Organizational Management Change - European Electricity Company - Case Study Example

Organizational Management Change Contents Part A 3 Introduction 3 Report Summary 4 Part B 4 Organizational Changing Issues 4 Recommendations 7 Limitations 11 Additional Alterations 12 Reference List 14 Part A Introduction The companies are exposed to extensive market rivalry. In order to enhance competitive strengths in business and improve productivity level, the approach of organizational change is often adopted by profit making firms (Cawsey, Deszca and Ingols, 2011). Organizational change is a method whereby a company changes the existing corporate structure. A company’s state of commercial affairs is largely affected by incidents taking place in the external and international business environment. Consequently, companies often bring about changes in the organizational structure under the influence of external or internal sources. It should be noted that external market pressure is often responsible for creating internal changes in a firm. The economic, political, social, cultural, technological and environmental shifts in the business world are factors that create artificial pressure for organizational changes. Also, the nature and features of factor services owned by an organization are influenced by its management changes. Hence, in order to experience stable trading activities and avoid constraints in business, firms ensure congruency between external or internal changes with respect to their own management structure. The case study highlights on a European electricity company named ELEC. It states that the company is facing a situation, where a change in the external market causes artificial pressure to bring about transformation in the existing organizational arrangement. This external market factor is political reforms in Europe that demand for greater efficiency in the electricity industry therein. The political authorities of the country had undertaken this decision to de-monopolize the concerned industry (Cawsey, Deszca and Ingols, 2011). The authorities perceived that monopolized services provided by ELEC were inefficient and had diminished net social welfare of the economy. The reforms aimed to render the electricity industry of the U.K. more competitive in nature. However, such reforms have forced to change the existing organizational structure of ELEC. Prior to the reforms, ELEC was exercising monopoly power in the electricity market and its employees were highly satisfied with compensations and allowances provided (Cawsey, Deszca and Ingols, 2011). After the reforms, the organizational managers of ELEC decided to bring about certain changes in operational quality, thereby modifying the existing management structure. The management authorities of ELEC had desired to render its services and activities more competitive in the market through a new management system. The company also decided to operate more rationally and maximize the output subjected to cost minimization. Minimal cost requirements involved stricter resource allocation. The management of ELEC had become stricter regarding productivity and efficiency levels of its existing workforce. The company introduced a program named “Qualified Development” in order to facilitate desired changes in the management structure. Nonetheless, the existing employees started to face issues in adjusting with the new regulations and management structure. The case study tries to analyze factors that cause internal resistance of human capital resource in ELEC due to changes made in the external and internal factors. It was found that the company’s communication system was inefficient. The regular workers were not adequately informed about the new management structure and rules (Cawsey, Deszca and Ingols, 2011). Confrontation, exhaustion and waiting were the three primary issues faced by the regular employees of ELEC. After examining such problems, the case study presents precise ways through which CEO of the company attempts to eradicate human resource management problems prevailing therein. Finally, the study provides certain recommendations for ELEC in order to reduce issues and frustration of the less productive employees, which in turn will make them aware of the significance behind introducing the organizational change. Report Summary The report will elaborate on the primary business problems faced by ELEC. The context would recommend ways whereby the company would be able to lower the level of frustration and dissatisfaction among the existing workforce. It will enumerate limitations of the recommendations given. Finally, the paper will include some additional alterations, which will enable the company to improve the current situation of its internal business management. Part B Organizational Changing Issues The degree of market uncertainty has considerably increased in the contemporary era. As a result, a company can conduct business successfully by making its factor services adaptive in nature. After the emergence of globalism and liberalism of trade, the degree of competition prevailing in all industrial segments has enhanced, which require greater operational efficiency in every organization. Human resource management has become a complex business management issue (Cawsey, Deszca and Ingols, 2011). The employers are often concerned about downsizing and assigning the role of each employee, when