Management of David Orton Plc on the Issues Faced by the Organisation - Case Study Example

REPORT TO THE MANAGEMENT OF DAVID ORTON PLC ON THE ISSUES FACED BY THE ORGANISATION. Executive Summary This paper examines the impending change thatis occurring in Costwise & Orton after the two different retail outlets decided to merge into a single entity David Orton PLC. This report examines a framework for the management of the change in this new venture and how it can be used to solve the major problems in the entity. The report begins by describing the major framework within which change occurs in organizations and how it is enhanced through the concept of change management. The report examines specific issues in relation to different aspects of the business that are affected by the change. This includes amongst other things, the motivational situation of the staff and management of the two merging entities. It concludes that the exclusion of Costwise employees in the merger is one of the main causes of the problems in David Orton PLC. Also, some issues like leadership, organizational design and the lack of communication and improper conflict management is the cause of the problems. The report concludes by giving recommendations on the best way of dealing with the situations in the organizational problems with David Orton PLC. Introduction This paper is management consultants report prepared for the management of David Orton PLC. The paper outlines the problems facing the company in line with the new merger and the corresponding changes in organizational dynamics that have occurred since the combination. The report utilizes the concepts in organizational behaviour and other theories relevant to this concept. It seeks to provide the basis of these issues and defines possible was of improving the systems and structures that are not going on so well. Framework for Managing the Change This merger between Costwise and Orton comes with inevitable changes that needs to be solved through the available models and concepts that relate to it. This is because the change in Costwise and Orton are major and affects all the structures, systems and components of the businesses. Meyers & Gerstman (2005) recommend that in a situation where major changes like mergers and acquisitions are carried out between two organizations, the concept of change management will have to be employed to ensure that the best results are attained. When a major component of a business changes as a result of an internal or external paradigm change in the business, there are five distinctive activities that must be conducted in the business to identify the need for change and make reasonable adjustments to meet those changes for optimum results from operations (Hayes, 2010). The main stages of this change are as follows: 1. Recognize the need and start the change process: This means that a business needs to identify the main cause of the change in the organization. This will determine the ends that the change will seek to attain for the organization. In the case of David Orton PLC, the merger has inevitably caused the need to outline the new systems in context to ensure that the organization-wide and long-term objectives of the new company are attained. 2. Diagnosis (review of the present situation and identify a future state): This requires David Orton PLC to identify the new vision of the company and and try to find areas within which the organization will need to adjust and make the necessary changes to meet this end. 3. Plan and prepare to change: When a definite objective is identified, it will be necessary to outline plans to make changes so that the organization works efficiently. 4. Implement change: The changes outlined above should be instituted and implemented in the best way possible. This will ensure that all objectives are met in the process of maintaining the change 5. Sustain change: The changes should be monitored and adjustments made as and when necessary. Lewin also identifies that a business that seeks to change will need to go through three main phases to ensure that the change is established and enhanced. Lewin states that when a business seeks to change, it will need to unfreeze, move and refreeze (Lewin, 1997). This means that the business will need to change its existing structures and systems by unfreezing. When this is done, the management can move the organization strategically from the past position in accordance to the new vision. When this is done, the new vision will be instituted in a process of refreezing. Clearly, the unfreezing, moving and refreezing elements of the change at David Orton PLC has been faced with several challenges. These challenges have affected the dynamics of the organization and its behaviour. These are outlined below. Perceptions, Personality Attitudes & Motivation Perceptions refer to how individuals decode messages and activities that occur in their environment and integrate it into their activities (Cramer, 2007). Perceptions have a strong influence on the way employees think and behave towards the change process in an organization. Perceptions can lead employees to resist change. Change resistance can lead to insecurity, loyalty switches, and loss of morale (Shyni, 2005). In this case at hand, it appears that there are some perception and attitude problems on the part of Costwise employees. The Costwise employees became uncertain about their future in the merger. This is evident by the fact that they stopped pursuing pay rises and concentrated on doing their work and doing it well. This suggests that as the change was going on, the employees felt insecure and they felt that working hard would ensure