Management of change – case discussions

By | April 20, 2015

Executive summary

There are two cases in this part of the assignment. In the first case which is about the old family business, eminent US local toy brand Lakeland’s plan to upgrade its business through hiring of the first outside CEO Cheryl who later found herself share different viewpoint on the vision and development of the business with the employees, management and family members. By the force-field analysis and Lewin’s step model analysis of the change proposed by Cheryl with the help of the corporate culture analysis, the position of Cheryl in the company was stated clearly and through the discussion of her role as a change agent, this part of assignment will focus on the assessment of Cheryl’s change strategy, change interventions and it ends in providing recommendations to in the feet the of Cheryl to continue the change in a appropriate manner base on the analysis.

The second case which is about the business turnaround carried by Eric Schmidt in Novell when the company is suffered in the financial losses and business downturn, this part of assignment will focus on the analysis of Eric Schmidt’s change strategy in the topic of business process reengineering which is techno structural interventions and is of great use in controlling cost and focus on the value added work in time of difficulties. And the case analysis is also supplemented by similar cases and other types’ interventions such as the cultural intervention.

List of figures

Figure 1.0 Force-field analysis of the change proposed by Cheryl………………….….4

Figure 2.0 Lewin’s steps model of change process…………………………………….7

Figure 3.0 The model of Johari window……………………………………………..14

Figure 4.0 Cheryl’s analysis of Johari window diagram……………………………..15

Content page

Assignment 2 case 1 4

Introduction and force-field analysis 4

Lakeland’s position in Lewin’s steps model of change process 5

Corporate culture analysis 7

Cheryl’s role as the change agent 7

Assessment of Cheryl Hailstrom’s change strategy 9

Change interventions 10

Interpersonal relationship analysis 11

Recommendation 13

Assignment 2 case 2 15

1.Question 1 15

Driving forces to the change 15

Restraining forces to the change 15

Novell’s sick culture 16

Similar case comparisons 17

Question 2 18

Business process reengineering 18

Other interventions 20

Reference 22

Assignment 2 case 1

Introduction and force-field analysis

In Lakeland Wonders, there are many stakeholders involved in the change that proposed by the new CEO Cheryl to expand the company’s business into the middle end market by sourcing its production in China. And these various stakeholders could either be the driving forces or constraining forces to the change. The relationship is analyzed below in the force-field analysis.

4 5

3

2

2 4

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Total: 12 Total: 11

Figure 1.0 Force-field analysis of the change proposed by Cheryl

Cheryl Hailstrom was famous for her ability to generate profits which was why Swensen spent several months to persuade her to take his succession as the CEO of Lakeland Wonders. The ambitions that Cheryl had to expand the business of the company made her obviously the most faithful supporter of the changes.

The Swensen family plays the roles of both driving force and restraining force to the changes proposed by Cheryl. Walter Swensen was the previous CEO of Lakeland Wonders, he was the original driving force to hope to grow the business to increase the profit of the company which consist the major source of the wealth of his family. But like many other families, he did not seem to agree with the way that the changes happen which was too radical and too fast to the 94 years old company in his mind.

And the union was indifference to the bonus scheme for improving the cycle times, but according to Mark, the senior vice president of operations, the union may probably consider the sourcing of the production of the first step of outsourcing the manufacturing. So the union’s attitude may pose great uncertainties for the company to get the Bull’s-Eye contract.

The key issue at present is to unite the management team as a whole or else the majority of the board will not accept the proposal of the change. And the persuasion of Mark who has close relationship with the family seems to be of great importance.

Lakeland’s position in Lewin’s steps model of change process

Kurt Lewin’s change model is one of the earliest models that had been developed to analyze the planned change in which the nature of change is considered to the modification of the forces that keep a system in stable functioning (Lewin 1951). In Lewin’s theory, there are two kinds of forces which are the forces that try to maintain the status quo and forces that press for a change. When the two kinds of forces tend to maintain an equal status, there will be no changes to be pushed forward. To break the so call “quasi-stationary equilibrium” the decrease of the forces that try to maintain the status quo or increase forces that press for a change could both be helpful but according to Lewin the decreases of the resistance to change will cause less problem than the increases of the pressure for change. There are three steps in Lewin’s change model as shown in the figure below.

