Impact of Organizational Change Programs - Example

IMPACT OF ORGANIZATIONAL CHANGE PROGRAMS IMPACT OF ORGANIZATIONAL CHANGE PROGRAMS Insert name: Insert course code: Instructor’s name: 21 October, 2010. Introduction The human resource management has always been part of human group effort, but became more significant when the rise of factories and mass production techniques in the nineteenth century led to jobs that were routine and monotonous. Bigger work organizations led managers and floor supervisor to be more attuned to basic personnel functions, like staffing and performance evaluation. This also meant that workers could be terminated and replaced with other individuals who could be trained quickly. This resulted to the exploitation of workers through long hours and low pay. Later labour laws were passed to deal with such exploitation and this increased the personnel function of work organizations. Changes in the labor force, affirmative action requirements, and multiple legal liabilities for working conditions, training and benefit costs, as well as stiff competition have called for a significant increase in the importance assigned to human resources in modern work organizations (Backer and O'Hara, 1991p. 154). The key mission of the human resource section is to make sure that there is competent and successful supervision of workers in the work scheme. This involves the recruitment and section of employees on one side while on the other side it is concerned with termination of employees, downsizing staff during lean business years, as well as facilitating retirement of older employees. The responsibilities of human resource are to manage workers while they are part of the system performance appraisal, promotions and pay raises. The Hr is as well responsible for evaluating jobs with respect to their worth to the organization, so that equitable compensation policies and procedures can be developed. The other key responsibility involves the management of labor relations, including key parts of collective bargaining in unionized work settings (Backer and O'Hara, 1991 p. 155). Changes in the work environment in the recent past have required the HR managers to gain new competencies to complement their specialized knowledge. Moreover, HR professionals working in this area require a larger understanding of the environment in which their organization operates, and its financial and management structures. In addition, HR professionals gradually are called to have competency in the organizational change process, since a fundamental ingredient in effective change is the involvement and participation of the workforce (Backer and O'Hara, 1991p. 156). In my paper, I am going to analyze the change incident of Nova Scotia Power that happened after the election of Louis Comeau as its new President. THE CHANGE INCIDENT In 1983 Nova Scotia Power elected Louis Comeau as its new President. This marked the beginning of a series of major changes that was to reshape the company over the next two decades. When Comeau joined the company, it had been in business under one name for around one hundred years and had grown through acquirement and incorporation of other utilities. By the early 1920s, the company had become a government agency and was called Nova Scotia Power Commission. The main work of the company was to supply electricity to all areas of the region that did not have access to power through private companies. A great transformation occurred in 1972 when the Commission brought in small companies, including Eastern Light and Power in Cape Breton as well as Nova Scotia Light and Power in Halifax and Yarmouth. The new company was now called Nova Scotia Power Corporation and amalgamated the senior management form the different smaller utilities with the management of the Commission. The status quo remained until 1992 when the company was privatized and was called Nova Scotia Power. After his election, Comeau went round the company to meet with staff. In his discussions with various employees at different locations, he realized that over time, the mergers of firms, and amalgamations of various departments along with the blending of different management styles had produced a fragmented organization that was working as several different companies, frequently with conflicting organizational goals. Comeau started organizing how to unify the organization through the notion of organizational culture. The problem was summed up in an international company document on ‘Culture Change at Nova Scotia Power’ (Mills, 2003 p. 18). In 1988 Nova Scotia Power started the process of culture change. This process was influenced by the political climate of the time (the firm was becoming unpopular with Nova Scotians), a transformation in company leadership (resulting from election of a change-minded President), extensive expressions of low morale within the company (as exhibited by the internal survey that was conducted by Comeau) as well as the growing popularity of culture change programs particularly throughout the association and several other companies. The government of that time required someone within Nova Scotia Power that they could trust to turn around the company’s bad public image. The worries of the government fitted well with Comeau’s political will and combined with a normal preference to reach out to employees and generate a condition of trust, drove him to search for a solution to the low morale he sensed all over the corporation. Comeau involved