Perspectives of Organizational Transformation of BP Lima - Case Study Example

Perspectives of organizational transformation The aim of the work is to discuss the process of organizational changes with the example of the company which faces major changes, from the theoretical point of view, with considering the main drivers of these changes, their effect on the structure of the organization and other factors, which the company should take into account while implementing those changed into practice. BP Lima and the situation leading to organizational changes The goal of any organizational change is improvement, and the goal of any improvement is to move on from the current level of production to a higher one; as far as most private organizations in the UK at present work in client domain, which means that the clients often appear to be the driving force of any positive changes, it means that organizational changes are targeted at improving some narrow work practices within the organization, which are caused by the modern business needs. BP Lima was established in 1955 beginning with the 380 full-time employees. It is a major producer of the industrial chemical products. It is stated that BP Lima constantly implements various approaches for improving the level of safety, environmental protection and health insurance for the staff. The safety of the production is the number one priority for the organizational performance. Management of the company actively exercises various community programs for the employees, as well as designs effective leadership structures for the better performance. BP Lima’s plant was bought by Clark group in 1998 after having implemented the major organizational changes into the company structure. At present BP Lima plans to construct new plant with improved environmental requirements and higher level of cost-reduction. (Ledet, 2005) BP Lima has faced the need for major organizational change when the threat of closing the plant was vivid and seemed irreversible. This threat was very effective in making people want and implement changes, because it affected absolutely everyone, and it was much more serious, than for example, cost cutting as it could be with other companies. The need for major organizational changes was realized not only by the management, but by each worker, though for someone it was later than for the others; however eventually the organization came down to understanding that without changing and transforming the organizational structure it would not be possible to keep the company floating. Thus, the company was straight in implementing the so-called continuous improvement initiative. (Ledet, 2005) As far as the threat of plant closure was serious, the volumes of this initiative implementation were large and touched each department of the organization. The company was able to create the Action Team, the aim of which was to concentrate on the elimination of the defects which already existed in the organizational structure of the plant, with making the work of the whole organizational structure more precise, and less concentrating on the planned maintenance work practices. (Ledet, 2005) The reason for this decision lied in the fact that planning itself only makes the general performance more efficient, but it does not eliminate the fields which are not necessary anymore, as well as it does not eliminate the drawbacks and defects which may exist in the company’s organizational structure. Precision domain of the organizational transformation is when the amount of work to get done is reduced by eliminating the root causes of the losses, which are the defects that lead to loss production, waste, and/ or health, safety or environmental incidents. (Ledet, 2005) BP Lima was able not only to keep its production, but to perform extensive improvement – the annual improvement was $45 million, and touched all spheres of the companys organizational structure. Lima was able to create a new leadership process – the whole leadership performance is now led through the so-called forums, which are held on the monthly basis and gather the heads of all departments and sites for the discussion of the current issues. Thus, it would be interesting to have a closer look at the processes and aspects which contributed and took part in the transformation of BP Lima and led to a successful performance in the light of the existing closure threat. The drivers of the change It is agreed, that the main driver of changes in the company was the threat of closing the plant, and this threat touched everyone with making everyone understand that the company needed major organizational changes. For the aims of the present work it is useful to see the changes in BP Lima from the viewpoint of the theoretical knowledge and the three stages of the organizational changes. Changes themselves can take different patterns; it depends on the character of the organization these changes concern. It means that the company may face the period of stagnation, or it may be constantly growing, but its growth rates as well as the directions of their movements may be misleading. However, the three main stages of change, through which any organization is desirable to go, should be identified here. First of all, as Burke (2002) calls it, the company should be unfrozen, which means it should be prepared for the major changes; it is essential not to forget that as soon as the company achieves the needed level of performance, this level should be frozen back not to let the company slide back to the old ways of making business. The second stage is the period of time, when the biggest amount of companys staff is involved into implementing the change. This stage is the way for spreading the new practices all over the company, making them common and usual for the staff. For example, as we see it in the example with the BP Lima, the second stage of changes was marked by the transition to the simpler way of performance, with the elimination of the certain kinds of work, which ultimately led not