Organisational Leadership and Performance - General Motors - Case Study Example

Organisational Leadership and Performance Name: Institute: Table of Contents Organisational Leadership and Performance 1 Table of Contents 2 Organisational Leadership and Performance 5 1.0 Introduction 5 2.0 Change in General Motors 5 2.1 Forces behind Change 6 2.2 Change Process Steps 7 2.3 Challenges in and Results of Change Process 8 3.0 Leadership Change 8 4.0 Resistance to Change 10 Resistance to change can as well be brought about by low trust, and can happen when workers do not believe that the organisation has the ability to knowledgeably manage change. However, this can be solved if the leader allows for lots of communication. At GM there was lack of understanding concerning the need for change, bearing in mind that if employees do not see the significance of change then resistance is likely. Particularly from workers who held the view that the then way of carry out things worked well, and were functional for some decades. In this regard, it is imperative to involve workers in the early stages of change, and look for ways to show why the change is essential. Some resistance can as well emanate from exhaustion/saturation: So companies must not mistake observance for recognition. Workers who are plagued by incessant change become saturated, and lose their enthusiasm resulting to low motivation. Furthermore, such employees do not like changes in the organisation’s status quo, and resistance can for that reason derive from the change perceptions held by people. For instance, workers who feel they will be more badly off latterly during the change process are doubtful to offer their full support (Fiedler, 2010, p.374). Likewise, if workers believe the proposed changes will only favours a certain group of persons/department there could be (silent) rage and anger. At GM this was solved through focus groups, whereby the leaders had to carefully listen for emotions and offer help through coaching or counselling. 11 5.0 Managing Change and Resistance to Change 12 So as to easily manage change and resistance to change GM leaders should have adopted the Kotter's 8-Step Change Model: first step is creating a sense of urgency, considering that for change to take place, it is imperative if the entire company actually desires it (Sabr et al., 2006, p.176). In this case, GM leader should have developed a sense of urgency around the change desire. This could have helped the company ignite the first motivation to get the change process going. For this treason, GM should have identify possible risks, and create scenarios exhibiting what may occur someday. Besides that, GM leader should have opportunities that must be, may be capitalized on, and start open discussions, and offer persuasive and dynamic reasons to get workers thinking and talking. What is more, GM leader should have asked for support from industry people as well as outside stakeholders so as to fortify his argument. Second step, is creating a powerful coalition, whereby the leaders should persuade employees that change is essential (Sabr et al., 2006, p.177). Basically, this frequently takes visible support as well as strong leadership from the top leaders in the company. Change management as noticed at GM is not sufficient, the leader must lead it. 12 In this case, GM should have identified the right leaders within the company, and also the key stakeholders before demanding an emotional commitment from such key persons. Besides that, GM should have worked on team building within the company’s change coalition, and also analyze the organizational team for weak areas, before making certain that the company has a first-class mix of persons from diverse departmental levels in the company. Third step is creating a change vision, in that when the organization begins strategizing for change, there will most likely be scores of great solutions and ideas hanging around (Sabr et al., 2006, p.178). In this regard, GM leadership should have connected such concepts to a general vision that workers may easily grasp and memorize. This could be achieved by establishing the organizational values that are essential to the change process. Besides that, GM leadership should have created a short summary that captures what the leaders see as the organization’s future. Other way that GM could have created a change vision is through developing a plan to implement that vision, making certain that the change coalition has the ability to explain the vision to workers, and frequently practicing the vision speech. 13 The fourth step is communicating the vision, bearing in mind what the organization will do with its vision subsequent to developing it rely heavily on leadership success. In this case, the leader’s message will almost certainly have stiff competition from other routine communications in the organization; therefore, the manager must communicate often and authoritatively do. In the case of GM, the company’s leadership should have communicated frequently with regard to change vision, and deal with workers’ anxieties and worries, honestly and truthfully. Besides that, the leadership should have applied their vision to every operation’s facet; that is from performance reviews to training so as to fasten everything back to the change vision. Fifth step is removing obstacles so as to make certain that the employees get the benefits that the organization leadership is promoting. Therefore, GM’s leadership should have identified or employ earlier, change leaders like Ed Whitacre whose key responsibility could have been to deliver the change. Besides that, the leaders should have examined the job descriptions, organizational culture, and remuneration and performance systems to make sure they are consistent with GM’s vision. 