himself in building strong inter-personal relationships between him and his employees. Comeau then set out to tackle the issue of low morale through commissioning an external consulting firm to carry out an employee attitude survey. He found out that there were problems between the managers and the workers. Also there were poor relations between the departments of the company and also between the divisions. Instead of solving the problems of the workers, Comeau went on to initiate the new program of culture change. The corporation encountered a lot of problems as the employees were not satisfied and the notion of culture change created a lot of hitches in the company. As the company became privatized, the political influence was eliminated and the shareholders became more powerful. The stakeholder reviewed the culture change program and decided that something had to be done to reduce the costs of operation as well as unnecessary spending. As a result, there was a redundancy and de-layering of workers. This was the beginning of many problems between the management and the workers as I shall analyze here (Mills, 2003 p. 23). THE ANALYSIS OF THE ORGANIZATIONAL CHANGE The analysis in this paper is based on the scenario that is discussed above. Although most employees admit that they know life is all about change, human beings generally struggle with shifts in their comfort zones. Best practices of respected employers bring about efforts to ease the transition and understanding of organizational change to keep workers engaged and motivated (Cumming, 2004 p.110). Choosing the sense-making model My first study of culture change in Nova Scotia Power faltered in the face of different interpretations of the programs involved as well as an inability to pinpoint an adequate or appropriate measure of success. While studying culture change, I found out that some managers find the new corporate values too vague and confusing. According to some managers, the corporate values encouraged employees to search for what they would do to get out of the scheme. The director of Human Resources of Nova Scotia Power and other companies viewed the cultural change program to be centered on Corporate Values and emphasized the significance of positive behaviors and attitudes, mutual trust and respect, individual control and accountability. In my study, I also came to learn that the introduction of the new corporate values met with a variety of contradictory responses from employees. Some were company oriented while others were customer oriented and thus the changes did not have any influence on them. This made me have many questions concerning the role of sense-making in organizational change. This made me to wonder just how far the acceptance and implementation of a change program depends on how individuals make sense of it. I was more perplexed as I tried to come to terms with an apparent change in direction from a focus on the employee to a focus on customer service and efficiency, as the company moved from culture change to re-engineering. I was amazed by the senior manager’s decision to switch away from an apparently thriving culture change to a program of re-engineering which appeared to disagree with the previously established values (Mills, 2003 p. 34). The aspect of people knowing what they are doing after they have done it is refereed to as the retrospective character. The retrospective character of sense-making can be traced through things like corporate materials, with the view to enlightening how endorsed regulations influenced precise ideas at a later instance. Making use of change program as the intervention, I found out that the need for change is understood based on prior knowledge of similar change programs, resulting from current discursive practices. Once the change is construed into regulations governing performance and woven into the sense making procedure through the management of meaning, it becomes the foundation of discursive practices and keeps on shaping prospect sense-making of other changes in a similar mode (Mills, 2003 p. 201). Impact of organizational change on employees Downsizing, de-layering, and redundancy are some of the forms of organizational change that are viewed to have become progressively more widespread since the 90s. Comeau made a report in 1992 concerning the challenges that the company was facing and the possible actions that would be undertaken. The corporation had no alternative other than to downsize and de-layer its workers. This was not taken positively by the employees since the company was turning from employee-oriented focus to customer-oriented focus. Looking at the reactions of the employees, it became clear to me that resistance and reluctance to adapt to change are the most common reactions of humans in an organizational environment. I also realized that in the context of organizational change, perceptions of uncertainty are detrimental to well-being. I believe that certain types of change are more likely to be detrimental to individuals, and in turn to organizations, than other forms of change. Redundancy is likely to be the most evocative as well as fear-inducing form of organizational change. Through my study on culture change at Nova Scotia Power, I learnt that redundancy and de-layering - associated with cost reduction program and downsizing – have played a great role in the overall process of restructuring that has affected many organizations in U.S. and U.K. Many companies in U.K and U.s have used