Ethics and Social Responsibility in Organizational Change Process - Essay Example

Ethics and Social Responsibility in Organizational Change Process Ethics and Social Responsibility in Organizational Change Process Organizational change refers to the process of putting individual employees, teams, the whole organization through a transition aimed at making sure that they are aligned to the current state of the market. It can also be referred to as the act of bringing change to the business organization as a result of the various changes that might take place in the market. In most cases they usually do this in reaction to external forces that are beyond their control. Organizational change can be necessitated by factors such as the merging of two business organizations, acquisition of s business organization, and change in the nature and demands of the market. This paper aims at giving a report on the organizational changes at Chrysler Motors with regard to ethical and social responsibility issues in the automotive industry. Issue The issues to be discussed in this report are the steps that Chrysler Motors have taken towards making sure that they adopt the changes that have been have been adamant in the automotive industry in the past decade. Change in the automotive industry can be said to be highly inevitable. In the process of countering these changes, a business organization should make sure that whatever organizational changes they settle for will have to uphold the ethical standards of the automotive industry and their social responsibilities. There are a number of things that can be said to be the primary drivers of change in the automotive industry. These change drivers include factors such as technology, globalization, and the accumulation of power by certain investors. In tackling such problem, the business organization in question is supposed to make informed decisions. These decisions always involve making some changes in the way they operate. These decisions are usually very critical to the success of the business organization. This implies that failure to come up with appropriate organizational change strategies they might end up paying the consequences of not doing so. Background Chrysler Motors is an automotive manufacturing company that is based in the United States of America. The company is fully under the ownership of Fiat S.p.A. which is a multinational manufacturer of automotive. This company is rated as one of the three biggest automotive companies in the United States of America. They sell their products all over the world under their brand name. They also sell their products under brand names such as Jeep, Ram Mopar, and Dodge. In the year 1998, the company was merged with a German automotive company by the name Daimler- Benz AG. As a result of the merging, the company was renamed as DaimlerChrysler. Later in the year 2007, the company was sold to a company by the name of Cerberus Capital Management. The company was then given the name Chrysler LLC under the new management. Being among the strongest in the automotive industry, they were among the most hit by the automotive industry crisis that took place in between the year 2008 and 2010. Given the many changes that have been seen in the history of, this business organization such as merging with other companies, being sold to new owners, and the automotive industry crisis, it is clearly evident that the business had to go through many organizational changes over these years. The business organizations had to go through the various organization changes as a result of these changes in their business environment. These are changes that can lead to underperformance of the company if not promptly attended to. The changes mention above can result to changes in factors such as the speed which the industry changes, the nature of competition in the market, management requirements, competitive pressure, human resource requirements, and financial requirements. These factors are so important to a business organization such that a change in them will definitely dictate a number of changes in a business organization and the manner in which they operate. However, the need to stick to the ethical standards of the automotive industries and the social responsibilities of the company makes the process of undertaking organizational changes complex. Alternatives and Potential Strategies and Programs There are a number of alternatives and Potential Strategies and Programs that Chrysler Motors could undertake in order to make sure that whatever their organizational strategy uphold the expected ethical standards while fulfilling their social responsibilities. Looking at the history of organizational changes at Chrysler Motors there are a number of events that would have instantly resulted in a need for organizational change at the company. One of such events was the time at which the business organization was sold to Fiat. After this change there would definitely be a change in the company’s management. This is exactly what took place in the case of organizational changes at Chrysler Motors. Apart from the company’s C.E.O, the company had to bring in a board of directors that consisted of nine members. In addition to the board of directors, there were additional directors that were to be appointed by fiat and the government of the United States of America. Fiat was to appoint three directors, while the government of the United States of America was given the mandate of appointing four directors. These changes brought a very big difference in the way the business organization was run (Pathak, 2010). The essence of bringing in the board of directors was to make sure that the interest of all the stakeholders was considered in the business’ decision making process. Another thing that might sometimes change as a result of organizational change is the organization’s culture. Organizational culture refers to the way an organization behaves with regard to the process of undertaking their activities. When business organizations face problems such as a decline in sales, the changes at Chrysler Motors under the management of Sergio Marchionne, things were attended to different. According to Sergio Marchionne, the manner in which the company had always attended to such crisis was one of the primary causes of the company’s bankruptcy. Instead of going the obvious route, he opted to take the most unlikely route. He decided to change the organization’s culture. He managed to do this by first eliminating some of the top executive officers. Close observers of his strategy claimed he used the element of fear to completely change the cultures. Critics of this kind of strategy claim that: despite the fact that