13 Sixth step is creating short-term wins, considering that success is the key motivator in any organization. In this regard, GM’s leaders should have given the employees a taste of win early during the process of change. In this regard, the leaders should have not selected expensive early targets; instead they should have first justified the each project’s investment. Then afterwards, carefully examine the likely pros as well as cons of their targets (Sabr et al., 2006, p.182). In addition, a creative leader as mentioned by Sabr et al., 2006 (p.183) should reward his followers who assist him/her meet the targets. The seventh step is building on the change: as argued by Kotter scores of change projects become unsuccessful for the reason that success is declared prematurely. GM leadership should understand that real organizational change runs deep and so speedy victories are just the start of what required to be performed so as to realize long-standing change. To achieve this as a leader, subsequent to every victory, examine what happened correctly, and what must be improved. Besides that, the leadership must set goals so as to carry on with building on the energy the company has achieved. Last step involves anchoring the changes in organizational culture, considering the corporate culture highlights what must be done within the organization. In this regard, for GM leadership integrate the organizational changes into corporate culture, they should include the values and ideas of change when training current staff or recruiting new ones. Besides that, the leadership should openly identify key members of the new change coalition, and ensure other staffs learn by heart their contributions to the change process. 14 6.0 Conclusion 15 7.0 References 16 Organisational Leadership and Performance 1.0 Introduction The world of business these days is advancing extremely fast and new technology, product production method in addition to new customer taste and new trend in the market as well as new strategies for improved leadership and workers motivation are surfacing and happening from old to fresh techniques (Matos, 2013, p. 382). This is because customers are the market kings and the majority of present companies are at the moment spending billions of dollars on organisational models for R&D. without a doubt, change may be disruptive as well as threatening, and it can as well be extremely uphill struggle for the reason that it normally involves becoming accustomed to a new setting, individual circumstances or working practices (Kempster et al., 2014, p.156). Basically, there are a number of changes that the majority of leaders have experienced like changing job, retraining or shifting to a new place of work. This collective change experience is a perfect basis for comprehending how change can have an effect on a leader together with their followers, both on an individual as well as organisational level. The paper seeks to outline and discuss a recent change that occurred in General Motors, by explaining how as a leader, one would manage that change so as to improve change management. 2.0 Change in General Motors General motors’ was instituted in 1908, and the company was then the only automaker dealer in the region, such as in Michigan. Initially, GM was a Buick Holdings company, until 1920, when it became the world biggest Automaker Company (Hashim, 2014, p. 003). Importantly, the company got an incredible achievement during the tenure of Alfred Salon; thanks to his leadership GM began producing vehicles with new design as well as style annually. Notable brands of GM produced during Alfred Salon tenure include Cadillac, Buick, Pontiac, and Chevrolet, and during this time there was no other competitor to compete with GM’s various automobiles (Muoio, 2000). However, when Japans automakers came into view, GM felt vulnerable, particularly with surfacing of Toyota, which for decades have greatly perturbed the GM’s productivity, in particular the North American market. As a result, the GM’s sale graph in 2001 started declining, for the reason that Toyota had seized a considerable market share. To regain its lost market share GM got a loan from both Canadian and U.S. government to sustain the company during the crises period (Hashim, 2014, p. 003). This failed, and in 2009 the company was declared bankrupt, prompting the need to close a number of brands and the base company was sold to china. After restructuring and making change in the company, GM regained its market position, and at present the company is carrying on with its business in America’s core brands like Chevrolet, Cadillac, Buick, and, GMC. 2.1 Forces behind Change The key forces which had an effect on the GM’s purpose of change included the following: First, external forces, whereby GM was significantly influenced by Toyota which was emerging as the main competitors. Even though, the North America market is still GM’s biggest marketplace, Toyota in addition to Chinese manufactured vehicles are putting forth intense completion, and as a result GM’s total profitability was extremely disturbed. Another eternal force that created the need for organizational change was financial crises which caused GM’s cash flow to collapse. Second were internal forces, which were brought about by GM’s high cost of wages to workers given that the company was paying $74/hr in contrast to Toyota’s $44/ht, and this was attributed by GM’s agreement with workers’ union (Hashim, 2014, p. 003). Considering that GM had to operate at a minimum capacity of 80 percent, the end result was bankruptcy. These factors (external and internal) created the need to make or bring change in the company, as a result, GM decided to bring change on a number of business area, and they included cultural change, process change, cost change, as well as structural change (Caggeso, 2008). 