Figure 2.0 Lewin’s Planned Change Model

figure 2.0

In the case of Lakeland Wonders, the current effort to try to press for a change is in the first step “unfreeze” in Lewin’s Planned Change Model in which the target is to reduce the forces that try to protect the current behavior in the organizations and show the discrepancies between the desired behaviors and the current behaviors through the process of “psychological disconfirmation” (Schein 1987).

The reasons why the company is currently in the first step of “unfreeze” are twofold. On one hand, the new CEO of the company, Cheryl is trying to replace some of the current senior managers with new blood who share her style and speed as she mentioned in the case. In this way, Cheryl is trying to reduce the forces that go against the change. On the other hand, Cheryl also demonstrated obviously the desired behaviors which were different from their conventional behaviors. For example, in the meeting with the management teams, Cheryl repeated twice that Barry should work with Sampsen Design rather than the local designers that have long been in cooperation with the company.

Corporate culture analysis

One definition of corporate culture is that culture involves how and why the organizations create myths and legends, engage in rites and rituals and are governed through shared symbols and customs (Meek, 1988, p.453). Under such definition, corporate culture is actually unique to every company as it is the special way in which problems are solved, decisions are made and activities are done, in other words, it is a company’s own climate, folklore and organizational personality (Thompson & Strickland 1987, p.237).

One critical feature of culture is the stability, and a company with a strong corporate culture is to perform a change that is in conflict with its current culture. In case of Lakeland Wonders, a family business with 94 years’ history that operates in strong culture which is a slow moving, risk adverse and bureaucratic culture, it is also the reflection of the Walter Swesen’s beliefs to protect the employees and family member’s long term interests by avoiding uncertainties. This kind of culture is not in accord with new share holder’s anticipated revenue growth and new CEO Cheryl Haistrom’s expansive plan. The importance of the change of culture is obvious as the current strong culture that focuses absolutely in the quality of the products rather than a cost beneficial business perspective has made the employees and management team in the position of going against the changes that Cheryl proposes.

Cheryl’s role as the change agent

A change agent is an assistant of the change manager in term of design and implementation of the change strategy, the change agent has the major responsibility for facilitating all the activities around the implementation of a change proposed in the organization (Doyle 2002). A change agent could be an internal change agent who is from within the company, and the change agent could also be an external agent who does not has close relationship with the company. There are advantages and disadvantages to have an internal or external change agent. An internal change agent is familiar with the company’s situation in term of opportunities to be developed and challenges faced by the company, but also because the change agent is too familiar with the company that he or she even holds a position in the company that may make the change become less objective and doubted by the employees as a bias change process. That’s why in many cases an external change agent is more preferred.

As in the Lakeland Wonders’ case, the role that Cheryl plays is a mixture of both internal and external agents. First of all, Cheryl is the CEO of the company and before she was invited to take the rein of the company, she has been in Kids & Company to work with Lakeland to develop new products. And now as the CEO of the Lakeland, Cheryl has been one of the members of the company and so she is an internal change agent. But as she has been the CEO of Lakeland for half a year and the most importantly she share very different opinion of the business with the most of the employees and managers, she is recognized in the corporate culture obviously. And in this perspective, Cheryl is still an external agent that has suggestions to the company in an external change agent role.

As the CEO, Cheryl as the change agent of the company has obvious advantages, one of the most apparent advantages is that the changes that proposed by Cheryl as the CEO represents the will of the management and such powerful top down changes will be enforced by the power of her as the CEO. In this way Cheryl will pay a very role of “Advocate” in the Warner Burke’s (1987) eight roles of a change agent. The disadvantage for Cheryl to be the change agent in the company is that she is still an outsider of the company and the even the senior managers would turn to the previous CEO to express position rather than arguing with her, that fact that she is not recognized as an internal change agent has placed her in a disadvantageous position.

