Key Force for Organisational Change at Autoliv Australia - Case Study Example

Case Study Report Student’s Name: Course Code: Date of Submission: Key force for Organisational Change at Autoliv Australia Forces for organisational change can be conceptualised at three tiers. The first tier is the macro-economic factors that impact on the operations of the firm and thus, need to re-align and leverage on the opportunities while limiting extreme negative factors. This constitutes one of the external factors that a business has no control over. Cadle, Paul & Turner (2010, p.3) observes that these falls under the banner known as Political, Economic, Social, Technological, Legal and Environmental forces (PESTLE). Kristandl and Bontis (2007, p.943) indicates that ability to comprehend such factors by management or strategist empowers them to contextualise implications and consequences for the organisation and thus, ability to develop propositions of how to respond by pinpoint attention areas. The second level is the industry dynamics which equally constitute external factors, but which a business organisation can strategically influence. The dynamics are best contextualised under Porter’s Model of the five competitive forces. These include threat of new entrants; rivalry among existing competitors; threat of substitute products/ services; bargaining power of suppliers; bargaining power of buyers (Goymer, 2004, p.209). The final one is the internal dynamics such as need to leverage on strength & opportunities while limiting threat & weaknesses so as to address any performance lapses that might not address customer needs in terms of value creation can necessitate organisational change (Kotter, 1995, p.60-61). However, the concerns for change internally are the organisational problems. This should be based on the need to ensure purposes, structure, rewards, helpful mechanisms, relationships, and leadership (Weisbord 1976). As such, this might include, but not limited to organisational behaviour, organisational processes, firm’s operations, human resource strategies and quality management. For the case of Autoliv, the first pressure which was an internal one was the need to re-align their human resource needs and practices with the business processes & operations so as to ensure that human resource acts as strategic partner and agent for change. This saw the organisation move from a mere traditional engineering & manufacturing business to state-of-art business that takes cognisance of human capital diversity and values in the organisation. This has seen the firm have a positive reputation amongst prospective and existing employees as it is ranked 817 out of 1000 BRW index. For instance, the firm has been able to address issues of diversity where they currently have employee from 57 different nationalities who speak 50 different languages with 75% being women. This has allowed the firm to exhibit strong annual growth at an average of 20%. The second perspective is premised on the aspirations to aligning operations according to the organisational culture of the parent company that is anchored on strong corporate values and ethics. In this regard, the hallmark of the all engagement is embedded on the shared value approach and sound value based leadership approach. For instance, under sound value based leadership, they seek to ensure growth and development of prospective employees; acquire and leverage on information technology; ensure delivery of high value customer service and continuous improvement so as to ensure high quality products. Under shared value paradigm, the principal premise is to ensure participation, consultation & communication. For instance, the three aspirations are exhibited during decision making processes that are normally consultative; empowerment of employees to engage in hands-on approach and face-to-face employee briefings. In terms of macro-environment and competition dynamics, the firm was forced to engage in downsizing approach where 350 jobs were taken abroad especially Korea and China owing to factors of labour cost in 2005. In 2011, the firm continued with the trend as it wound up her operations in Australia as result of losing contractual agreements to offshore competitors and termination of certain car model in South Korea that constituted one of the bulk purchasers. Analysing the change process implemented at Autoliv Australia In a broader perspective, organisational change can be attained through a three step approach. In this regard, the first step is the stage of unfreezing. Under this stage a leader/ management sees the need for change and creates the urgency it deserves as exhibited by various organisational problems such as reduced sales, high employee turnover and so on. The whole process is premised on shake ups so as to gain commitment and eliminate those that are unwilling from their comfort zone. The subsequent would be the stage of change where new ways of operations are initiated. To attain such, stakeholder consultation and communication is paramount. Finally, there is the stage of refreeze where gains accumulated out of the change process are consolidated and embedded as part of organisational culture, management and operations. The in-depth explanation of change management framework is provided by Kotter’s Eight-Step Change Management Model. Kotter, (1995) provides an eight-step management model that includes establishing the need for urgency; ensuring there is a powerful change group to guide the change; developing a vision; communicating the vision; empowering the staff; ensuring there are short-term wins; consolidating of gains and embedding the change in the organisational culture. Basing on Kotter’s Eight-Step Change Management Model, this subsection assesses how change process has been implemented at Autoliv Australia and how the model has been employed to create readiness for change at the company. The first step in managing change is to establish the need for urgency. For Kotter, (1995, p.1) the two deliverables under the first step is to evaluate market & competitive issues for possible crises & untapped opportunities. Secondly, it is prudent to influence at minimum 75% of the mangers that the existing status is unhealthier than the unknown. The same is evident in Autoliv Australia. Faced with numerous operating issues therefore placing the company of a red line in 1980s and early 1990s, the new management under Chief Executive Officer Robert Franklin in 1997 created the urgency for change by unfreezing the