Organisation Theories Theories of Change and Change Management - Essay Example

Whether and How Organisation Theories and Theories of Change and Change Management Can Help a Focal Firm of the Construction Industry to Understand and Influence Its Environment Student’s Name Grade Course Instructor’s Name (November 22, 2015) Abstract The environment in which organisations operate has increasingly become dynamic, requiring that such organisations should adopt appropriate strategies that can enhance their competitiveness. Different organisation theories and theories of change and change management can help organisations understand and influence their environment to suit their operations and market goals. Wates Group Construction Company, a company operating in the UK construction industry implemented a disastrous organisational restructuring in 2012 through merging two of its divisions into one unit, resulting in the organisation losing 48% of its profitability that year. The organisation can avert such disastrous outcomes in the future, through applying the principles of different organisation theories and change management theories. The principles of Human Relations & Contingency Theory, Maslow’s hierarchy of needs Theory, Contingency Theory, McKinsey 7s Framework and Behavioural management Theory can help the company articulate its future operations and changes for better success. Nevertheless, the unifying framework of organisational change as proposed by Burnes (2009) is recommended as the suitable model that can help the company continue implementing its change process that it already started in 2012. Whether and how organisation theories and theories of change and change management can help a focal firm of the construction industry understand and influence its environment Introduction Organisations have always existed since the ancient time, but theories of organisational management emerged only in the 20th century, after the onset of the industrial revolution (Burnes, 2009). The dynamic nature of the modern business environment has also necessitated the rise of theories of organisational change and change management, to guide businesses as they seek to transform their operations from the initial methods of management to the new and more efficient ones. The theories of change and change management have also become relevant in guiding businesses during transitioning to different locations. This has been necessitated by globalization that has seen businesses expand beyond the local boundaries, to serve the international markets (Hayes, 2014). The success of any organisation depends on how well the organisation is able to manage change in order to refocus its operations to suit the existing business environment, as well as the expected future changes in the business environment. The relevance of organisational theories to businesses is that they do not only help organisations to plan and strategize for success, but also guide the organisations on how they should allocate resources optimally (Sharma, 2007). The early organisational theories were highly bureaucratic, but the ever dynamic business environment has resulted in the creation of more multidimensional organisational theories and theories of change management. This discussion seeks to establish how organisation theories and theories of change and change management can help Wates Group Construction company understand and influence its environment for success. Wates Group Construction Company incurred a profit loss of 48% in 2012 arising from its restructuring reforms and changes in the business environment in the UK construction industry (Hurst, 2013). Therefore, there is a need to establish the organisation theories and theories of change and change management that can help the company overcome such challenges in the future, and avoid incurring profit losses. Discussion Background of Organisational and Change Management Challenges Facing Wates Group Construction Company Wates Group Construction Company is a London-based company operating in the United Kingdom’s construction industry, where it is involved in different building projects, living space and interiors designing and retail of already constructed houses (Cross, 2013). The company was initially split into five different divisions, but later decided to undertake a divisional reform by merging some of its divisions together. In 2012, Wates Group Construction Company embarked on a reform that entailed merging both its commercial fit-out and retail divisions together, and the consequence was a drop in the company profits by 48% in 2012 (Hurst, 2013). The huge profits loss was occasioned partly by the reconstruction costs of merging the two divisions, which cost the company a total of £4.9m, in addition to causing the company layoff a total of 283 workers (Hurst, 2013). The company restructuring changes saw its overall profit margin reduce from the initial 3.6% in 2011, to only 2% in 2012 (Hurst, 2013). According to the company’s CEO and chairman Paul Drechsler, the fall in the profitability of the company was not only occasioned by the restructuring reforms undertaken by the company, but also by the difficult trading conditions, resulting from unsustainable pricing strategies of the competitors (Cross, 2013). The competitors’ unsustainable pricing strategies saw the company lose in the construction markets business, reducing the construction division’s profits by 25% (Cross, 2013). Therefore, the operational challenges, change management and difficult business environment combined to make the company’s profitability drop by almost 50%, from the initial £38.2m profits before tax in 2011 to £19.8m profits before tax in 2012 (Cross, 2013). How Organisation Theories and Theories of Change and Change Management Can Help Wates Group Construction Company Organisation theories provide valuable organisational operation strategies that can be applied to help Wates Group Construction Company understand and influence its environment, and thus avert the chances of profit loss in the future. The Human Relations & Contingency Theory is one of the organisation theories that can be applied to guide the company avert profits losses in the future. According to the Human Relations & Contingency Theory, changes in the overall structure of organisations are inevitable. Thus organisations should ensure that the employees have been involved in every aspect of change within the organisation, if the organisational productivity is to be sustained through and after change (Lutans, 2011). This is because, workers are more productive within an organisation, if they feel more involved in all process of the organisation (Burnes, 2009). Further, the Human Relations & Contingency Theory provides that security and a sense of belonging are paramount in defining workers