Managing Organizational Change at Siemens AG - Essay Example

Managing Organizational Change Table of Contents Table of Contents 2 Section A: Introduction 3 Siemens AG: Change Context 3 Section B: Project Feasibility Study (PFS) 4 Change agenda 4 Stakeholders 4 Incorporating Change 5 Conclusion 8 Section A: Introduction Organizational change is driven by situation specific needs that are adjusted in accordance with dynamics of internal and external environment (Weick and Putnam, 2006). Research scholars like, Burnes (2009), have advocated that large organizations need to undergo changes due to organizational complexity, incorporation of new business objectives, adaptation of new technology and need for addressing competitive threat. In such context, the researcher here is employed as a consultant to Siemens AG, which is a German multinational electronics and engineering company. In recent years, Siemens AG has faced problems regarding competition from competitors, inability to integrate an effective corporate culture within organization and fluctuating financial performance (Körte, 2007). As an external consultant, the researcher has been asked by Siemens AG to conduct Project Feasibility Study (PFS) on change initiatives that are proposed by the company so as to address emergent problems. As part of Project Feasibility Study (PFS), the study will assess ways in which Siemens AG can address existing problems through change initiatives. In the PFS, the study will elaborate on change process that will be most suitable to address problems faced by the client and issues that are likely to arise during the change process. In order to understand context of the change, situational analysis of the problems faced by Siemens AG will be conducted in the next section. Siemens AG: Change Context Siemens AG is a German multinational electronics and engineering company, which is referred as a global leader in the field of electrical and electronic engineering (Körte, 2007). The company offers diversified range of product portfolio such as, engineering equipments, light emitting diodes and power stations. More than 90% of revenue of the company comes from selling infrastructure systems and engineering products (Körte, 2007). As of 2007, the company earns revenue worth of € 87 billion annually (Körte, 2007). Currently, the company has established operations in more than 150 countries with an employee base of over 450,000 (Körte, 2007). Bradt (2013) pointed out that problems that are faced by Siemens AG are not only serious in nature, but are also raising questions against future of the company. The company is facing leadership problems as CEO Peter Loescher has recently left the job due to his failure to address volatility in profit earning of the company. Fluctuations in financial performance of the company are directed by previous unsuccessful business diversification attempts, inability of rigid corporate culture to support innovation and lack of confidence of board members in making risky strategic decisions. These three issues have conjointly created the urgency for Siemens AG to incorporate organizational change process, which can ensure leadership position of the company. The company is headquartered in Munich, Germany and during the end of 2013; financial position of the company was negatively affected due to presence of abovementioned reasons. According to Bradt (2013), organizational change should be incorporated in Munich headquarter of the company because majority of the strategic decisions are taken there. In such context, Bradt (2013) suggested that Siemens AG needs to change its corporate culture so as to support innovation and risk-taking attitude for the purpose of achieving competitive advantage over competitors. Considering the argument of Bradt (2013), the researcher will conduct PFS addressing cultural and organizational change in Siemens AG. Section B: Project Feasibility Study (PFS) Consideration of research works of Hernes (2008) and Hernes and Maitlis (2010) reveals the fact that organizations can undergo two types of change such as, 1- change through planned approach and 2- change through emergent approach. In case of emergent change, wide level of experimentation is done in order to select optimal way of change. Unfortunately, in case of complex and huge organizations like, Siemens AG, too much experimentation can lead to waste of resources without yielding significant returns (Bradt, 2013). On the other hand, adopting planned change model would help Siemens AG to address existing problems systematically. The organizational change process for Siemens AG can be defined in a stepwise manner. Change agenda Siemens AG needs to regain competitiveness and ensure stability in financial performance by bringing in changes in its corporate culture and developing a learning environment within the organization, which supports innovation and knowledge sharing. Stakeholders Schein (2010) has pointed out that organizational change cannot be incorporated without the help of stakeholders. In case of organizational change in Siemens AG, Mendelow’s (1981) stakeholder matrix can be used to identify stakeholders who can influence the change process. Category A (low