Agilent Technologies - the Nature and Purpose of Change in the Organization - Case Study Example

Case Study Name Class Unit Q. 1 What was the nature of change in the organization? Clarify your answer whether the change is a human process techno structural or strategic change. Give an explanation and evidence for your answers. Agilent Technologies had been successful due to their technological superiority. The company stock prices had been rising as well as hiring. In 2000, the company had employed 47,000 people. The downturn in economy during 2001 had a great effect on the company despite its earlier success. This was accompanied by cancellations of the orders from the telecommunication companies. Due to these difficulties, Agilent had to look for an appropriate organization change. This made Agilent to respond in downsizing so that they could save the firm in the difficult times. The company had to cut the costs which included the expenses and salaries before coming to the final decision of downsizing (Cummings & Worley, 2009). This change is a techno structural nature of intervention. This is a type of intervention that has its roots in engineering, sociology, and other social technical disciplines. The method puts its efforts on structural design, downsizing and reengineering (Noronha & D’Cruz, 2005). At Agilent, the process involved downsizing. This involves reducing the workforce in a firm, redesigning and outsourcing. Downsizing is done with an aim of reducing the organization size and expenditure through layoffs. To undertake downsizing the firm should first try other options available. From the case, Agilent started by reducing the expenditure and salary cut. This was a method that was to work temporarily. The case explains that when the orders continued declining, Agilent had no option but to reduce their employees. The firm started by looking for a way to reduce the employees strategically. This is a move that would downsize the staff by 9 percent. Techno structural interventions are done with an aim of coming up with the required structure which is cost effective for the organization. Through a reengineering initiative, the organization is transformed into a fast, effective and responsive firm. The process utilizes a common platform that enables it to bring the required structural changes (Noronha & D’Cruz, 2005). The process of change at Agilent would reduce employee’s headcount through layoff. Q. 2 What is the purpose of the change at the organization? Agilent had been under pressure due to the downturn in economy that was experienced in 2001. There was pressure of continued cancellation of orders by the telecommunication companies. Most of the telecommunication companies had been forced to reduce their orders due to several problems which resulted from the economic downturn. Loss of revenue at Agilent led to the company executives looking for ways to cut costs (Cummings & Worley, 2009). The main aim of the change was to save Agilent from the difficult times it faced. Downsizings refer to the process of reducing the job positions with the main aim of reducing the company expenditure and improve on its performance. Downsizing is refereed with several names as restructuring or right sizing. If well implemented, downsizing leads to efficient running of the organization and helps in improving competitiveness. For Agilent, downsizing was inevitable. The company had tried other measures to reduce the expenses but had not achieved good results. The net income per employee was falling and the company had to reduce the workers. The act of downsizing would save the company a lot of revenue. The management figured that the only way Agilent was to succeed in the difficult times was through reducing the number of the employees. Change is very important in an organization. This is due to fact that change enables the organization to work in a manner that optimizes its current state. The environment is constantly changing. To respond to change, the leadership has to trigger action. Agilent was faced with crisis and the management had to initiate change. The main goal for change in most organizations is to reduce the costs (Noronha & D’Cruz, 2005). Minimizing the costs in a firm enables maximum profit and competitiveness. For Agilent, implementing change would enable them to survive the difficult times. An organization has to optimize its work to become in almost ideal state. One aspect of a progressive manager is through initiating change. An organization evolves through lifecycle and in each state there are changes in the environment. For Agilent, the organization had experienced a period of rapid growth. The change in the environment brought by the economic downturn initiated change. Q.3 Could the organization change be characterized as successful? Why or why not? What are some of the reasons that made the change successful or unsuccessful? Change at Agilent was successfully implemented (Cummings & Worley, 2009). This is illustrated by the way in which the organization progressed after the employees were informed of the planned job cuts. Despite the first few ten days, the production was able to pick up. The plant was making a great progress than it had been anticipated. If downsizing was not successfully implemented, it could have led to chaos and loss of productivity. Poor implementation of downsizing has adverse problems ranging from loss of esteem, depression and financial losses (Noronha & D’Cruz, 2006). These are outcomes that were not witnessed at Agilent. The management utilized the right process in implementing the change. This is through understanding that the way in which an organization handles change influences the employees’ outcome. Agilent management utilized ethics in carrying out their downsizing. This is by through an understanding that they the management have a mandate to act in interests of then firm, they have to look at the employees right. This is by ensuring that the downsizing process does not affect the employee’s right. The process of downsizing can be effective if it is performed at the right time and providing the stakeholders with the right information (Noronha & D’Cruz, 2005). According to the case study, the employees were provided with information through emails, newsletters and meetings. The information provided elaborated why the firm needed to take the action of reducing expenditure and how this would help the employees. The information was relayed in every quarter of the day. The company top management guided the employee on reducing the expenditures. This led to the cost cutting strategy being a success. This was followed by the salary cut strategy. When this measure was not enough, Agilent had to implement the downsizing strategy. The success of downsizing strategy was immense. The firm came with a process that would enable the downsizing to be carried without leading to adverse effects to survivors. Involving the employees in the downsizing process is one of the best