Change Management as a Leadership Challenge: The Adidas Group - Case Study Example

 Change Management as a Leadership Challenge: A Case Study of Adidas Group 1.0 Introduction As a fashion company, Adidas Group mainly specialises on sports footwear, apparel and accessories. At present, Adidas Group is considered a global leader in sports apparel and boasts of a broad portfolio of products. As a global brand, Adidas Group is virtually present in almost every country across the globe. With regard to their strategy, the company focuses on strengthening their brands and products on a continuous basis to remain competitive in the sports apparel industry. Other than the Adidas brand, the Conglomerate has also acquired Reebok and owns TaylorMade-Adidas Golf and for each of these brands, the Adidas Group specialises in designing and marketing footwear, apparel and accessories. Today, the Adidas Group boasts of over 150 subsidiaries that are centrally managed from the company’s headquarters in Herzogenaurach, Germany. Further, the company also has its strategic business units located in Herzogenaurach and the main focus for these units involves the production of sports apparel used in athletics, football and tennis (Dogiamis & Vijayashanker, 2009). The Research and Development Centre is also strategically located at the Company’s headquarters where the top management is directly involved in improving Adidas Group’s R& D capabilities. Other significant corporate units of Adidas Group are located in the United States. The United States is strategic for Adidas Group because of the lucrative market for sports apparel used in Basketball, Adventure and other sports. While the United States is the leading market for Adidas products, the company has also established design studios and developments in other locations across the globe. However, while Adidas Group is among the leading sports apparel in the World, it faces global competition from Nike and Puma. As such, the company needs to change its strategy on a frequent basis to adapt to the dynamic sports apparel industry. On the same note, while change management is necessary for Adidas to implement new strategies, there is still a challenge in terms of establishing an efficient and effective leadership system in the company (Dogiamis & Vijayashanker, 2009). 2.0 Scope and analysis of the leadership challenge in managing the change process at Adidas Group As a company that operates in a global context, leadership in the change management process is a daunting task. Adidas Group has over 150 subsidiaries around the world and leadership is a critical aspect of managing the strategic changes adopted by the company on a continuous basis. Adidas Group has a workforce of over 50,000 in different parts of the world and whose age averages 30 years. This is a young workforce that requires the establishment of sound leadership structures in the company. Because the company has branches in different parts of the globe, the coordination between the branches and headquarters depends on the type of leadership system used by the company. In this regard, it is not easy to coordinate the activities of a global brand from a centralised location (Ross, 2014). In change management, efficient communication is influenced by the type of leadership that an organisation uses. In some cases, the top management such as the CEO may distant themselves from the day to day activities of the company or take the hands off attitude with regard to how affairs of the company are managed. This can create a challenge when implementing new changes in the company because; the key stakeholders of the company may have a negative attitude towards the change agent. In essence, good leadership requires the CEO to improve communication with other key stakeholders to avoid misunderstandings when implementing new changes in the company. In one instance, the CEO of Adidas Group was challenged by shareholders for his inefficient leadership of the company. The concern among the shareholders (Union Investment) was that the company was falling behind its main competitor, Nike. In this case, Union Investment lost trust in the leadership of the company’s CEO. Where key stakeholders in a company have lost trust in the leadership of the change agent, it is difficult to implement new changes (Ross, 2014). In different regions, work ethics tends to differ, and Adidas Group is not an exception. For instance, work ethics that applies to Adidas Group in the United States may not work for the company’s branch in Latin America or Asia. On this note, change management can be a challenging task where the same leadership style is applied to different regions that the company operates. A common trend in most organisations, and including Adidas Group is that employees may resist change (Dogiamis & Vijayashanker, 2009). This is more evident in situations where they are not involved in the decision-making process regarding the changes that occur continuously in the company. The resistance may emerge in terms of disagreement between employees and their team managers or supervisors. Other than disagreements, the challenges that may appear during the change management include lack of motivation and in extreme cases; employees may resign from their work and join other companies that seem to meet their demand. Consequently, Adidas Group finds itself in a precarious situation as a result of running a global brand. Employees in different regions have their demands and as such, the change agent in the company can face opposition in implementing new strategies that they consider can improve the company’s competitiveness (Schwarzenberger & Hyde, 2013). In the company, the retail department is the most crucial because; it focuses on selling the Group’s merchandise to customers across the globe. In this sense, any change that takes place not only has an impact on the employees, but also other key stakeholders that include customers, suppliers and the shareholders of the company. Leadership plays a role in influencing the decisions that take place in an organisation such as the Adidas Group. For instance, when