Assessment of Cheryl Hailstrom’s change strategy

The change strategy which is marked by the key words of “leading by example, introduction of bonus plan, setting aggressive deadlines for new projects, focus on the most profitable markets and products”, though these strategies that Cheryl used was aiming at bringing the old company back to prosperity. But speaking from the current result of the change process, the strategy of the change that had adopted by Cheryl did not prove to be a good strategy as most of the managers and big shareholders turn out to be in the position against her radical change.

Firstly, Cheryl underestimates the resistance to the change. She had not make clear the close relationships between the members and the management team of the company, and she also fell in an awkward position when the last CEO did not demonstrate enough support to her change. Secondly, she had pushed too hard for the implementation of her strategy without too much compromise. When conflicts and argument appeared her first priority was to transfer the topic and continue her idea by command, and that is why people express their disagreements behind her.

Change interventions

Intervention is defined as series of planned actions, approaches, techniques, applications or events that are designed to address the issues in the organizations and increase the performance (McNamara 2008). In the “Organization Development and Change” Cummings and Worley (2008) concluded four major types of Organizational Development (OD) interventions: Human Process Interventions which focuses on group and individual human relations, Techno-structural Interventions which through the change of the company’s structure and procedures to improve the performance of the organization, Human Resource Management(HRM) interventions which aim at improving the performance of the individuals and groups and the last type of OD intervention is the Organizational Transformation which deal with the interaction to form the new culture, mission, strategy that is desired by the company through strategies such as organization learning, high performance work system redesign, cultural change and strategic change.

As in Lakeland Wonders, the change that Cheryl Hailstrom tried to implement falls in the field of fourth type of interventions mentioned above: the Organizational Transformation. Three kinds of organizational interventions have been used here to promote an organizational transformation including the cultural interventions, strategic change and high performance work system.

Firstly, in term of cultural interventions, Cheryl had been working hard with a pounding schedule and setting aggressive goals as an example for the managers and employees to follow to change the conservative culture of the old company. What’s more, we can see from the conference joint by the management team that Cheryl tried hard to Elaine’s and her own enthusiasm to cheer up the management team to overcome the difficulties faced. And it is such vivid and optimistic culture that is desired by Cheryl. Secondly, in term of strategic intervention which has been defined as any fundamental changes that have system wide changes of the organizational purpose or mission in term of three dimensions: size, depth and pervasiveness (Ledford, Mohrman S. A., Mohrman A. M. & Lawler 1989), Cheryl had decided to change to a “dynamic fit” of the company in the business by expanding the company’s business to mid market in front of the increasing demand of the mid market products and hyper competitions. And in term of design of high performance work system, Cheryl had working hard to push forward a bonus scheme to the union for improving cycle times, even though the scheme had not been received with enough of attention but it shows the will of Cheryl to create a her performance work system for the company.

Interpersonal relationship analysis

The ability to deal with the interpersonal relationship within the organizational for any change agents plays an important role in the successful implementation of organizational changes, below the model of Johari window diagram developed by Joseph Luft and Harry Ingham in 1955 in American which is a useful tool to access the soft skills of a change agent will be used to analyze the current position of Cheryl Hailstrom in term of interpersonal development. The Johari window diagram describes the participant’s personalities with a grid by two dimensions which are “known to self or not known to self” and “known to others or not known to others”.

Known to self Not known to self

Known To others

Not known to others

Figure 3.0 The model of Johari window

Known to self Not known to self

Known to others

Not known

to others

Figure 4.0 Cheryl’s analysis of Johari window diagram

For the case of Lakeland Wonders, Cheryl as a new CEO in the old company, her position in the Johari window is shown in the figure above. Firstly, the open area which represents the traits of Cheryl that are known to her and others is very small because as a new CEO her management team had not had enough of time to get along with her. Moreover, Cheryl is a result oriented person who focuses more on actions rather than communication; this has caused a higher portion of hidden. And the blind area is also small which is also due to not enough of communication. The unknown area is the biggest area which means that Cheryl is still young as a CEO in such an old company with long history and special culture and she had not enough of experiences as a change agent in the similar environments.