the external business environment turns highly volatile. If the workforce management system of an organization is not resourceful, then severe losses can be experienced in terms of revenue or goodwill in long run. In order to lead within the competitive markets, companies often bring about major changes in the existing organizational structure. Then again, it should be noted that these changes can adversely affect utility levels of the workforce. In long run, productivity level of the unsatisfied employees declines and limits an organisation’s competitive power (Chenet, Tynan and Money, 2000). It is believed that adequate communication between the management authorities and employees can contribute towards minimizing issues related to the human resource management. The communication system of ELEC was inappropriate. When the company changed its management structure, the employees felt that the authorities were behaving in “mysterious ways” and had become sceptical (Cawsey, Deszca and Ingols, 2011). The management officials included drastic managerial alterations without informing or involving the workforce in the process (Carolan, 2014). Consequently, the workers were not aware of the significance of changes made and begun to suspect the company’s true motive. The problems faced by ELEC can be analyzed with the help of theoretical models introduced by renowned scholars such as, Kotter and William Bridges. The Kotter’s model helps to maintain employee engagement during an organizational development process. It is also popularly known as the change implementation model. The model states that any organizational change should be adopted in eight stages. These stages are: Urgency creation Coalition Formulation Vision Creation Vision Communication Increasing Vision Employability Improvement Consolidation Change Institutionalization Kotter stated that organizational change can be successfully implemented with the help of supportive and facilitative management, implying that a company should bring about internal management changes through mutual support (Tepper, 2000). Even so, the managers of ELEC had changed the organizational management structure without the support of its employees. The new CEO of ELEC did not clearly mention the rationality and objectives of changes made to employees. Moreover, the company did not recruit mid-level managers who would help the employees adapt to the changes in organizational structure (Tepper, 2000). Mid-level managers act as functional specialists and are able to facilitate the changing process in a company. The absence of such managers has considerably heightened the degree of frustration among the workforce of ELEC. It can be stated that a prominent problem faced by ELEC’s management was related to poor communication system. It is believed by scholars that communication often acts as a bridge between organizational change and employee involvement in the process. Research studies have proved that if employees are not aware about the changes made in the management approach, they become uncertain about position of the organization in future (Tepper, 2000). Figure 1: Importance of Employee Empowerment (Source: Anaza, 2014) As shown in the above figure, it is assumed that greater empowerment of the workers helps to augment their job satisfaction levels. Improved satisfaction further enhances the perceived service quality of a company. The employees of ELEC would not turn aggressive and suspect the management, if they had been adequately aware of the organizational practices and changes made therein. The workers of the company were not satisfied with the relocation process. Moreover, they were unhappy with the rigid working hours introduced and refused to work extra hours. If ELEC desired to experience greater focus and commitment from workers, then it should have informed them about the significance of bringing about the changes. As a result, ELEC had faced severe issues while implementing the organizational change. The management officials of the company neither maintained a smooth communication network nor did it inform employees about changes made in the operational structure. From the above theoretical analysis of Kotter, it is proved that any organizational change cannot be effectively implemented without the essence of efficient coalition between the management authorities and employees. Organizational change introduced by ELEC was highly rational and indispensible subjected to the external market conditions (Huse, 2003). Even so, these changes rendered the employees less productive and incompetent due to inadequate communication. Recommendations ELEC should adopt the process of guidance location and ignore the existing top-down approach. The company must realize that only effective communication can help to make the internal management changes successful. The following section will explain few ways through which ELEC can effectively resolve the existing problems faced. ELEC should firstly elaborate on the rationality of establishing the management structural change, which can be done with the help of improved communication means with the employees. The management officials of ELEC can conduct regular meetings with the workers for this purpose. Such interactive sessions would lower the level of ambiguity and uncertainty faced by the employees (Brown, et al., 2002). According to the case study, managers