downsizing-driven redundancy and de-layering programs as a means of strategic transformation ostensibly to change organizations’ corporate cultures in addition to driving down costs (Fay and Lührmann, 2004 p. 140). In several cases downsizing seems to have been a corporate euphemism for mass redundancies and the obsessive stripping out layers of administration. Of greater concern is that several organizational change programs rely heavily of redundancy and de-layering. Organizations are constantly under pressure to perform well and especially make profits for the shareholders. The norm of delivering more for less has resulted to pressure to downsize. Thus, there has been an increasing use of change strategies, for instance downsizing and de-layering, which rely mainly on redundancies with the hope of increasing organizational performance. There has been the notion that downsizing, de-layering and redundancy increase organizational performance by improving productivity, efficiency, effectiveness as well as competitiveness. There are allegations that downsizing has improved performance through increased flexibility, smoother communication along with faster decision making. However, my studies on culture change have made me to have questions on these assumptions. The main end result of redundancy on survivors is a sharpened sense of accountability, increased work overload and task fragmentation, as well as reduced role clarity, as redundancy and de-layering seem to be far more effective in removing people from an organization than in removing the tasks that these discarded people used to do. The consequence of this can be described as work intensification (where role, task information and work volume overloading takes place) and work extensification (where the work – life balance is shifted as the barrier to the two becomes less well defined). Other negative effects of redundancy and de-layering appear to be due to its destabilizing effect: skills shortages, low morale, anger, as well as lack of innovation. Employees have now become more fearful and risk averse. Organizational restructuring which involves significant reductions in employees damages the organizations aspiring to do this by losing competencies as important chunks of organizational memory are discarded. Employees also loose morale, become overloaded and fear is instilled in them as they feel they can be terminated any time. The consequences of this is adverse behaviors on the job (in terms of effort, propensity to leave, as well as resistance to change), which in turn leads to adverse impacts for the organization in terms of productivity, turnover, along with adaptability as it was in Nova Scotia Power. Although the relation between job insecurity and employees’ attitudes and behavior may be moderated by some work and non-work related factors, job satisfaction and organizational commitment mediate job insecurity effects on withdrawal cognitions in a downsizing organization, while threats to managers’ positions and careers results in decreased trust and diminished organizational commitment. Consequences of poor HR practices The scenario in Nova Scotia Power made me realize that satisfaction with HR practices including those which influence rewards, careers, recognition, workload as well as other related variables including satisfaction with communication are likely to be lower in organizations that undergo changes involving redundancy. This is because good HR practices – even though widely renowned – are not practiced redundancy. Efficient communication carries out an essential responsibility in every change initiative. Failure to communicate openly and honestly contributes to the atmosphere of uncertainty. Research has revealed that employees who understand the reasons behind changes view themselves in a more positive light and as a justified option. Study show that there is a positive correlation between the clarity of manager’s explanations and the favorability of employee’s reactions (Fay and Lührmann, 2004 p. 146). This is particularly true in situations of high uncertainty for employees and high importance in terms of individuals’ needs as well as priorities. There are other consequences of poor HR practices denoted as organizational practices but involve threats of job loss to employees. This is a harassment culture and can be measured by the extent to which the individuals have perceptions of the organization as a source of threat and fear. Such organizations present their controls as in the interests of employees but are perceived as forms of punishment. For instance, performance management improvement plans can be presented as in the interests of the employee but are taken as forms of punishment. This is so since the results of performance management procedures can contribute straightforwardly to the decisions concerning ‘who’ the victims of restructuring and downsizing will be. On the other hand, subjectivity in such procedures and a lack of objective assessment can lead to a lack of trust and confidence in the system (Fay and Lührmann, 2004 p. 146). The other significance of effective management of redundancy and de-layering is that under the threat of redundancy, individuals become more loyal to their own personal development than to their employing organization. In other words, individuals tend to redefine and switch their loyalty away form the organization and to themselves. Thus there is need for HR to be proactive in developing and effectively managing policies