Why are there different perspectives on change within organisations - Essay Example

CHANGE MANAGEMENT Why are there different perspectives on change within organisations? January 05, 2009 Introduction Change Management has been variously regarded as a structured method and approach that is used for transformation and transitioning people and organisations from the current state to a new state. A change management program would have a number of stakeholders and entities that are impacted by the change. Typically, a change management operation would involve a certain realignment of roles, responsibilities, work process, power structures, reporting hierarchies and so on. Each of these entities would be impacted in a different manner by the proposed changes. Therefore, it is expected that each entity would have a different view or a perspective on the change management (Hughes, 2006). This paper would attempt to answer the thesis question of "Why are there different perspectives on change within organisations?" A point-to-point answer to this question can be offered in a couple of sentences. However, such a short answer would not illuminate the concept of perspective, stakeholders and why perspectives differ. The paper would examine these issues in greater detail by using support from case studies. The paper is organised as follows, first a brief overview of change management; stakeholders involvement and the impact on the organisational work flow and then an understanding of why there are different perspectives on change management in the same organisation. Some case studies in change management are used to illustrate the discussion. 2. An Overview of Change Management An organisation would have a certain set of business rules, formal and informal work processes and a certain organisation culture on which the daily operations are run. Over a period of time, these rules would have become organisation wide policies and habits and people would have been practicing the rules. When there are new market imperatives, new competition activity, advances in technology, changed customer perceptions and likes, the management would realise that its internal process have to be revised or changed. The decision to change the process would mean that there would old methods and habits would be changed and perhaps done away with. An employee who finds that the work that he had been doing for the past few years has changed and there are chances that his role has been modified and done away with. The employee would have to be retrained, learn new skills or change to a new habit and perspective of work. This is the process of change and it can be traumatic, disruptive, and cataclysmic or it can be gradual and administered in an equitable manner (Shurville,, 2008). Management of the change or change management is about lessening the adverse impact of change management and ensuring that the targeted objectives are met. Change management can be about technology, people, processes, materials, marketing functions and other aspects of organisation processes. Technology change management would mean that one technology is changed to another and in some instances; the older technology would become obsolete. Digital photography is one such disruptive technology since it disrupted the existing film technology and rendered it almost obsolete. People change management can be seen in the automobile industry where the recession has forced unemployment on millions of workers. Introduction of lean manufacturing, CNC machines has rendered many conventional and manually operated machines obsolete. The advent of new composite materials and engineered fabrics such as Kevlar, Mylar, Carbon graphite has changed the manner in which products are manufactured (Shurville,, 2008). Among all these changes, there would be some common features and that is the original state and the new state. The old state would have a set of practitioners and entities, organisations and so on and the new state would have new entities. In some cases, the old entities would transform themselves to be the new change practitioners and in some cases, the old ones would be cast aside. It is to be expected that perspectives towards change would be different for both (Shurville,, 2008). 2.1. Stakeholders in Change Management. According to DFID (2003), stakeholders are the entities, departments, bodies and individuals that can influence the change management process either positively or negatively. Stakeholders are also the entities that are impacted by the change management process. There are three main categories of stakeholders and these are the followers, opponents and enthusiasts. In a given situation, stakeholders behaviour can be mapped as per the impact of change and the reaction to change and this is as illustrated in the following figure. Figure 2.1. Mapping of Stakeholders Behaviour The impact of change would be low, medium or high and the perspective for the change would depend on the impact that the stakeholder experiences. When the impact is low, the perspective would be low and the interest in the change would be marginal. When the impact is high, the perspective in the change would be intense while a medium impact would have a perspective that varies between these two. 3. Analysis of Perspective in Change Management Cases The previous sections have given an overall view of the theory behind change management and how stakeholders are impacted by the changes. It was also shown that perspectives of stakeholders in the change management process would depend and differ depending on how they would be impacted by the change. A few case studies in change management are analysed in this section to understand how differences occur in real