Abstract
Established in the year 1976, Acer is currently one among the top three most renowned PC brands in the international scene. Over the last four decades of the company’s existence, remarkable changes have taken place. Managing such change has posed quite a challenge for both the management and the other stakeholders – both external and internal. This paper is based on a critical review of change management in Acer; the Taiwan based PC Company that has emerged as one of the legendary organizations as far as strong management is, in the east. The first part of the paper is the introduction, which entails the history of the organization, the primary purpose of the paper, as well as, the significance of the review. The academic underpinning that follows entails a detailed discussion of the arguments and debates surrounding change management in Acer, the impact of such changes on the employees, the challenges faced by Acer, possibility of resistance to change, the strategies employed by the organization’s management in dealing with resistance, and outcomes and impacts of such changes. In the conclusion, the paper gives a recap of the major findings and conclusions from the review of existing literature.
Introduction
Stan Shih and four of the other Taiwanese investors joined their hands in 1976 and created Multi-tech. The company publicized its business in 1988, and the name changed to Acer Inc. During the early 90’s, the organization faced a decline in profits and sales and the top management had to go through the change of infrastructure. The changed model worked well till early 90s, but again organization started declining in late 90s. By the start of year 2000, a new president was appointed, who proposed the new structure, and introduced the integrated approach based on certain principles. These changes did not only lead the organization change its infrastructure but also impacted employees. However, Acer followed key principles of organizational change and intelligently took decisions for the management of employees. This paper seeks to review the aspects of change management in Acer, Inc. the paper is of exceptional significance, especially considering that the organization is currently one among the top three PC companies worldwide, but has lesser margins compared to peers. Additionally, the topic is of particular importance because, in the current era of technology and globalization, rapid change is inevitable, therefore, making change management a critical concept. Studying the concept through such a notable case study as Acer Inc will make it possible for students and practitioners to comprehend change management in the context.
An overview of in the organizational context
According to Chia and Holt (2011), change brings opportunities, as well as, threats for the organization along with it, and so it is an integral part of any manager’s job to manage change in a way that can help organization make the most out of opportunities and take control on threats. Hon et al (2011) also notes that managers or internal entrepreneurs are also sometimes called as the change agents as they are responsible for the changing process and decisions. Organizations also take advises through change specialists and change implementation experts. Acer is one among those organizations that most intelligently managed changes and survived even after facing hard threats (Ford and Ford 2009).
Organizational Changes in Acer
Change began in the organization as early as 1979 (KLA-Tencor 2013). According to Singapore FTA (2013), Multitech started exporting personal computers consolidating OEM contracts and sales under the name of its own brand in 1979. The perception that Taiwan always dealt in counterfeit and often low quality products hindered the expansion of the organization’s market. Stan Shih devised various strategies to change this image (Paulino and Callois 2010). Singstat (2013) explain that change began in the company when its management made alliances and acquisitions with USA companies like Altos, Texas Instruments, and Counterpoint.
Need for change escalated in the 1990s, when the organization faced unprecedented decline in profit and sales of Acer due to the price war between the IBM, Compaq, and HP (Qiu et al 2008). During this period, Stan Shih again went for change management approaches and immediately undertook particular series of restructuring initiatives like downsizing non profitable company operations, tightening internal cost control, and laying-off low company performers as all these came with tax implications (IRAS 2013a).
Impact of the changes on the employees
Acer Inc has approximately 7956 employees – a number significant enough to make the organization be referred to a major employer in the east. Among the notable effects of the changes on the staff of the organization are such negatives as reduced morale. According to Publishing (2013), the organization’s employees lost the morale to work as hard as they did before because they associate change with the loss of jobs. As a result, they do not offer the extra effort required for exceptional performance of the organization because it is characteristic of the average employee to be pessimistic when they deem their job security threatened (WEF 2013). A research by Transparency International (2013) indicated that Taiwanese employees in such companies as Acer Inc experienced mental stress as a result of change within the internal environment of the organization.
Among the long term effects of the changes on the employees are such negatives as the loss of loyalty (Westover 2010). According to Westover, employees are exceptionally loyal to an organization that assures them of job security and stability of tenure. With the adoption of downsizing at Acer, notes (Wong 2012), the organization’s work force live in anticipation of losing their jobs. As a result, they have turned to searching for new occupations as they continue working. White (2009) whose research has similar findings as those of Wong explained that such job searching efforts of existing employees is the ultimate show of disloyalty. Wong (2012), Westover (2010) and Cyhn (2002) argue that the most notable effect is the fear of loss of job, which causes other complicated effects.
In case of organizational change management, the psychological contract is regarded as an important perspective. The employees and employers should be well aware of each others duties and rights. Managers have to be very much careful in pursuing this duty. They must keep employees and employers in direct communication so that nothing should remain unclear. This open communication is regarded as important during the time of change; for example, if the employer is up to changing the working time of the employees then manager is the one who communicates between the two parties and make assurance for the employees that they will also be compensated for any change in the organization. However, any change that does not seems to be as favorable for the employees face resistance. There are different strategies that managers can take on to reduce resistance; for example involve employees in the change process to make them feel that they are an important part of organization (White 2009).
