Managing Organizational Changes
Part 2: The Change Analysis – Images of Change
General Motor and Ford Corporation went under tremendous changes to improve Company’s financial condition. The major changes carried-out by both the organizations at various levels are as follows:
Organizational Changes in General Motor:
General Motor faced significant decrease in sales and financial losses during years 2005 to 2009. In 2009 company went for bankruptcy and made significant organizational changes.
Closing of unprofitable business: General Motor either sold off or closed down unprofitable units and car models. Company sold its two brands named Hummer, Saab and closed Saturn and Pontiac. Goodwrench and Oldsmobile were also discontinued. Company discontinued putting its “Mark of Excellence” on all cars. Company closed brand Daewoo in international market. Company in South Korea launched Chevrolet brand in year 2011. General motor closed down multiple production and sales units that were not earning any profit. Company shifted its focus on the brands that were delivering value, excellent performers, greatly designed, proactive, reliable, and powerful. Company refined its existing models to deliver customer satisfaction in different regions.
Reduction in legacy cost and other expenditure: General Motor realizes that its expenditure is on higher side hence company needs to reduce it. Company reduced legacy cost by executing agreement with “United Auto Worker”. GM transferred its responsibility of healthcare benefits to UAW Retiree Medical Benefits Trust. These payments were accounted for around half of the payments need to be made by GM in future. Company sold off various assets to increase its liquidity and performed transactions in capital market. Company decreased its human resources by closing multiple unprofitable units and brands.
Changes in leadership and organization structure: General Motor appointed new CEO Whitacre, who brought various organizational changes to improve organizational culture. He made decision process more efficient by improving communication at all levels (Godwyn & Gittell, 2012). Organizational Goals and objectives were strengthened. Old low productive workers were replaced with new, enthusiastic, and skilled workforce. The organizational structure was flattened; executives were made directly responsible for sales and other activities.
Adaptation of new technology and methods: General motor started focusing on adopting new technology and methods to reduce the cost at various supply chain levels and to build great designer vehicles. Company emphasized on creating fuel efficient and environment friendly vehicles. Competitor’s analysis helped organization to replicate their model to reduce the cost and improve the efficiency.
Organizational Changes in Ford Motor:
Ford Motor started facing challenges from 2005 due to high medical cost for workers, increased fuel prices and declining. To deal with these issues company made following changes:
Resize of organization: Ford closed down its various unprofitable units and cut down jobs to improve its financial conditions. Ford sold its brands Land Rover and Jaguar to Tata. The company closed down various units in international market.
Change in leadership: Alan Mulally was appointed as Chief Executive Officer of the Ford in year 2006. The new CEO increased borrowing capacity of the organization by giving some assets as guarantee. This change worsens the financial situation during the time of recession.
Reduction in legacy expenditures: Ford done some arrangements with United Auto Worker to make the balance sheet better. Ford executed agreement with UAW, under which Ford is allowed to reduce health care benefits significantly of its employees. Company established independent, Ford funded trust VEBA (Voluntary Employee Beneficiary Association). This arrangement enhanced cash position of Ford significantly by shifting employee’s health related liabilities to VEBA account.
Adaptation of new technology and methods: Ford made different changes at different levels of operations to improve the performance. The company emphasized on developing fuel efficient, stylish, cost effective, and advance technology loaded vehicles. The company implemented various regulations and processes to save energy and make world greener. Company tried to develop models that fulfill all advance needs of customers in terms of design, fuel efficiency, cost and performance.
Compare and Contract of Organizational Changes:
Both organizations went through similar circumstances like: declining sales and revenue, financial pressure, competitive pressure and higher operational expenses. To deal with these elements companies adopted for various changes. Majority of the changes implemented by companies were similar for example both General Motor and Ford evidenced changes in leadership, company cut down their expenses by reducing legacy cost and by closing unprofitable brands as well as units. Ford as well as General motor both executed special agreement with United Auto Worker to reduce the legacy cost. Both organizations resized their operations and workforce; both focused on implementing latest technology, processes and methods to improve the performance of vehicles. The changes implemented by both companies were almost similar. However, Ford did not go for bankruptcy. On the other hand General Motor used sum obtained by Bankruptcy in repaying loan, expenses and interest. Ford increased its borrowing capacity under the guidance of Mullali which further increased the trouble. The changes implemented by both the organizations were so strong that it impacted all stakeholders including customers. The changes implemented by organizations yielded desired results which reflected in next year balance sheet. Presently both organizations are successfully running profitable business.
Analysis of Images of Managing Change
Compare and Contract of Three Images of Managing Change:
The six images of change describes various aspects related with change for example nature of change, change agent, outcomes etc. the six images of change are: Director, Coach, Navigator, Interpreter, Caretaker and Nurturer. All these six images of change can be categorized in to two parts according to management of changes: control and shaping. Three images Director, Navigator and Caretaker are shortlisted to analyze the changes implemented in General Motor and Ford.