life. 3.1. Change Management at Daimler Chrysler Waller (2001) has written about the disastrous change management program or the lack of it that lead to the failure of the Daimler Chrysler merger. The merger was designed to create an organisation with a cap of 130 billion USD. However, due to mismanagement and failure to anticipate issues of change management, the merger was not successful and the merged firm was declared a massive failure. There were a number of stakeholders in the merger and it was unfortunate that the perspective of each was different from the others. Moreover, some of the stakeholders from one firm perceived the other equivalent member as an enemy and not as a partner. The main stakeholders were Daimler Benz and Chrysler; workers union of the two firms; Kirk Kerkorian a large shareholder in the firm; different national and organisation cultures and a management that could not see eye to eye. The unfortunate thing was that no one had even considered a change management process that would help the two cultures to work in a cooperative manner. The main ‘rivals’ were Daimler Benz and Chrysler organisations and each wanted to dominate the other. When they came to the board, each had a different perspective that differed from what was needed at the organisation level. Chrysler was a US firm that was not doing very well and it was forced to take a subjugated perspective and this was not acceptable to the workers and managers. Daimler Benz was a German firm and the workers prided themselves on the engineering and reliability that German cars stood for. Moreover, Mercedes was a luxury car while Chrysler was a middle class car. Workers unions also had a different perspective on matters of team working and on wages. Wages in USA were higher than German wages and the US workers were not willing to accept a salary cut that would match their wages with the Germans. On the hand, the Germans wanted their wages to be hiked and made at par with the US workers. The perspectives of both unions were thus different (Waller, 2001). Organisation cultures were also different in both the firms. Chrysler was a US firm with a typical brash and loud behaviour that was often flashy. Americans had an informal manner of speaking and believed only in getting the result and there was not much importance given to hierarchies and order of importance. American workers also addressed their superiors by their first names, spoke informally with them and there were not much of empty respect. The Germans on the other hand had a strict set of hierarchy and rules and believed in formal reporting levels. Superior officers were never addressed by their first names and formal rules guided the organisation. Therefore the culture of each organisation had a different perspective and this created friction among the teams. It has also been reported that when coming for meetings, the Germans came fully prepared with detailed workings, drawings and solutions that would be presented. The Americans on the other hand were rather informal in their preparation and would often walk into the meeting empty handed, expecting to be briefed and expecting that they would discuss any possible solution. Therefore, the perspectives of each team were different (Waller, 2001). The change management program that was initiated was very ineffective, as it had not considered these differing perspectives. As a result, the environment was filled with distrust and each group would derail the efforts of the other leading to a failed merger. 3.2. Change Management at Nissan - Renault The Renault Nissan Alliance that was formed between Renault of France and Nissan of Japan in 1999 was an excellent example of how different perspectives of the partners were integrated to form a successful alliance. The alliance has withstood market forces and come out stronger than ever and has 9% of the global automobile market share and is the 5th largest global automobile group. The companies manufacture cars that are meant for the compact and the midsize market, a segment that is highly fragmented and filled with a number of players. While Ford, GM, Chrysler, Toyota and a host of other companies are active in the global market, there are a number of small regional players such as Maruti in India. With such a highly fragmented market, brand identity and customer loyalty is a major issue. Each firm has its own product line and continues to manufacture and market the cars separately. Thus the perspectives of each firm was unique and different. To ensure that the two perspectives were integrated, a joint effort has been used with excellent change management practices. The main strategies that the alliance has used includes: launching new models that are clearly segmented and in accordance with market needs, clear management controls, sharing of technologies and marketing efforts, joint development of engines and using a high end supply chain management system (Renault-Nissan, 2008). Pooley (2005) notes that change management was a crucial area and both companies invested heavily in cross cultural training of the employees The companies hired external consultants to train Renault employees about Japanese culture, how the Japanese work with consensus, team building and undertook training for managers and other employees would be a part of the alliance. About 1500 French employees were given training and told about what the Japanese look for in the French people. Similar exercises were conducted among the Japanese employees so that when individuals from both companies met, they knew in advance, what was expected and thus a cultural shock was avoided. A cross holding of company shares was instituted with Renault holding 44.3% stake in Nissan and Nissan holding a 15% stake in Renault. This meant that each company had invested millions in the other and therefore the success of one company meant more income for the other. At stake were Renault companies of Dacia, Renault Samsung and AB Volvo. The alliance called the Renault Nissan Purchasing Organisation - RNPO and the Renault Nissan Information Services - RNIS and each company had a 50:50 stake in the alliance. The structure of the alliance is such that it promotes mutual growth and allows sharing of technology through cross-functional teams from both companies. The Renault Nissan case is an excellent example of how different perspectives of the stakeholders were mapped to produce a coherent and highly successful partnership. 