Accepting change is considered the biggest paranoia in todays world. Organizations - both business and non-business confront a challenging world. Some of the challenges that are faced by managers today include competition from other firms, globalization, and technological changes besides others. Let us consider a small example that can set the stage for discussing the effects of change. Daily life in a modern society is like a routine, where we wake up in the mornings, have breakfast, go for work, have lunch, come back from work, eat dinner and then sleep again. It has become a scheduled life, or so to say, we conform to structure in our lives. This structure provides us the necessary security. But, if we were to live in a world full of anxiety and unexpected mechanisms, it may leave us feeling uneasy and apprehensive. If this is the condition of individuals, a large-scale change in an organization can surely transform its people into anxiety, exasperation, frustration, depression or even fatal incidents. To curb this, organizations practice what is to be referred to as Change Management.
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Change Management is a process whereby, the individual, team or the organization develops a planned approach towards any sort of an alteration. The objective is to capitalize the benefits for the people and lessen the risk of failure of implementation. Change management entails thoughtful planning and sensitive implementation, and most importantly, consultation with the people who are going to be involved in the process. This task studies how organizations have evolved to accept change. But let us first look at the drivers that affect organizational change:
Ø Inadequate Financial Performance - the 2008 economic slowdown can be well quoted as an example for this. Companies failing to reach their financial benchmarks, have to undergo change. Competitive organizations can cannibalize their market share, provided they enter with cheaper labor or superior technology. Failure to maintain the market share can force companies to rethink their opportunity cost and also the deployment of resources.
Ø Changes in Strategic objectives - many companies shift their focus from being product-driven to being customer-driven or even process-driven. To enable this, restructuring and re-orientation of processes, people are required of in the organization.
Ø New Technology - companies that neglect the new trends in the market are set to suffer a setback, and, therefore, should adapt to the changes in technology.
Ø Mergers and Acquisitions - when companies merge and consolidate their operations, people and the culture, re-engineering takes place. The streamlining of the operations, infrastructure and the structure of the two organizations into one centralized theme is a huge part of the change management process.
These, could be defined as the drivers of change that evolve businesses and markets.
Organizations, today, have learnt to adapt to change. In this era of globalization, fast-moving lives and business-centered organizations, people and the processes have accepted the transformation. For instance, a lot of investment banks had to undergo transformation during the economic slowdown. Citigroup Inc. restructured its banks and other affiliates during the recessionary period, to acclimatize with the new environment. And it did happen. The management has to ensure that a smooth shift occurs, and for this it adopts a number of organizational theories as a basis for effective change management. Some of them are listed in the next few paragraphs.
The central challenge of changing people's behavior and making them susceptible to change remains to be a huge challenge. John Kotter and Dan Cohen, discuss in their book The Heart of Change: real life stories of how people change their organizations discuss highly-successful organizations embark large-scale change. They say it moves through eight stages:
What people do and what is to be done for them, requires systematic thinking and planning on the part of the management. It is necessary to build upon a sense of urgency in the people by inspiring them with the need that has arisen to undergo change. This could be done with relevant people in the organization first and then go onto include others. These could be referred to as the Change Agents. These agents can then create a team with the credibility, reputation and formal authority that can inspire change leadership. The visions, strategies and goals of the employees and the organization could be uplifted in this process but communication of these is of utmost important. The right communication can get the change process on an easy path. Every path has some definite barriers to action, and it is imperative to remove these as they would prove harmful. Empowering the people to act on their vision could lead to easy transition. Change cannot be brought about in a jiffy. It requires a lot of patience and observation on part of the organization, and therefore, small waves of change can lead to a bigger, better ocean of possibilities. When the change management process is nearly done, the new culture should remain stagnant until, the next change process comes around. This eight-step process of change would help to slide organizational change smoothly into organizational processes and functions and would bring about a new culture.
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The next theory of change is Kurt Lewin's Three-Step Change theory. This theory is considered to be systematic and planned in its approach. It talks about three steps namely:
The first step says to unfreeze or to change the existing behavior. This is necessary to overcome the strains of individual resistance. Some activities that can assist in this step are - motivating the employees, building trust and recognition and letting the employees participate in brainstorming sessions and other group activities. The second step talks about taking the level of the employees to a new target level. In this stage, the employees are encouraged to work together, look at the changes from a new perspective, and support the change agents and the leaders in the process of change. The purpose of refreezing is to stabilize the new equilibrium and ensuring that the changes implemented are followed by the employees.