The model could also be applied to the key persons to Cheryl. For example, if the position of “others” is replaced by the former CEO Walter who had been spending months to persuade Cheryl to join the company should have more open areas with Cheryl. And if the “others” is replaced by Mark, her senior vice president of operations, he had disagreements with some of Cheryl’s decisions, but he preferred to talk to the family rather than to her. So the blind areas here for Cheryl will be bigger while the unknown area is still the biggest area with Cheryl are newly joining as the CEO.

Recommendation

Firstly, the implementation of cultural interventions needs to be reinforced from top down. Cummings and Worley (2005, p. 491 – 492) provided six guidelines (eight stages) for companies to follow to change their culture. The first guideline is to formulate a clear strategic vision about the company’s new value, beliefs and norms that are shared by the all the employees in the company. And the second guideline of the cultural change according to Cummings and Worley (2005,p490) is designed to increase the commitment of the top management to the changed culture desired which means that the changes should be carried out from top of the organization to lower levels. As in the case of Lakeland Wonders, Cheryl in the beginning stage need to formulate a clear vision of how the corporate culture will be changed and make it clear and accepted by the senior management first which is the key task for Cheryl to get a consensus of how the corporate culture will be shaped into.

Secondly, according to the Johari windos diagram analysis of Cheryl as stated above; there are some areas of her interpersonal relationships in which improvement can be made to reduce the resistances to the changes that she tried to propose. On one hand she can continue the plan to bring in fresh blood who shares similar vision and ideas in the business with her to create her own interpersonal network and gain more support from the new management team. On the other hand, she should try to gain honest reflections from her managers especially Mark to help her understand how she can improve and progress with the rest of the members. Moreover, the communication of the changes with her previous CEO and family member seems to play an important role in pushing forward a successful cultural intervention.

Assignment 2 case 2

  1. Question 1

The change that Eric Schmidt, as at that time the new CEO of Novell tried to implement was to make a turnaround the lead the company out of the rough time of downturns. The change had been implemented through interventions such as cultural change, large scale of laid off, survey feedback and strategic changes. And the change had been carried out with both driving forces and restraining forces that resist the happening of the change.

Driving forces to the change

The driving forces are many. Firstly the customers are the one of the major forces that drives the change to take place. Because of the decline of the sale of the product, the company was troubled with the great financial lost which brought the company to the brink of bankruptcy. So the change should be targeted to regain the customer royalty. Secondly, the shareholders also desired to see the change to happen to save the company as the continual business downturn could only lead to the extinction of the company and also their financial interests. And the change would be needed to save the company and recover the lost suffered by the shareholders. Thirdly, the smart people of the company and Eric Schmidt himself also like to foster the change and obviously the smart people did not want to work in a company without promising future and Eric Schmidt wanted to demonstrate his ability as a good CEO, a role which he had not been playing before.

Restraining forces to the change

Forces against the change include current corporate culture, part of the employees and management. In term of corporate culture, as mentioned in the case the culture that Novell had was a dysfunctional culture which was a sick culture in Eric Schmidt’s words. This kind of culture has been common in the period of business downturn. And this sick culture had been restraining the company’s ability the change effectively. As Eric Schmidt had only indentified about 100 smart people who are the core human resource and source of competitiveness in the software industry and were desired to retain with efforts. And this fact also meant that any of the major employees and even management could be the sacrifice to foster the change. And the fact that more than 1,000 employees and most of the executive management team had been replaced had shown the threat to the employees during the change process.