this strategy might be successful, it might turn against the organization and its leadership immediately they are out of the situation currently facing them (Øystein, 2009). The merging between fiat and Chrysler Motors was not only a merger between investor. The merging brought together workers unions from both companies. In reaction to this merger, the company decided to keep both workers unions. The workers union under the German workers union had been given a job guarantee after the merging took place. Given that there was no official proof to this guarantee under the merged organization, there was a little bit unrest among the worker after the two companies were merged. The German workers had been promised a position of ten representatives of the board of directors after the two companies were merged. However, the Americans were not willing to let this happen on the ground that they were not aware of the arrangements. Eventually, both sides came into an agreement that saw both sides having equal representation in the board of directors. When two companies are merged there is always a difference in the waging system of the two companies. This is always a problem, especially when it is considered that the merging of two companies will definitely result to a single management. There is no way that a company will have employees carrying out the same duties paid differently. In the case of the merging of German workers union and fiat, the German employees seemed to have been earning less compared to their American counterpart. It is the ethical responsibility of a business organization to make sure that they develop a culture of equal employee treatment (Myers, Hulks & Wiggins, 2012). This is always a way of increasing their collective productivity. The dilemma that is always involved in wage disparities is as a result of the process of deciding on whether to increase the wages of the less paid or decreasing the wages of the group of employees who earn more. In the case of Chrysler Motors, the management opted to give the German group of employees’ bonuses while the wages of the American employees remained constant. At that particular moment someone would have easily said that the strategy was effective. However, after some time the same issue brought rise to some wrangles between the American and German employees. Another thing that can directly lead to a need to organizational change is global warming. This is something that Chrysler Motors as a business organization can have no control on. The global campaign against global warming is so intense that no business organization would afford to ignore it (Glick & Huber, 1995). In the case of Chrysler Motors, their production activities and the activities that their products are involved in having a direct impact on global warming. As a result of this nature of the automotive industry, companies in the automotive industry all over the world have been under the pressure to reduce the level to which their activities contribute to global warming. In the case of Chrysler Motors, they reacted to this by changing some of the aspects of their production process that they knew had some effect on the global warming. They managed this by innovatively introducing new technologies to their process of production. In addition to these changes, they also committed themselves to producing more environmentally friendly automobiles. In the past decade, there has been a significant decrease in the amount of carbon emission that results from motors that are produced by Chrysler Motors. However, this means that they are supposed to incur a greater production cost in the process. The increase in the cost of production would eventually reflect in their market prices. Recommendations to Management The actions that were taken by Chrysler Motors towards undertaking organizational change can be said to have been effective to some extent. For, instance, when the C.E.O opted for an organizational culture that aimed at instilling fear to maximize productivity, there were other organizational cultural changes that would have been more fruitful than the one applied in this case. Instead the management would have opted for an organizational culture that would treat employees and the management as part of a team. The culture that Chrysler Motors management opted for being that viewed the company’s employees as mere subjects who were expected to take and fulfil orders. This can only work for a short while, but will definitely not be effective for a long period. However, when the entire organization works as a team, the productivity levels of the organization are always higher (Sanchez & Mahoney, 2002). This will also increase the levels of innovation in the company. Through such a culture, Chrysler Motors can be able to fulfil their ethical obligations to their employees. Another issue that would have needed a different way of handling is the gap in wages that was experienced after the merger. The introduction of the bonuses was a good idea though it was discovered to be ineffective at Chrysler Motors after some time. In this case a different approach would have prevented the dissatisfaction that took place at the company after some time. To avoid resentments from either of the two sides, the company would consider holding forums from the different workers unions. Under these forums, the management and the leaders of the workers unions would come up with a harmonized rate of payment. The ultimate result of organizational change is supposed to be increased productivity of the organization. However, in the process of coming up with organizational change strategies, business organizations should always make sure that they take their ethical and social responsibilities into consideration. This report shows the level to which Chrysler Motors complied with the ethical and social expectations of the industry. It also gives further actions that could have been taken to make sure that they are more respondent their ethical and social responsibilities. References Glick, W. H., & Huber, G. P. (1995). Organizational change and redesign: Ideas and insights for improving performance. New York, NY [u.a.: Oxford Univ. Press. Myers, P., Hulks, S., & Wiggins, L. (2012). Organizational change: Perspectives on theory and practice. Oxford: Oxford University Press. Øystein, S. P. (2009). Prerequisites for healthy organizational change. Hilversum, Netherlands: Bentham Science Publishers. Pathak, H. (2010). Organisational change. S. I.: Pearson. Sanchez, R., & Mahoney, J. T. (2002). Modularity, flexibility and knowledge management in product and organization design. Managing in the modular age: architectures, networks, and organizations, 362. Read More