Organizational Behavior: Volkswagen Company - Case Study Example

OrganisationalBehaviourOrganisationalBehaviourOrganisationalBehaviourOrganisationalOrganisational Behaviour December Assignment Task1 & Task2 London School of Business and Finance 11/1/2009 BM(Marong) BIB Intake 4 (A4016688) Sultan Ahmed ionalBehaviourOrganisationalBehaviourOrganisationalBehaviourOrganisationalBehaviourOrganisationalBehaviourOrganisationalBehaviourOrganisationalBehaviourOrganisationalBehaviourOrganisationalBehaviourOrganisationalBehaviour Table of Contents Task No. Sl. No. Particulars Pg. No. I 1 Introduction 3 2 External Issues 3-4 3 Internal Issues 5 4 Series of Change 6-7 5 Overcoming Resistance 7-8 6 Conclusion 8 II 1 Mc. Gregor’s X and Y theory of motivation 9-12 2 Summary 13 3 Conclusion 13 III 1 References 14 Task I Introduction: Volkswagen is a world leader in the automobile manufacturing sector in Europe. It was established in 1938 and the company’s then headquarters are still the same as of today at Wolfsburg. It has nine brands under its flagship and is operating in 150 countries around 5 continents in the world. It believes in taking up serious responsibility on its shoulders as regards any issues be it legal, environmental or technical and fulfills the requirements with utmost diligence. Even when the whole world was reeling under sustainability issues in 2008, this company reported net profits. In this journey, of late, it was faced with the issue of technical competency. It could not sustain change and management of configuration of IT management on an enterprise-wide basis. The issues could be both external and internal. To analyze the external issues, a more detailed PESTLE analysis would be result fetching. (Anon., 2009) - 1 Macro Factors They refers the external Political, Economic, Social, Technical, Legal and Environmental (PESTLE) issues which any existing firm faces in this world. (Cheverton. P. 2001). Political Factors: As the firm is expanded over 150 countries and 5 continents, political factors of one region may not bear any significance over the sustainability of the company. Economic Factors: The whole world was reeling under economic depression due to collapse in global demand in 2008. However, this company has managed its sales and profits successfully through multi-level customer and supplier collaboration. Social Factors: There was a sharp rise in the employee turnover in the year 2006 to5.8%. It gradually decreased in the next years and in 2008, the turnover was only .7%. In the mean while there were also recruitments. As such, while 3,24,875 were employed in 2006. The same number has now risen to 3,69,928. The important point to be noted here is that the company also increased its sales targets and greater transparency aspects on technical fronts. So, sufficiency of this employed work force could be an issue on the amount of work done by them. Technical Factors: The firm was unable to catch up with the modern generation technology due to non-reproducibility of developers’ projects in its branches worldwide. Control of employees in all these units became a major issue. Even compliance to legal issues on deadlines was very difficult. As such, it has undertaken a drastic change in IT configuration. (Anon., 2009) - 2. Legal Factors: As an international brand compliance to legal issues was always required by the organization. However due to non- integrated IT systems, understandability of the reports was always a question. This became a major problem for complying with the legal related matters before the deadline which was very important to have a good rating at the credit rating agencies. Environmental Factors: Volkswagen is trying to answer environmental issues through technologies like blue motion and engines which can facilitate internal combustion. These design processes enable to emit lower than 100g of Co2 per KM and also increase fuel efficiency. These were the external factors to integrate the IT systems by customizing certain software products to the company requirements. To answer these technical issues, some internal issues relating to change management have also cropped up. Internal Issues Acceptance of change by the managerial personnel: The existing staff was adapted to the already operating IT systems. Implementing new IT systems and configuring would naturally require more amounts of understanding and learning by the personnel. Resistance to shift to new systems may be possible by those who have already developed core competencies in the existing systems. The higher levels of management should first be proactive in implementing these changes. Unless they become technically savvy, the lower levels would never be interested to take up that pressure. New recruitments of people who are technically efficient may also be taken up. Existence of deficiencies in the systems: These had to be curbed at the earliest possible time because it was inter-related with many issues relating to legal reporting, control over the systems and also credit rating by the agencies. Change implies chain effect: This can be very much understood by the very fact that in the year 2006, there was a high labor turnover ratio of 5.8% which got subdued to .7% by 2007. The reason is the chain effect of implementation of new IT systems. Those who could not cope up with the pace of change would have been probably replaced by new personnel. The firm has adopted a planned change in technology which can be depicted as follows: Structure Technology Task People Series of Change In short, due to the need for technical improvement, people had to undergo a series of changes in the organization. These series can be put together under three stages namely: Stage of unfreezing: Wherein the already set systems are discarded and the staff gets ready to learn new methods of configuration and implementation. Stage of changing: After learning those new methods, those have to be implemented without fail. It is the general tendency of every individual