Management of Change. Why General Electric was required to bring about a complete transformation in the organization - Essay Example

? Management of Change Table of Contents Introduction 3 Organizational Change 3 Evaluation of Process of Cultural Change in General Electric 5 Outcomes of the Cultural Change Program in GE 8 Conclusion 10 Reference 12 Bibliography 13 Introduction Recently, organizations and teams are faced with rapid changes like never before. With the advent of globalization, organizations are confronted with greater opportunities and markets for growth and revenue. However, the increase in diversification of these markets is also coupled with greater variety of expectations and needs which must be thoroughly understood such that they become strong collaborators and customers. The importance of stakeholders in organizations has become all the more important over the years. Thus organizations are constantly confronted with the crisis of managing change so as to keep themselves at par with stakeholders’ needs and requirements. The project seeks to bring forth the process of cultural change that was brought about in General Electric. Elaborating the factors which initiated the change process in the organization, the project goes on to weigh the actual outcomes against the desired outcomes in the organization. Finally the project provides an evaluation of the extent to which GE has been successful in implementing the change process in the organization. Organizational Change Theorists have brought forth some generic definitions of organizational change. Burnes (1996) noted that organizational change is regarded as the alterations taking place in organizations at the groups, individuals and the entire organizational level. According to Van de Ven and Poole, (1995) change is defined as the observation of differences over a period of time on a variety of dimensions. Researchers and practitioners exploring change through social-cognition perspective or cultural perspective in organizations consider focussing on such aspects as values and mental maps of participants in the change, rather than on aspects like organizational structures, size etc. Since the language of change differs across perceptions of researchers it is difficult to find a unanimous and common perception of language fir change. However, there are certain common concepts in change theories produced by authors, such as sources of change, forces of change, first order and second order change. These common concepts are available within the major sources literature of change like Burnes, 1996; Levy and Merry, 1986; Goodman, 1982; and Spreitzer and Rajagopalan, 1996. More and more studies related to change increased the critical points of these concepts in their analysis. Morgan (1986) makes the main assumption underlying the evolutionary theories that change is a response which is generated due to situational variables, external conditions and environment surrounding organizations. He regards social systems as being complex, diversified and interdependent, which evolve over time naturally responding to external demands (Kezar, 2001, p.4). The planned change models or Teleological theories assume the fact that organizations remain purposeful and adaptive to change. It is because organizational leaders, change agents and others see the needed change in organizations that change happens or occurs. Even though the change process is regarded as being linear and rational, Carnall (1995); Carr, Hard and Trahant (1996) regard the individual managers to be more instrumental in the process. Morgan, conceptualises the process of change as a being a natural part of organizational development. Researchers have a brought a direct association between organizational change and consequent performance and productivity of firms. Change process is said to act as a catalyst or facilitator of organizational growth and performance. Some of the leading examples of organizational changes which have subsequently reflected through enhanced performance, productivity and competitive position in the market are British Airways, General Electric and Rover Group (APOC, 1997, p.5). Effective change management initiated and led through proper leadership program are found to be instrumental in these organizations. Some of the critical success factors which were found in these organizations for leading the change process are formal training and education; changes in the corporate infrastructure, formal and informal modes of communication and finally; financial incentives. These aspects allow making the change process constant and high yielding in the long run and bringing about complete transformation of the organizational culture (Senior, 2009, p.41). Evaluation of Process of Cultural Change in General Electric It is difficult to predict the strategic direction of companies from their executive training facilities; however, the General Electric has always tended to move in the direction set by Crotonville since 1950s. Jack Welch incorporated a change acceleration process to drive forth success of the organization too. He has been particularly responsible for bringing about a complete transformation and changes in the organization, GE and takes it towards continuous and sustainable success and growth (Kleiner, n.d., p.1). One of the prominent change management strategies initiated was the employee empowerment program and team based problem solving program. This was modelled according to the Japanese Quality Circles model. The program was found to be highly successful and massively adopted throughout the organization. The vision realised by the CEO was that in the era of constant change, those who adopted themselves to the change would be the only survivors in the competitive market. Organizations failing to adapt themselves to the changing environment and culture would become obsolete and outdated such that surviving amidst global competition would become impossible. The change process was initiated under the guidance of a team of strategic consultants. The main insights of these consultants were the