failed to automate or expand, failed to diversify failed to change its product line’ (pg. 6). In other words, there are all facts that could justify the implementation of change policies on the particular organization. Apart from the sectors already mentioned above, other parts of the organizational activity (like the production department where the machinery is considered to be quite ‘aged’ and so on) could be also characterized as inappropriate regarding the current position of the firm in the market. In fact, because of the firm’s current position in the market, its leaders should try to improve existed practices and techniques reviewing all organizational activities. At a next level, the implementation of the appropriate plans of change could help towards the improvement of the organizational performance – not just in financial terms where the consequences of the inappropriate organizational structure are not visible yet – but mainly in terms of productivity. A primary suggestion made by Sir Jones was that ‘the company needed to determine the demand for the car in its various markets, stop being production-led, & think about the consequences of the US market opening up if their clean-burn emission control modifications were successful’ (pg. 6). However, a series of changes would be necessary in order for the firm’s performance to be improved and stabilized in the long term. 2.3 Organizational design in Morgan Motor As already stated above, organizational structure in Morgan Motors is not complicated. In fact, the firm is governed by Peter Morgan (who actually died in 2003) and his son Charles. The policies followed by the firm remain almost the same since the firm’s establishment in 1909. More specifically, each car is produced separately and the production rate is extremely low. Of course, the quality is high but so are the costs involved. Because of the skills required for the production of the specific car, the wages of employees are high and if combined with the total costs of production then it can be explained why the margin for profit is narrow (only approximately to 5% compared to 20% percent normally in the specific industry). On the other hand, it should be noticed that there is no specific HR department – at least there is no reference for its existence - but all organizational activities are decided by Peter and Charles. As described above, the firm’s structure is clearly inappropriate if taking into account the position of the firm in the global market. Because of the volume of work required for the delivery of the orders made on a daily basis, it would be preferable that the firm would be divided into sub-departments with specific duties. In this way, all organizational activities would be improved while the level of production would be also increased. 2.4 Role of stakeholders Traditionally, stakeholders are considered to have a significant role in the performance of any organization. Regarding this issue, it is suggested by Rowden (1999, 22) that ‘the new business context is prompting managements to take a greater interest in the utilization of their organizations’ human resources’. In accordance with the above, because of the complexity related with the operation of modern firms around the world, it is expected that the role of leaders within organizations is significant. As for the other stakeholders, like the firm’s employees or the managers, they are also considered to have a significant role in the development of operational activities. In this context, in case that the implementation of potential change policy is followed by resistance, then it would be necessary for all stakeholders to participate actively in the reduction of this resistance either in the short or in the long term. Regarding this issue, it is noticed by Karp et al. (2000, 454) that within all organizational resistance usually ‘needs to be recognized, honoured and worked with; it is very important that designers and deliverers of diversity training be aware of the positive aspects of participant resistance’. However, it should be made clear that the methods used by leaders and stakeholders for the limitation of resistance within a particular workplace is highly depended on the structure of the specific firm and its targets for the future. 2.5 Could the challenges faced by Morgan be addressed more effectively if a similar change initiative were to be introduced in another organisation? In Morgan Motors the suggested change policies were not welcomed. More specifically, in accordance with the case study ‘Harvey-Jones was pugnacious in his challenges to the company, & they reacted defensively, indeed Charles became most conservative & defensive of his father’s company, they rejected the idea that demand was much of a problem by arguing that it is cyclical not consistent’ (pg. 7). In other words, changes recommended were viewed as not absolutely necessary, a fact that can be explained by the current demand of the firm’s product as already explained above. However, the particular behaviour could lead to the failure of attempted changes. In fact, it is supported by Bunker et al. (2005, 12) that ‘much of that failure stems from not understanding how to manage the structural side of change and the human dynamic of transition’. Moreover, Katzenbach (1996, 149) suggested that ‘change efforts are often conceived as waves of initiatives that sweep through an organization from the top down, or the bottom up, or both, and flow across functions’. In other words, the success of any attempted change is closely related with the active participation of the firm’s leaders (and its stakeholders at a next level). However, in any case that a change policy is to be implemented within a specific firm, it should be expected that severe opposition would follow. It is for this reason that Huy (2002, 31) supported that ‘fundamental change in personnel, strategy, organizational identity, or established work roles and interests often triggers intense emotions’. However, if appropriate preparation is made in advance, then the attempted change is usually completed with success. Indeed, the study of Eoyang et al. (2001, 5) led to the conclusion that ‘many organization change initiatives start at the top and deal strongly with any resistance from system agents that blocks progress; common ways of responding to resistance include downsizing, restructuring, and re-engineering’. In accordance with the above, if the particular changes would be attempted in another organization, it could be expected that their success would be more secure. However, even under these circumstances because there is a desire for growth and there is also a ‘weak’ support by Charles, it could be expected that the attempted change in the case of Morgan Motors would be successful. Part Three – Conclusion As already stated above, the organizational