Perspectives on Organizational Change - Literature review Example

Managing Change  Place Introduction In the modern fast-changing business environments, organizations are left struggling to institutionalize new approaches and strategies in order to be more achievement-oriented and stay in tune with the global and local business trends. They are building numerous proactive constant improvement plans in order to create organization’s change capability as the key strategic advantage in the current century (Anderson & Anderson, 2010). However, obtaining change capability, an organization should have strong leadership skills, tools, mindsets and methodology that would enable business person to lead the change. Besides, it is critical to understand what drives change of the organization, as these drivers would establish the entire complex within which an organization change appears. While these drivers are the increasing customers’ demands for quality and services, the new technologies and rapid-changeable market trends, the way businesses run their activities is no longer effective, hence, organizations need changes (Jacobs, 1997). The main problem of implementing a change is in its design, since leaders focus more on the content of the change rather than on people or process (Anderson & Anderson, 2010). Distinct approaches in understanding change While some argue that any change and its effective management leads to the success of an organization, theories and approaches to change management speak about the contradictory facts, claiming that there is a lack of empirical evidence that would support the nature of necessity of change management within organization (By, 2005). Amagoh (2008) states, however, that it is increasingly important for any organization to achieve its competitive edge through managing and surviving change. He states that systems and complexity theories equip organizational leaders with the necessary knowledge and understanding about the uncertainties and demands of the global change. Spector (2012) instead argues about the scientific study of change implementation that forms the basis for behavioral change. It creates conditions of lasting behavioral change that change the environmental context of an individual and before the behavioral change appears, forces should be taken from in order to create disequilibrium. To create the behavioral change, there is a necessity of leaders to work on the contextual and individual levels that will enable organization to create new equilibrium and will motivate individuals on adjustment of the new norms and standards. Bringing change within such organizations as hospital and universities can be rather complicated task because of the bureaucratic way of running of these organizations. Instead, in less controlled institutions, changes are implemented with every CEO’s initiative as a part of organizational strategy. However, it is critically to undergo the process of change in order to meet the needs of the changeable business and organizational environment. Zell (2003) argues that in this context the process of change is close to the model described by Kübler-Ross for terminally ill patients that pass five stages of the change: denial, anger, bargaining, depress ion and acceptance. Being at the stage of denial, changes within the organization are perceived as a state of shock with the lack of information, fear of the unknown and changes in the role assignments. The denial aspect of the first stage is usually understood by the employees as something which is not necessary, since the processes were in Source: The Change Curve (n.d.) the right order. In order to avoid the negative reaction of the workforce mass, leaders should communicate the changes as much as possible, support individuals and reassure that changes are for good. Cameron and Green (2012) state, that the stage of anger of organizational change is usually focused in the blame on someone or something that allows the denial to continue and focus people’s fears on skepticism, frustration and even apathy. However, effective communication allows people to see new opportunities and feel certain relief during the stage of acceptance and then focus on the future possibilities and accept the situation of change more positively (Schoolin, 2010). The other approach in understanding change within certain organization is the humanistic psychology approach where Gestalt therapy is aimed to show individuals that they interrupt themselves in achieving what they want. Gestalt approach pays attention on the contact with people, context and need, accepting each person and each part of a system to perceive the world in large part (Farrands,2012). Source: Cameron and Green (2012) For the real change to appear, there is a need to experience the full Gestalt cycle. Cameron and Green (2012) argue that Gestalt cycle can be utilized to the stages in managerial decision making, where the manager or leader is seeks information, share it and reviews the past performance. One tries to mobilize energy and interest in proposals and support ideas if such occur, chooses the course of