Change within Ford Motor Company - Case Study Example

Change within Ford Motor Company Name Institution Course Date Table of Contents Introduction 3 Ford Motor Company 3 Ford’s Current Status 4 Ford Culture 5 Ford’s Experience and Stability Project (ESP) 6 Fords Technical Maturity Models 8 Fords Technical Maturity Models 8 Why Cultural Change is Important in the Organization 9 List of references 14 Change within Ford Motor Company Introduction Change management can be described as the practice of constantly replenishing the capabilities, frameworks, and directions of an organization to cover the changing requirements of internal and exterior consumers (Balogun and Hope, 2004). Change can also be defined as an existing aspect of organizational existence at a strategic and functional level. Therefore, an organization should be able to know its goals in the next few years as well as the different techniques it should use to control all transformations that it will face when achieving its objectives. Moreover, organizational change and organizational approach are inseparable. Because organizational change plays a huge role in any company, its control tends to be an extremely needed administrative expertise. Ford Motor Company During its 100th centennial, Ford Motor Company was still facing challenges because of inadequate technological proficiency (Connelly, 2000). The inadequacy in technological profundity inside the organizations workforce is because of an intensely inbuilt culture, which motivates the personnel into changing positions after every 18 to 24 months to different sections of the organization. The challenge is worsened by untimely retirement, sell-offs, and technological design work outsourcing to suppliers. Because of inadequate technological competency, Ford decided to transform its operations. Currently, the organization is based on operation that has loose tie-backs to several automobile programs. To support another corporate background that knows the importance of technological depth, Ford developed change projects. The change projects to be discussed in this paper will be the ESP (Employee Stability Project) and the TMM (Technical Maturity Model) used to tackle inadequate technological depth and corporate cultural change. Ford’s Current Status McIntyre (2002) stipulates that Ford Motor Company takes the second place amongst the leading industrialized conglomerate. The company has employed about 335,000 personnel in about 200 marketplaces in 6 continents. Ford has several vehicle brands such as Volvo, Mercury, Mazda, Lincoln, Land Lover, Jaguar, Ford, and Aston Martin. Its automotive-based services entail Hertz, Quality care, and Ford Credit. It is also separated into two major activities such as the fiscal services part and the automotive part. The fiscal services part handles automobile insurance, leasing, and monetary issues including renting and leasing of trucks and cars. Ford benefits very much from its automotive sector since it brought about 85 percent revenue in 2001 and the fiscal services sector brought about the other 15 percent. The automotive business is an established market that has intense rivalry and thin restrictions. However, although the company obtained 162 billion dollars in revenues, it just obtained 880 million dollars in earnings. This was a decrease because in the previous years, the company has obtained about 6.70 and 6.72 billion dollars in proceeds in 2001 and 2012 respectively. This indicates that Ford Motor Company is facing several challenges attempting to sustain its headship in the vehicle industry. In North America, Ford’s Company revenue and sales dropped to approximately 12 percent in 2001. It also lost about 2.15 billion dollars in the same region when compared to 5.57 billion dollars in 2000 (Connelly, 2000). To decrease cost, Ford postponed remunerated overtime to 2011, significantly reduced company trips, and delayed office supplies purchases. The company is also faced with pressure from its business rivals. However, Ford challenges had started in 2000 even making it to announce job eradication round while cost cutting to remain as the main priority. Ford Culture McIntyre (2002) states that Ford Motor Company is a large company with a storied history. It is very competitive in the automobile industry having experienced flourishing times and horrible times. Moreover, most Ford staffs have a sense of pride because they have compelled the company to become successful as it is today. Another thing that the personnel have a sense of pride is because they have fought through difficult times and come out victorious. The employees work in a “family” form of environment. They profoundly recognize with all the commodities they plan and create. They know each other especially those that compel Ford especially those who possess opinions regarding the trucks and cars built in the company. When operations are flowing smoothly, employees feel better concerning their job but when things do not go as planned, things become personal. Indeed, since Ford has operated for about 100 years, it is apparent that its culture is ingrained. Although Ford’s culture tends to evolve gradually, past influence tend to be evident. Ford as a company is compelled by its products. The engineering business has more power and influence over the company’s products. The main objective includes delivering manufactured goods that cover all technological requirements. Therefore, employees are stressed on how to carry out their duties in an undermanned setting formed by the company’s business and monetary challenges. Ford also recognizes and rewards personnel who are enthusiastic on working on extra hours. In