development of a high quality technical strategy solution which would be insufficient to guarantee success for the company. However, in spite of the great deal of efforts which went into the technical strategies the organization required a complete transformation of its culture in order to support the change. The first step towards implementing the process was the creation of a shared vision within the organization. The idea was to instigate a need for change which would outweigh its resistance. The change efforts must be backed by compelling reasons such that it would resonate not only to the leaders but also to the stakeholders. Jack Welch implemented goals setting for employees for motivating them to perform at higher levels. This was complemented by setting up of specific performance objectives for the individual companies and divisions. This was done by creating a sense of competition within the organization (Dulberg, et al., 1999, p.4). For this the concept of goals and stretch goals was incorporated throughout the organization. The purpose of implementing stretch goals was to heighten the overall targets for employees and improve their success rates. The stretch-goal strategy was highly succeeded and in the year 1977, GE was able to generate 26% of its overseas revenues. The change management strategy at GE is compared to the “boiling frog syndrome” in which the frog placed in hot water does not realise the heat slowly rising and thus remains complacent and finally boils to death. The idea was to exploit the rising and cut throat competition surrounding the company and drive employee commitment and efforts towards that competition. Initially the motive was fulfilled and GE attained tremendous success and managers and employees were seen to outperform their targets. However this was faced with high resistance from employees after some time and created dissatisfaction and frustration at the workplace (Dulberg, et al., 1999, p.6). The process of handling employee resistance was done by incorporating employee empowerment. The program was implemented with the purpose of providing people with greater accountability for their individual work and responsibilities. This was done with the purpose of eliminating jobs that were unnecessary and unproductive (Dulberg, 1999, p.7). It was successful in making employees more accountable and responsible for their works. Since they worked as per their own goals they required less supervision. Consequently the unnecessary layers of management could be removed and subsequently costs could be curtailed to a considerable extent (Dulberg, et al., 1999, p.8). The stretch-goals strategy was found to be effective in improving performance and productivity of the organization on the whole. However, the increased costs associated with it cannot be ignored. There was an aspect of failure and stress in the process which accompanies results of the strategy. There was a layer of management which was removed completely for giving direct power to employees to perform their functions without supervision. The company did become successful to its shareholders, however, have destroyed the thousands of families through the mass layout process of change. Unions resisted to this layout strategy considerably but the company did little to compensate them, restore their satisfaction and contentment. In fact there were a large number of workers who were not willing to be empowered; rather they wanted the management to direct them through the work processes. Consequently their performance remained low. Many workers had the view that if they wanted greater responsibility they would rather become part of the management. The management rather chose to assume that all people were content with the change process and very little was done to handle resistance from them. Nothing much was done to even compensate for their loss either which was a shock for the company’s goodwill and reputation (Dulberg, et al., 1999, p.15). GE’s change management efforts were further complemented with proper and training and development programs. There were specific training provided for the organizational leaders for driving the change process. All senior members and management team of the company were brought together in the process. The program was meant to bring about focus on the expanding business of the company and also creating new ones too. Team training was substantially accelerated and barriers to the change process were handled with ease in the process. Training was most crucially required for managing change resistance of employees. Participants were trained to manage both soft barriers as well as hard barriers to change, which included capabilities, structures and resources on the one hand, and individual and collective behaviour of team members on the other. Leadership development programs were essentially balancing both the short term and long term objectives of the firm. Through such programs, the company was able to generate a complete cultural transformation which became part of the daily communication inside and across the company’s businesses. It was not a one-time transformation which was implemented. The basis of long term and sustainable change in the company was attained through continuous monitoring and supervision and reflecting on the loopholes and removing them from occurring (Prokesch, 2009). Outcomes of the Cultural Change Program in GE The cultural change was brought about in GE mainly through the employee empowerment program. In this, some of the areas of business attained potential improvements which were possible because it took full advantage of the ideas and thoughts of employees. Some of the outcomes of the process are provided. By assigning ultimate responsibility of tasks to people, they were made more accountable for their productivity and performance. The other prominent outcome of the strategy was the emergence of a highly motivated workforce which performed their activities optimally. The elimination of the old managerial habit of obliging people with their ideas and thoughts which used to strip them off