There are many other theories that can catapult an organization into accepting change, namely, 7-S Framework by Mckinsey, Cultural Dimensions by Hofstede, Managerial Grid by Blake-Mouton, Causal Model of Organizational Performance and Change by Burke-Litwin, besides others. Organizations, today, understand the relevance of inclusion of its employees in the process of change management, and, therefore by implication of various models and theories, involve their people with full intention of their benefit. The Cognitive theory states the importance of understanding the thought processes of human beings, and this theory aids in the development of the theories and the models used by organizations for engaging their employees in the change management process.
The next task studies the strengths and weaknesses of a Bureaucratic Organization.
Max Weber gave the concept of bureaucracy at the turn of the 20th century. For him, the ideal bureaucracy was defined by the terms efficiency, impersonality and rationality. The employees are subject to published codes of rules i.e. the ones that are available in writing. The structure of the organization is a continuous hierarchy where every level has authority on the level below it. Job holders have no rights to a particular position. Responsibilities are delineated within each level, which has its own sphere of competence. Technical competence is the basis for appointment to an office. The strengths and the weaknesses of the bureaucratic organization are described as below:
These are the strengths and the weaknesses of the bureaucratic organization.
The organization chosen is BMW or Bayerische Motoren Werke which is headquartered in Munich, Germany and came into being in 1917. It has become one of the ten largest car manufacturers in the world. Long-term thinking and cornerstone thinking has been the reasons for their success. The prime objectives of their corporate strategy include striving for ecological and social sustainability, taking full responsibility for their products, and giving commitment towards their resources. It is for these objectives, that BMW has been the sector leader since the last five years, according to the Dow Jones Sustainability Indices. BMW holds the privilege of having some of the best brands in the world, to be their creations. These are the BMW Series, MINI and the Rolls Royce. These automobiles represent the finest and the most luxurious segment of the cars in the world. Along with the automotive concerns BMW is also employed with other services such as:
- Motorcycles - BMW is also engaged with the development, production and the marketing of motorcycles. These motorcycles are set in standard with technology, environmental protection and outstanding customer pre-sales and after-sales services.
- Financial Services - an extensive product portfolio is offered by BMW that supplies expert information and advice for situations and questions in relation with the finance sector.
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As stated in their Annual Report 2009, BMW is clear with their mission for 2020 where they are the world's leading provider of premium products and services for individual mobility. More driving pleasure and less of emissions - the BMW group is implementing on this principle, unlike the other automobile manufacturers by working on Efficient Dynamics technology. In 2007, BMW adopted the Number ONE strategy that focused on long-term value growth and profitability. The four pillars of this strategy are - Future, Growth, Customers and Profitability. This strategy revolutionized the BMW group and put them on the path to success.BMW has about 24 production and assembly plants in 13 countries. The sales distribution network of BMW stands strong at 41 company-owned subsidiaries and more than 3,000 dealerships.
The next task discusses and compares the ways of organizational development and aligns it with BMW.
Organization development consists of the activities that intervene in the interactions of the people and the systems, i.e. in the work culture and in the organizational design in order to increase the efficiency using a variety of applied behavioral sciences. Richard Beckhard in what is Organizational Development?, mentions that it is “an effort (1) planned, (2) organization-wide, and (3) managed from the top, to (4) increase organization effectiveness and health through (5) planned interventions in the organization's ‘processes', using behavioral-science knowledge.”
The intervention techniques focus on four categories- the Interpersonal, team or group, intergroup and then the overall organizational intervention. Each intervention revolves around these four categories. Some of the important organization development interventions include:
- Survey Feedback - is a part of intervening in the total organizational system. This methodology believes in taking feedback from the managers in the form of a survey conducted. The data is collected, the results are analyzed and then the means are developed to correct the situation.
- Process Consultation - a behavioral effort, this intervention aims at the teams or the intergroup activities, where through interaction, the problem is resolved. Coaching and counseling are the means of influencing change.
- Goal setting - the goals of every division in the organization is set. This aligns with the overall organizational objectives. This is an inter-group activity.
- Managerial Grid - it consists of group and individual activities with a view to developing the managerial style, interpersonal competence and group effectiveness.
- Management by Objectives - this tool developed by Peter Drucker, where the managers at different levels and their subordinates work together to establish and then achieve their goals.
- Re-engineering - a radical redesigning of the people, processes and customer satisfaction that would obtain drastic changes in the performance.
These are some of the ways in which organizational development is encouraged in the organization.
