Organizational Change at the Ford Motor Company - Case Study Example

• Abstract

Total Quality Management (TQM) is an approach that is applied by corporations for changing their organisational culture. Ford Motor Company encountered issues of speed sensor, steering control, software and poor sourcing. Therefore, in order to mitigate the issues, TQM is necessary because it works on the principle of producing quality products, employee empowerment, planned approach, group work and incessant improvements. As a leader, I will implement it by setting certain goals of increasing market share, mitigating product quality issues, enhancing customer base and adopting strategic approach. However, for fulfilling the targets, Vroom-Yetton model needs to be applied which defines group-based approach as the most suitable one for Ford Motor Company. Additionally, the structure of the organisation has to be changed into flat system where there is presence of organic framework. The presence of employee buy-in will also assist in encouraging workers, which will be reflected in the organisational performance.

The program will successfully assist in changing the traditional organisational culture of Ford Motor Company. The changes in it will help in enhancing employee performance and customer satisfaction. However, the principle of continuous improvement has to be focused in order to gain better results.

• Introduction

Organizational change is desirable since it has the capability of helping an organization in continuous improvements. The inability to conduct the same often results in negative outcomes such as loss in employees, market shares and decline in profit level. In order to analyze the same, the researcher has chosen the case of Ford Motor Company. The approach of TQM will be discussed in the paper for implementing organizational change in Ford Motor Company.

Issues encountered by Ford Motor Company

As per the opinion of Dearborn (2016), there are several quality issues with Ford Motor Company, which have affected the financial prospects of the corporation. One of it refers to problems in speed sensor, which reduces the velocity of a moving Ford model suddenly. Apart from the stated issue, in some of its models such as Ford Explorer Vehicles, the toe links in the rear suspension have the possibility of fracturing thereby affecting the steering control negatively. The reason behind the problem was utilization of poor quality weld (Dearborn, 2016). Moreover, in some of its car models such as Ford F-Series, complains were issued regarding poor quality tires. Even Ford’s Touch system is facing certain software problems that have affected its user interface (Rosevear, 2013).

All these issues clearly highlight that in Ford Motor Company, there is absence of organizational change. The presence of traditional culture in the company is clear from the rising complaints from customers. In the year 2006, Alan Mulally tried to change the culture where transparency is present but failed to achieve major success (Wernle, 2013). Therefore, in order to bring organizational changes in Ford Motor Company, a project needs to be undertaken that applies the approach of Total Quality Management (TQM). Although TQM was implemented in 1980s, the initiative failed to reap benefits (Scheid, 2011). Therefore, as a leader, I would implement TQM with a major change in organizational culture to improve it.

Ford Motor Company

Before discussing about TQM and its implementation in Ford Motor Company, as a leader, it is important to gain information on the corporation.

Figure 1: Financial information on Ford Motor Company

(Source: Annual Report, 2015)

Figure-1 clearly depicts the performance of Ford Motor Company in all the countries of the US, Canada, Mexico, North America and similar such nations. A comparison of the market share during 2013-15 highlights that it has increased to 7.3% in 2015 from a low of 7.1% (Annual Report, 2015). Even in terms of wholesales, which represent the sale of heavy vehicles, the company witnessed fluctuations and recorded a low sales volume in 2014. Although the organization is headquartered in the US, it operates in Japan, UK and China (Annual Report, 2015).

TQM, Six Sigma and CQI

There are various approaches of organizational change and these refer to TQM, Six Sigma and Continual Quality Improvement (CQI). According to Vest & Gamm (2009), Six Sigma is the approach, which has an objective of removing defects in manufacturing procedures of an organization by determining standard deviation of six specification limit and mean. On the other hand, CQM is an approach that aims at decreasing waste generation for enhancing the efficiency of the organization in order to satisfy the customers (Vest & Gamm, 2009). However, as a leader in Ford Motor Company, I recommend the use of TQM for organizational change.

According to Isac (2010), TQM is an approach where the aim of the organization quality enhancement of products, services and procedures in order to attract the customers. This approach depends on five principles namely production of quality products through employee empowerment, giving importance to customers, adopting strategic approach, incessant development and group work (Cornelison, 2013).

Specific goals of TQM program at Ford Motor Company

By implementing the program of TQM for bringing organizational change, four goals are required to be set which are given in the continuing section.

• To increase the market share above 14.7%
• To mitigate the problems of product quality by the end of the year 2020
• To increase its customers by 20% at the end of the year 2020
• To adopt strategic approach in order to ensure the suppliers distribute quality materials

For measuring the success of the TQM program, the mentioned goals have to be achieved by the leader. I can possibly reach the stated measurable goals as a leader through implementation of TQM program.

Plan for implementation

Before implementing the program of TQM, a specified plan is required to be made. In order to prevent the production of poor quality products in future, the leader requires use of Vroom-Yetton model. Since the quality of manufactured products depends on the work culture and communication with employees; therefore, the application of the specified model is appropriate. The discussion on the way of implementing is provided in the continuing section.