2.2 Change Process Steps While undergoing change, GM took a number of steps to espouse change, and these are the latest changes which the company has taken in the 21st century. GM’s first step was cutting the cost; wherein the company had to reduce its some brands cost so as to maintain the needed level of profit, so costs of Hammer and Saturn were cut (Caggeso, 2008). Equally the company had to cut workers pay, which arguably was the key setback to the company, but still the target of cost cutting to almost $15 billion was achieved. Another step of change process was cultural change: GM also had to change the company’s organizational culture. In this case, the company reduced its automotive strategy and product board to eight team members involved in making decisions, and directly report to CEO. The key goal of these changes was to accelerate the everyday decision making process. The GM as well changed the organizational culture so as to improve the workers efficiency as well as make employee more responsible and answerable (Hashim, 2014, p. 004). 2.3 Challenges in and Results of Change Process In every change process, setbacks are expected, and in GM’s case the cultural plan was anchored on top-down approach, which completely overlooked the participation of the workers. Then the company lacked down-top approach, wherein workers felt ignored and dissatisfied, so the company had to introduce the down-top approach to empower the workers and also tailored the existing approach to allow participation of workers in change management (Caggeso, 2008). Besides that, cost management presented another setback considering there was an agreement between the company and trade union, so cutting the labor cost was an uphill task. Based on 1998-2009 employment figure was reduced by 55% (that is from 226000 to 101000 employees), and also the company decided to reduce the factory from worked force by 33% (Hashim, 2014, p. 004). Undoubtedly, this led to cost saving. From the cultural change, GM received encouraging results given that workers now turning out to be more aware concerning the accountability as well as responsibility, and GM as well empowered the workers to offer improved productivity. 3.0 Leadership Change Theories and models of leadership as per Kotter (2007) must be utilised as frameworks for developing self-reflecting as well as individual styles. Whereas a range of leadership theories subsist, a leader who is successful must understand their industries, have perceptive insights, as well as be ready to speed up changes needed in their company (Kotter, 2007). Additionally, leaders steering organizational change must be an inspirational figure, where they may be able to persuade their followers during the process of change. Considering GM case, Fritz Henderson, the former leader was kindly asked to bow out from the CEO’s position, bearing mind that all through his career he had worked together with the Rick Wagoner, the former president of GM. Some argued that this could pose very serious setbacks for the company, which could find it tough to get not just a substitute for the then known charismatic vehicle man (Welch, 2010). Yet, worries like the reality that Henderson was hanging on to control for stability was revealed, and was keenly attempting to restore the company back to the conventional paradigm that the company used before the crisis. According to Lutz (2013), Henderson was not ready for changeability, and so he is a transactional leader, where apparent structures have to be implemented and workers are needed to just follow. Henderson was path-goal oriented, wherein he used to direct his followers, instruct them what to perform, and offer suitable directions. The new leaders acknowledged Henderson efforts claiming that he had a outstanding job in directing GM through an exceptional epoch of change and challenge. Quite the reverse, Fritz Henderson successor, Ed Whitacre is more of a charismatic and transformational leader. The succeeding CEO, Ed Whitacre who beforehand was senior leader at AT&T Telecoms Company, was hired by Obama government to bring change to GM. Without a doubt, GM required someone from outside, whom as the leader, had no attachments. After assuming the office, Whitacre posited that sweeping changes in the management had to be done at GM. The verity that Whitacre restructured and reorganized GM’s departments 72 hours after assuming the CEO office proves that he is not just a path-goal oriented leader, but also a transformational leader. Whitacre was able to effectively direct his followers so as to realize GM’s strategic goals implemented. Furthermore, Whitacre had a vision to re-establish GM and deposit enthusiasm and power into everything (Lutz, 2013). Basically, this form of leader always sells his and organizational vision to his followers so as to avert resistance to change. Considering all the changes that the company was undergoing, Whitacre comprehended that the workers were worked up and instantly handled it by communicating to them through email. This email assured the workers that the key change in the leadership was behind them. Although Whitacre could be a bit inexperienced when framing product development among other fields, he tactically assigned other individuals to supervise the areas he had insufficient knowledge. Besides, he desired to offer workers with more authority and responsibility deeper in GM and they were held responsible for their activities. In making of decisions, Whitacre pursued Group procedure, whereby the organizational problems area shared with followers and always look for common understanding (Welch, 2010). Fundamentally, as a path-goal oriented, charismatic, and transformational leader, Whitacre tried to make sure there was a successful and smooth transition for both workers and GM as a company. 