Process Control Inc - Case Study Example

 Table of Contents Table of Contents 2 Background 3 Organizational Development Theory and Outcomes 6 Recommendations 11 Works Cited 16 Background The case is based on organizational development of a European manufacturing unit of an American corporation named Process Control Inc (PCI). The business of PCI came into existence in the year 1979 through a merger with a subsidiary of a British electronics organization. The organization shares same production plant as the Marketing and Technology division of the parent organization. PCI concentrated on manufacturing printed circuit boards (PCBs) and process control tools. Over the years, the organization had faced several operational problems with respect to product quality and product delivery. This had created a negative impact on the parent company. This problem resulted in the development and implementation of new strategy in order to enhance the business operation. To counter the quality and the delivery problems, the British Chief Executive Officer (CEO) of PCI had been replaced with an American CEO. The major intention of the change in leadership position was to take the plant to a particular position where it can fulfill the obligations. The new CEO had identified situations which had resulted in creating challenges in the business operations. There were two major causes for the deterioration of operations. Firstly, the organizational structure and the approaches and abilities of the management and the employees were inadequate for PCI to accomplish high level of productivity. The organizational structure was not flexible enough to deal with the fluctuations in the demands of the product in the markets. Secondly, there was a lack of appropriate liaison between PCI and Marketing and Technology division which made the deliverance of organizational tasks quite difficult. Thus, the new CEO had flattened the managerial hierarchy. Previously, there were only three managers which directly reported to the CEO. With respect to the new managerial structure, the new CEO had combined two managerial layers and created a new eleven persons management team. Nevertheless, the new organizational structure created antipathy among the previous managerial team members. In order to bring the management team closer and mitigate the underlying problem of the plant, the new CEO arranged offsite management seminars concentrating on the development of vision and strategies for accomplishing them. There was a requirement for planning suitable strategies as a solution to the problem of PCI for pulling out the difficulties in manufacturing. The new CEO had developed strategic plans in order to accomplish five major elements which are high level of people involvement, strong supplier partnership, just-in-time management, total quality management and fulfillment of social responsibility. However, certain managers felt that the strategic improvement process was hurried and the time available for thinking through and deliberating the strategic proposal was limited. In order to implement the strategy, the CEO arranged meetings in order to describe about the strategy and ensure high level of people involvement. The major problem of strategic implementation was identified as increased pressure on the organization for generating quick outcomes as well as to turn the fortunes around. Thus, most of the time of the organization was spent on formulating actions required for accomplishing the devised strategic plan, rather than on taking time to explain them adequately to the workforce. In such circumstances, there was a significant buzz concentrating on the Americanization of PCI. Besides, there was anxiety among supervisors and middle level managers regarding the future of the organization and the future of their job position. In the meantime, the departure of CEO in 1989 had thrown the entire organization into an uncertainty regarding the implementation of the strategy. In the year 1990, new CEO had arrived who concentrated on making profit. He played the role of a provisional leader and was quite critical regarding the implementation of a revolutionary approach. However, the CEO was quite reluctant about the strategic plan which resulted in its suspension. As a result of the suspension of the strategic plan, PCI started facing several difficulties in regular business activities. In late 1990, again the new CEO departed, and the position of CEO was replaced by the materials manager. In order to mitigate the problem of PCI, the new CEO had resuscitated the manufacturing strategy. Although the new strategy was supported by the superiors in the parent organization, they were highly disappointed about the performance of PCI and attempted to close down the production plant. Therefore, a report had been prepared with respect to the new manufacturing strategy and its impact on the performance. After several discussions, the parent company had accepted the report and agreed to the implementation of a new manufacturing strategy. During the year 1992, major strategic changes had been accomplished with few interruptions. As a result, PCI started to gain benefits in terms of product quality, cost and delivery. The major situations that had caused challenges for PCI to implement organizational development were instability of leadership and frequent managerial changes. Besides, there was low level of commitment amid the management team which also hindered the organizational development procedure. Organizational Development Theory and Outcomes Organizational development is essential for every business. Organizational development is considered as a complex procedure which is demarcated as a set of values, strategies and technologies intended for a planned change of organizational work environment. The objective of organizational development is to enhance the performance of individuals and to improve the productivity. Organizational development in an organization can be accomplished by alterations of the jobs performed by employees. The procedure of organizational development at times brings about changes in the regular workplace routine which results in increased productivity. It facilitates the organization to improve and evolve into a more successful business entity. In order to make organizational development successful, certain situations must be fulfilled. Top management needs to support the development in order to make the possible changes in the workplace. There are several theories which are associated with organizational development. Lewin had developed field theory in the area of organizational development. This theory explores the influence of social environment as a dynamic area which has an impact upon the activities of employees in an