Implementation of a major program of change

In order to follow the formulated plan for the program, the leader requires deciding on the suitable method. Thomas (2015) stated that the Vroom-Yetton model clearly specifies that for becoming a better leader, the method of decision-making needs to be transformed. The model highlights fives types of approaches, which refer to autocratic type II and I; Consultative type II and I along with Group-based type II. The autocratic type II and I is unsuitable for Ford Motor Company because it will demotivate the employees since their opinion will hardly be considered for improving the steering, speed sensor, tires and software like Touch system. Even the consultative approach is inappropriate for Ford Motor Company because in such a kind, the leader ultimately makes the final decision (Isac, 2010).

Cornelison (2013) pointed out that in view of the current issues faced by Ford Motor Company, a group-based type II approach will help the corporation to implement TQM effectively. The specific approach will fulfill the target of producing high quality automotive parts by engaging the employees in teamwork. This action taken by the leader will empower the employees and simplify the communication in the organization. Ford Motor actually requires such a kind of approach, which will allow the employees to decide collaboratively regarding the actions appropriate for sourcing their raw material such as weld from suppliers (Scheid, 2011).

The leader will restructure the organization and assign different roles to varied employees having different skills. For instance, the hiring of a technician for testing the software used in Ford automobiles before launching it will help the company to prevent occurrence of quality issues hampering their reputation. On the contrary, the marketing department needs to be given guidance on impressing customers by allowing them to take a suitable decision. Although the leader will create different teams and assign responsibilities to each of them, it will ensure that there is communication between them.

Furthermore, for proper implementation of the TQM program, the leader will conduct training sessions for each of the employees in Ford Motor Company so that the combined decisions taken by all of them are correct.

Company structure

In an attempt to implement the TQM approach and enhance communication in Ford Motor Company, the structure of the organization needs to be changed into organic one. It will allow the leader to decentralize the authoritative power. The same activity will encourage mutual adjustment in the organization and face-to-face interaction will help the leader to clarify the problems to its subordinates (Meyer & Gagne, 2008). However, for improving the organizational culture and facilitate enhanced communication among members, the leader will transform the structure into a flat one. By adopting such a mechanism, the interaction gap between leader and employees will decline.

The leader will practice customer differentiation because it will allow the individual to know about the taste and preferences of consumers. The marketing team will utilize the gathered information to create advertisements, which will help it to attract customers. Therefore, this action based on organizational change will help the leader to fulfill one of its TQM objectives of focusing on customers (Isac, 2010).

Employee buy-in

In order to change the organizational culture and promote TQM, employee buy-in has to be used by the leader. This will require it to follow the Self Determination Theory where the employees will be motivated both intrinsically and extrinsically. As per the views of Meyer & Gagne (2008), by allotting responsibility of organizational operations to workers, the objective of employee engagement can be achieved and their performance will improve. This in turn will assist Ford Motor Company to achieve its target of producing quality automotive parts and prevent future issues.

Moreover, employee buy-in requires the leader to practice organizational socialization and learning by conducting training sessions. The leader will successfully apply behavioral management for employees, which in turn will act as a motivational technique (Cornelison, 2013).

Role of leadership in TQM

Consultative leadership is suitable for implementing TQM at Ford Motor Company, which will be guided by Herzberg’s Theory. Isac (2010) pointed out that since one of the principles of TQM is to empower employees for producing quality products; therefore, the extrinsic and intrinsic motivators will act as an assisting force for the leader helping it to achieve its target. The leader needs to provide better employee benefits for encouraging them extrinsically and allot them responsibilities for motivating them intrinsically. Cherry (2010) stated that as per the Trait Theory of leadership, the leader already possesses the qualities of a manager. However, it requires proper implementation through practice of collaborative leadership style.

Discussion on implications of plan on organizational culture

Through proper implementation of the plan, the leader will be able to change the hierarchical structure to a flatter one where the communication gaps will reduce. Furthermore, Meyer & Gagne (2008) stated that the application of Self Determination Theory would allot the workers with power of decision-making. This means that the authority or control will lie in the hands of both the leader and the employees. Cornelison (2013) stated that the transformation of the leader into a consultative manager will encourage group activities at Ford Motor Company. Therefore, ultimately, all the five principles of TQM will be fulfilled which refer to improvement in product quality, customer satisfaction, adoption of strategic approach, continuous improvements in operations and teamwork.

• Conclusion

TQM is an essential approach for bringing organizational change. By adopting the method, as a leader, I can prevent the occurrence of speed sensor, steering control and software issues at Ford Motor. It is anticipated that the market share will rise above 14% and the customer base will increase by 20%. This will occur since the leader will become consultative. Consequently, the employees will be encouraged extrinsically and intrinsically which will be reflected on their job performance. The flat and organic organizational structure will increase the degree of communication among employees and the leader, ultimately resulting in fulfillment of organizational goals. However, the principle of continuous improvement needs to be emphasized at Ford Motor Company.