Novell’s sick culture

As Eric Schmidt tried to locate the smart people by talking with them, he found out that Novell had a dysfunctional culture which was a sick culture in which employees tend not to speak up because they were in fear of being laid off so instead they suppress their feeling and complain vociferously to their friends and peers. And the “Novell nod” which describe the seemingly agreement by the employees implied that the sick culture had been very serious in Novell in the time of the business downturn.

The reasons for such a culture of fear were two folds. On one hand, because employees perceived that the company will be in the rough time for a certain period, and there is going to be a large scale of redundancy and there will be uncertainties about the company and their future which were out of their control, and people have a natural fear of change and when change is mandated they feel a loss of control (Evans 2001), so they had been pushed into such a fear of culture due to their own sense of natural fear. On the other hand, while not all the employees and managers were targeted to be laid off some core employees such as the “smart people” as described by Eric Schmidt, they had been promise the job but they were also in the culture of fear in term of depression and became part of the resistance to change. The lack of effective communications strategy is the major reason for the failure of the change initiatives (Chonko & Lawrence 2004). And because of the lack of effective communication, even the core engineers were suppressed to express their views.

Similar case comparisons

In 2009 when BT first announced its plan to cut 15, 000 jobs that year most of which were in UK due to a reported annual loss of £134 millions. Even though the company had close talk with the unions to reduce the labor cost of BT and promises had been made that there will be no compulsory redundancies in 2009 (Unknown 2009), but the announcement of the plan of redundancy did put the employees in the culture of fear. We can see the similarity between BT’s case and Novell’s case from one of BT’s former employee’s comment: “I left BT nearly 2 years ago after 35 plus years’ service, the last 2 years with GS, which were the worst 2 years of my whole BT career. The division is so top heavy with non producers……How GS makes any money is a mystery to me……Leaving was certainly the best move I ever made”. The similarity between these two cases is that the core employees that have significant importance to the company, they are not satisfied with just the salary and they require more than that. If they perceive that the company is not performing then they will be worried and want to escape from the depressions. On the other hand, common employees are suffering more than the smart people as they are facing the possibility of being laid off as one of the BT’s employees complained, “……this feels like a slap in my face, morale is at an all time low as it is. In our office the staff numbers have dwindled by more than half……If they offer this again……I have no passion for working for BT anymore”, from the common employees’ harsh words we can see the pressure on them and their fear to be terminated as part of the change which explain their being part of the resistance to the changes.

Question 2

Business process reengineering

Business process reengineering identifies, analyzes, and reengineers organizational core business processes with the target of achieving dramatic improvements in critical performance measures, such as cost, quality, service, and speed (United States General Accounting Office, 1997). The reason for business process reengineering is best described by Dr. Michael Hammer that non-value-adding work is root cause of the problems such as high cost, slow cycle time (Read 1990). And the strategies used in the business process reengineering are to remove the non-value-adding work and achieve high level of operating performance by focusing on the process that creates value to the organizations.

The re-engineer actions planned by Eric Schmidt fall into field of the techno structure intervention which is to create competitiveness by increasing the workers’ satisfactions and efficiency, Eric Schmidt’s corporate reengineering took form of the following strategies:

Firstly, speed up the release and update of the new product every month to shorten the circle time of the products. The concept of circle time refers to the time that takes the company to provide its products and services from development of the conception of the products (Unknown 2006). In the fast changing industrial environment like software industry in which time is a critically crucial factor, saving time equals gaining competitive advantages especially in the key products because the core competitiveness source majorly from the advantages of the core products.

Secondly, by firing more than 1000 employees and replacing the majority of the executive management team, the original seven layers of management had been reduced to four layers. And the simplified and flexible management team managed to work more effectively and in a lower cost because hiring the hierarchical management had been very costly to the company.

Thirdly, reposition the company on the core products in the network field in which the company possessed competitive strength. For example, by focusing of the networking together with the encouragement of purse to the employees’ passion, the NetWare 5.0 was developed and release in 1998 with great contribution to the revenue in that fiscal year and years coming.