and practices to reduce the negative consequences of organizational changes (Fay and Lührmann, 2004 p. 146). Impact of change on management There are several factors that drive the organizational change, and the most obvious one relates to changes in external environment which trigger reaction. For instance, in the last few years, there was a shift by vehicle producers and fuel associations towards the stipulation of additional environmentally responsive types of produce. Environmental disturbances could have been the main precipitating factor, but was not the sole cause of or explanations of change. Managers see the external events taking place that, to them, signal the need for change and also perceive the internal context of change as it relates to structure, culture, system of power and control. In Nova Scotia Power, the electricity was not as competitive, the need to become cost-effective and customer oriented were some of the driving force for change program. These are the triggers of organizational change. Managers ought to communicate to employees about these triggers in clear and identifiable terms. The pace of change has increased dramatically, thus companies and directors are now encountered with extremely vibrant and ever more multifaceted working situations. The managers are always struggling to run transformation in such a quick changing environment, without trailing behind management of the association and accessible center competencies. This becomes stressing to the management team as they always have to be o toes planning what do next (Paton, R.A., Paton, R. and McCalman, 2000 p. 6). Impact of organizational change on groups Interventions aimed at one kind of organizational issue will invariably have repercussions on the other kinds of issues. On top of encountering interconnected problems, associations function at dissimilar ranks: persons, cluster, association as well as trans-organization. Structural design affects mainly the organization level, but it can have an indirect effect on groups and individuals since it sets the broad parameters for designing workgroups and individual jobs (Cummings and Worley, 2008 p.156). In groups, what is termed as conflict between groups involves substantive issues, and the groups express competitive behavior, rather than blaming one another. I have found out that within each group, members are close and loyal to one another. Their internal differences are submerged; group climate is formal, serious, and task oriented, and not merely informal, playful, and oriented toward members’ psychological needs; the group leader is more directive and less participative; activities are structured and organized; strong norms exist that demand loyalty to the group from each member; and there is considerable energy to resist the other group (Bolman and Deal 2003 p. 420). There is a higher probability that work units in the organization are likely to embrace rather than resist the organization change effort if they are involved in helping to plan and implement change. On the contrary, there are for forms of resistance that groups can take: Turf protection and competition: During the times of organizational change, changing units endangers the central and core competence of the organization. The work groups, functions, departments, or business units always fight for survival and will muster every rationale, fact, and guilt-inducing behavior to justify their continuation in times of organizational change (Burke, 2002 p. 103). Closing ranks: work groups, units and departments always insist on remaining as a group and resist to divide them. Their arguments are that dividing them destroys their identity and function. Changing Alliances and ownership: a group may opt to become a separate entity, by formally departing from the parent organization so as to avoid dealing with the organization change. Leveraged buy out (LBO) is one type of division. The group may join another division within the organization but remain intact. The group may become a wholly owned subsidiary and have to survive on its own but remain intact and maintain its independence. The demand for new leadership: the leader of the group is sometimes replaced when he is not in a position to tackle and lead a change effort. However, there are situations where the leader is capable but the followers are not willing to change and revolt as a way of resisting change. They collude with one another to resist their change leader by suggesting that the leader is incompetent. This form of resistance is a deeper psychological process and may reside more in collective unconscious of the group than in their consciousness (Bolman and Deal 2003 p. 420). Organization change generates emotions for organizational members. People may be aware of their feelings but may not always be conscious of what might be causing them. Conducting a brief funeral for a former program or the past ways of operation and then celebrating the new way or program might be more productive than remaining at an individual level. Also people can release the tension of organizational change by having an opportunity to discuss these feelings with people who are going or have gone through the same experience (Burke, 2002 p.104). Change in organization at the larger-system level It is in rare occasions that an organization change effort begins all at once with the total system, particularly with large organizations. As it starts, it mainly involve individuals, a group, a program like