Downsizing as the Most Successful Change Strategy for Organisations in a Turbulent Environment - Assignment Example

Part 1 – Essay Questions Question 1: 700 words ‘Downsizing has been the most successful change strategy for organisations in a turbulent environment. Critically evaluate this statement. Downsizing can be defined as a set of activities that are carried out by the management of an organisation to improve productivity, organisational efficiency, competitiveness – or all the three phenomena combined – by reducing the size of the organisation. Downsizing is characterised by four keys attributes. The first one is that downsizing is a deliberate set of activities. The second aspect is that downsizing involves a reduction in the number of personnel in an organisation, and the reduction is meant to improve efficiency. The third aspect is that downsizing focuses on improving the efficiency of the organisation in question. The fourth aspect is that downsizing affects the work processes of an organisation either positively or negatively. This means that although downsizing is meant to improve the performance of an organisation, the outcomes of the process can be positive or negative. Given that downsizing is associated with both positive and negative effects to an organisation, the argument that downsizing has been the most successful change strategy for organisations in a turbulent environment is not entirely true. It is true that downsizing has several advantages, but most of these advantages are only felt in the short-term. The advantages are in the form of financial savings due to reduced labour costs, having a manageable number of people and reduced repetition of roles, and increased competitiveness. Downsizing leads to savings due to reduced labour costs because when an organisation reduces the number of employees on its payroll, it will make savings on what would have been used to pay the workers who are made to leave the organisation. This is particularly important during turbulent times because the resources that are saved can be used to meet other important needs of the organisation. Downsizing also means having a having a group of personnel that is more manageable, with reduced repetition of roles played by different individuals. This can lead to more efficiency in the organisation since only those employees who play critical roles in the organisation are left to continue doing the work. Downsizing can also result in increased competitiveness since the resources that would have been used to pay employees are deployed to increasing the efficiency of an organisation. For instance, in turbulent times, an organisation can come up with more creative ways of making the few employees who remain in the organisation do more work with the aid of technologies such as automation of some services. This means that the organisation will be able to achieve more using fewer resources, hence being more competitive. To that extent, downsizing can be seen as an effective change strategy that organisations can adopt it turbulent times. On the other hand, downsizing can be viewed as disadvantageous because of the negative effects that it associated with. Notably, downsizing can lead to low employee morale and make an organisation lose some of its key employees. This is because when an organisation lets some of its employees to leave, especially during turbulent times, the employees who remain will have low morale due to the fear that they are the ones who could be required to leave next. As well, downsizing may hinder the future growth of an organisation. Although having a leaner organisation may be beneficial in the short-term, this many be disadvantageous when some employees who are critical to the growth of the organisation leave. Notably, some key employees may leave on their own after a downsizing exercise because of the perception that the organisation is unstable. If the employees who leave have the core competences that the organisation requires for future success, then this will be detrimental to the future performance of the organisation. Therefore, downsizing can be a good change strategy for organisations in a turbulent environment, but only to the extent that it helps any organisation to go through the difficult time. The good side of downsizing is seen through aspects like financial savings and improved competiveness because of more efficient use of human resources. But in the long-term, downsizing is associated with negative effects such as low employee morale, increased employee turnover and difficulties in attaining future growth for the organisation. Question 2: 700 words Distinguish between organisational development and organisational transformation. With relevant examples, identify and discuss the factors that trigger transformational change. Organisation development can be defined as a system-wide application of knowledge in behavioural science to the planned development as well as strengthening of organisational strategies, processes and structures so as to improve the effectiveness of an organisation. On the other hand, organisation transformation refers to a radical change in the way in which the members of an organisation think, perceive and behave in the workplace. In other words, organisation transformation involves the action of changing the manner in which an organisation (represented by its members) thinks, perceives and behaves. In regard to the definition of organisation development, it can be seen that there are four key issues relating to the definition. First is that organisation development applies to a whole system such as a department, a single plant of a factory, or an entire organisation. Secondly, organisation development is premised on knowledge and practices of behavioural science, including aspects such as leadership, work design and organisation design. Thirdly, organisation development concerns itself with planned change. The fourth point is that organisation development encompasses creation and reinforcement of change. For example, when an organisation comes up with the use of self-managed teams, it will also have to work on how supervisors can enable workers in the teams to have control over the work that they do. The fifth point is that organisation development involves changes in strategies, processes and the structure of the organisation. This implies that organisation development recognises the interrelationship between strategies, processes and the structure of the organisation. Turning to organisation transformation, the process involves notable changes that go beyond making an organisation better or modifying the systems that exist in an organisation. The changes in organisation transformation are concerned with significantly reworking the assumptions that exist about the functioning of the organisation in question and how the organisation interacts with its environment. Given that