productivity, because workers are more productive within an organisation that offer job security, consistency and predictability (Burnes, 2009). These principles of the Human Relations & Contingency Theory can be applied by Wates Group Construction Company to overcome future operational and change management challenges that occasioned the huge profit loss, through ensuring that while restructuring the company, the employees are fully involved. The restructuring of the Wates Group Construction Company resulted in the loss of 283 jobs, while incurring a restructuring cost of 4.9m (Hurst, 2013). Such job losses may have created uncertainty and unpredictability on the part of the remaining workers who were unsure of their job security, resulting in low productivity. Guided by the Human Relations & Contingency Theory principle of increasing the sense of belongingness of the workers, coupled with involving the employees through all stages of organisational restructuring, Wates Group Construction Company can avoid future profit losses. The other organisational theory that is instrumental in helping Wates Group Construction Company understand its business environment is the Maslow’s hierarchy of needs Theory. The Maslow’s hierarchy of needs Theory provides that employee productivity is motivated by different factors, which occur in a progressive hierarchy that causes employee to target a higher need after fully achieving the current needs (Burnes, 2009). One of the levels of needs as provided by the Maslow’s hierarchy of needs Theory is the safety needs level offering that individuals need to obtain freedom from fear (Maslow, 1943). Therefore, at the safety level of needs, employees are more concerned with the safety and security of their jobs and at this stage, an employee is highly likely to lose focus and productivity if the organisation does not provide the employee with confidence that his/her job is secure (Tay & Diener, 2011). In the case of the Wates Group Construction Company, laying-off 283 workers was a premise for creating concern among the rest of the workers regarding their job security and future with the company. In such a situation, the Maslow’s hierarchy of needs Theory provides that employers should increase the comfort, confidence and certainty of the workers regarding their jobs, to ensure that the workers feel secure and re-assured (Tay & Diener, 2011). Thus, the Maslow’s hierarchy of needs Theory is relevant to the Wates Group Construction Company scenario, because it offers guidance on how the company should motivate the workers who were left in the company to become more productive, through assuring their job security. The Contingency Theory further provides guidance on how the Wates Group Construction Company can understand and influence its environment, to avert future profit losses. According to the Contingency Theory, an organisational structure and style of management depends on the organisation’s own situation (contingencies) (Burnes, 2009). Thus, an organisation is part of a large system of the environment, which does not have full control of its fate, but rather has to depend on the external environmental factors for its overall performance (Bacher, 2007). This provision of the Contingency Theory accurately captures the situation of Wates Group Construction Company, whose loss of 48% profitability was occasioned by competitors’ unsustainable pricing strategies that made the company lose 25% of construction profits (Cross, 2013). The Contingency Theory provides that for a company to overcome the business challenges posed by the external environmental factors, it should invest in Research & Development to produce new ideas for long-term innovation, while targeting fairly stable markets in the short-term (Burnes, 2009). Additionally, the theory provides that organisational leaders should build good rapport with their subordinates, as a way of ensuring that the organisational goals set for both the short and the long term are implemented (Bacher, 2007). The Contingency Theory therefore provides guidance on how Wates Group Construction Company can influence its business environment through investing in R&D, targeting fairly stable construction markets and developing good rapport with the employees, to avert future profit losses. Through investing in R&D and also focusing on the fairly stable markets, the Contingency Theory provides that a company can be able to reduce the uncertainty associated with the external environment, while increasing dependence on its internal strengths such as good relationships with employees (Bacher, 2007). In relation to the management of change process for Wates Group Construction Company, McKinsey 7s Framework is a relevant theory that can help the company understand and influence its environment for future success. The , McKinsey 7s Framework is a theory that provides for strategy as the fundamental factor that can enable an organisation overcome competition and realise its set goals, through creating a step-by-step plan for achieving the set organisational future goals (Michalski, 2011). The McKinsey 7s Framework also provides that for an organisation to manage change effectively and focus on the pathway of success, the organisation must formulate structures and systems that will support the step-by-step plan laid down for future organisational goals achievement (Burnes, 2009). Most importantly however, the McKinsey 7s Framework provides that staffs are the most important element in the development and execution of an organisations strategy. Therefore, the theory provides that the staff’s skill, competencies and goodwill should be enlisted by an organisation, for successful implementation of a strategy (Michalski, 2011). This model framework can be relevant in helping Wates Group Construction Company influence its environment by managing the change process systematically and refining the organisational future goals and targets, despite the initial profit loss suffered. The company can apply this model to enable the employees who were left after the rest were laid off to process the transition in a more healthy manner, through enlisting their goodwill by involving them in every step of future goals and targets formulation. This would in turn ensure that the employees support the organisation in its future strategies, while also taking personal responsibility for driving the organisation towards its future targets. The McKinsey 7s Framework provides that successful organisations achieve high productivity through investing in their work-force as the major driving force for success, while at the same time maintaining a lean workforce that is skilled and competent in the areas of operation of the organisation (Burnes, 2009). This model framework can therefore be applied by the company to refine its workforce