status quo by proposing raft of measures and needed to be changed. Most of the change agenda were on the strategic human resource management platform that sought to have positive impact on the firm. The second step is to avail a powerful guiding coalition (Kotter, 1995, p.1). Beaudan (2006, p.2) established that “three out of five change efforts are only a partial success, and two out of five end up in failure” leading to what is known as stall warming as result of fatigue. This is where the powerful team comes into play as they are critical in ensuring followership and overcoming of resistance (Thach, Thompson and Morris, 2006, p.306). Indeed, the CEO went beyond the clique of small powerful team and ensured that everyone was involved in the change process under the sound value based leadership practices that appreciates teamwork and teambuilding. In this platform, the business strategy was premised on skilled and educated people to deliver quality automotive safety systems. In creating this powerful team, the CEO ensured management of diversity and enhancement of quality of life of employees anchored on participation, communication and consultation. For instance, he put in place a consultative committee that comprised of three management representatives and fourteen employees drawn from National Union of Worker & Australian Manufacturing Workers Union. The third and the fourth step is to create and communicate a vision. Within this paradigm, the attainable include creating new vision, formulation of strategies for attaining the new vision, using any platform to communicate the new vision and inculcating the new expectations through the selected powerful team (Kotter, 1995, p.1). For Franklin, the vision was to have a strategic human resource that could be leveraged on to produce vehicle safety products that address the needs of their bulk buyers and the ultimate consumer based on open leadership. In this regard, he ensured employees managerial and leadership skills were horned further. Closely related to the two is empowering others to act on the vision by altering or curtailing limiting structures, and inculcation of non-traditional behaviours, actions & activities. Within this phase the CEO introduced new structures such as integrated performance management, training & development as premised on continuous improvement so as to guarantee human resource management objectives and outcomes. Secondly, the firm introduced ‘two test approach’ so as to ensure work practices & decisions are on track. These two include evaluation whether the decision is in tandem with business objectives and equally if it is sync with organisation’s values and behaviours. Other structures implemented include self-assessment approach, benchmarking and relating work design to strategic focus. In regard to the later, production cells have been created to address the needs of her bulk consumers such as Ford & Toyota. This empowers team leaders of each production cells to sustain close rapport with customers by being able to show them performance measures. The last, but not least structure implemented is the training needs analyses and competency profiling that greatly informs recruitment, development, performance management and reviews. The sixth and seventh phases call for planning for short term wins and consolidation of these wins/ improvements so as to sustain more change. As such Kotter (1995, p.1) opines that it is integral to outline performance improvements, reward employees contributing to the same cause, change the structures limiting the vision, promote employees who can implement the vision and rejuvenation of the process with new projects & change agents. In these two steps, the firm has put in place total reward mechanisms which are both monetary and non-monetary to attract and retain her employees. For instance, it has enterprise agreement that falls under Metal, Engineering and Associated Industries Award, 1998. These has seen implementation of family friendly policies such flexible work policies such as early finish on Friday and emergency six weaks leave without pay and so on. Equality and gender issues have also been enhanced and now since 2000 the number of women in management has increased tremendously. As such, such HR strategies have allowed the firm to reduce employee turnover, enhanced satisfaction & limited industrial conflicts and attract highly talented professionals. These have seen the firm win a number of awards nationally and internationally. The final step is to consolidate the gains by institutionalising the new approaches. In this regards, Kotter (1995, p.2) calls for creation of connection between the new perspectives, strategies and behaviours to business success. Secondly, he opines that there is need to create leadership and succession plan that are congruent with the new attainments. All these have been implemented by Autoliv Australia. However, the above changes experienced in Kotter’s eigth step model were also used to prepare or create readiness for another change. Owing to global economic dynamic s and search for low cost production and operation areas, the company engaged in a downsizing programme that saw most jobs relocated to Korea and other competitive cost countries such as China in 2005. As such 350 jobs were taken off shore. Nevertheless, the ultimate change arrived in 2011 when the firm decided to wound its manufacturing operations in Australia. This was result of losing out contract to offshore competitor and death of a given car model in South Korea. References Beaudan, E 2006, Making change last: how to get beyond change fatigue, Ivey Business Journal,22(7), 23-89. Cadle, J., Paul, D & Turner, P 2010, Business Analysis Techniques: 72 Essential Tools for Success. BCS, The Chartered Institute. Available at: http://bcs.org/upload/pdf/business- analysis-techniques.pdf. Goymer, J 2004, BTEC National E-Business. Oxford: Heinemann . Kotter, J 1995, Leading change: Why transformation efforts fail. Harvard Business Review, 73(2), 59-67. Kristandl, G & Bontis, N 2007, Constructing a definition for intangibles using the resource based view of the firm. Management Decision, 45(9), 1510-1524. Thach, E. C., Thompson, K. J. and Morris 2006, A fresh look at followership: a model for matching followership and leadership styles. Institute of Behavioural and Applied Management, pp. 304-319. Weisbord, M 1976, Organizational Diagnosis: Six Places to Look for Trouble with or Without a Theory. Group and Organization Studies, vol.1, pp.430-47. Read More