3.3. Change Management at Intecom InteCom was founded in 1978 in Texas and is a manufacturer of PBX - Private Branch Exchange equipment, used in applications for fixed telephony. Among its competitors are AT&T, Rolm, Northern Telecom, Siemens and many other big and small companies. The company was not capable of financially and technically fighting its rivals who were international giants in Telecom products. However, Intecom managed to ward off bankruptcy and failure by bringing in a excellent change management program. The case is presented since it shows how different perspectives of stakeholders in a firm were integrated and managed to place the firm as a niche player. The main stakeholders were the external agents and distributors and the change management method used is based on how the distribution channel was changed (Ghemawat, 1986). InteCom has a product called as IBX - Integrated Business Exchange, which is an integrated system for voice and data transmission. IBX S/ 40 had an open architecture and allowed easy integration of other party systems. As a result, IBX S/ 40 could easily be adapted into other countries. Products of other companies had compatibility problems with other languages and office systems and they required extensive reconfiguring. As a result these products could not be used in other countries where English was not the official language. IBX S/ 40 has recently been installed at the University of Chicago with a high level of success. The installation would allow InteCom to use the success to enter other large universities. However, the firm has not yet registered a patent for IBX S/ 40 and it must immediately do so (Ghemawat, 1986). In the earlier distribution channel, products were sold to the distributors who would then attempt to identify markets in their region and sell products there. The perspective of the firm and the dealer converged largely. InteCom brought a change management system where it offered lease facilities for customers. Such an arrangement would substantially reduce the cost of ownership for customers and reduce change over costs from rival firms. The contract system also allowed Intecom to upgrade the products a few times and charge a small amount to the customer. The customer’s cost of ownership were greatly reduced and they always had an updated product with company provided maintenance. The only losers were the distributors who did not have the technical know how of managing upgrades and providing support. Intecom then considered the perspective of the dealers and created a program for intensive technical training of dealers employees. In this way, the perspectives of both were brought together (Ghemawat, 1986). 4. Conclusion The paper has answered the research question of Why are there different perspectives on change within organisations?". After giving a brief overview of stakeholders it was seen that the perspectives change as per the impact on the stakeholders. When the interests of stakeholders are different, their perspectives and interest in the change management process would be different. Three case studies using the above reasoning have been examined. From the study, it emerges that a change management process is successful only when differing perspectives, needs and interests of various stakeholders are considered. Two case studies of change management process during the merger of multinational automobile firms have been examined. It has been seen that in the case of Daimler Chrysler, differing perspectives of the stakeholders were not resolved and controlled by a proper change management process. As a result there was intense suspicion and infighting thus leading to a failure of the merger. In the second case of an alliance between Renault and Nissan was examined. Both firms had different perspectives and these were managed by integrating the culture through a change management program. References DFID, 2003. Promoting Institutional and Organizational Development: A Source Book of Tools and Techniques. Department for International Development, London, UK. Ghemawat, P., 11 March, 1986. InteCom. HBS Case Services, Harvard Business School, Boston, USA. Hughes, M., March 2006. Change Management A Critical Perspective. CIPD Enterprises Limited., London, UK. Pooley, R., 2005. The model alliance of Renault and Nissan: How to work successfully with overseas partners. Human Resource Management International Digest, 13(2), pp. 29-32 Renault-Nissan, 2008. Alliance Facts and Figures. [Online] Nissan Global. Available at http://www.nissan-global.com/EN/COMPANY/PROFILE/ALLIANCE/RENAULT01/index.html [Accessed 5 January 2009]. Shurville, S., 2008. Change Management: A Critical Perspective. International Journal of Managing Projects in Business, 1(3), pp. 447-450. Storey, J., 1991. Blackwell Cases in Human Resource and Change Management. Wiley-Blackwell Publications, UK. Waller, D, 2001., Wheels on Fire: The Amazing Inside Story of the Daimler Chrysler Merger. Hodder & Stoughton, London. Read More