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Over few decades, many organizations have made changes in their internal and external affairs. What makes these corporate giants change? To name a few they are increase in market demand, business competitors, technology, and social responsibility. Tough organizations are changing according to the requirement, there are many times they are not able to audit and measure and the change result. Result of this lead to many process/flow complications, reduction in profit margin, dissatisfaction among employees and customers, high financial expenses.
Consumer Goods (FMCG)
Blades and Razors, Duracell, Oral Care, Braun, and Personal Care
We will have a brief study on such organization for better understanding of current perspective and approach of today's organization towards changes. We will be discussing about the corporate strategy, organizational culture, corporate vision, factor influencing the change, strategies and corrective measures adopted for change. We will be exploring the strategies and process 'Gillette' has adopted to bring in technological change and organizational change. 'The Gillette Company' has implemented enterprise resource planning tool SAP and now in the face of introducing RFID into their products. The adoption of this technology has significant implications for the redesign of organizational structures, business processes, and employee hierarchies. As more organizations adopt this technology, an understanding of the factors that influence managerial responses to technological change is increasingly important in both theoretical and practical terms.
Types of change
Development change à Gillette is been acquired by P&G. (people and process)
Transitional change à Implementation of SAP technology change
Transformational change à In the process of introducing RFID Technology change
Impact of change
The ERP implementation created a robust and flexible, agile platform that allowed successful management of change and aided to cope with integration needs. It allowed more visibility throughout the organisation and also enabled continuous business operations and integration with Procter & Gamble. There was transparency in the transactions which occurred. It provided both high operational stability and system reliability. This gave Gillette and P&G a platform for continuously realizing business benefits and a competitive edge against their market competitors.
The levels information flows got better between the companies and also between Gillette and its vendors. Their relationship was more stabilised and collaborative which led to reduced wastage of material and other industrial wastes. There was also a reduction in inventory levels which led to higher quality and better service levels.
On the organisational level the data and information between all the departments was shared and integrated. Which led to more efficiency, this also encouraged the employees to leave silo mentality and focus on working as an organisation team instead of an individual team. The Employee standards and expectations increased which reflected as proactive attitude from the employers and could enable the organisation to aim bigger. Since the information flows were faster and more visible the top management could analyse and audit the business process, strategies, cost etc. with greater clarity.
About The Company
The Gillette name is synonymous with a wide range of personal care products for men and women. It is the world's leading manufacturer of razor blades, razors (Gillette), alkaline batteries (Duracell), writing instruments (Parker, Paper Mate, and Waterman), and toothbrushes (Oral B). Shaving products account for more than 50% of Gillette's profits. Gillette's business also includes toiletries (Right Guard and Soft & Dri), hair removal products and household appliances (Braun). More than 1.2 million people around the world use one or more of Gillette's products every day. Gillette is the world leader in 13 major consumer product categories. The company has a very extensive global presence and is credited with a strong program of new product development.
Ownership: 'Gillette' is a brand of Procter & Gamble. It is one of several brands originally owned by 'The Gillette Company', a leading global supplier of products under various brands, which was acquired by P&G in 2005. Their slogan is "The Best a Man Can Get". 'The Gillette company' is a publicly held company traded on the New York Stock Exchange with over 44,000 employees.
Principal Subsidiary Companies: Gillette's subsidiaries include: The Gillette Company Andover Manufacturing Centre, the Gillette Company Personal Care Division, Oral-B Laboratories, Paper Mate, Braun AG, and Duracell.
Strategy: Gillette's strategy is a three-pronged focus. Simply put, its mission is to achieve or enhance clear leadership, worldwide, in the core consumer product categories in which it chooses to compete. The company hopes to achieve this through a continuing process of new product introductions. Maintaining a new-product ratio above 40% of sales is the objective. A record 49% of Gillette sales in 1997 came from products new to the market in the last five years. This is twice the level of innovation at the average consumer-products company.
A vast research and development program is at the core of Gillette's success with its new product introductions. According to Business Week, 'Gillette' religiously devotes 2.2% of its annual sales, or over $200 million, to research and development (R&D)-roughly twice the average for consumer products. The company aims to prove that consumers can be induced to pay a premium for innovative products that deliver superior performance. The company goal is to increase spending on R&D, capital expenses, and advertising-all combined-at least as fast as sales to assure continued company growth.
Gillette's principal means of putting change into practice is effective 'two way communication' - the ability to clarify and communicate is the top-ranked competency for facilitating change. The second and third competencies, building trust and achieving collaboration, also involve communication.
Gillette also believes that Planning and operational competencies are necessary for implementing change. Strategic planning and decision-making are given intermediate rankings by respondents, as is the operational ability to manage cultural change, but other competencies like facilitating intervention, managing diversity are not practices regularly.
Companies are using a variety of techniques in carrying out their change initiatives. Communication, as noted, comes in at the top, followed by employee participation. But there are several specific techniques to promote motivation and employee empowerment that are widely used.
Linking implementation to individual performance objectives and compensation is ranked third: two-thirds of companies have adopted this policy. Integrating with HR processes (e.g., in hiring, promotion, and training) is commonly used, but shared decision-making, which also promotes empowerment and engagement, is less popular.