organisation transformation is all about change, the process requires notable shifts in organisational norms and values as well as the organisational arrangement and structures that shape the behaviours of the individuals in the organisation. Organisations undertake transformational change due to various significant reasons. In other words, organisations implement transformational change in response to certain occurrences that necessitate action. Some of these occurrences include industry discontinuities, shifts in the life cycles of products, and internal changes within an organisation. Industry discontinuities include sharp changes in the economic, political, legal and technological conditions, which cause a shift in the basis for competition in a given industry. For example, Kodak was faced with a technology discontinuity challenge in that although it was a leader in the photography equipment industry, it did not quickly embrace the change from the use of films to the use of digital cameras. Specifically, Kodak failed to take a decisive action to deal with the threat that it was facing, despite having been a leader in innovation and change in previous times. As other companies moved from to digital cameras, Kodak continued relying on film. In the end, the company had to join the digital camera market as a late entrant, which threatened its performance and competiveness. The ideal situation would have been for Kodak to lead in the shift to digital cameras through transformational change since the company had in earlier times inculcated a culture of change and innovation. Shifts in the life cycles of products do call for businesses to change their strategies in response to the shifts. For example, many electronic devices nowadays have very short life cycles (e.g. compact discs, flash drives and other forms of storage media). Thus, in order to remain relevant, the companies that produce products whose life cycles keep changing having to adopt business strategies that enable them to continually embrace change and come up with new products. Internal changes within an organisation such as a change in the size of the organisation or executive turnover can also trigger transformational change. For instance, in 1993, Qantas merged with Australian Airlines and this required transformational changes that involved cost reduction to make the larger airline more competitive. Another example is General Electric (GE), whose size has grown as a result of the company’s global operations. Given that the company currently employs many young people, it has started the Global New Directions group as part of its transformational change process to understand the kind of organisational culture that millennials want. Part 2: Case Study Question 1: 300 Words. Employee resistance is a symptom, not a problem, in the change process. Identify and discuss the main factors in the case that may lead to employee resistance. The first factor that may cause employee resistance to change is reluctance to do away with old habits. In the case study, it has been noted that some of the paid staff are not competent at what they have been doing as part of their tasks. For instance, the person in charge of maintaining the company website is not adequately skilled for the work, and hence, the website is outdated. It is clear that when John Kahui decides to take measures to attract more donors, some of the underperforming staff will be required to change their habits or even leave the organization. It is likely that the employees will resist the change since they have got used to what they have been doing. Another factor is reluctance to lose control. John is of the view that the engineer who is currently employed in the organisation lacks the managerial skills to head the separate for-profit consulting company that he (John) intends to create. Here, it is clear that although John wants to initiate change, he also has some form resistance since he is afraid of losing control over the new organisation that he plans to establish. Also, if john takes the role of heading the new unit, this will mean that the engineer will have a reduced to role to play, and this is a potential source of resistance to change in the engineer. The third point is that there appears to be lack of a creative response in implementing the change. There appear to be various changes that John wants to implement. Hence, there is lack of focus on a clear strategic vision. The employees of the organisation may resist the planned changes because they are not sure what their roles will be in implementing the change and they may be doubtful regarding their roles in the organisation after the changes. Question 2: 300 words. Comment on who might support or resist the changes and why and explain how John could engage their support or deal with their resistance. Volunteers and donors may support the proposed changes since the changes are aimed at making the organisation more vibrant and more visible in comparison to its competitors. More importantly, donors are likely to support the changes because when the organisation gains a chartable status, the donors may be able to claim tax rebates when they make donations to the charity. On the other hand, many of the organisation’s employees may resist the changes. For instance, the accountant is likely to show some resistance due to the added work that he or she will have to perform in registering the organisation with the Charities Commission. As well, the other employees, the engineer included, may resist change because of their unclear role in the change process and the doubts that they may have regarding their positions once the changes have been implemented. John can engage the various people who are to be affected by the changes at Ecology Matters by employing Lewin’s Force Field Analysis. This model recognises that in any change process, there are always driving forces that drive organisations towards a new state, and restraining forces that push for maintaining the status quo. Successful change occurs when the driving force is strengthened or the restraining force is weakened. Change is attained by unfreezing the existing situation and moving to the desired situation, and then freezing so that new situation that is attained becomes the norm. In the case, unfreezing requires that John should explain to every stakeholder of the organisation why change is necessary and how it will benefit them. This can be achieved through communication about the change and provision of the required support (such as training employees who are not familiar with their roles). When everyone becomes aware about why the change is required, they will be more willing to move to the desired state of change. Refreezing should then follow by supporting and reminding every stakeholder about their new roles or the new state of the organisation so that they do not revert to the old ways. Read More