management training, or an already noticed need to make a significant change in the structure of the organization (Burke, 2002 p.105). When an organization is intending to change some sections or the whole system, the aim is mainly to achieve Total Quality Management (TQM) as the organizational change program. In several methods, it insists on the type of radical organizational transformation that is linked with the proponents of business Process Re-engineering. Total Quality Management is an approach to improve the effectiveness and flexibility of business as a whole. It is basically a method of systematizing and connecting the entire group; each section, each action, every particular individual at all ranks. According to the research in my studies, I have come to realize that despite the efforts of many companies to make TQM the way of life, most of these projects fail within a period of 18 months to two years. The programmable elements of TQM as a business process reveal its organizational limitations. From the incidents that I have witnessed, I have come up with some critiques concerning change programs directed at TQM principles (Egan, 1995 p. 98). The predicament of insubstantial benefits: TQM generates an incredible quantity of doings but frequently delivers little which is tangible. This only brings very little organizational transformation. TQM creates sectional interests: this is a special predicament that occurs whenever the interests in the process fragments between the dream carriers and those who are much less enthusiastic. The customer first/ customer as judge syndrome: even though it is agreeable that the customer be the first, the general situation whereby the client is the solitary judge of TQM success can estrange and de-motivate those accountable for commencing the innovative plan. From the analysis, we can generate the following hypotheses: Hypothesis 1: When organizations undergo transformations involving redundancy or de-layering, director perceive the effects of organizational transformation or organizational outcome variables like organizational effectiveness, organizational performance as well as competences loss and on employee wellbeing variables like employee loyalty and job security more positively the non-directors. Hypothesis 2: managers perceive the effects of transformation on performance and employee wellbeing most positively when the changes do not include de-layering or redundancy and most negatively when changes involve redundancy. Hypothesis 3: managers’ current personal wellbeing depends on whether or not their company has undergone a change that involves redundancy or de-layering, as well as whether there is no change at all. RECOMMENDATIONS Strong management practices and leadership models For Comeau Louis to have been able to spearhead the organizational change, his team needed to have strong management practices and leadership qualities. For any organization to be a great place to work, the top management must set good examples to their subjects. Offering ethical, intelligent and strategic initiatives in how management handles business issues and deals with people – both inside and outside the company – sets the tone for employee expectations. Attitude: the attitude of the top management to the employees is very vital in setting good working conditions. For instance, at Luxottica Retail, home of Lens-crafters, Sunglass Hut, Watch Station and Watch World (Cincinnati, Ohio), its 25,000 employees are referred to as associates, which yield to the corporate attitude. Consequently, the HR staff believes that they work as a team to achieve the goals of the company. The associates act as the owners of the company and they act as such with the company’s resources. In fact the associates have done so well with the firm’s resources in the recently struggling United States economy that the firm was able to avoid layoffs (Cumming, 2004 p.105). Driving and managing organizational change Although most employees admit that they know life is all about change, human beings generally struggle with shifts in their comfort zones. Best practices of respected employers bring about efforts to ease the transition and understanding of organizational change to keep workers engaged and motivated (Cumming, 2004 p.110). There are various things that the top management is needed to keep employees engaged and motivated: Aligning changes with overall strategies: Firm require to use a strategic approach to handle changes in their organization. This can be done by tying the needed change directly to the business strategy. A good example of a firm that uses this idea is the Bank of Lancaster to manage changes for its 900 employees. This excellent practice of structuring HR initiatives in alignment with corporate strategy is significant for any firm to acquire change acceptance. This practice brings together managers, supervisors and workers to tackle change both individually and professionally (Cumming, 2004 p.110). This come along with offering a course on change management and leading change programs that is taught through the corporate training initiative. HR as well partners with the organization’s marketing team to make sure that internal employee communication plans are in place to articulate the company’s progress on the change initiative. Developing performance management systems: Change is the most challenging thing to people and not every one buys it into their mind. Most of employees are happy when the status quo