4.0 Resistance to Change Evidently, change generates resistance to change in all organization, and when organizational strategies for change have been implemented the workers swiftly react by taking part in work slowdown, voicing complaints, making strikes threats, and so forth. However, change management has to take care if they anticipate triumphing over the resistance. Change resistance is always experienced due to fear of change, and this includes fears of losing job. In order to overcome the fear of change, GM’s Whitacre had to act as role model to the workers. During the change process, GM’s workers were not consulted considering that participation of employees’ results to no or less resistance. Involvement of workers is crucial, and so GM should involve its workers in case of another change process (Laframboise et al., 2003, p.307). Communication is crucial in any organisation, and so lack or poor communication between management and workers will obviously result in resistance. Besides that, to make employees secure and comfortable, changes to routines is imperative given that there is bound to resistance every time changes need workers to do things differently. Whether it is new reporting lines, procedures, or organisational culture, changes to routines as mentioned by Fiedler (2010, p.375) can be bumpy, but to succeed the leader must show his followers how this changes will work and show the importance of change. Resistance to change can as well be brought about by low trust, and can happen when workers do not believe that the organisation has the ability to knowledgeably manage change. However, this can be solved if the leader allows for lots of communication. At GM there was lack of understanding concerning the need for change, bearing in mind that if employees do not see the significance of change then resistance is likely. Particularly from workers who held the view that the then way of carry out things worked well, and were functional for some decades. In this regard, it is imperative to involve workers in the early stages of change, and look for ways to show why the change is essential. Some resistance can as well emanate from exhaustion/saturation: So companies must not mistake observance for recognition. Workers who are plagued by incessant change become saturated, and lose their enthusiasm resulting to low motivation. Furthermore, such employees do not like changes in the organisation’s status quo, and resistance can for that reason derive from the change perceptions held by people. For instance, workers who feel they will be more badly off latterly during the change process are doubtful to offer their full support (Fiedler, 2010, p.374). Likewise, if workers believe the proposed changes will only favours a certain group of persons/department there could be (silent) rage and anger. At GM this was solved through focus groups, whereby the leaders had to carefully listen for emotions and offer help through coaching or counselling. 5.0 Managing Change and Resistance to Change So as to easily manage change and resistance to change GM leaders should have adopted the Kotter's 8-Step Change Model: first step is creating a sense of urgency, considering that for change to take place, it is imperative if the entire company actually desires it (Sabr et al., 2006, p.176). In this case, GM leader should have developed a sense of urgency around the change desire. This could have helped the company ignite the first motivation to get the change process going. For this treason, GM should have identify possible risks, and create scenarios exhibiting what may occur someday. Besides that, GM leader should have opportunities that must be, may be capitalized on, and start open discussions, and offer persuasive and dynamic reasons to get workers thinking and talking. What is more, GM leader should have asked for support from industry people as well as outside stakeholders so as to fortify his argument. Second step, is creating a powerful coalition, whereby the leaders should persuade employees that change is essential (Sabr et al., 2006, p.177). Basically, this frequently takes visible support as well as strong leadership from the top leaders in the company. Change management as noticed at GM is not sufficient, the leader must lead it. In this case, GM should have identified the right leaders within the company, and also the key stakeholders before demanding an emotional commitment from such key persons. Besides that, GM should have worked on team building within the company’s change coalition, and also analyze the organizational team for weak areas, before making certain that the company has a first-class mix of persons from diverse departmental levels in the company. Third step is creating a change vision, in that when the organization begins strategizing for change, there will most likely be scores of great solutions and ideas hanging around (Sabr et al., 2006, p.178). In this regard, GM leadership should have connected such concepts to a general vision that workers may easily grasp and memorize. This could be achieved by establishing the organizational values that are essential to the change process. Besides that, GM leadership should have created a short summary that captures what the leaders see as the organization’s future. Other way that GM could have created a change vision is through developing a plan to implement that vision, making certain that the change coalition has the ability to explain the vision to workers, and frequently practicing the vision