possible future actions, tests and checks for common understanding and begins to develop the implementation and action plans. Wuchty, Jones and Uzzi (2007) consider that teams are more productive and have exceptionally high impact research than individuals. Hence, effective management of change within teams creates positive predispositions to creation of more innovative solutions and bringing more success and productivity to the organization. West, Hirst, Richter andShipton (2004) argue that use of change through innovation was achieved largely by the collaboration of teams within certain organization. For effectiveness of teams and bigger commitment to reflection and ongoing evaluation, Tuckman has developed phases that enabled the teams to grow, face challenges, tackle problems and find solutions. The teams were changed according to the stage from being ineffective to the period of high performance. The team evolvement toward effectiveness depends greatly on the leader’s role and interventions that are made. Merger and acquisition as organizational change scenario Despite the wide range of approaches and theories that enable organizational leaders and managers to handle change, modern global economy has been marked by the significant business and talent survival tactics that respond the challenging economic conditions (Hewitt, 2013). Mergers and acquisitions are considered to be the major strategic moves for the companies’ restructuring and meeting the new economic and competitive conditions. The main reasons for such organizational change scenario may be the market dominance, risk spreading and cost cutting, growth for world leadership, technology and talents acquisition, which is on the rise in the last decades (Schuler & Jackson, 2001). Besides, there are assumptions that such organizational change scenario leads to the fastest and easiest ways of organizational growth within the shortest period of time, despite the fact that mergers and acquisitions are difficult to do. In the recent time, cross border alliances have also become the efficient way to organizational expansion in the new markets and incorporation of new technologies as well as attaining new talented employees. Stahl, Nemdenhall and Oddou (2012) argue about the importance of international mergers and acquisitions in their majority as friendly activities, however, when the takeover target occurs, that means that there is an unsolicited bid that is made for a poorly performing company. In the context of strategic motives of any merger or acquisition, the emphasis is placed on the company’s attempt to improve the strength of its strategy. As stated (Hopkins, 1999), the examples of strategic motives are the creation of synergy, capitalization on the company’s core competence, enlargement of the market power and achieving advantage of the parenting advantage. The market motive of the international acquisition is called by the company’s striving to enter the new market within the same or new country. Along with being fast in acquiring a position in the certain market, it is also a possibility for the company to add additional capacity to the market and establish brand name within the new market environment. Acquiring of the same or close related company ensures the reduction of costs through establishing economies of scale. Besides, the macroeconomic differences between the countries are also among the economic motives for acquisition and merger. By restructuring its corporate activities, Nestle, a Swiss multinational food and beverage company, has expanded its worldwide positions by replacing operational motives of economies of scale to the strategic motives where competition with other food companies and retailers was place on the first place (Custance, Harness, Hingley & Lindgreen, 2012). The company has also chosen merger and acquisition as organizational change scenario, when in 2011 it reached an agreement to pay 60% interest in Chinese candy maker. The deal was one of the biggest deals in China and constituted the biggest deal for Nestle itself. As Flannery (2014) reported, Nestle has already opened a research and development center in the Chinese factory of Hsu Fu Chi brand, by which the company has demonstrated its high commitment to developing of the Chinese brand. There are also takeover experiences within the Nestle organizational change. Thus, in 1992 the company won the takeover battle of Source Perrier SA and its mineral water collection. Nestle ended a five-month takeover process where it involved the number of suitors for the target company (GA, & COMP, n.d.). However, the European Commission determined the deal would limit free trade and thus approved Nestle to modify the initial merger plan by fulfilling a series of commitments. As a result, Nestle won the takeover of Perrier SA. By 2000 the Nestle Company operated in eighty countries and employed more than two hundred thousand people. The success of the company may be explained through a commitment to long-term outcomes that the company will never scarify for the short-term objectives and the path of numerous changes that the company