should make the employees realize that in absence of the changes, ELEC’s competitive advantage in the market would decline, along with the aggregate revenue. The CEO and top level managers of the company should convince the mid and low level employees that without their active cooperation and dedication, the changes introduced cannot be fruitful. Several scholars such as, Kotter, believe that without coalition and mutual support, any organizational alternation process is ineffective. The company should introduce a special chain of mid-level managers who will help to lower the communication gap between the senior management authorities and employees. These managers can resolve the potential issues faced by ELEC regarding working hours, job locations or compensations. ELEC should introduce a participatory ambiance in its workplace. The company should not be autocratic in nature. The case study points out that the company’s management structure was changed without the involvement of employees. The company should ensure that the existing workers are allowed to contribute their opinions pertaining to the organizational changing program. The CEO of the company can recruit additional top level human resource officials with special transformational leadership skills. These officials would manage the workforce on grounds of individualized consideration, intellectual stimulation, inspirational motivation and idealized influence (Spreitzer, 1995). Such leadership activities would render the employees of ELEC more productive and competent at work. ELEC should introduce new motivational programs for its employees. The productive and hard working workers should be provided with additional financial and non-financial rewards or incentives. It should be noted that motivation can bridge the gap between willingness and ability to work, thereby rendering employees more competent in ELEC. The employees can become greatly productive with adequate training sessions. Figure 2: Training Program (Source: Kimando and Njogu, 2012) ELEC can introduce new employee training program as per the above framework. Considering the above recommendations, ELEC can introduce certain implementation programs, which would reduce the difficulties related to workforce management (Brown, et al., 2002). Taking these prevailing issues into account, the three major implementation plans are mentioned below. Communication Plan Communication Plan Outline Activities Implication Implementation Tenure Elaborating rationality of the organizational change This would lower the degree of uncertainty among employees Conducting meetings in regular intervals 3 Months Making employees realize that they are indispensable assets of the concern This would enhance trust of the employees towards the new management structure Through top level managers 3 Months Recruitment of mid level managers These professionals would help to lower the communication gaps in the firm. Through mid-level managers 3 Months Ensuring participatory workplace atmosphere This would enhance empowerment and efficiency of the workers Through the top and mid-level managers 3 Months Human Resource Management Plan Human Resource Management Plan Outline Activities Implication Implementation Tenure Recruiting additional senior level human resource professionals To increase productivity and efficiency levels of the workers Through human resource officials 6Months Introducing employee motivational programs This would improve the level of worker’s job satisfaction and productivity Through human resource officials 6 Months Training Plan Training Plan Outline Activities Implication Implementation Tenure Conducting regular training sessions To improve working efficiency of the employees Through specialized experienced officials 6 Months Conducting knowledge sharing sessions To enhance knowledge base of the employees Through specialized experienced officials 6 Months It must be noted that the above mentioned three plans span over tenure of one year and can be executed together. Limitations From the case study, it can be claimed that the primary business issue faced by ELEC is related to growing cynicism among workers against the organizational change implemented. The employees did not protest against such changes, but were highly dissatisfied with the organization. The workplace climate of ELEC was extremely unhealthy for employees’ productivity or efficiency growth. From the above analysis, it is found that the company had faced such problems primarily due to poor communication network and less transparency in operational procedures (Brown, et al., 2002). The organization must elaborate on urgency of the change to its workforce, so that they are able to share the vision of senior managers. The report has presented certain recommendations and implementation plans, which will contribute towards eradicating the existing issues faced by ELEC. Then again, there are certain limitations present. It has been stated in the case study that the employees addressed the company as “Mother ELEC”. Previously, the organization enjoyed a monopoly position in the market, which is why discrimination and inefficiency in terms of the employee services were permeable. Nonetheless, after implementing the new political reforms, the company’s monopoly power had declined, which required proving its position in order to sustain in long run (Brown, et al., 2002). This a