the previous decades, employees at the company have obtained rewards because of move-around obtaining more experience in the firm. In 2001, Ford Motor Company underwent a major change to concentrate on technological proficiency because of the increasing quality difficulties and rising expenditure. The company also realized that employees’ identification with its consumers and products play a huge role in its development. Additionally, the company wanted to avoid circumstances where power struggle exists amongst functional companies such as the way Ford was in the 2000s. The new Ford still remained a matrix company where operational connections became powerful and direct compared to the program and product connections. Engineers were required to directly repot to an operational manager. Based on the company, an operational manager supervises body arrangement for a project or either supervises certain operation in a single group in the five automobile segments for instance supervisor in the mechanism and locks for all SUVs at Ford. Ford’s Experience and Stability Project (ESP) Inside Ford’s profoundly in-built culture, the personnel have accepted the system where every employee has another position after 18 to 24 months. The company rewards its employees to go around obtaining various experiences. This event commenced during the Ford 2000 project reorganization. Although this reorganization took place in the 90s, the whole organization swiftly adopted it while the employees held it deeply. Staff who did similar jobs for over 18 to 24 months started to think that their profession was becoming delayed in case they failed to move. Together with premature retirement tactics, Ford faced a corrosion of technological proficiency. De Wit and Meyer (2000) say that even though Ford’s management identifies this matter, it has failed to successfully it. It is presently executing the ESP (Experience and Stability Project) across diverse operational organizations to handle this challenge. In 2002, Ford identified 8 programs in its Product growth’s business plan. A group of HR managers and product development function launched the control structure of the ESP initiative. The Experience and Stability Project operations are based on 3 major points namely: a) The creation of processes and practices that promotes a culture that depends on the company’s goals. b) the requirement to form an infrastructure that supports and values the growth of engineering proficiency and know-how c) The aspiration that Ford engineers expand technological expertise and profundity in acknowledged proficiency areas. Ford also formed Action Groups intended to implement plans in every function. The company also developed principles to concentrate and support the groups that would assist in providing direction as well as the establishment of general vision for their recommendation and work. They include: a) Elevation of engineer to a respectable position b) Creation of a setting that provides both material and emotional rewards c) Removal of obstructions that restrain engineers from carrying out their job d) Establishment of prospects that technological quality is an important PD requirement e) Leadership and technological deepness plays a huge role to the organization as administrative leadership The Experience and Stability Project (ESP) also created another position inside the engineering society known as a senior engineer (De Wit and Meyer, 2000). This group of engineers is delegated by title not through management echelon position in salary rating or responsibility. They are also identified because of obtain a profound proficiency in a certain operational area inside the organization. Additionally, senior engineers’ responsibilities differ by ranks. The selected group started to execute the ESP by leveling the initiative to Body Engineering subset commonly referred to as ‘Pilot of the pilot.’ Ford Motor Company’s operational manages and chiefs went to a one day offsite. During the camp, they were trained about the experience and stability project so that they can also train the company’s staff. By the end of the training, more than 100 engineers knew about ESP. Fords Technical Maturity Models Ford Motor Company established Action Groups that planned and formulated the TMM as well as support infrastructure for every operational practice. The design groups consisted of diverse engineers and management levels. The Technical Maturity Models is a technicians and engineers tool that defines projected competencies in major areas. The Technical Maturity Tool must be employed together with some discipline-explicit mastery records to; a) Map individual developmental objectives b) Take part in growth negotiations with mentors and supervisors c) Self assess technological job performances Based on competencies, three proficiency levels exist whereby engineers are able to rank themselves. The first proficiency level includes acquiring where the novice familiarizes him/herself with tasks and skills, fundamental concepts of knowledge, or processes for performing an activity. Stage two deals with application where the user possess adequate knowledge, expertise, and skills to carry out efficiently with no help. In the last stage, the user has widespread knowledge, experience, and skills concerning a matter. Fords Technical Maturity Models Ford Motor Company established Action Groups that planned and formulated the TMM as well as support infrastructure for every operational practice. The design groups consisted of diverse engineers and management levels. The Technical Maturity Models is a technicians and engineers too that defines projected competencies in major areas. The