structure of Morgan Motors is rather simple. The role of its leaders (Peter and Charles) regarding all operational activities is crucial. The management system followed in the specific company could be possibly evaluated using the Punctuated Change Model (Tushman and Romanelli, 1985). In accordance with Sastry (1997, 237) this model ‘describes an evolutionary process through which organizations alternate between two modes of behaviour being divided into four general sectors that represent strategic orientation, inertia, performance and pressure to change; each sector includes several equations that govern the behaviour of the state variable’. However, in order for the above model to be valuable regarding the specific target, it should be appropriately combined with all info related with organizational activity (like the firm’s performance, the conditions in the workplace and so on). The evaluation of the management system applied in Morgan Motros could help towards the identification of potential weaknesses and the suggestion of appropriate solutions within the time required. Towards this direction, it is suggested by Sias (2005, 385) that ‘practitioners in troubled organizations (e.g., those with high levels of turnover, low levels of performance and morale) might examine the quality of the supervisor-subordinate relationships in their organizations to determine how that might be detracting from the dispersion of quality information throughout the organization’. Again, practitioners in firms are considered to have a crucial role in the development of organizational performance. In fact, if appropriate handled by the firm’s leaders, suggested changes could have a really impressive result on the organizational performance leading to the increase of production, the limitation of failures and the improvement of quality of products/ services provided to the public. In accordance with the above, the success of any change policy is strongly depended on the willingness of the firm’s leaders to support the relevant initiative. In fact, when this effort is supported by the firm’s leaders (and its stakeholders) it should be expected that the particular policy would be successful even under extremely adverse market conditions. However, in case that the recommended change policy cause resistance within the workplace, then appropriate management techniques should be applied in order for this resistance to be limited. The above issue was examined by Karp et al. (2000) who came to the result that there are a series of methods/ steps available to the firm’s leaders in case of resistance: ‘1. Provide a Contract; as the very first step of any diversity training program, negotiate a contract with the group; the contract sets the guidelines for appropriate behaviour for the length of the training session. 2. deal only in behaviours and awareness, Never In Attitudes and 3. work with the resistance’ (Karp et al., 2000, 454). However, as already stated above even if all appropriate measures are taken, it is still possible that the application of change policies on a particular organization will be delayed. In Morgan Motors the efforts for the implementation of changes in all organizational activities were intensive. More specifically, in accordance with the case study ‘Charles had introduced a manufacturing resource planning computer system into the factory as he had intimated earlier, & enrolled on a course at Coventry University in modern manufacturing, leading to an MBA’ (pg. 9). Apart from this, ‘prices had begun to rise slightly in advance of inflation; on the technical side, engines were updated & new developments were trialled on the race track with the collaboration of a Morgan dealer, including an aluminium chassis’ (pg. 9). Because of the above changes, the productivity of the company was increased and the time required for the delivery of an order was decreased in 18 months (in 2002). In other words, attempted changes in Morgan Motors have been proved to be valuable towards the improvement of the firm’s productivity and the development of its activities worldwide. In fact, efforts for change did not limited to the above initiatives. In accordance with the case study ‘Morgan motor company is looking to invest in new models and novel designs; further projects announced have included a British partnership with the fuel-cell experts QinetiQ to build the world’s first environmentally green sports car’ (pg. 12). In accordance with the above, the implementation of change policies on Morgan Motor has been a challenging and complex task. The time required for the completion of the relevant initiative is also considered as significant. However, the firm’s leaders managed to appropriately improve operational activities in all firm’s sectors implementing the required plans (in terms of the firm’s targets in the long term). It could be stated here that ‘change is a constant in modern working life; no matter how managers and employees struggle to control their lives, change is forced on them, reinforcing the feeling of being a pawn in someone else's game; since change is inevitable, managers must work to give their staff a sense of control over changing situations’ (Rosenberg, 1993, 21). In the case of Morgan Motor, the firm’s leaders managed to face effectively the obstacles appeared during the efforts for the implementation of change policies. In the long term, their initiatives had been proved appropriate for the particular market aligning existed business strategies with the demands of the particular marketplace. References Anson, B. (2000) Taking Charge of Change in a Volatile Healthcare Marketplace. Human Resource Planning, 23(4): 21-24 Bunker, K., Wakefield, M. (2005). Changing Workforce: Leading Effectively When Change Is the Norm Canadian Government Managers Discover How to Weather Draconian Layoffs and Budget Cuts by Turning Inward to Become More Authentic. The Public Manager, 34(4): 9-17 Eoyang, G., Olson, E. (2001). Facilitating Organization Change: Lessons from Complexity Science. San Francisco: Jossey-Bass Greve, H. (1998). Performance, Aspirations and Risky Organizational Change. Administrative Science Quarterly, 43(1): 58-63 Huy, O. (2002). Emotional Balancing of Organizational Continuity and Radical Change: The Contribution of Middle Managers. Administrative Science Quarterly, 47(1): 31-66 Poole, P. (1998). Words and Deeds of Organizational Change. Journal of Managerial Issues, 10(1): 45-47 Rosenberg, D. (1993). Eliminating Resistance to Change. Security Management, 37(1): 20-22 Rowden, R.W. (1999) ‘Potential Roles of the Human Resource Management Professional in the Strategic Planning Process’, SAM Advanced Management Journal, 64(3): 22-29 Sias, P. (2005) Workplace Relationship Quality and Employee Information Experiences. Communication Studies, 56(4): 375-392 Read More