their survival. Also, the fact that they sought to build camaraderie meant that they desired to remain united to resist the change wherever necessary. Resistance from perception comes in two ways: systematic resistance which involves the lack of appropriate knowledge and information of affairs and behavioural resistance which stems from emotional factors (Blackard, 2000). From the way things began with uncertainty for Costwise employees, it appears that they did not really support the new systems that were put in place by David Orton PLC since they were clearly against the normal perception that they were used to which included autonomy, service the middle class and Southern customers. This caused the Costwise employees to remain resistant throughout the process. It is clear that at some point, they began to quit their jobs. It is clear that this change was related to the new systems of the change in the organization that made them feel adversely affected. Group Dynamics & Communication Group dynamics is the way group members work together with different people to form a cohesive and productive unit that ensures efficient and effective performance (Taylor, 2008). The staff of Orton were used to the old systems and structures in their operations. And it was these same systems that were expanded and applied to the staff of Costwise. In the process, the symbols of the old Costwise were crumpled with very little concern for their old styles. This obviously stood in the way of their effort to work with their colleagues as partners. This therefore means that they could not really co-operate with other members of the old Orton to provide results. Automatically, such a trend would lead to conflicts, resentments, sabotage and other negative trends that will prevent communication and cooperation. This obviously made the movement and refreezing of the new David Orton PLC difficult. Organisational Design Organisational design is made up of five main elements: structure, tasks, systems, culture and strategy (Daft, 2009). Every business will need to have some core elements that will define and give an identity to an entity. This therefore means that the company would have to put in place various measures that will set the framework within which it will operate. In the case of David Orton PLC, the whole idea from the onset seem to be one that sought to eclipse the cultures of Costwise. This is because the management seemed to focus more on expanding Ortons structure and strategy to define the new entity. This was exhibited in several ways and systems: 1. Change of store structures: The new company seeks to promote large stores to the detriment of smaller stores which were representative of Costwises layout. 2. The merger focuses more on the northern customers and northern clients as Orton did. This clearly eliminates Costwises Southern orientation. 3. The old Costwise branches were renamed Orton this clearly shows that the whole idea was to capture Costwise into the old Orton culture. 4. David Orton PLC gives little cognisance to the demands and feelings of the employees of Costwise. This therefore means that they were eliminated from the core operations. Operations Systems The operation systems was to ensure that that company seeks to open new larger stores throughout the country. This therefore means that the old Orton systems was meant to promote the idea. However, this system was clearly not very profitable from the onset. And this is causing some friction and challenges within the company. Also, the new arrangement seeks to promote new and more offerings. This means that there would be little specialization that will ensure that there will be better products. However, the old offerings and systems were limited and specialized. This was a major paradigm shift. However, without training and the making of adjustments, it might be difficult for the company to raise revenue from the new introductions. This therefore means that the David Orton PLC will have to invest in finding the best ways of promoting the company and selling the new products that are available now. Leadership The old system of the Costwise was one where the managers of local stores were given autonomy. The new arrangement however is one where power is concentrated within the top-level management of the company. This therefore means that the managers in the shops had to wait for instructions from above. Clearly, the centralized system means that there will be limitations in the ability of each store to mobilize and utilize local opportunities. This implies that there will be lots of financial losses that would be incurred in the company because of the new arrangements. The attempts to use uniform systems and abolish heterogeneity also presents some challenges. This is because the new system ensures that there will be no new introductions that would promote the diversification of activities and operations. The laws that seeks uniformity ensures that there will be fewer systems and methods. And this can prevent them from having a uniform system for the promotion of business. Another issue is that for most of the time the the new system has been in place, the Chairman has been too dominant. This is against most corporate governance rules like the Stock Exchange requirements, and the various Corporate Governance laws (like Cadbury Report) which recommend that the Chairman of the Board of Directors should not be the same as the Chief Executive Officer in a public company. This therefore means that for a very long time, dominant decisions, some of which were inappropriate have been taken which is responsible for the challenges in unfreezing, moving and refreezing