to do the easier and benefit giving jobs thereby neglecting the supporting jobs. Those jobs also need to be performed on time. If not, because of lack of support, within a short span of time, the implemented change may go unsuccessful. Stage of refreezing: After all the new methodologies are learnt and imbibed in the daily routine business, they have to be followed meticulously so that the work done becomes a habit. Slowly the staff tends to gain familiarity with the work efficiencies in functioning can be improved. Any change which has reached third stage of perfection is sure to be long lasting. But during this change, there can be resistance either in: Individual level Group level and even Organizational level. The basic reasons for such resistance are the general personality traits like ego, intolerance, lacking of trust, fear to learn new things, fear of losing on economic fronts and incentives, lack of proper communication etc. At the same time, inculcating new methods and being responsible for those methods becomes more tedious. This needs a lot of effort from the staff and as such, they resist such momentum. One more great disbelief is with automation. Workers feel that with automation, their need would be less felt by the organizations. As such, they resist just showing their importance to the organization. It is the onus of the management to accept their importance and lead them towards change. They should be explained that non-adherence to the stipulated change may prove the organizational products to be obsolete and they may lose business. This method of overcoming resistance needs a planned management of problems both at the individual and group level. Overcoming Resistance At the individual level: The management should ensure that every individual: Gets involved Becomes committed to change process Takes the responsibility of leadership and Prepares for the best output of the job. For this sake, psychological counseling and training if required could be given to the staff. At the group level: Emphasis should be given to foster: Positive contacts of the groups to discuss about the ongoing change Allow the staff to participate in the discussions and let their say to be heard in the meet Get the groups involved through dynamic techniques like playing of roles, psychodrama, training on psycho drama or sensitivity etc. These trainings should build mutual trust and understanding between the people which is essential for the change to be fruitful. If necessary, outside change agents could also be appointed. These people try to interact with the existing staff and devise the necessary change strategies. However, whether to appoint them or whether the chief executive or any other departmental would take the initiative to convince the staff is again an issue which depends on the degree of control which the management exercises on the staff. (Prasad. L.M., 2009). If the management tries to convince too much, the employees may try to show their importance. On the other hand, if there is too much coercion, the employees may resort to destructive tendencies like strike etc. The outside availability of employment opportunities also are deciding factors for the staff reaction. But the best course is that the management should convince to some extent and at the same time, the staff should never get the thought of leaving the organization. Conclusion Volkswagen has undergone a change implementation process which is in the stage of motion. To sustain these change effects, it needs to refreeze again to the changed environment. To get this result, the management needs to take up some methodologies so that the change could happen in a phased manner. Table of Contents for Task - II Sl. No. Particulars Pg. No. 1 Introduction 10 2 Definition of Motivation: Herzberg Theories of Motivation 11 3 Frederick Herzberg factors in detail Hygiene Factors Motivation Factors 12 12-13 13-15 4 Influences on Individuals 15-16 5 Improving team work 16-17 6 Conclusion 17 7 References 18 Introduction: Coach Inc. Brand is one of the leading companies American brands in clothing, accessories and styling. They are one of America’s pre-eminent designer and producer for clothing and accessories for men and women. Coach Inc. produce a variety of products like handbags, wallets, outwear, eyewear gloves, scarves, fragrances, fine jewelry and a lot of other accessories. It has a heritage for their fine leather and customized fabric. They also have other licensing partners to offer watches, office furniture on their brand name. Coach was founded in 1941 and it was a family running workshop in Manhattan, New York, United States of America. A total of six artisans were handcrafting from generations to generation and the customers began looking for the quality of the Coach Inc. craftsmanship and till today the company designs quality goods which are uniquely crafted by its craftsmanship. The company was renowned in 1985 by Sara Lee Corporation and in October, 2000, Coach Inc. published their initials and became a publicly traded company. It was listed in New York Stock Exchange under the initials COH. The company has a multichannel distribution strategy and they have more than 400 boutiques in United States and Canada itself. They own the distribution in Japan also. To be more precise, its accessories and quality goods are available in more than 900 department stores in United States and in 167 international department stores, store boutiques and duty free shops in over 20 countries. They also distribute them in 149 department store shop-in-shops. Coach Inc. has approximately 12,000 workers for full time and part time. Of them, 3,700 are full time workers and 6,400 are part time workers in the retail fields of Japan and North America. Coach Inc.’s corporate headquarters is located in Manhattan, New York. Its mission is to be the leader of quality lifestyle accessories to offer modern American styling. (Anon. 2009) - 4. Definition of Motivation: The simplest definition