power and low interest) – individual customers neither have sufficient bargaining power to compel Siemens AG into making changes nor are they interested in knowing internal complexities of the organization. Therefore, these stakeholders probably will not resist organizational change initiatives in Siemens AG. Category B (low power and high interest) - staff of project consultancy company will have little power to dictate top level management of Siemens AG so as to adjust change initiatives. They might have financial interest in change project; but personally, these external staff might not be linked to the organizational change initiatives. Category C (high power and low interest) - top level management and shareholders of Siemens AG have the power to alter course of change activities. Nevertheless, as the change is planned for betterment of the organization, these stakeholders probably would not resist change initiatives. Category D (high power and high interest) – employees will be driver of change initiatives in Siemens AG and senior employees will act as change agents for the company. In context of employees, their job responsibilities will change and employee downsizing might be needed during transformation phase. Due to such level of uncertainties and fear of falling out of comfort zone, some employees might resist the change initiatives in Siemens AG. In such cases, training and development of employees will be conducted in order to reduce resistance. Incorporating Change As part of the planned organizational change process, Schein (2010) stated that Lewin’s three step model can be used. Three steps in Lewin’s change model are highlighted as, unfreezing- diluting the existing system and using change agents to create motivation for change, moving- implementing change initiatives with the help of external and internal support within organization and refreezing- stabilizing the newly implemented system with the help of reward system, training and supervision (Schein, 2010). Consideration of research works of Cameron and Green (2012) reveals the fact that 5 stage ‘coping cycle’ is involved in order to elaborate the activities in Lewin’s three step model. While implementing organizational change in Siemens AG, these 5 phases are bound to occur. Stage 1 (denial) – in order to change existing corporate culture and develop learning environment for Siemens AG, major corporate restructuring is needed. Due to fear of uncertainties regarding corporate restructuring, many employees might deny the need for change. Stage 2 (defence) - change is inevitable for restoring competitiveness of Siemens AG, which will not be stalled for any particular organizational member. When organizational members will be aware of this fact, they might try to defend their previous work practices so as to create buffer against uncertainties. Stage 3 (discarding) - in case of organizational change in Siemens AG, training will be provided to organizational members in order to discard their past behaviour. To discard past behaviour; knowledge session, seminar and group dynamics activities will be conducted (Cameron and Green, 2012). Stage 4 (adaptation)- for the purpose of making changes successful, the proposed change model will be adjusted in accordance with performance level, work ethics and capabilities of existing employees in Siemens AG. As part of adaptation, group meetings and mentoring for employees will be used in the company. Stage 5 (internalisation) - in order to make proposed changes fully operational, rewards will be provided to participants in the change process and a external project consultant will supervise the progress of team members within the new system (Cameron and Green, 2012). According to Schein (2010), Lewin’s three step model lacks detailing of the breakdown change process in micro levels. For example, in order to modify corporate culture and develop learning environment in Siemens AG, researchers need to consider details of different pertinent business matrices. Therefore, detailed version of Lewin’s three step model will be used by the consultant in order to incorporate change in Siemens AG (Fernandez and Rainey, 2006). In such context, Kotter (1996) and Kotter and Cohen (2002) have identified eight different steps for incorporating successful changes in the organization. The 8 step model of change can be explained in context to change agenda of Siemens AG. According to Kotter (1996), 8 steps of change can be briefed as establishing sense of urgency within organization, creation of guiding coalition, developing strategy guided by vision, communication of vision for change among team members, empowering change agents to incorporate actions, celebrating short-term win during change process, consolidating good results of change process and integrating new organizational cultures. Sense of urgency- with sudden resignation of CEO Peter Loescher, a leadership gap has been created in Siemens AG. In such a context, newly appointed CEO Joe Kaeser needs to create a sense of urgency among board members. Group of board members need to assess viability of change agenda and work upon it. As a project consultant, the researcher will help top management of Siemens AG develop