their vitality was found to be highly beneficial. Taking ownership of their work made them perform with greater enthusiasm and energy. The power of command was eliminated in this way as it did not help in yielding any loyalty by constant supervision. Large extent of productivity improvements were attained through the change process, particularly by employee empowerment program. For a long time, management of the company was of the assumption that they knew the best ways of doing things. Consequently they used to force their workers about how things were to be done. Thus workers worked according to the will of their bosses and supervisors and performed as they were directed. However, the realization that the workers had their own ideas and strategies of performing their jobs which were highly effective and which could bring about large productivity improvements was particularly beneficial for the organization. Another prominent outcome of the change process was that the organization was able to become more innovative in this way. They were able to implement new ideas and strategies faster and had become more responsive to the market. In the old company GE, ideas had to be approved and agreed from the many layers of management and also had to be entombed in facts as well as research whether they had any chance of being implemented. In the new and culturally changed GE, the individual coming with a bright idea faced with very little hurdle and hassles of getting it approved by the bureaucracy (Chevrier, 2003, p.142). The company was able to attain remove communication barriers and hurdles through the change process. Internal communication improved considerably in the organization. Employees were free to express their views, ideas and thoughts to the management which was particularly beneficial for the process. Every employee was encouraged to provide their input, starting from the factory floor to the company’s executive suite. Setting clear lines of communication in the organization was particularly effective in setting transparent and defined goals for employees which were also more achievable in the process. This was effective in creating a workforce which had the capacity to think outside the box and also challenge the status quo. Proper communication channels between employees and management was particularly effective in allowing employees to air their concerns to the management and also work towards a consensus for action. The overall motivation level of the organization was greatly improved and heightened. Importantly, employees felt that they were part of the organization, their works and activities were recognised and that they were directly responsible for the success of the company (Dulberg, et al., 1999, p.11). Conclusion The study reveals that due to external circumstances and business conditions, GE was required to bring about a complete transformation in the organization. In order to bring it up to a competitive market position and maintain sustainability in the market too, the change initiatives were taken. The strategies were essentially beneficial for stakeholders of the company and catered to their needs and requirements. However, the employee layoff program in the strategy was not appreciated by all. There were resistance from employees and management did little to handle such resistances. The aspect which was highly successful in the process was employee empowerment. Under this employees were allocated the responsibility and accountability of their own tasks. They were allowed to bring forth and apply their views and ideas in the work functions. This was a dramatic change from the age old procedures in which management directed as how work processes would proceed and employees were required to follow the same without question. The success of the program was further instigated through proper leadership development program which was based on the idea of developing the required leadership for driving the change processes. Training programs were incorporated in the proper direction and path and mainly towards the aspect of handling employee resistance and conflicts. It is seen that though the change process was successful in bringing about long growth and sustainability in the organization, it is criticised of the costs it incurred in removing the management and supervisory layer across all its branches. This had fuelled a sense of rejection among employees which spread dissatisfaction and contentment among existing employees of the organization. It also went against the goodwill and reputation of the firm. Reference APOC. (1997). Organizational Change: Managing the Human Side. [Pdf]. Available at: http://www.exinfm.com/pdffiles/change_apqc.pdf. [Accessed on May 01, 2012]. Chevrier, S. (2003). Cross-cultural management in multinational project groups. [Pdf]. Available at: http://master-e2i.u-bordeaux4.fr/Enseignants/supports%20de%20cours/Bonfils/gt_chevrier_2003-1.pdf. [Accessed on May 02, 2012]. Dulberg, M., Paschen, J., Sprindis, S. & Stawski, S. (1999). Jack Welch And the Motivation of... [Pdf]. Available at: http://www.sstawski.com/download/GE.pdf. [Accessed on May 02, 2012]. Kezar, A. J. (2001). Understanding and Facilitating Organizational Change in the 21st Century: Recent Research and Conceptualizations. ASHE-ERIC Higher Education Report Volume 28, Number 4. [Pdf]. Available at: http://www.jcu.edu/academic/planassess/planning/files/Planning%20articles/organizational%20change.pdf. [Accessed on May 01, 2012]. Kleiner, A. (No Date). GE’s Next Workout. [Pdf]. Available at: http://abidian.com/articles/GEWorkout03403.pdf. [Accessed on May 02, 2012]. Prokesch, S. (2009). How GE Teaches Teams to Lead Change. [Online]. Available at: http://hbr.org/2009/01/how-ge-teaches-teams-to-lead-change/ar/1. [Accessed on May 02, 2012]. Senior, B. (2009). Organizational Change, 3/E. Pearson Education India. Bibliography Colquitt, J. A. (2011). Organizational Behaviour. Tata McGraw-Hill Education. Krause, T. R. (2005). Leading with safety. John Wiley and Sons. Simms, H. (1985). Human Resource Planning. Select Knowledge Limited. Read More