of the new David Orton PLC. Conflict Management It appears that there were no conscious efforts to manage conflicts in the company. Conflict management means the establishment and maintenance of systems and structures to prevent and resolve conflicts in organizations (Loosemore, 2003). However, it must be pointed out that it is not all conflicts that are bad. There are destructive conflicts that are not in the best interest of the company whilst there is constructive conflict which seeks to identify and nurture positive things that can help the company to grow (Barker, 2006). It is clear that most of the conflicts between the various units of the company has not been very well handled. This has clearly been disadvantageous to the company in maintaining this merger. Clearly, the cases of the various Costwise employees were not heard. There seemed to have been no representation system or this system was not working so well. As a result of this, there was little or no effort to incorporate the various needs and desires of concerned stakeholders in the merger. Such a system could have restrained the Chairman of the company from exhibiting prejudice against the Southern orientation and the middle class orientation that existed in the old Costwise. Financial Systems Financially, there have been some challenges that have befallen the company. These challenges include numerous decisions that sought to promote certain concepts that were worthwhile under the old Orton but were absolutely inapplicable to the Costwise section of the new merger. First of all, the old Costwise brand was twice more profitable than Orton. This means that there was the need to carefully examine the existing Costwise systems and structures and make recommendations on how best to keep these shops profitable. Rather, David Orton sought to close as many as 50 Costwise shops and seek to introduce the Orton system which was earning just 50% of what Costwise was earning. Also, the invocation of new discount ideas and systems to the profitable Costwise lines was a waste of money since it failed to increase the wealth of the group and rather caused the revenue for Costwise to fall. Additionally, the selling off of branches should stop. This is because when more branches are sold, assets are reduced and there is a corresponding reduction in the income-generating abilities of the business. Recommendations In line with this consultation work, the following recommendations are being made in line with the concepts of change management to ensure that the unfreezing, movement and refreezing of the new David Orton PLC can be done to ensure the best interest for all stakeholders: 1. There is the need to study the old systems that Costwise employees were best used to. This will enable them to set up good employee relation systems that will enable them to return to their old schedules and remain as productive as they were. 2. There is the need for the Human Resource Management system to be tasked with the supporting of Costwise employees to improve their skills and also integrate into the new environment with their unique and distinct abilities. 3. The old Costwise shops, autonomy and diversity should be studied again and re-introduced to provide a different income generating outlet to ensure that the company gains more profits 4. New offerings that are being given to the company should be examined closely for profitability and viability. Afterwards, there should be training for the employees to ensure that those new additions are offered well to the clientele. 5. There should be some autonomy granted to the various shops to ensure that they can organize themselves and take up local opportunities. 6. Communication should be enhanced in the company. There should be appropriate communication between the top-level management and their subordinates and autocracy should be reduced in the operations. 7. Heterogeneity should promoted at the various branches. This will enable different branches to provide different services which will diversify risks and reduce losses. 8. Now that the Chairman and the CEO responsibilities have been separated, there is the need to set up an independent committee to investigate some of the lapses that the old system has caused. These lapses should be identified and appropriate actions taken to ensure that they are taken. 9. There is also the need for a conflict resolution and risk management system that would be supervised by the board to ensure that problems are solved in the organization. 10. Also, there should be a ban on the sale of David Orton stores. This ban should help the company to prevent losses in assets and subsequent income losses. References Barker Ann (2006) Leadership Competency for Managers London: Edward Elgar Publishing Blackard, Kirk (2000) Managing Change in A Unionized Workplace Greenwood Publishing Group. Cramer, Paul Jeffry (2007) Perceptions of the Effects of Relationships Purdue University Press. Daft, Richard (2009) Organizational Theory & Design London: Wiley Publishing. Hayes, John (2010) The Theory & Practice of Change Management London: Palgrave Lewin K. (1997). “Defining the "Field at a Given Time.” Resolving Social Conflicts & Field Theory in Social Science, Washington, D.C.: American Psychological Association. Loosemore Martin (2003) Essentials of Construction Project Management University of Texas Press. Meyers Herbert & Gerstman Richard (2005) The Visionary Package: Using Packaging to Build Effective Brands London: Palgrave Macmillan Shyni, Kumari (2005) Change Management Vis-A-Vis Human Resource Management Discovery Publishing House. Taylor, John (2009) Organizational Behavior Mason OH: Cengage Read More