and ensure that the restructuring reforms only leaves the organisation with a lean workforce that is fully skilled and competent in the operations of the construction industry. This way, the company can be able to motivate its employees through higher pay and suitable benefits, while attaining higher productivity from just a lean workforce (Beer & Nohria, 2000). Further, the Behavioural management theory can help Wates Group Construction company understand and influence its environment for success. The Behavioural management theory provides that behaviour is learnt from an individual’s interaction with the environment, in response to certain stimuli or rewards offered by the environment (Burnes, 2009). Thus, for a firm to be successful in boosting its productivity and overall success, the Behavioural management theory provides that organisations should help its workforce understand themselves and also understand the organisational situation (Burnes, 2009). The theory provides that if an organisation is to be successful and competitive in the industry in which it operates, the organisation must change its focus from production-orientation success to people-orientation success. The Behavioural management theory offers that it is through an organisation focusing on the workers human needs, as well as providing the workers with good working conditions and fostering work-related satisfaction among the workers, that an organisation can compete effectively in the market (Davies & Servigny, 2012). Additionally, the Behavioural management theory provides that in addition to rewards and benefits that might motivate the employees of an organisation to increase their productivity, connectedness with the organisational leadership and management is fundamental for enhanced employee motivation. Therefore, when workers are treated by the organisational management as humans rather than machines, they respond to the work situation in a positive way, which in turn enhances individual productivity of the employees (Griffin, 2015). According to Burnes (2009), organisational change occurs through focusing on changing the group behaviour as opposed to changing individuals, because individuals respond and get conditioned to the group’s environment. Therefore, according to the Behavioural management theory, an organisation should focus on changing the group norms, values and roles, if it seeks to shape its workforce effectively towards higher productivity (Davies & Servigny, 2012). This theory is instrumental in guiding Wates Group Construction company understand and influence its environment for future success and avoidance of profit loss, through guiding the company on how to focus on changing the roles, norms and behaviours of its remaining workforce to increase productivity. The company already laid-off 283 of its workers, which in turn acts as demoralization to the remaining workers. Therefore, in order for the company to refocus itself towards the path of success after this restructuring, the Behavioural management theory provides that the company needs to value the remaining employees and motivate them through offering different rewards and stimuli that can boost the employees morale (Griffin, 2015). This way, the organisation can be able to tune its workforce towards achieving its newly formulated goals and targets, following the unfortunate restructuring that saw the company loss 48% of its profitability. Recommendation The unifying framework of organisational change as proposed by Burnes (2009) is recommended as the suitable model that can help Wates Group Construction company continue implementing its change process, while also averting chances of future profitability loss arising from organisational restructuring. The unifying framework of organisational change provides that organisations should not approach change as a one-time organisational event. Instead, organisations should be transforming continuously through incorporating both small and big change projects that are interlinked towards achieving a major organisational restructuring goal (Burnes, 2009). The unifying framework of organisational change also provide that the process of change within an organisation should span across different levels and functions of the organisation, while also being implemented over interspersed time scales (Burnes, 2009). According to this framework, implementing major changes for an organisation at once can be disastrous, considering that major changes are always accompanied by fundamental shifts in the distribution and centres of power (Burnes, 2009). It is this major shift in the dimensions of power that is highly likely to cause the organisational change process more disastrous, if it is not implemented in phases and spread across all the organisational structures and functions. The unifying framework of organisational change is relevant in guiding Wates Group Construction company continue to implement its change process, through guiding the organisation on how it should drive the change process it already started in 2012 by combining two divisions and laying-off 283 workers. Change is a gradual process and it may even take years to complete, depending on the nature of change that an organisation is implementing (Sugarman, 2001). The restructuring of Wates Group Construction Company through merging different divisions is a change process that can take long to be effectively implemented, since it entails the reformulation of the organisational structure and centres of power (Miller, 2002). The merging of two divisions means that a vacuum is created for some of the leaders who were heading both divisions. Implementing such a transformative change therefore requires imposing change from the top in a directive or even coercive way (Burnes, 2009). However, even when imposing change in a directive of coercive way, it is very necessary that the change is implemented gradually and in phases, to avert the chances of creating conflict of dissention among the company’s employees, especially those ones in management levels. Therefore, it is recommended that the change process restructuring of the company should span over a period of several years, during which the organisation can be able to select and retain the workers with the right skills and competencies. Conclusion The business environment is an ever-changing and dynamic environment, where change is inevitable. Successful organisational management is complex, because it entails balancing an organisation’s internal structures and systems with the forces of external business environment. Managing change is even more complex, because it entails restructuring an organisation’s structures and systems, which in turn affects the employees and the management’s centres of power. 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