Fourthly, the serious control over cash flow also played an important role in reducing cost and kept the company stay alive in period of difficulties. For example, the target of sales had been changed to be measured base on the cash collection which highlighted the significance of saving money for the sale persons. Similar cases happened in Yutong Group which is one of the largest bus manufacturers in China; at the beginning of 2004 the company’s profitability was found to be declining dramatically together with the cash flow when the sale was undergoing a fast growth. Later when the company looked into the problem, the responsibility was found to be on sale forces that did not follow procedures and pursue the increases of sale revenue. During the business process reengineering, the focus had been given to two aspects: cost control and reducing circle time. And by the implementation of these two strategies help substantially increase the operating performance of the company and more over the employees and managers who participate the business process reengineering were found to be highly motivated together with the change of the culture (Unknown 2008).

Other interventions

In term of Human Resource Management intervention, Eric Schmidt had adopted the HRM intervention of survey feedback to facilitate the change. Survey feedback refers to the systematic feedback of survey date to stimulate the discussion of the existing problem and collect possible solution (Nicholas 1982). In detail, Schmidt had dialogues with all the employees to listen to their complaints and need especially the smart people that he had identified and through the encouragement of the discussion of the problems surrounded the company, Schmidt management to generate solutions by using some of the solutions generated through the survey feedback.

In term of organizational transformation, the intervention of culture change which was a comprehensive change to the company had been pushed forward by Eric Schmidt to bring the company alive again because when the company was hit by the great financial loss and decreases in demand a culture of culture and depression had been generated which eliminate the creativity and loyalty of the employees. And by providing the open door policy to employees who expressed their different views and new ideas, the culture of fear was released. For example, one of the many achievements of the culture intervention was the development ZENworks which was developed under the leadership of Eric Schmidt and through the release of the ZENworks the culture of depression was further release within people’s laughing and cheering. Proved by the Novell’s case the culture intervention is of great importance to the successful implementation of a business process reengineering because when the company is in the downturn not only the red amounts need to be fixed but blue feeling of the employees also need to be cured to prepare for a turnaround as it is nature of human to be upset to the failures and challenges.

Reference

Nicholas 1982, Essentials of team building: Principle and practice, Champaign, IL: Human Kinetics

Burke, W. W. 1987, Organization development, Reading, MA: Addision-Wesley

Chonko & Lawrence, B. 2004, Organizational readiness for change, individual fear of change, and sales manager performance: an empirical investigation, Journal of Personal Selling & Sales Management, last edited 1st Jan 2014, accessed on 9th Aug 2010 [online] available: http://www.allbusiness.com/management/187133-1.html

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McNamara, C. 2008, Organizational Change and Development (includes field of Organization Development), accessed on 7 Aug 2010 [online] available: http://managementhelp.org/org_chng/org_chng.htm#anchor75698

Read, D. 1990, An interview with Dr. Michael Hammer, accessed on 9th Aug 2010 [online] available: http://managers.emeraldinsight.com/change_management/interviews/pdf/hammer.pdf

Schein, E. 1987, Process Consultation, vols. 1 & 2Addison-Wesley, Mass

Thompson, A.A. and Strickland, A.J. 1987 Strategic Management: Concepts and

Cases, 4th Ed.. Business Publications Inc.: Plano, TX

United States General Accounting Office 1997, Business Process Reengineering Assessment Guide, accessed on 9th Aug 2010 [online] available: http://www.gao.gov/special.pubs/bprag/bprag.pdf

Unknown 2006, Strategic concepts and principles, accessed on 9th Aug 2010, [online] available: http://www.appraisal-smart.com/Strategic%20Concepts.pdf

Unknown 2008, 通流程再造案例:不要指望一次把流程做完美 (Yutong Business Process Reengineering case: Do not expect a once for all perfect BPR), [online] available: http://www.360doc.com/content/08/0816/15/32668_1546941.shtml

Unknown 2009, BT to shed a further 15,000 jobs, accessed on 9th Aug 2010 [online] available: http://news.bbc.co.uk/2/hi/business/8049276.stm

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