requirement has inevitably demanded for greater participation and efficiency in the existing workforce. Furthermore, such objectives could be only fulfilled with additional work effort from the employees. It was likely that the workers would resist to over working with the existing resources. Hence, a primary issue for ELEC is its conventional monopolizing business attitude (Brown, et al., 2002). The recommendations claim that ELEC must initiate new employee training, engagement and motivational programs. However, such practices might restrict pace of the organizational management change desired to be achieved by the company. Workers training and knowledge enhancing sessions are time consuming. The regulations imposed by the government on ELEC had demanded for rapid organizational change. Under such circumstances, the time consuming process of change implementation can prove to be expensive for the company. The requirement to launch several recruitments and implementation programs would involve large financial expenditures. Owning to turbulent state of the electricity market in the U.K. and increased need for gaining business competency, such expenditures relating to workforce management would be less feasible in nature (Brown, et al., 2002). Additional Alterations There are some modifications whereby ELEC can successfully implement the recommended programs by removing the forecasted barriers. Special employee assistance programs and group working can resolve the implementation issues. The employee assistance programs of ELEC would lower the employee problems as well as ensure that they are satisfied with their job roles. The case study states that the employees of ELEC are encountering extreme psychological stress due to increased work load and stricter organizational management. As a result, workers assistance programs introduced by the company can be highly beneficial. In addition, it should be noted that the company’s implementation plans would not be successful without presence of the employee assistance programs (Milliman, Czapleurski and Ferguson, 2003). The problems faced the workers pertaining to training, communication and human resource management activities cannot be analyzed and resolved without the employment assistance programs. Apart from this, implementation issues can also be resolved by ELEC through introduction of T-groups. These groups would help the existing employees to realize their strengths and deficiencies. Following such realizations, employees would be able to correctly recognise the ways to improve efficiency and productivity at work (Milliman, Czapleurski and Ferguson, 2003). The case study points out that the existing employees of ELEC are doubtful about its new organizational change. They feel that the changes can adversely affect them. As a consequence, the T-groups can convince the workers about true intensions of the changes made. Besides such means, the company can appoint external trainers who can render the employees more dynamic by way of resolving their respective issues. It is true that formal means of training would help to improve the working capability of each employee. Nevertheless, informal approaches of training and knowledge sharing sessions would be beneficial in order for ELEC to alleviate prevalent issues (Milliman, Czapleurski and Ferguson, 2003). ELEC had once downsized 10% of its inefficient workforce. If all other approaches appear to be less effective, then ELEC can opt for downsizing once again. However, the company should appoint professional envoys so as to carry out the above mentioned processes, which in turn would contribute towards enhancing organizational goodwill in the market. Although organizational change is indispensible for ELEC, it can become successful only with the help of workers’ support and coalition. Reference List Anaza, N. A., 2014. Factors influencing perceptions of service quality in cooperative extension workers. [online] Available at: [Accessed 8 July 2014]. Brown, T., Mowen, J. C. Donavan, D. T. and Licata, J. W., 2002. The customer orientation of service workers: Personality trait effects on self-and supervisor performance ratings. Journal of Marketing Research, 39(1), pp. 110 - 119. Carolan, M., 2014. Cheaponomics: The high cost of low prices. London: Roultedge. Cawsey, T. F., Deszca, G. and Ingols, C., 2011. Organizational change: An action-oriented toolkit. London: Sage. Chenet, P., Tynan, C. and Money, A., 2000. The service performance gap: Testing the redeveloped causal model. European Journal of Marketing, 34(3), pp. 472-497. Huse, T. D., 2003. Transformational leadership in the era of change. [pdf] SAMS. Available at: > [Accessed 8 July 2014]. Kimando, L. N. and Njogu, G. W., 2012. Factors that affect quality of customer service in the banking industry in Kenya: A case study of post bank head office Nairobi. International Journal of Business and Commerce, 1(10), pp. 82-105. Milliman, J., Czapleurski, A. J. and Ferguson, J., 2003. Workplace spirituality and employee work attitudes: An exploratory empirical assessment. Journal of Organisational Change Management, 16(4), pp. 426−447. Spreitzer, G. M., 1995. Psychological empowerment in the workplace: Dimensions, measurement, and validation. Academy of Management Journal, 38(5), pp. 1442-1465. Tepper, B., 2000. Consequences of abusive supervision. Academy of Management Journal, 43(2), pp. 178-190. Read More