practices that were adopted by the firm. This was done through offering consistent information flow in a two way manner. The employees were informed on any decision regarding the downsizing strategy before hearing it on the media. Communication acts in enabling the employee to have trust in the firm (Noronha & D’Cruz, 2006). The company made rules that the employees were to be laid off only by their direct managers. The management was trained on layoff procedures. This was done in an outplacement firm where they were couched on the right words to use when laying off the employees. The management was also honest. The news about the looming layoff was given accurately and at the right time. The employees were told why the firm has decided to take the action and what was to follow. Through carrying out downsizing using the right method, Agilent was able to gain employees’ trust and regain its initial growth. The employees were able to relate to the company as theirs despite the fact that they were to lose the jobs. Thus the success of the downsizing strategy carried out by Agilent can be associated by the use of excellent management skills, sufficient planning and empathy. This made Agilent to continue performing despite the difficulties it faced (Cummings & Worley, 2009). Q. 4 What is your view on the planned change implemented by the organization? What are some strengths and weakness of this particular change process? What does this particular change process require to be successful? According to Noronha & D’Cruz (2005), downsizing is a change strategy that should be used in the event all other strategies fails. This method has several weaknesses that should be catered for if the firm opts to use it. In the case of Agilent, they had to use this method of change since salary cut and a reduction in expenditure had failed. Downsizing becomes effective if the firm is able to minimize the negative effects that are associated with it. The method should also be implemented with the firm long term view in mind. This is to ensure that the downsizing process does not lead to lose of critical workforce. Downsizing is the best option if the firm is faced by a critical situation such as the one at Agilent. Downsizing is an intentional endavour and has an effect on the work process. The main areas that are affected by downsizing are three groups of individuals. The groups are survivors, implementers and victims. The survivors are those who are left in the organization after downsizing, victims are those removed from the organization while implementers are those who execute the change process. This group has to be looked in a manner that ensures their interests are catered for during the change. This leads to an efficient downsizing strategy. The strategies of downsizing have both positive and negative consequences. The strengths of downsizing are it leads to increase in efficiency, increased competitiveness and reduced expenses on employees. Having few workers helps the company to reduce the bill of paying the salaries and expenses. This contributes to the organization being able to save revenue which they could be using as wages. The company is also able to offer better salaries to the employees due to low headcount. A lean organization is also believed to be competitive. The company experiences higher productivity if the process of downsizing is carried out in the right manner. After downsizing the organization is able to reduce its bureaucracy. Communication can be disseminated easily since the numbers of employee are fewer. Research have proven that when the organization carries out successful downsizing, they tend to be effective than past. The organization competitiveness is improved and there is improved quality culture. Noronha & D’Cruz (2006), describes that advantages can be unleashed only if the firm carries out its downsizing strategies in a systematic manner. Despite the strengths of downsizing, the method has its weakness. The weakness of downsizing are reduction in employees involvement, reduced attachment, violation of the psychological contract, creates anxiety among employees and reduced self esteem among those who survive. The process in most cases faces resistance from the employees which is manifested in form of poor motivation, reduced employee productivity and cases of absenteeism (Noronha & D’Cruz, 2005). One of the major weaknesses of downsizing is breaking of the psychological contract. This is the employee expectation from the employer about the job security. The employees might feel betrayed by their employer. The employees who are to be the victims of downsizing lose their self esteem and are in depression. This is due to fact that the process of downsizing leaves them jobless with no source of finances and difficulty in finding another employment. There is also survivors’ syndrome on those who remain in the organization. The survivors start viewing their employer in a different manner. There is increase in mistrust and most of the employees in an organization may question the legitimacy of the operation. This is mostly related on the manner in which the management handled the process of downsizing. The remaining employees are uncertain of their future in the company. This leads to some of the workers feeling insecure and might start looking for new jobs. The effects of the survivors’ syndrome may lead to reduced productivity and commitment after downsizing. The method may leave guilt in those who were left as they have difficulty in interacting with victims (Noronha & D’Cruz, 2006). For downsizing to be effective, it must be carried out strategically as in the case of Agilent. The manner in which downsizing is handled determines its success. There is need of ethics to be followed while carrying out the process of downsizing. The organization has to carry the process by ensuring that they do not violate the rights of employees (Noronha & D’Cruz, 2005). Through the use of appropriate ethics, it’s possible to minimize the negative consequences of downsizing. The employees should be involved in the whole process of downsizing. This is through being informed in a timely manner and appropriately. Communication must be utilized at all times as it was done in the case of Agilent. The key factors that made downsizing at Agilent successful are good management, planning and empathy. The management should be well versed with the ethical procedure of downsizing. This can be achieved through training them as Agilent did. Failure to carry out a successful downsizing strategy can be catastrophic to the firm. References Cummings, T. G., & Worley, C. G. (2009). Organization Development and Change. Ontario: Cengage Learning, pp. 338-339. Noronha, E. & D’Cruz, P. (2006). A necessary evil: The experiences of managers implementing downsizing programmes. The Qualitative Report, 11(1), 88-112. Noronha, E. & D’Cruz, P. (2005). Achieving downsizing: Managerial perspectives. Global Business Review, 6, 77-94. Read More