The automotive industry undergoes structural changes in an uncertain economic climate. Manufacturers face a new set of challenges to their business models, designs and ultimately, their cost structures. Automotive companies have to ensure that their designs are fuel-efficient, light-weight, are cheap to produce and are desirable. In this era of globalization, where the consumer has become a think-tank and is conscious of its status and upbringing in the society, BMW as an organization has always believed in identifying demands, reflecting on the challenges and investing in the future. The group understands that success and sustainability belong together. The Sustainability Board at BMW continuously evaluates progress and determines the suitable strategic directions. Every employee at BMW is called upon to help implement the goal of sustainability and responsibility.
Of the ways of organizational development that have been discussed above, the intervention of Re-engineering would suit the framework of BMW. This organizational development intervention would seek to radically transform all the processes and gain quantum leaps in the processes. This model would look at the overall improvement at BMW and would even make amendments in the separate divisions.
The level of changes that can be implemented in BMW would include:
- Structural changes - change at the level of the structure of the organization. Inclusion of new members in the committee. BMW continuously evaluates its board members and members of the supervisory board. Also, mergers and acquisitions could bring about a hefty change in the organization.
- Technical changes - hybrid and fuel-efficient cars are the demands of the environment and the industry today. BMW faces the challenge of promoting social and ecological aspects as resource-friendly and effective alternatives on the supplier markets. This is the ecological change that BMW needs to apply in its operations. One of the objectives of BMW is reduce the resource consumption and emissions by another 30% as compared to the 2006 level. BMW is already exercising these options by way of applying the Efficient Dynamics Technology.
- Changes in the Human Resources - people are the most important element in any organization. BMW ensures that its employees are satisfied and that they meet the targets of their Strategy Number ONE, as discussed before. In fact, for any organization, organizational development for its employees is of utmost importance. And that is why, BMW holds its members as the strongest pillar in its Strategy Number ONE. With the help of the Balanced Scorecard method, BMW ensures that its members achieve their targets which are also in view with achieving the company-wide objectives. The human resources department attracts mainly the high performers with the highest competencies. Also, cross-functional training, ideal job description are some of the ways in which the employees are encouraged to challenge the changing environments. One of the powerful programmes of BMW is called “Drive” for the young professionals with only up to three years of experience.
The next part deals with the development of systems for understanding and involving others in the process of change.
In today's fast paced business environment, companies need to have flexible and planned business operations to facilitate radical change. Change to company processes requires dedicated planning, and it's become imperative to align resources and employees to the company's objectives and goals. Adopting long term-change, strategic planning in the business units, building performance metrics, management-encouraged ideas, employee training and development are some of the critical success factors that would help infuse change in the organization. Of these, the most important is the Stakeholder Analysis. This analysis helps in creating and documenting those policies that would be in the interest of the stakeholders. This analysis would help in aggrandizing the process of change management of the organization.
Stakeholder Analysis is a process of gathering and analyzing qualitative data in relation to those to whom the interests of the organization are worthwhile. This data is taken into account while deciding upon a particular policy or a program to be implemented. Stakeholders are the persons or organization with vested interest in the policy being promoted. These stakeholders can be the international donors, national/political figures, public agencies, labor, civil society and the users/consumers. There are eight major steps that are involved in this process:
Kammi Schmeer provides these eight steps in Stakeholder Analysis Guidelines, and regards this information to be useful for other analyses as well. This system would help in developing and in introducing change in the organization. When this analysis would be conducted before the policy is implemented then, the policy makers and the managers can act to prevent any potential misunderstanding or opposition. This would enable the program to succeed most likely.
BMW already exercises good stakeholder engagement policies in their organization. It believes in the principle of ‘Listen, understand and act'. In 2009, BMW hosted its first Stakeholder Roundtable where experts from various environmental, societal and organizational concerns were present. They discussed the issues relating to product strategies and lessen the resource consumption across the value chain. BMW regularly holds stakeholder surveys, employee surveys and commits to sustainability initiatives.
After developing the system for engaging the stakeholders in the implementation of change, the organization is still most likely to receive resistance. In the light of transitions, it is almost natural for stakeholders to resist change. The most affected in the changing circumstances are the employees. Humans have a desire for perpetual stability, especially in their jobs and roles. And hence, the urge to resist is dominant. Many processes recognize and tend to overcome resistance in an organization. Some of them are:
- Individual Interviews - these would help in determining the exact thought processes that are prevailing in the minds of the stakeholders
- Commitment Plan- all the stakeholders and the members of the organization should be committed to the change plan. And this would majorly succeed, if the top-level management inspire leadership and help create a conducive environment to change
- Communication of decisions - as soon as the decisions are taken, they should be intimated to the stakeholders. The same should be done with care and honor for the stakeholders, respecting the past traditions and describing the advantages of a changed future.