passed over the years. () states, that by 1900 the company changed its approach to global expansion by purchasing local subsidiaries in the foreign markets. Further, it paid more attention to diversification of its product, promoting its growth. It acquired L’Oreal and purchased Alcon Laboratories Inc. In the later years, the company improved its financial data through continuation of strategic acquisitions. This gave the company possibility to purchase the Carnation, the company known for its evaporated milk product. The modern acquisitions of the company are Ralston-Purina, which made Nestle the global pet food manufacturer and the Dreyer’s Grand Ice Cream, which gave the merged company to obtain the largest supermarket sales share in U.S. (Day, 2002). Interventions to facilitate change Change is a part of Nestlé’s corporate culture, hence, each unit of the company contributes to this core attribute in order to ensure the constant improvement and development of the company. The economic and social factors have called the company to change it strategies. Therefore, the market and research and development have become the main prerogative of Nestle (Lee, 2014). Using the behavioral approach to change, there is a necessity to mention company’s ambition and commitment on research, product and innovation. Thus, the company has developed the game-oriented training module in order to assist Creating Shared Value understanding and certain behavior among the Nestle leaders. The solution for the initiative is the delivery in its International Training Centre that will be deployed globally (Nestle in society, 2014). In context of psychodynamic understanding of change dynamics, the company fosters its culture based on the values of trust and mutual respect toward its stakeholders, in which employees are the main drivers of the company’s success. Hence, Nestle declares its obligations toward employees through implementing of the Employee Relations policy that requires the compliance of the workforce with the law and also guides company’s actions toward compelling the existing rules (The Nestle employee relation policy, 2010). As a part of humanistic approach of change, the company develops the learning of its organization as a part of the Company’s culture. It means that when any change is planned or implemented, the employees at all levels are conscious about the need of such change and will to learn as the non-negotiable condition in order to be the beneficial unit of the company (The Nestle Human Resources Policy, n.d.). Potential pitfalls during the implementation of the change program Schuler and Jackson (2001) consider that one of the main pitfalls in implementing the change strategy within any organization is the human resources. The workforce issues are the primary indicator of the success or failure of changes, whether they are merger and acquisitions or changes within the internal organizational structure. Since many mergers do not create the shareholder value as they are expected, the combination of differences and an ill-perceived human resource integration strategy is one of the biggest reasons for failure of change. Change situations can cause many employees feel confused and be unsure about their future belonging to the certain organization. Along with the miscommunication, uncertainty and role conflict can enhance talents’ turnover and delays in reaching company’s objectives. Among the other pitfall in change implementation there is a leadership readiness, especially if leaders lack decisiveness, and risk mitigation, where all relevant stakeholders impacts are not identified. References Amagouh, F. 2008. Perspectives on organizational change: Systems and Complexity Theories, The Innovation Journal: The Public Sector Innovation Journal, Volume 13(3) Anderson, D. and Anderson, L. 2010. Beyond Change Management: How to Achieve Breakthrough Results Through Conscious Change Leadership, John Wiley & Sons Anderson, D. and Anderson, L. 2010. The Change Leaders Roadmap: How to Navigate Your Organizations Transformation, John Wiley & Sons By, R. 2005. Organizational change management: a xritical review, Journal of Change Management, Vol.5, No.4 Cameron, E. and Green, M. 2012. Making Sense of Change Management: A Complete Guide to the Models Tools and Techniques of Organizational Change, Kogan Page Publishers Custance, P., Harness, D., Hingley, M. and Lindgreen, A. 2012. Market Orientation: Transforming Food and Agribusiness around the Customer, Gower Publishing Day, S. 2002. Nestlé and Dreyers to Merge in $2.4 Billion Deal, Creating Top U.S. Ice Cream Seller, The New York Times, [online] Available at: http://www.nytimes.com/2002/06/18/business/nestle-dreyer-s-merge-2.4-billion-deal-creating-top-us-ice-cream-seller.html [Accessed on March 5, 2015]. Flannery, R. 2014. Nestle Boosts Sweets R&D In China With Hsu Fu Chi Center, The Forbes, [online] Available at: http://www.forbes.com/sites/russellflannery/2014/06/16/nestle-boosts-sweets-rd-in-china-with-hsu-fu-chi-center/ [Accessed on March 5, 2015]. Ga. J. Intl & COMP. 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