decisions are made at the company’s headquarters in Germany, what type of leadership style can the change agent adopt to convince the key stakeholders of the changes taking place in the company (Doh & Qugley, 2014). On the other hand, the company has managed to remain competitive in the sports apparel industry because of an emphasis on innovation. However, motivating employees to showcase their talent requires good leadership skills. In addition, while innovation is enhanced through team work, it is necessary to note that, some branches of the company around the globe still have a workforce that requires close supervision (Frisch & Huppenbauer, 2014). As such, when implementing new changes, the leadership challenges can emerge where the workforce lacks proper skills and experience. In a situation where there is a lack of skills and experience, the challenge for the leaders involves looking for the appropriate ways to implement change. For example, in Asia or Africa, it is possible that the workforce there is semi-skilled. As a result, the company can face challenges in terms of implementing new changes. This is because, a semi-skilled workforce still need further training to understand how things work in the company (Lorinkova & Pearsall, 2013). While carrying out an in-house training for a semi-skilled staff, the leadership style used is critical in imparting knowledge to the novice workforce in new markets that the company is venturing. On another note, just like any other organisation in the business world, there are cases where some members of the company may want to maintain the status quo. This is more difficult where such members belong to the senior management team. In such a situation, managing change is not an easy task and depends on the type of leadership style used by the company in its different branches around the world (Mehta et al. 2010). 3.0 Critically Evaluation of Options As a global brand, leadership challenges during the change process emerge because of the type of leadership style used to implement the new changes. As a result, it is important for the change agent at Adidas Group to identify the leadership style that is ideal for its different branches around the world. As a company that thrives because of embracing innovation, a participatory leadership style is necessary because the employees work as a team. However, because the company is also establishing its branches in new markets, there is a need to consider other leadership styles such as an authoritative leadership style. Change management process in Adidas Group can achieve success if the employees are involved in the decision-making process particularly in its highly performing corporate units in the United States and the Latin America. This is because, these units have highly experienced workforce that can work under minimal supervision (Dimofte, Johansson & Bagozzi, 2010). In this regard, the type of leadership enforced in such a highly performing unit needs to be democratic. This ensures that the skilled and experienced employees have the freedom to explore their talents aimed at meeting the overall goal of the company. On the other hand, the leadership style to direct change management in the new markets requires the change agent to be more authoritative. This is because, the employees still lack the necessary skills and experience required to adapt to new changes in the company (Pihlak & Alas, 2012). In different regions around the world, the company normally employs a certain percentage of locals to provide some form of balance while operating in a foreign territory. However, in some regions, the locals are still semi-skilled, and there is a need for a close supervision when implementing new changes in the company. As such, an authoritative leadership style is necessary for such situations to ensure that employees do the right thing. On the other hand, change management can realise its objectives when the company improve communication channels (Sigmar, Hynes & Hill, 2012). In this regard, efficient leadership to direct the change process requires that the change agent communicate directly with the workers. In an organisational setting, employees often support a change process that they already understand. As such, a communication channel established by the change agent that engages employees in a face to face conversation regarding proposed changes is significant in realising success with new strategies. Communication skills are also an important attribute of an efficient leader because, how a leader relates to other members has an influence on the change process. Since the company depends on strengthening its brands and products on a continuous basis, the leadership style used in the change process is important. The company faces stiff competition from Nike and Puma, and efficient leadership style is necessary if the company wants to remain a leader in sports apparel industry (Campbell, Bommer & Yeo, 1993). In this sense, it is important for the company to integrate a participatory and authoritative leadership style in the management of its activities around the world. In addition, an efficient leadership that is ideal for managing change requires an understanding of the organisational culture. This is because; the behaviours of employees in the company can impact positively or negatively on new changes. As such, the change agent at the company needs to show a good example to their followers who rely on them for direction and leadership (Yazdani & Murad, 2015). 