speech. The fourth step is communicating the vision, bearing in mind what the organization will do with its vision subsequent to developing it rely heavily on leadership success. In this case, the leader’s message will almost certainly have stiff competition from other routine communications in the organization; therefore, the manager must communicate often and authoritatively do. In the case of GM, the company’s leadership should have communicated frequently with regard to change vision, and deal with workers’ anxieties and worries, honestly and truthfully. Besides that, the leadership should have applied their vision to every operation’s facet; that is from performance reviews to training so as to fasten everything back to the change vision. Fifth step is removing obstacles so as to make certain that the employees get the benefits that the organization leadership is promoting. Therefore, GM’s leadership should have identified or employ earlier, change leaders like Ed Whitacre whose key responsibility could have been to deliver the change. Besides that, the leaders should have examined the job descriptions, organizational culture, and remuneration and performance systems to make sure they are consistent with GM’s vision. Sixth step is creating short-term wins, considering that success is the key motivator in any organization. In this regard, GM’s leaders should have given the employees a taste of win early during the process of change. In this regard, the leaders should have not selected expensive early targets; instead they should have first justified the each project’s investment. Then afterwards, carefully examine the likely pros as well as cons of their targets (Sabr et al., 2006, p.182). In addition, a creative leader as mentioned by Sabr et al., 2006 (p.183) should reward his followers who assist him/her meet the targets. The seventh step is building on the change: as argued by Kotter scores of change projects become unsuccessful for the reason that success is declared prematurely. GM leadership should understand that real organizational change runs deep and so speedy victories are just the start of what required to be performed so as to realize long-standing change. To achieve this as a leader, subsequent to every victory, examine what happened correctly, and what must be improved. Besides that, the leadership must set goals so as to carry on with building on the energy the company has achieved. Last step involves anchoring the changes in organizational culture, considering the corporate culture highlights what must be done within the organization. In this regard, for GM leadership integrate the organizational changes into corporate culture, they should include the values and ideas of change when training current staff or recruiting new ones. Besides that, the leadership should openly identify key members of the new change coalition, and ensure other staffs learn by heart their contributions to the change process. 6.0 Conclusion In conclusion, it has been argued that subsequent to experiencing the intense competition from other automakers like Toyota as well as bankruptcy, GM had to perform an organizational change in order to regain its position as a market leader in automotive industry. The changes that GM experienced did not just improve the employee’ working condition, but also the ability of the company to note weakness as well as public perception in order to increase the automobile sale and market shares. Lack of communication was the reason behind GM’s employee’s resistance to change, bearing in mind that communications assist in keeping employees feel connected to and included in the organization change process. In this regard, it is recommended that GM’s leadership should have espoused Kotter's 8-Step Change Model to overcome resistance to change and realise the change goals and objectives. 7.0 References Caggeso, M. (2008, November 24). GM Taking Swift Cost-Cutting Action. Retrieved from Money Morning: http://moneymorning.com/2008/11/24/general-motors-2/ Fiedler, S. (2010). Managing resistance in an organizational transformation: a case study from a mobile operator company. International journal of project management, 28(4), 370 - 383 . Hashim, M. (2014). Organizational change: Case study of GM (General Motor). Journal of Business Administration and Management Sciences Research, 3(1), 001-005. Kempster, S., Higgs, M., & Wuerz, T. (2014). Pilots for change: exploring organisational change through distributed leadership. Leadership & Organization Development Journal, 35(2), 152 - 167 . Kotter, J. P. (2007, January). Leading Change: Why Transformation Efforts Fail. Retrieved from Harvard Business Review: http://hbr.org/2007/01/leading-change-why-transformation-efforts-fail/ar/1 Laframboise, D., Nelson, R. L., & Schmaltz, J. (2003). Managing resistance to change in workplace accommodation projects. Journal of Facilities Management, 1(4), 306 - 321. Lutz, B. (2013, February 28). How Ed Whitacre Saved GM In Just 10 Months, And Other Fables. Retrieved from Forbes: http://www.forbes.com/sites/boblutz/2013/02/28/how-ed-whitacre-saved-gm-in-just-10-months-and-other-fables/ Matos, J. A. (2013). Sustainability and organizational change. Journal of change management, 13(4), 382 - 386. Muoio, A. (2000, November 30). GM Has a New Model for Change. Retrieved from Fast Company: http://www.fastcompany.com/40841/gm-has-new-model-change Sabr, E. H., Gupta, A. P., & Beitler, M. A. (2006). Purchase Order Management Best Practices: Process, Technology, and Change Management. Florida: J. Ross Publishing. Welch, D. (2010, April 29). Ed Whitacre's Battle to Save GM from Itself. Retrieved from Bloomberg Business Week: http://www.businessweek.com/magazine/content/10_19/b4177048204431.htm Read More