more focused change agenda, such as, 1- changing its corporate culture in order to develop learning environment and 2- regaining competitiveness and ensuring stability in financial performance. Guiding coalition- strategic planning committee (SPC) will be selected by choosing two senior members from each functional department of Siemens AG. The SPC will conduct weekly meetings with the project consultant. Structural planning and stepwise guidance for change process will be designed by SPC upon consulting with researcher. Vision and strategy – for next 6 months, rigorous scrutiny of problems being faced by Siemens AG will be done by strategic planning committee. External consulting support will be provided by the researcher in order to formulate change strategy blended with organizational vision. In such context, internal employees will also be asked to state their opinions regarding existing problems of the company. While designing change strategy, employee feedback will be taken into account by project consultant. Communication- CEO Joe Kaeser needs to address the urgency and proposed change mechanism to employees with the help of meetings and seminars. Employee portal and artefacts within organization such as, posters or billboards, knowledge sessions and team meetings, will be used to communicate change agenda to organisational members. SPC members will individually communicate urgency and suitability of the proposed model to team members in functional departments. Empowering- 15 to 20 organizational individuals will be tagged as change agents on the basis of their willingness, work experience and skill level. These change agents will work as situational leaders and will be responsible for motivating their team members to participate in change process. Short-term wins- the entire change project may last for 3 to 4 years. In the due course of time, periodic short wins like, innovative product development, increase in production capacity, integration of new technology and rise in sales revenue, will be celebrated by team members in Siemens AG. Gain consolidation- in order to consolidate small level project wins, change agents will be rewarded and analysis of pitfalls regarding the project will be done. For example, in order to enhance flexibility in corporate culture, restructuring and decentralization of the organization will be done. Upon decentralization and integration of lattice management structure, organizational members will be encouraged to communicate with each other and share cross-functional knowledge. For consolidating benefits of flexible knowledge sharing, financial incentives will be provided to production and engineering teams. Anchoring new approaches- after incorporation of successful change initiatives, project consultant will work with SPC members for another 12 months so as to supervise progress of newly implemented system. Separate monitoring division will be created in Siemens AG, which will control irregularities in the new organizational system. Conclusion There are certain advantages and disadvantages that are associated with the mentioned change process. Advantages- the mentioned change process highlights stepwise mechanism to incorporate changes and Kotter’s (1996) model create additional scope for resource audit at each stage of the change. Disadvantages- there is no certainty that the proposed change model would be successful in developing powerful guiding coalition and specification for short-term win is also not included in the model. Overall, it can be said that additional buffer capacity of proposed change model for Siemens AG will be created in order to address disadvantages and uncertainties regarding business environment. Reference List Bradt, G., 2013. Shock Therapy: How Siemens New CEO Can Fix Its Corporate Culture. [online] Available at: [Accessed 27 March 2014]. Burnes, B., 2009. Managing change: A strategic approach to organisational dynamics. 5th ed. New Jersey: Prentice Hall. Cameron, E. and Green, M., 2012. Making sense of change management: A complete guide to the models tools and techniques of organizational change. 3rd ed. London: Kogan Page Publishers. Fernandez, S. and Rainey, H. L., 2006. Managing successful organizational change in the public sector: An agenda for research and practice. Public Administration Review, 66(2), pp. 168–176. Hernes, T. and Maitlis, S., 2010. Process, sensemaking & organizing. Oxford: Oxford University Press. Hernes, T., 2008. Understanding organization as process: Theory for a tangled world. New York: Routledge. Körte, P., 2007. Siemens Corporate Strategy. [pdf] Siemens AG. Available at: [Accessed 27 March 2014]. Kotter, J. and Cohen, D., 2002. Heart of change. Boston: Harvard Business School Press. Kotter, J., 1996. Leading change. Boston: Harvard Business School Press. Mendelow, A., 1981. Environmental scanning: the impact of stakeholder concept. Cambridge: Second international conference on information systems. Schein, E. H., 2010. Organizational culture and leadership. 4th ed. San Francisco: John Wiley & Sons. Weick, K. E. and Putnam, T., 2006. Organizing for Mindfulness: Eastern Wisdom and Western Knowledge. Journal of Management Inquiry, 15(3), pp. 275-287. Read More