only to the cost reduction, but to the general financial improvement. The third stage is meant for the institutionalization of the already designed new practices, not only making them usual, but making the staff support them; the general mistake is that many organizations start their organizational changes from the third stage, while it should be born in mind, that organizational changes are not valid and working until the workers are ready for such change. In the case with BP Lima, workers partially played the role of driver, because each of them understood the threat of losing the job as a result of the plant closure, and thus each of them came to understanding of the need in organizational changes. (Burke, 2002) The opposition of the staff to the changes to come appears to be one of the most significant factors in breaking down the changes. From the viewpoint of the PEST analysis, BP Lima was not a leading company by the time it was ready for closure; moreover, its competitive position on the market was rather vulnerable for the less optimized production process and lower levels of cost-effectiveness in comparison with the other similar players. Simultaneously, the efficiency of the organizational changes implementation for BP Lima was so high, that its financial improvement of $45 million for this single plant is not even compared to the saving of $300 million when one speaks about 70 DuPont similar plants. (Ledet, 2005) The reason for that was that DuPont has concentrated in efforts on cost-reduction only, while Lima made this reduction a part of the more complex plan of changes, including the issues of environment and safety. As it has already been noticed, the staff often appears to oppose to the changes, and thus the fact of it being prepared for these changes creates a solid ground for their implementation. Impact of changes The main impact of the changes was in the following consequences: 1. The plant was able to only to reduce the costs, but to increase its financial profits up to $45 million; 2. The plant was not only able to survive, but it was later bought by the Clark Refining group; 3. The plant has changed the production line and has eliminated a number of processes for the general optimization of production; 4. The plant has created new structure of leadership. There was no clear resistance to the changes, as far as at the threat of the plant closure everyone was ready for actions and implementation of any novelties which would bring the plant back to life. The fact of the Clark group purchasing the Lima plant was symbolizing the beginning of the third stage of organizational change, when the company had to freeze back the improvements it had been able to achieve and to make them work on the constant basis. However, this fact of purchase has not really brought the overall positive result – out of the 458 employees 100 had to leave for various reasons, and among those 100 was the bigger portion of those who had initiated those changes and was leading them until they were successfully implemented. What is seen at present in the company is that it was able to go through the absence of its principal change agents, and was keeping to the path of improvements, though these improvements have now acquired slower pace. At this stage of the company performance it is valuable to create discipline and order in organizational performance, to save the previous changes and to improve the existing structure. The created leadership system was successfully implemented and resulted in the more optimal staff structure, which ultimately led to the optimization of the production process as a whole. Evaluation of changes From the theoretical viewpoint, any organizational change has its aim to improve company’s performance. The result of the changes which were considered through the work was not only the cost-reduction of the enterprise, but turning it into a profitable one with the ultimate purchase by another chemical group with the perspectives of development and construction of the new plant with the account of the current requirements. Evaluating the changes it is impossible to say that they were absolutely positive. Due to the process of elimination and optimization of the production process, in combination with purchasing the plant, the number of leading workers left the enterprise, but through the successful efforts of the management this fact has not resulted in the loss of the positions which the company had already acquired; due to the precisely designed leadership structure the plant was able to keep to the line of organizational changes through the years, though slower and mostly concentrated on the making the process more precise. Conclusion It has become clear, that it is often with the companies, when they realize the necessity of major organizational changes in the light of serious threats. It has also become evident, that organizational changes include three principal stages, and it is essential that without active participation of the staff and without its understanding the importance of the changes for the company and its performance it won’t be possible to realize anything. Organizational changes in any company are targeted at improvements; these improvements may touch some separate aspects of the company’s performance, or its general business activity. In the case described the organizational changes have gone through all three stages, and were very complex and various in their targeting. They have led to one ultimate result – the company was able to survive, to become profitable, and which is even more important, to continue its improvement path. It should be born in mind that any organizational change needs complex approach and accounting all aspects of the company’s activity; only in this case it will lead to the desired result with minimal costs. Works cited Burke, Warner W. Organization Change: Theory and Practice. Sage Publications Inc., 2002 Ledet, Winston P. Modeling Sustainable Organizational Change. Ledet Enterprises Inc., 2005 Read More