Director: in this image the changes implemented in organization are planned and derived from senior management. Director assumes that the outcome of changes will be favorable and achievable. This image focuses on intended and controlled changes. Director planned desired changes in very organized manner and the changes are supported with contingency plan.
Navigator: in this image the changes are partially planned but implemented under full control of change manager. The result of such changes is influenced by various factors like processes and competition. Under this image the emphasis is given on controlling change activities. However, change manger may not achieve desired results completely because of influence of external factors.
Caretaker: this image emphasis on controlling changes but influence of internal and external forces is very high that the outcome not be as per desire. The results of changes get impacted by internal and external factors hence the results are more independent. Change manger tries to de best to respond to those factors (Paton & McCalman, 2008).
In all above mentioned three images changes are completely controlled by the change manger but results vary in each image. In Director the results are controlled whereas in Navigator and Caretaker the results are partially intended and unintended respectively.
Implementation of Images in GM and Ford:
Director: All major four changes implemented in both organizations i.e. closing of unprofitable business, Reduction in legacy cost and other expenditure, Changes in leadership and organization structure, and Adaptation of new technology and methods, are focused on improving organizational performance. If all changes are planned and controlled by change manger then implementation and effectiveness of these controls will be higher. Collaborative approach will not be successful in this case because employees always resist changes, especially when they are focused on closing few units, brands and replacing old employees with new. The outcome of changes is indented hence objectives of changes will be achieved and both organizations will register increase in profit.
Navigator: in this image the changes implemented in both the organization can get influenced by external factors like competition, changes in technology, processes etc. in such case the changes implemented by management may be or may not yield desire results. Both organizations are facing tuff competition from its rivals like Toyota, Honda and Hyundai hence it may not be possible for both companies to develop competitive advantages like lower cost, fuel efficiency and excellent performance. Healthy organizational culture, advance technology and better efficiency increase the chances of developing cost effective and excellent products.
Caretaker: in this image all changes implemented in both organizations are planned but they are influenced by various internal and external factors. Both organizations would not be able to achieve its objective under this image. The changes implemented in GM and Ford are focused on cost reduction, changing organizational culture and replacement of manpower which cannot be achieved successfully if change manger do not have control on internal factors.
Comparison of Results of Both Organizations:
Images/Results
General Motor
Ford Motor
Director
In absence of influence of internal and external factors the changes implemented by management will improve organizational performance
The organization will improve its financial position, sales and develop competitive advantages.
Navigator
The organizational will successfully close unprofitable units and brands. Organization culture will also improve in desired manner and adaptation of advance technology and processes can be done.
Development and increase in sales are influenced by external factors like competitors hence it may or may not be achieved.
The organizational will successfully achieve desired objectives that are intended.
Development and increase in sales are influenced by external factors like competitors hence it may or may not be achieved.
Caretaker
All objectives will be difficult to achieve because of the nature of changes which are not very employee friendly. (Replacement of old workforce with new workforce plays vital role in building innovative and excellent vehicles).
All objectives will be difficult to achieve because of the nature of changes which are not very employee friendly.
The best suitable image for both organizations could be Director where changes are intended, planned and organized step by step. The outcomes of changes are also intended. Both organizations are focusing on making their financial and business position stronger. To achieve desired results both organizations should develop competitive advantages like cost effective, fuel effective and excellent performance of vehicle.
Navigator image is best image that describes the case efficiently. Both Organizations are successfully operating business for last several decades. The products are reaching on maturity on their life cycle. After maturity the stage is decline if companies do not develop effective, innovative strategy. The same thing faced by both Ford and General Motor. There are few factors that are controlled and few are uncontrolled by management (Crawforda & Nahmiase, 2010). Both organizations can implement planned changes to reduce cost, change in leadership, organizational restructuring, and implementation of advance technology. What competitor is doing is not known; competitors are also working on improving their products to deliver customer satisfaction. Hence increase in sales and development of competitive advantages cannot be controlled.
References
L. Crawforda & A. H. Nahmiase. (2010). Competencies for managingchange. International Journal of Project Management , 405–412.
Luft, A. (2010, Mar 3). GM authority. Retrieved Novemebr 20, 2012, from gmauthority.com: http://gmauthority.com/blog/2010/03/gm-announces-major-organizational-changes-to-gm-north-america-with-org-chart/
M. Godwyn & J. H. Gittell. (2012). Sociology of Organizations: Structures and Relationships. Los Angeles: Pine Forge Press, SAGE.
Palmer. (2005). Managing Org. Change. New Delhi: Tata McGraw-Hill Education.
R. A Paton & J. McCalman. (2008). Change Management: A Guide to Effective Implementation. London: SAGE.
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