organization. In this approach, Lewin believed that in order to make any changes there is a need for considering the entire situation of the organization. If only a portion of the entire prevailing situation is considered then it can distort the picture that is likely to develop. According to Kurt Lewin, organizational development is a three step procedure, namely, unfreezing, transformation and refreezing. In the first phase, an organization comprehends the requirements for development. In the second phase, i.e. transformation phase, the determined changes in terms of organizational development arise and in the third phase, implemented changes are refreeze into the regular tasks (Burnes, “Kurt Lewin and the Planned Approach to Change: A Re-appraisal”). The other theory in the area of organizational development is systems theory. Systems theory equates an organization with interdependent parts having specific activities and demonstrating consistent accountabilities. Therefore, in order to make organizational development successful, there is a need for understanding how an organization functions as a system. Systems theory of organizational development is based on the belief that an organization is an open system which can interact with the external environment. Thus, it is possible for an organization to obtain development by the arrangement of relations between different portions, resulting in its frequent growth. The major argument of this theory is that organizations are open systems which cooperate with the business environment and accordingly familiarize and develop with it (Millett, “Understanding Organisations: The Dominance of Systems Theory”). Social constructionism is the other theory in the field of organizational development. Social constructionism intends to reveal the method in which employees, teams and departments within an organization cooperate with each other and contribute to develop the perceived reality of the organization. The social made reality provides the framework for culture and organizational tradition that frames the ways in which activities are performed. The significance of this theory is that organizational truth and reality is actually a socially constructed knowledge which is subject to experiences and attitudes relating to the past and possible futures of the organization. This knowledge is distributed by attending to the stories and descriptions within the system. Furthermore, the reality of organizational future prospects can be transformed by introducing positive and modified alternatives. The major points of this theory are that relationship is crucial for forming collective truth and it is created by what people can conceive (Ferdig and Illinois, “Complexity Theories: Perspectives for the Social Construction of Organizational Transformation”). With respect to the sequence of change, most of the organizational development theories are classified into four major categories which are evolutionary change, dialectic change, life cycle theory and theological theories. Evolutionary theory is considered as a constant cycle of variation, maintenance and selection among several divisions irrespective of the rate of change. Thus, in this type of change, the result can be radical. The dialectic theory of organizational development is based on organizational presence in multicultural world of uncertain and inconsistent forces and morals that compete with one another. The lifecycle theory of organizational development suggests change procedure as direct irretrievable arrangement of prescribed phases which enable an organization to move from point of withdrawal towards an end which is foreshadowed in the existing state. Finally, the teleological theory discusses regarding the organization’s collaboration with the external and the internal ideas and its effort to reach clear objectives (Sengupta and Bhattacharya 6-7). The theory of Rensis Likert had conveyed a new facet to the organizational development. Likert described the nature of high and low productive organizations. He had recognized four management approaches and systems which include exploitative authoritative, benevolent authoritative, consultative and participative (Sengupta and Bhattacharya 6-7). With respect to the case study described above, it can be stated that PCI was a consultative type of organization. The management constructively used the ideas of team members and subordinates for developing and implementing strategies. However, the participation of team members and subordinates in the decision making is limited and major decisions are made by the top level management which includes CEO. Moreover, the information from subordinates and managers are partial and indirect. Considering the sequence of change, the organizational development of PCI can be considered as a dialectic change. PCI operates in varied business environments with uncertain and inconsistent forces. The organizational change in PCI occurred due to the confrontation of status quo. Furthermore, the organizational development that occurred in PCI followed Lewin’s field theory. In the first phase of development (i.e. unfreeze), the organization identified the requirements for change to be poor product quality and poor product delivery. In this phase, it can be observed that several employees had resisted the change due to the fear of loss of job position. In this phase, the major challenge for the management was to convince employees to accept the change. In the second phase, the actual transformation is initiated through the implementation of strategy. This phase is the central phase of Lewin’s theory of organizational change which is characterized by a period of confusion, since there was no apparent understanding of the new methods that can replace their position. The final phase of organizational development was to reconstruct new position of steadiness and re-link the employees to the acquainted work environment. Thus, considering the organizational developments and changes that had occurred in PCI, it can be stated that employees and organizations are dependent. Both employees and organizations are vital for determining the consequence of change in any organizational development intervention. The work environment in an organization is prearranged and it reacts to the changes. Recommendations Considering the case of PCI with respect to organizational development, there are certain recommendations which would be helpful for successfully managing change in the organization. Strong Leadership With respect to the organizational development that had occurred in PCI, it can be observed that there was a lack of leadership which hindered the procedure of change. Leadership is considered as one of the key elements for successful organizational