of motivation could be the behavior of the human towards work. It depends on the motives of the worker and the factors of motivation. Hence it is a complex process which can be diagrammatically represented as follows: For example: If we take the case of Coach Inc. the company was started by just 6 artisans. The organization is now spread over in three big countries with a work force of 12,000 people. The company still leads in the leather goods trade which means that it has never compromised on its quality of goods. This means that its workers are quite committed to the organizational goal achievement. They could taste success by rightly motivating their workers as explained above. In short, motivation could be the goal to which a human would want to reach to. There are two types of motivation and they are: Intrinsic (Internal Behavior): These are the personal interests in a human like interests, desires and other examples that will fulfill his interests. Extrinsic (External Behavior): These are the other things that would motivate a human to work like increase in salary, promotion, bonuses and other rewards. Herzberg Theories of Motivation: Frederick Herzberg identified two categories of needs which are independent of each other which can affect the behavior of an individual. He observed that: 1. Some job conditions are generally required for the satisfactory performance of the job. Absence of these factors will dissatisfy the employers and may result in lower output. Improvement in them, however, will not much motivate the workers. These are called the hygiene factors which are extrinsic in nature. 2. The second set of job conditions are primarily undertaken to build motivation in the workers and bestow them satisfaction to the highest level. But, their absence would hardly prove to be dissatisfying. These are called the motivational factors which are intrinsic in nature. A detailed explanation of these factors taking the example of Coach Inc. would justify the phenomena in a better way. Hygiene Factors (Extrinsic in nature): These are affected by the prevailing conditions at work. They are the basic requirements which need to be fulfilled by every employer for the employees to work satisfactorily. They relate to: a. Company Policy and administration: Coach’s policy can be understood by its mission statement to deliver classic, modern, stylishly American products to its customers b. Salary: This is the first basic factor which a worker checks on before joining the work force. Naturally, when you demand higher performance standards, you need to commensurately compensate the worker. c. Quality of Supervision: Every work performed will be scrutinized to ensure high standards. Thus, the workers are forced to responsibly perform the work diligently. d. Interpersonal relations: Effective communication is the only method through which you can perform such high standard performance diligently. e. Working conditions: A leather stitching factory will naturally be well lit and provided with basic amenities so that the worker does not lose too much time in fulfilling his personal needs. f. Job security: This is the second basic factor that the worker would undergo supervision from his superiors. If the business of the concern looks dwindling, then, the worker may be worried about his future. Thus it may prove to be a dissatisfying agent. Thus you can understand that the above mentioned hygiene factors stipulate the expectations of the employer from an employee and the compensation for the same. They have no personal touch in their administration but, failure to adhere to those basic work conditions by the employer may dissatisfy the worker and force him to leave the organization or decrease his output quality. Motivational Factors (Intrinsic in nature): These are the factors which motivate the worker towards performance of the organizational objectives. They deal with the satisfaction of the worker that he has performed a job diligently and the rewards for performance. They relate to: a. Status: Social acceptance usually comes to a worker with the recognition he has that he is an employee of an esteemed organization and that firm is doing business very well. b. Advancement: With increase in commitment, the workers tend to produce fine crafted articles which speak of creativity thus paving way for advancement. c. Gaining recognition: Staying committed for some time in the same organization proves that the workman is result oriented and stands up to the expected standards. This is the recognition which motivates him to perform harder to continue in the organization. d. Being given responsibility: With fulfillment of certain standards, higher responsible work would be assigned to the worker. Because it involves adventure and excitement, the worker will be more interested in performing the work. Thus, higher order work always motivates skilled workers. e. Challenging work: It is the general tendency of every individual to take up challenges and perform at the time of need with perfection. This correlates with Mc. Gregors theory of Y wherein the basic assumption is that every individual’s work excitement is as natural as play unless he is trained in the opposite. So, where there is challenging work, workers tend to perform for the sake of self-satisfaction. f. Achievement: When such challenges are taken up and the person stands up to high expectations, he gains a sense of achievement which is very important for taking up the next challenge. g. Growth in job: With continuous performance of work with standards and fulfilling all the challenges, naturally, the worker would be entitled for growth in his job profile. This is the ultimate motivator for which the worker works hard other than for salary. Thus the motivational factors deal with the personal satisfying factors of the workers. They are not measurable in terms of money but make a lot of difference. If these conditions of satisfaction are not accepted by the employer, the worker gets