Managing and Leading Change - Essay Example

The theory of Business Process re-engineering applies to the case under consideration. The change at the General Motors Company executed a complete reengineering of the organizational structure, which not only reduced the cost of business but also improved the flow of communication at all levels and the pace of decision making.

Organizational structure is the pattern of hierarchies of management in a company that controls the information flows as well as the reporting of relationships. The organizational structure of a company lays the basis of the operational policies. “[C]companies may find it necessary to change organizational structure to remain competitive or adapt to changes in the company, industry or marketplace” (Ingram, 2012). Organizational changes at the General Motors Company started with the forced retirement of Stempel. After Stempel’s retirement, Jack Smith was made the new CEO and Smale was made the chairman of the board. Hoagland, on the other hand, became the new president of the General Motors Company and served as the right-hand man of Smith. After implementing these changes, the next target of the new top management team was to alter the chain of command of the General Motors Company. These changes were followed by the flattening of the organizational structure of the General Motors Company with the elimination of 50,000 hourly and 24,000 salaried jobs. This helped the top management cut down the costs and enhance the profitability of the business.

Formal organizational structure is not quite important for small organizations because the flow of communication is easy, but the organization of the magnitude of the General Motors Company requires a formal organizational structure. “[I]n a larger organization decisions have to be made about the delegation of various tasks. Thus, procedures are established that assign responsibilities for various functions” (Distelzweig, 2012). As Smale became the leader of the board’s executive committee, he took the directors’ board of the General Motors Company into confidence. Under Smale’s leadership, the board of directors instituted a revolt against the old management team of the General Motors Company. The power which the board of the General Motors Company used to oust the old management team of the company was basically their majority, realization of the company’s poor functioning with respect to profit-making, and an urge for change.

The managerial strategies used by the company’s board in achieving success included but were not limited to the identification of loopholes in the system, the realization of the unnecessarily tall structure of the organization, and the downsizing of the company. The fundamental objectives which the company’s board wanted to achieve included reduction of the corporate staff so that the decision making could be improved and simpler and change would be easier to introduce and implement. Too many managers working at different levels in the company made it difficult for any decision to be taken and any strategies to be implemented since any decision that was taken needed the approval of many. “To make good downsizing decisions, executives need to appreciate more than just the immediate impact on human resources. And their information should be based on the collective experience of many firms” (Bruton, Keels, and Shook, 1996). The board replaced Stempel with Smith and Hoagland both of whom were very experienced in the reduction of expenses and institutionalization of a turnaround. The appointment of these people in the senior management helped the company make informed decisions while downsizing. Reassessment of the operations by the new team increased the speed of change at the General Motors Company.

Organizations can achieve the balance of power at the top of the organization by making the system more transparent. Before implementing the change, the staff needs to be made aware of the potential loopholes in the current system and the way the proposed change would serve to eradicate them so that the employees would actively participate in the change management process. The system within the organization needs to be made more democratic and such a culture should be promoted wherein constructive criticism is appreciated. Dr. Martin Luther King expressed, “the concepts of love and power have usually been contrasted as opposites – polar opposites – so that love is identified with the resignation of power, and power with the denial of love. Now we’ve got to get this thing right” (King cited in Experience Curve, 2009). Transparency and inclusion promote such a culture.