Technical Maturity Tool must be employed together with some discipline-explicit mastery records to Why Cultural Change is Important in the Organization There are different suggestions concerning successful change communication (Wilson, 1992 and Senior, 2002). They recommend about resisting the need to orally communicate standards. To a huge number of employees, communication can be trite. Both researchers recommend that actions play a huge role in communication rather than words. For example, a person who issues his/her business cards that possess the words “I do not swindle, lie or defraud” can lead to suspicions. Moreover, most organizations fail to exert more effort when finding and stating facts, which strengthen their projects. They prefer wrapping the transformation in attractive words. It is also important to note that face to face individual communication does not have an alternative. However, conferences, publications, and videos are not effective techniques to communicate change. Although individuals can prefer videos to obtain information, they fail to motivate change on people. When his asynchronous one-direction communication is carried out in assembled audience, it leaves room for ridicule and criticism. Publications do not require audience assemblage although they tend to be unreliable and are mostly incomprehensible. Senior (2002) posits that most companies prefer big conferences when communicating change projects. Unfortunately, meetings possess similar video problems since it is a one-direction communication technique used in a big crowd. Individuals are expected to resist change instead of supporting it in a group mentality. An apparent illustration of one-on-one communication pre-eminence includes the rumor mill. Organizations can utilize different techniques such as memos and emails to send information amongst their employees but they cannot surpass a rumor mill. Change must be aimed at front-line supervisors (Taylor and Hirst, 2001). However, most organizations distrust their senior managers. Additionally, employees must heed about change from an individual, to whom they are professionally close to, for instance their managers. Research indicates that staffs like to receive information from their direct supervisors. The studies continue to indicate that change briefings should occur in two rounds. First, senior managers should explain about the change and ask for supervisors’ opinions. The superior manager then takes the recommendations to the change group where they ought to integrate fully since individuals tend to promote an exertion they take part in. Second, the superior manager should report on the recommendation status and clarify about the absolute plan. Reasons behind Failure of Cultural Change in Big Organizations Most articles provide various reasons as to why cultural change does not succeed in most big companies. On the contrary, learning experiences from such cultural change failures result to successful cultural change. An article by Pfeiffer and Sutton entitled “The Smart Talk Trap” states that individuals in most organizations behave as if arguing about a hurdle, making decisions, and drafting action plans is similar to fixing the problem in sight. According to Pfeffer and Sutton (2000), ‘Smart Talk’ describes a certain form of conversation that hampers action. Corporate traditions and business institutions often strengthen the ‘Smart Talk’ by likening leadership prospective with the capacity of often speaking intelligently. Such individuals mainly display very dangerous smart talk aspect, concentrate on negative things, favor unreasonably abstract and sophisticated language. The inclination of concentrating on negative things mainly drifts into condemnation for the sake of condemnation. Additionally, utilization of unreasonably sophisticated language but at the same time sounding fine perplexes people. Both propensities bring plans of action into a stop. In the article “Why do Employees Resist Change?” by Paul Strebel, company reengineering accomplishment pace amongst Fortune 1000 organizations falls below fifty percent (Studer-Noguez, 2002). Such extensive challenges originate from one general source- different view about change from supervisors and employees. Supervisors should understand their employees’ perspectives so that they can be able to examine ‘individual compacts’ terms between the company and its employees. Individual compacts can be described as reciprocal responsibilities and joint commitments either implied or stated that describe organizations and employees relationships. Unless supervisors define other terms or persuades their work force into acknowledging them, it becomes impractical for supervisors to anticipate the personnel to completely accept changes that modify the status quo. These individual compacts possess 3 general aspects namely public, psychological, and formal. The public aspect deals with implicit regulations used in career growth, decision making, resource allotment, layoffs, risk sharing, conflicts resolution, and promotions. Some of the questions that relate to the social aspect include, do real regulations that measure what employees receive in a company exist? Does one employee’s have the same values other employees in the company? The psychological aspect tackles employment relation elements that tend to be mostly inherent such as the joint expectation elements and the reciprocal agreement elements, which originate from dependence and trust feelings (Pfeffer and Sutton, 2000). For instance: what is the required working level, what identification, monetary incentive or further individual satisfaction will be given because of my exertion? Does