non- motivated and thus he would not be interested to take up new challenges. A closer examination of these hygiene and motivational factors coincides with Maslow’s need hierarchy theory wherein the hygiene factors replicate the lower end physiological and security needs while the motivational factors replicate to the higher end social, esteem and self-actualization needs which can be depicted as follows: Motivation Factors Self-actualization Esteem Social Security Physiological Hygiene factors Influences on Individuals: It has been observed that the potency of these factors is not a function of factors alone in entirety. The personal characteristic of the individual also plays an important role. a. If the worker is more inclined towards satisfying only the hygiene factors, he would be more concerned about the job conditions and security levels. On the other hand, if the worker is more inclined to satisfy his motivational needs like status maintenance through cars, possession of electronic goods and other entertainment gadgets, he craves for self-actualization needs. b. Commitment from the former type of workers can be expected to the fullest extent. But, intricate jobs cannot be performed by them. The latter would be more interested in performing highly responsible and risky jobs like deep diving, high voltage electricity works etc. c. The former type is least bothered about the esteem and self-actualization needs and as such does not plan for the same. Motivating these people can be highly tiresome, expensive without any worthy productivity. But in the case of latter type, motivating can create wonders and masterpieces of creativity out of risky jobs. They take up more responsibility with confidence. d. The former type would not search for comradeship or interest in work. He only thinks of doing the day to day activities. The latter type tries to improve efficiency in his work and also involves his team mates to. Thus, he creates a good environment of work culture. e. The former type worker is more bothered about the working conditions and tries to improve them. The latter type worker will be keener in improving the perfection in his work and would be least bothered about the working conditions and supervisory control. In any organization, there should be a balance of both committed and status oriented workers. The degree of such balance depends on the intricacy of the job performed. People who look for hygiene factors generally tend to stay with the organization for long and they do not disrupt the day-to-day activities. Learning newer jobs becomes difficult for them. People who are status oriented take up jobs of higher cadre and learning is very interesting for them. In organizations like Coach Inc. necessary measures to select more of status oriented staff would be preferred. This is to ensure that the firm would be able to cater to the higher end people’s requirements in the society. (Prasad. L.M. 2009). Improving team work: Coach Inc. already being an established leather articles manufacturer and the leader in that segment little can be thought about its improving performance. a. Provide security for part time job holders and if possible retain them as full time workers. b. Inculcate the habit of craving for self-actualization needs and show them the way to fulfill them. c. Clearly state the minimum standards expected of them and remunerate those workers who perform over and above those standards. d. Reward the people who perform better and exhibit creativity. At the same time, people who laze around also should be given prior notice and removed from employment. Providing security does not mean that non-performing candidates need to be spared. e. Better performing candidates should be given higher responsibility. They should also be given chance to fulfill his self-actualization needs like providing him a car, free trip to holiday destinations etc. He should be able to propagate the rewards enjoyed by him due to his hard work. In this way, measures can be devised for improving the performance of the workers. Conclusion: It has been observed that Coach Inc. which is a world leader in leather goods believes in creating artistic master pieces through its workmen. It caters to the higher end customers and is truly American in style quotient. It has to create the sense of work intricacy in its workers through motivating them towards self-actualization needs. It also has to prove that it stays committed to its promises by rewarding the workers who have performed above the expected standards through creativity. At the same time, lazy workers should never be spared because they can spoil the work culture in the organization. In this way, it should create high working standards and maintain them to hold on to its leadership position in leather goods. Book References: Cheverton. P. (2000). Key Account Management: A complete Action kit of Tools and Techniques for Achieving Profitable Key Supplier Status. U.K. Kogan Page. 3rd Chapter. Prasad. L.M. (2006). Organizational Behavior. New Delhi. Sultan Chand & Sons. 25th Chapter. Internet References: Anonymous. (2009). About the Volkswagen Group. Das Auto. http://www.volkswagen.de/vwcms/master_public/virtualmaster/en2/unternehmen.html. 9th Dec., 2009. Anonymous. (2009). Volkswagen IT Divisions Accelerate Process Improvement with IBM Rational Synergy and Rational Change Solutions. IBM. http://www-01.ibm.com/software/success/cssdb.nsf/CS/CCLE-7TZQHN?OpenDocument&Site=default&cty=en_us 9th Dec., 2009. Internet Bibliography: Anonymous. (2009). Driving Ideas - Sustainability Report - 2009-10. Volkswagen. http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2009/09/sustainability_report0.-bin.acq/qual-BinaryStorageItem.Single.File/VW_Sustainability_Report_2009.pdf 9th Dec., 2009. Anonymous. (2009). Company Information. Coach Leatherware. http://www.coach.com/online/handbags/genWCM-10551-10051-en-/Coach_US/CompanyInformation/InvestorRelations/MissionStatement 10th Dec., 2009. Read More