Westover (2010) found in a report that companies with high level engagement levels show 29% better revenues, 50% more customer loyalty, and 44% better profits. But here the question how can the companies keep the employees engaged with their work and so the organization. There are various techniques that the managers apply in to keep their subordinates motivated, engaged and loyal to the organization; for example rewards, flexible timings, and challenges can keep the employees motivated and engaged towards their work (Hayes 2010)
Wong (2012) also proposed some strategies that can help to deal with the change resistance in the organization. These strategies are used in different scenarios; for example, manager should negotiate with the employees if there are chances of losing their commodities or any thing else. For this they should be offered incentives on making the change. This method can though be expensive but it is the best way to defuse any major resistance. Similarly, coercion strategy can be used in case there is a threat to employees job due to need of initiating rapid change or there is pressure on the company itself. This method can set off resentment towards change and can leave a bad image of the organization. Though, resistance can quickly be controlled but it is suggested to use it when there is nothing left to decide.
Reactions of the employees to the changes
In reacting to the changes, the employees have resorted to various reactions, which, according to Liu and City University of Hog Kong (20100 have adverse effects on the performance of the organization. Notably, the organization’s employees have resorted to such adverse reactions as absenteeism, which has slowed down the entire production process (Erwin and Garaman 2010).
Another notable reaction is resistance to change, a common reaction to changing as noted by MOM (20130. Resistance to change has caused bitter conflict between the management and employees of the organization. Such conflicts touch on various organizational functions, hence causing a potential paralysis of operations. As a reaction to the continuous change, a majority of the employees have ultimately lost confidence in the management of Acer. Such loss of confidence in the management of the organization has as a fault that is likely to widen the distance between the management and the workforce. It therefore, follows that, as a result of the reaction from the employees, the organization could be in for more trouble, which could affect many factors, including the organization’s tax burden (IRAS 2013b).
Strategies employed by the management
The management of the organization has adopted a number of strategies to reduce organizational resistance to change. Foremost, the organization has resorted to using democratic management, an approach that entails the embracing of employees’ views in the decision making process. Involving the employees, according to Wong (2010) and White (2009) makes the employees perceive the changes as their own efforts at improving the organization. While this is the case, employee relationships with the management have been on an upward trend or a positive direction. This has enabled the organization experience more acceptance than resistance to change, especially among the middle level employees. Such changes as downsizing and laying off have been made acceptable through the use of industrial and organizational counseling.
Another strategy worth noting is the use of servant leadership in Acer Inc management (Dow and Perotti 2010). Dow and Perotti note that the employment of servant leadership, coupled with transformational leadership has spearheaded change management and high rates of acceptance in the organization. Hon et al (2011), notes that transformational leadership is the essence of change management as such leaders make the workforce believe that change is the fundamental factor behind any success, at least in the contemporary, technology-driven corporate world.
The impact and outcomes of the changes
As mentioned, the post employee response period has seen the implementation of a multiplicity of strategies to see acceptance of change in the organization. Due to the use of such strategies, the relationships between the employees and management have significantly improved (Singapore FTA 2013). Due to fair relationship of employees with their managers and employers at Acer, the organization has not faced any major conflicts between the two parties. Acer, keeps its employees involved in the organizational decisions, and regards their opinion. An organization conducts opinion surveys from time to time to know about the views and suggestion of its employees. It is due to these actions that Acer is on top 4th position among technology vendors all over the world (Acer, 2013).
Besides all the difficulties, hardships, and challenges, Acer has been able to come up with its leading name. During all such phases of change, the top management focused on the following principles.
- Face all of the problems aggressively.
- Try to solve the problem permanently by finding the perfect solution instead of focusing on personal interests.
- Do not overlook the benefits of employees and also prioritize the interest of stakeholders, while making significant decisions for the organization.
- Explicitly seek and provide different solutions.
Acer has always taken favored decisions for its human resources while being in the tight situations. However, currently the organization has taken the toughest decision of its history that is cutting down the cost of employees by 7%. This is because; an organization is facing worst loss since 2 years. Therefore, in order to save the expenses the company was to take such decision (MOM 2013). Among other outcomes of the changes are such positives as reduced tax burdens (IRAS 2013b). WEF (2013) explains that Acer’s performance is on an upward trend because costs have been effectively cut, implying high margins, almost equaling its peers. Overall, the performance has improved, especially with regard to finances (Qiu et al 2008). O the external environment, the organization has developed a negative image, something commonly associated with organizations that employ downsizing and layoffs (Hayes 2010)
Conclusion
In conclusion, it is worth mentioning that Acer, just like it peer giants, has undergone changes in many ways. Most notably, the organization has yielded positive performance in terms of margin. Among the most notable effects that change has had on the employees are such negatives as reduced morale, more stress and fear of the unknown. In reaction, the Acer employees have resorted to absenteeism, resistance and management conflict. The primary strategies used by the management to boost acceptance include transformational leadership, industrial and organizational counseling and inclusive decision making. Acer has been following an emergent approach or theory of change all its life. The decisions were taken as according to the changing situation at an organization. However, the set methods or rules of an organization towards the change process made it easy for the top management to take important decisions related to employee empowerment and other issues.
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