the reward measure the exertion? The sensitivity of an administrator to this aspect of his/her relations with subordinates plays a huge role in commitment achievement of new objectives as well as performance principles. Burke (2002) posits that the formal aspects captures all essential performance and tasks prerequisites for a profession such as what should I do? What kind of assistance will I receive? When and how my work be assessed? What form will my worked be assesses? What is my payment? How do payments relate to performance assessment? Regrettably, most administrators’ halt at this point when predicting the way change will influence employees. Below are the main reasons why big companies such as Ford Motor Company change projects fail (Burnes, 2004) a) They fail to establish adequate urgency sense. At times, managers undervalue the challenges involved in getting individuals to do something new. The common mandate of management includes minimizing risks and maintaining the existing system operational. This phase is very important because without inspiration, individuals cannot work together. b) Companies fail to create an influential guiding alliance. Organizations that do not succeed in this stage miscalculate the challenges involved in change production and therefore the significance of an authoritative guiding alliance. Sometimes, they do not have teamwork history between the upper managements, thus, underestimate this alliance type. Some people expects the Human Resource, strategic planning, or consulting team to lead the project rather than powerful people such as organizations’ leaders who have the real power of ensuring that change occurs. c) Companies do not have any vision. In any successful change, companies develop an image of the future, which ensured simple communication with consumers, employees, and shareholders. The vision assists in clarification of the course whereby the businesses wanted to progress. d) The companies declared victory very soon. After several years, organizations often announce victory during the initial clear improvement of performance. Although a win celebration is good. Declaring that you have succeeded in a combat cab become disastrous. The change process tends to take about five to ten years. Until change forms a basis, new strategies are fragile and can regress to old ways. e) These companies fail to anchor transformations in the company’s culture. Change really takes place when the transformation turns out to be the manner in which an organization performs its activities. As with the stage before, until fresh behaviors become entrenched in collective values and social standards, they can be degraded when the change pressure become detached. f) These companies fail to remove hurdles in the novel vision. To allow success of a project, an organization should discard all obstructions such as organizational frameworks that avert successful execution of other initiatives, performance or compensation assessment schemes that remunerate behaviors that disagree with the projects’ values. However, systems, processes, and people should be associated with the novel project to ensure its success. Change is very important in most organizations. It is as the practice of constantly replenishing the capabilities, frameworks, and directions of an organization to cover the changing requirements of internal and exterior consumers (Balogun and Hope, 2004). Therefore, it is important for organizations to ensure that they use the appropriate approaches when introducing change. They should also realize that employees tend to resist change once it is introduced (Strebel, 1996). Therefore, it should not occur abruptly without informing and training them about the change. For example, Ford Motor Company realized that it was losing its sales and profits and decided to make some changes. It introduced the ESP and the TMM models to ensure that all employees are well taken care of and that all technological problems are taken care of. This has made the company to maintain its leading position in the automobile industry. List of references Balogun, J. and Hope, V., 2004, Exploring Strategic Change, London: Prentice Hall. Batchelor, R., 1994, Henry Ford: Mass Production, Modernism and Design London: Manchester U. Press Burnes, B., 2004, Managing Change: A Strategic Approach to Organizational Dynamics, Harlow: Prentice Hall. Burke, W., 2002, Organizational Change: Theory and Practice. Thousand Oaks, CA: Sage Publications. Connelly, M, 2000, Ford 1000: A Cultural Revolution. Automotive News, October 13, 1994. De Wit, B. and Meyer, R., 2000, Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage. London: Thomson Learning. Doyle, M., 2002, ‘From Change Novice to Change Expert: Issues of Learning, Development and Support’, Personnel Review, vol. 31, no. 4, pp. 465–481. Lave, J. and Wenger, Ettienne, 2001, Situated Learning. Cambridge. (Eds). United Kingdom: Cambridge University Press. Pfeffer, J. and Sutton, R, 2000, The Smart Talk Trap. Harvard Business Review. McIntyre, S, 2002, "The Failure of Fordism: Reform of the Automobile Repair Industry, 1913–1940: Technology and Culture 2000. Vol. 41, no. 2, pp: 269–299. Senior, B., 2002, Organizational Change, London: Prentice Hall. Strebel, P, 1996, Why do Employees Resist Change. Harvard Business Review. Studer-Noguez, I., 2002, Ford and the Global Strategies of Multinationals: The North American Auto Industry London: Routledge. Taylor, P. and Hirst, J., 2001, ‘Facilitating Effective Change and Continuous Improvement: The Mortgage Expressway’, Journal of Change Management, vol. 2, no. 1, pp. 67–71. Wilson, D., 1992, A Strategy of Change. London: Routledge. Read More