remains for a long time. However, with the current change in technology and preferences of people, the status quo cannot remain for long. Change becomes frequent with time (Osborne and Brown, 2005 p. 95). To maintain the employees engaged and motivated, a performance development process can be initiated using a comprehensive compensation program that ties compensation and performance to the company’s corporate strategy and drives organizational change around the strategic goals (Cumming, 2004 p.111). CONCLUSION HR contributes so much in the proliferation of various organizational changes and quality programs. These programs are sometimes called re-engineering, restructuring, total quality management, continuous process improvement, employee empowerment or customer focus. HR’s important role in managing change has brought about a re-examination of its own function. Human resource ought to increase its value to the organization by becoming consultative rather than administrative, automated rather than paper driven, and lean rather than layered, as the case in the American Express. For the wide majority of progressive firms, ‘Total Quality Management’ (TQM) turned out to be a way of life in the 90s. TQM has been commended for changing companies, increasing market share, increasing or creating significant growth rates, most significant, producing top quality products while increasing profitability (Phillips, 1996 p.13). References: Backer T. E. and O'Hara K. B. 1991. Organizational change and drug-free workplaces: templates for success. New York, Greenwood Publishing Group. From http://books.google.com/books?id=nJLLLwOHudgC&pg=PA156&dq=role+played+by+HR+in+organizational+change+programs&as_brr=3&client=firefox-a&cd=1#v=onepage&q&f=false (accessed October 18, 2010) Bate P. 1996. Strategies for cultural change. Edition4, MA, Butterworth-Heinemann. 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From http://books.google.com/books?id=F3FFzGOJDMkC&pg=PA83&dq=how+organizational+change+affects+groups&hl=en&ei=GgW_TNOGDs2TjAeOvIWGAg&sa=X&oi=book_result&ct=result&resnum=5&ved=0CDwQ6AEwBA#v=onepage&q=how%20organizational%20change%20affects%20groups&f=false (accessed October 18, 2010) Cumming S. 2004. HR networking: retention. Chicago, CCH Incorporated. From http://books.google.com/books?id=M29ONcRfOPYC&pg=PA110&dq=role+played+by+HR+in+organizational+change+programs&as_brr=3&client=firefox-a&cd=2#v=onepage&q&f=false (accessed October 18, 2010) Cummings T. G. and Worley C. G. 2008. Organization development & change. Edition9, London, Cengage Learning. From http://books.google.com/books?id=rdjtPTfkWG8C&pg=PA156&dq=how+organizational+change+affects+groups&hl=en&ei=GgW_TNOGDs2TjAeOvIWGAg&sa=X&oi=book_result&ct=result&resnum=3&ved=0CDEQ6AEwAg#v=onepage&q=how%20organizational%20change%20affects%20groups&f=false (accessed October 18, 2010) Egan C. 1995. Creating organizational advantage. MA, Butterworth-Heinemann, From http://books.google.com/books?id=TRWRLvQNKYEC&pg=PA97&dq=impact+of+organizational+change+programmes+on+sections+within+the+organization&hl=en&ei=V92-TMKRDom6jAexte20Ag&sa=X&oi=book_result&ct=result&resnum=2&ved=0CC4Q6AEwAQ#v=onepage&q=impact%20of%20organizational%20change%20programmes%20on%20sections%20within%20the%20organization&f=false (accessed October 18, 2010) Fay D. and Lührmann H. 2004. “Facing Up to the Constancy of Organizational Change: Further Insights and Approaches to Solutions”. U.K, Psychology Press. From http://books.google.com/books?id=L9z5PqhN5w0C&pg=PA139&dq=impact+of+organizational+change+programmes+on+individuals&as_brr=3&client=firefox-a&cd=2#v=onepage&q=impact%20of%20organizational%20change%20programmes%20on%20individuals&f=false (accessed October 18, 2010) Kotter, J.P. 1996. Leading change. Harvard Business Press. From http://books.google.com/books?id=NiAoQ63v4skC&pg=PT23&dq=Eight+%E2%80%93+stage+process+of+creating+major+change&hl=en&ei=OCDATMqQJYm6jAexk_mXCg&sa=X&oi=book_result&ct=result&resnum=3&ved=0CDEQ6AEwAg#v=onepage&q=Eight%20%E2%80%93%20stage%20process%20of%20creating%20major%20change&f=false (accessed October 21, 2010) Mills J. H. 2003. Making sense of organizational change. U.K, Routledge. From http://books.google.com/books?id=hsgJ9x1XjQcC&pg=PA201&dq=impact+of+organizational+change+programmes+on+individuals&as_brr=3&client=firefox-a&cd=3#v=onepage&q=impact%20of%20organizational%20change%20programmes%20on%20individuals&f=false (accessed October 18, 2010) Osborne, S.P. and Brown K. 2005. Managing change and innovation in public service organizations U.K. Routledge. From http://books.google.com/books?id=sXg8fRkoVsC&pg=PA90&dq=Implementing+successful+change&hl=en&ei=kyDATJfNHMOOjAf7mKWMCg&sa=X&oi=book_result&ct=result&resnum=5&ved=0CDwQ6AEwBA#v=onepage&q=Implementing%20successful%20change&f=false (accessed October 21, 2010) Paton, R.A., Paton, R. and McCalman J. 2000. Change management: a guide to effective implementation. Edition2, London, SAGE. From http://books.google.com/books?id=rZjGmKkOjvMC&pg=PA6&dq=Implementing+successful+change&hl=en&ei=z3eTKqLDtV4gajxP3GAQ&sa=X&oi=book_result&ct=result&resnum=9&ved=0CFAQ6AEwCA#v=onepage&q=Implementing%20successful%20change&f=false (accessed October 18, 2010) Phillips Jack J. 1996. Accountability in human resource management. Houston, Gulf Professional Publishing. From http://books.google.com/books?id=qhTbMhesnQC&pg=PA13&dq=role+played+by+HR+in+organizational+change+programs&as_brr=3&client=firefox-a&cd=3#v=onepage&q&f=false (accessed October 18, 2010) Read More