- Input - every stakeholder that is going to be affected by the change plan should be given a chance to express the views, but in a defined and composed manner. A systematic plan should be developed.
- Rewards - successful implementation and cooperation should be credited with compensatory rewards.
- Evaluation - after the necessary changes have been implemented, the organization should evaluate the strategic changes on continual basis. This evaluation is of utmost importance to the stakeholders, as then the effects of the new policy or programme would be known to the policy makers. This would help in making amendments and improvising further.
This part deals with the plan that would be required to implement ongoing change in the organization.
Every organization needs to gain competitive advantage in today's world. Taking a holistic approach towards the process can assure the company to adopt the right mindset from the first go. There are various models for implementation of change management in an organization. Some of the models that would aid in proper change management especially in BMW are described as below.
1. ADKAR Change Model by Prosci
This a goal oriented change model that allows the management teams to focus their activities on the business results. This acronym is characterized by the words - Awareness, Desire, Knowledge, Ability and Reinforcement. There should be Awareness for the need for change; a Desire to participate and support the change; Knowledge of how to change; Ability to change on a day-to-day basis and Reinforcement to keep the change in place. This model can be used to:
Ø Diagnose the resistance of employees to change
Ø Help the employees in accepting the transition
Ø Create a successful action plan for personal and professional management
Ø Develop a change management plan
This model helps in identifying why the changes are not working and what could be done to implement the changes.
2. The 4-D process of Appreciative Enquiry
This model by David Cooperrider talks about the change interventions that can take process via the 4-D way:
Ø Discovery - mobilizing a whole system enquiry
Ø Dream - envisioning the impact
Ø Design - co-constructing the future with the stakeholders
Ø Delivery - Sustaining the Change
Organizations, says this theory, are centers of human relations and thrive only when there is an appreciative eye.
Kurt Lewin's Three-Stage model has been discussed before is a powerful tool in bring about the necessary changes in an organization.
BMW, as an organization has learnt to adapt flexibly to any new situation. There are some recommendations that need to be applied by BMW in its organization to foster easy change acceptance by the employees. These are:
- Temporal Flexibility - in this module, the employees should be able to take advantage of flexible work time models. They can work part-time or even full time.
- In motion- geographically and professionally - not only geographical expansion, BMW should ensure that it does not exceed the head count of its employees. It is necessary to have skilled labor in order to survive new technologies and new markets
- Staff-oriented leadership - the staff should be meant to lead the way into the organization.
- Active Participation - BMW should encourage innovation and improvement culture by giving its staff numerous opportunities to have a share in the company's future. They should have the right to give in suggestions and ideas.
- Co-evaluate - staff surveys should be held regularly at BMW to evaluate the effects of change in the organization
- Total Quality Management - the quality at BMW should be enhanced and maintained at all levels. Care should be taken to avoid any mistakes.
BMW is a technology-driven organization, and therefore, should apply the above given recommendations. If these are implemented practically, then it would be easier for the stakeholders to accept the new policies which would be based on successful past data.
In order to ensure that a correct change management plan has been implemented, a plan needs to be developed. This plan is divided into three phases that has been developed by ages of research by Prosci:
Phase 1 - Preparation for change
Phase 2- Managing the change
Phase 3 - Reinforcing the Change
There are various possible outcomes that an organization would experience after successful implementation of the plan. These are:
- Greater organizational effectiveness
- Improved work quality and morale
- Enhanced cooperation and collaboration in work
- Better customer service
- Increased ROI
- Reduced time to implement change
This plan can be implemented in BMW by operating not only horizontally but even in the vertical structure. Every division of BMW should exercise this plan and work upon it in making the recommended changes.
This effective plan would be able to result in fruitful changes in BMW, and help them in achieving their Strategy Number ONE with ease.
1. Handy, Charles, (1990), “The Age of Unreason”, Harvard Business School Press, United States of America
2. Kotter, John; Cohen, Dan, (2002), “The Heart of Change”, Harvard Business School Press, United States of America
3. Weber, Max , (1947), “The Theory of Social and Economic Organization”, Collier Macmillan Publishers, London
1. Schmeer, Kammi, “Stakeholder Analysis Guidelines”.
2. Beckhard, Richard, “What is Organizational Development?”.
3. “Prosci Change Management Series”
4. BMW Annual Report 2009
5. BMW Sustainability Value Report 2009