4.0 Assessment of actual/potential consequences In order to ensure a responsible leadership in the change process, the change agent needs to engage in a consultative process with the key stakeholders of the company. This is because, it is necessary for the key stakeholders to understand why a particular change is taking place in their company. On the same note, consultations are the best platform that leaders of the Adidas Group can use to convince stakeholders to support new initiatives. On the other hand, because the company emphasises more on teamwork, a participatory process in the change management process eliminates mistrust or misunderstanding between the change agent and the employees of the company (Yazdani & Murad, 2015). However, while democratic style of leadership helps to improve employee involvement in a company that focuses on innovation to gain competitive edge, there is a need for the change agent to maintain some level of authority. This is necessary to ensure that the employees of the company do not overstep their mandate. While a participatory process improves the working relationship between employees and the top management, it is important for the company to set rules that governs such relationships at the workplace. The leaders in the company, while giving freedom to other employees to explore their talents, it is important that they make the final decision regarding actions taken as a team. This helps to avoid cases where employees tend to insubordinate their superiors (Nelson et al. 2014). Conversely, while participatory leadership style is effective in implementing new changes in Adidas Group, some members of the senior management team may be against the idea. This is because of the fear that a participatory leadership style tend to usurp their authority over other employees in the company. Consequently, such an attitude in the senior management team tends to impact negatively on the change management process particularly where the senior management decides not to co-operate with other employees in the implementation of new strategies (Minter, 2004). A participatory process in change management is ideal in situations where teamwork thrives; however, this process should also consider skills and experience of the workforce. Because Adidas Group has branches in almost every part of the world, there are some regions where a participatory leadership style may not be effective in implementing new changes for the company. This is because; the employees are still not conversant with the practices of the company. In this context, an authoritative leadership style is appropriate because, such employees still need a close supervision when carrying out the duties of the company. However, while an authoritative style is necessary for such a situation, it is important for the management to be patient and understand the circumstances of the semi-skilled employees. This helps to improve learning among new employees as the company continues to implement new strategies (Minter, 2004). Overall, the leadership style that is appropriate for Adidas Group is the participatory leadership style. This is because, the company operates globally, and centralised management requires efficient coordination of activities between the branches around the world. As such, the top management at the headquarters needs to involve other branches in the decision-making process. Accordingly, this would allow the middle managers and other employees to understand why the changes are needed. A participatory leadership style in Adidas Group also ensures that the culture established in the branches is the same to what is emphasised at the headquarters (Palmer, 2009). 5.0 Conclusions and recommendations for future action In conclusion, two leadership styles are critical in ensuring that the Adidas Group realise success when implementing new changes at present and in the future. In this sense, a participatory process is essential where teamwork thrives, and employees’ possess the necessary skills and experience. On the other hand, an authoritative process is ideal in situations where the new employees lack the necessary skills and experience in implementing new changes in the company. Change management in any organisation is a challenging task, and Adidas Group can improve this process by emphasising on efficient and effective leadership styles in its business units around the world. In order to improve efficiency and competitiveness, the top management of the company needs to adopt sound practices related to leadership that can be followed by other employees in the company. In essence, responsible leadership at Adidas Group goes beyond a participatory process. There is also a need for accountability, transparency and reliability in leading other people. These are the key tenets for leaders to establish themselves and win the trust of the key stakeholders of the company. In this regard, four main actions are recommended to help the company avoid leadership challenges when implementing new changes in the company. ‘SMART’ Actions Specific Ensure that team work is enhanced through a participatory process. Using a participatory leadership style to improve innovation. Implement new changes using an efficient and effective leadership style. To establish trust among key stakeholders during the change management process. Measurable Annual report or Appraisals on performance for both leaders and other employees. Feedback from key stakeholders. Achievable Proper coordination between the headquarters and other branches around the world. Change agent consulting other employees before implementing new changes. Relevant Gaining competitive edge as a result of a participative process in the change management process. Time –bound Promoting a participatory process in teams working at Adidas Group require the leadership positions to change hands after every three months. This ensures that everyone in the team has a chance to showcase their leadership abilities. Authoritative leadership style is necessary in the first six months when working with new employees who still need to improve in terms of skills and work experience. 6.0 References Campbell, D.J., Bommer,W., & Yeo, E. 1993. Perceptions of appropriate leadership style: participation versus consultation across two cultures. Asian Pacific Journal of Management, 10(1), 1-19. Dimofte, C.V., Johansson, J.K., & Bagozzi, R.P., 2010. Global brands in the United States: how consumer ethnicity mediates the global brand effect. Journal of International Marketing, 18(3), 81-106. Dogiamis, G., & Vijayashanker, N. 2009.Adidas: Sprinting Ahead of Nike. [pdf] Herzogenaurach, Bavaria: Adidas. Doh, J.P., & Qugley, N.R., 2014. 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