development. The success of change management in an organization is determined by how a leader communicates with the employees. The key for effective change management and organizational development is a leader’s approach and corresponding judgments and feelings. Successful leadership concentrates on the capabilities involved in visioning, collaborating, inducing, cooperating and mentoring while maintaining an optimistic outlook. An effective leadership is needed to deal with the challenges as well as stressors along with considering the requirements of employees in an organization which are essential for successful organizational development (Darling and Heller, “The Key for Effective Stress Management: Importance of Responsive Leadership in Organizational Development”). Employee Commitment Employee commitment is considered as the other vital factor for PCI for successful management of change. Throughout the change process of PCI, it can be observed that several employees had not supported the change which resulted in delays and interruptions in the development procedure. In the period of changes in an organization, employees usually feel that their involvement in the organization has changed. The major reasons for this low level of attachment during the change procedure are job uncertainty, reduced trust, job reform and augmented stress (Mishra, “Role of Employee Commitment in Organisational Effectiveness”). The reaction of employees with respect to any change in an organization can be either active or passive. The active role of employees towards change can demonstrate a positive approach for change in the organization. This positive attitude can only be developed by employee commitment. Thus, in order to encourage employee commitment, it is essential for the organization to implement relevant strategies. These strategies can be classified into two categories which are short-term strategies and long-term strategies. As a part of short- term strategy, the organization will require to incorporate the following aspects: Treat employees with admiration and make them feel respected and esteemed during the change process The management must evidently describe the job responsibilities of employees and the supervisors must precisely communicate the activities that are to be performed in order to make changes The organisation must design the tasks in such a way that can permit employees to utilise their abilities, professional understandings and judgements The organisation must provide high quality of rich information to the employees regarding the future plans and activities. This is particularly important throughout the period of change and development because during that time employees usually feel anxious and uncertain regarding their future in the organisation Finally, the organisation must provide job improvement prospects and certain level of independence to the employees. This can significantly contribute to the increasing employee commitment With respect to the long-term policies, the organization can perform several best practices which encompass making better selection of employees, providing training to employees, offering socialization facilities, conducting better performance appraisals and bestowing promotion opportunities and delivering several compensations and benefits (Dordevic, “Employee Commitment In Times Of Radical Organizational Changes”). Recommendations for Good Organizational Development Practices Organizational development initially concentrates on evaluating organizational working environment, management style, decision making and other collaborative as well as relational activities. In present day’s dynamic business environment, the managerial executives who are in charge of making organizational changes must deal with a range of business issues. Thus, in order to better fulfill the requirements of the organization, the following best practices are recommended to PCI. Utilizing Strategic Approach to Change In order to ensure effective change, the organization must act strategically. In other words, there must be simplicity regarding the objective and the focus of the anticipated results from change initiatives which can make it easier for evaluating the effectiveness of change in the organization. Establishment of Adaptive and Leadership Capabilities An effective organizational development requires the establishment of adaptive leadership abilities which can help to concentrate on the improvement of managerial and tactical capabilities of the organization. Working in Partnership Apart from the above described practices, it is equally important for any organization to work in alignment with the common interests of employees. It will help to deal with any controversial issues that may arise throughout the change and can also facilitate to enhance the support from all levels of employees throughout the change procedure (Bolton and Abdy, “Foundations for Organisational Development: Practice in the UK and USA”). Finally, it can be stated that the case of PCI is worth knowing in today’s context as it can provide significant knowledge about the hindrances that may appear in the path of organizational change and development. The case would provide substantial benefits to the managers or supervisors who need to deal with the changes in an organization in order to enhance the performance. Through studying the case of PCI, they can understand the relevant aspects and the practices that can result in the accomplishment of successful changes in an organization. Works Cited Burnes, Bernard. “Kurt Lewin and the Planned Approach to Change: A Re-appraisal”. Journal of Management Studies 41.6 (2004): 977-1002. Print. Bolton, Margaret and Meg Abdy. Foundations for Organisational Development: Practice in the UK and USA. The Baring Foundation, 2007. Web. 19 Feb. 2013. Darling, John R. and Victor L. Heller, “The Key for Effective Stress Management: Importance of Responsive Leadership in Organizational Development”. Organization Development Journal 29.1 (2011). Print. Dordevic, Biljana. “Employee Commitment in Times of Radical Organizational Changes”. Economics and Organization 2.2 (2004): 111-117. Print. Ferdig, Mary A. and Lisle Illinois. Complexity Theories: Perspectives for the Social Construction of Organizational Transformation. Benedictine University, 2000. Web. 19 Feb. 2013. Mishra, G. P. “Role of Employee Commitment in Organisational Effectiveness”. Delhi Business Review 6.2 (2005): 89-93. Print. Millett, Bruce. “Understanding Organisations: The Dominance of Systems Theory”. International Journal of Organisational Behaviour 1.1 (n.d.): 1-12. Print. Sengupta, Nilanjan and Mousumi S. Bhattacharya. Managing Change in Organizations. India: PHI Learning Pvt. Ltd., 2006. Print. Read More