One approach that appears to be underutilized by 'Gillette' is leveraging knowledge from the industry (such as pursuit of best practices and benchmarking).
Business Problems & Solutions:
As we understand that there are many issues/hurdles organizations have to face to implement changes in their work flow and process. The issues which 'Gillette' had after merging with 'P&G' (Development change), implementing SAP & RFID new technology (Transitional change) are unique and strategically planned and executed.
Top management of Gillette and P&G have started planning the integration strategy almost immediately after acquisition. For legal and antitrust reasons, P&G was limited in the actual planning and meetings with Gillette, but clearly developed a strategy for the merger of the two companies' procurement organizations and supply bases. Once the green light was given, they formed a cross-functional team to manage the procurement integration. There were four clear principles driving the internal organizational integration as well as the supplier integration.
Field the best team possible.
Communicate with staff as openly as possible.
Strive to have the resulting organization be better than two previously separate ones were.
Face suppliers as one company as soon as possible.
In some cases, that meant some P&G staffers would be left without a clear future in the merged organization. There were also Gillette staffers who did not want to be part of the new organization.
Less clear was the integration of the business processes used at the respective companies. P&G was known for a very consensus-driven decision making approach. It can be a time-consuming process to align the different parts of the business against a specific initiative. But when it happens, it has tremendous strength because everything is aligned and marching in the same direction. On the other hand, Gillette had more of a rapid-response decision making process that helped it react more quickly to market changes, but had less alignment strength behind it. Both processes worked, but Gillette's was much clearer. So they developed a new process combining elements of both.
Selecting the tools
In addition to the integration of people and processes, there was a major procurement technology integration that had to happen. In fact, they list the technology integration as one of the most difficult components of the merger. "The complexity of bringing all of the information systems and e-capabilities together was a bigger challenge than they expected. The technology integration is about 95% done (ie. Within the organization), but there are a lot of steps they need to take before integrating the information systems of two companies of this size.Specifically, both companies were using an SAP backbone, which eased some of the integration issues. Each company had a contract management tool in place, but with the higher number of contracts in the combined organization, neither of the existing tools was considered adequate. So a new tool had to be selected and implemented to merge the contracts from both companies. The company held a six-month pilot and decided to standardize on a contract management tool from Upside Software.
Managing Change Roles
The broad-based engagement of many management categories in the change management process is striking. Effecting change is no longer compartmentalized (divided in to categories) or externalized; rather, executives at all levels across the enterprise are seen as having important roles in change management. Initiating there is considerable diversity in the roles that various levels of management take in change management. The most common pattern is to assign initiating change to the CEO and/or other top officers. But top executives appear to have less active roles in other stages of change management.
Leading for most participants, leadership over the change process is fairly evenly divided between HR directors, local business unit leaders, and corporate officers at the vice president level. A substantial number of respondents still see an important role for the CEO or COO in leading the change management process. More sweeping changes and extensive organizational restructurings (e.g., mergers and divestitures) generally require more hands-on leadership from the top brass, if only to demonstrate will and commitment.
Roles of management
According to survey and research by 'Gregory R. Guy and Karen V. Beaman' from 'The Conference Board'-a non-profitable organization, the % of responsibility for change in an organization is listed as:
VP strategy, development, planning
Change management manager
Organizational effectiveness leader
Organizational planning and development manager
Senior VP of operations
Business unit leader/manager
In the case of 'Gillette' the changes which took place in the organization was initiated by the top management. Managing and sustaining Day-to-day activity, managing and sustaining change is assigned to the local unit leaders at the line level and to HR directors at the corporate level. They believe that any initiative, effectiveness is typically greatest when it is driven from the level closest to the people who are actually affected by it.
Evaluating change is more diffuse across the organization. In 'Gillette' the evaluation for change is:
HR director: Evaluates people factors
COO: Assesses ROI and effects on the bottom line
Business unit leader: Determines effects on the business unit's efficiency
Various specialized roles, e.g., change management manager, and VP of strategy, development, and planning.
Summarise the major problem
Identify alternative solutions
Advantages and disadvantages of solution
No need to refer to theory
The above case study we have identified the issues and the solution the organization had after SAP implementation, and what issues they are currently facing to bring in RFID into their product to maintain and keep a count on their inventory. From this case we also understand the "Gillette" did not implement SAP as they needed it, but implemented it with the influence of their parent company "P&G" (Procter& Gamble). Initially, "P&G" after acquiring "Gillette", did not want to disturb the business process and employee, they want to integrate "Gillette" business and the product with their own product. For this integration to have a smooth and transparent flow of information, data, finance "P&G" the holding company has chosen SAP.
After months of drafting vision statements and rearranging organizational boxes, many companies have bogged down in the muddy terrain that separates theory from implementation, change on paper from change in reality. What went wrong? In their eagerness to unlock the creativity of the worker, some companies neglected a most valuable and necessary player in any change process - the middle manager
Choose alternative solutions to be adopted
justify your choice explaining how it will solve the problem
integration of theory