Organizational Change

If you are a business leader today there is one thing that constantly runs through your mind, “How can we continue to succeed and grow. ” In today’s society it has become harder and harder to accomplish such a task. The world is ever changing and it does so in a pace that is far more rapid than that of 20 years ago. Business leaders know that change is inevitable, but where the problem lies is how to manage the change in a way that will allow for continued growth and success, but at the same time they want to be able to do so with as little stress as possible to the employees.

There are hundreds of ways to make changes in an organization, and plenty of people out there pitching their ideas as the best. It is up to the business leaders to find a technique that will best suite their needs as an organization, a technique that will give them the results they are looking for, this is the case with General Motors. General Motors is made up of four different auto makers (Buick, GM, Pontiac and Chevrolet) and each one runs independently from the others.

GM decided that having four independently ran divisions, which competed against one another was more costly than beneficial and they searched to find a way to change this for the better. Organizational Change 3 Change Implementation describes the “actions taken by organizational leaders in order to support strategic renewal and maintain outstanding performance in a dynamic environment. ” In GM’s case they needed to find a way to bring all their independent divisions together and put everyone on the same page.

GM executives knew the task of bringing everyone together into a more centralized organization would require everyone, including management to learn a new set of skills that centered around the GM corporation as a whole, rather than four separate entities. They also realized that by doing this they would need to develop some type of support system that would ensure the successful implementation of the proposed change. Two areas which were first affected by the change involved computer software and engineering designs.

Each automaker used a different computer software for their day to day operations, which made communication between the groups difficult. To fix this problem everyone went to a centralized computer software. Getting it implemented and and everyone trained was a difficult task, but in the long run made communication easier. Engineer designs were affected because the GM executives wanted their engineers to learn each others design Other changes included things like discontinuing certain vehicle lines and closing some factories to streamline production.

The effects from these changes were felt both internally and externally. Internally people were losing their jobs, and GM began losing some customers because of these changes, and externally communities were being affected. When a large corporation like GM closes a factory the community is often times hit hard. Organizational Change 4 People lose jobs, which not only affected them, but it also affects other businesses like grocery stores, movie theaters and restaurants. These types of affects are hard to deal with, but are a necessary evil in business survival.

Once the changes were made and implementation was successful GM began seeing the positives they were looking for. General Motors became one corporation working together, operational costs decreased due to streamlining functions and operations, and effective communication methods were established. GM has succeeded in implementing their change and still operates at a high level even in this downed economy. GM as do most auto manufacturers operated using a functional structure.

They are ran by a CEO, and rely on the marketplace for ideas, which are then engineered and made a reality, and then the finished product is sold via the dealerships. But unlike many functional structures GM has developed a support staff which has helped prevent some of the common problems seen in these types of structures. By requiring the engineers to learn each others designs, it has helped communication between departments. As I read about GM and their success they had with the new change, I compared it to the five-phase process for managing change that was described by Cummings and Worley (Organization Development and Change, 1995).

In this process the five phases described are: 1) motivating change, 2) creating vision, 3) developing political support, 4) managing the transition and 5) sustaining momentum. I used this comparison because I feel that Cummings and Worley effectively described everything needed to be successful when implementing change. Organizational Change 5 The first phase is Motivating Change. In this phase creating a readiness for change and developing approaches to overcome resistance to change are vital.

GM’s answer to this phase was communicating the change to everyone and developing a support system to help with easing the tensions of change and ensuring successful implementations. The second phase is Creating Vision. Jack Smith was the CEO who realized a change was needed and put the process in motion. Smith realized that having four separately ran divisions, which competed against on another was not cost efficient. Smith was successful in creating a vision that by operating together and communicating as one would greatly increase productivity and revenue, and cut cost.

The third phase is Developing Political Support. As described by Cummings and Worley this phase is often overlooked and can prevent successful change implementation. This was covered by GM when they required all levels, including management to learn one set of centralized skills, and by requiring each engineer to learn the others designs. By doing this there was no longer a barrier which allowed one to feel more powerful over the other. The forth phase is Managing Transition. This is the process when you begin your change from the old to the new.

GM managed the transition by creating the Automotive Strategy Board, which is a management committee, that was established to keep the CEO informed of the on goings of the corporation. Monthly meetings were established and attendance was mandatory; global offices attended these meeting via phone. All the heads of regional operations would utilize these meetings to inform the CEO of the progress of the Organizational Change 6 transformation. These meetings enabled all the staff to be on the same page and working towards the same goals. The fifth of final phase in this model is the Sustaining Momentum phase.

GM encountered many obstacles when this change was implemented. But they have been successful in dealing with them and are sustaining their momentum by becoming a corporation that works together, and cutting their operational costs by streamlining functions and operations, and effectively communicating between one another. GM may not have used Cummings and Worley’s five-phase process for managing change, but by comparing the things they it is clear that they had a similar approach in mind and were able to effectively deal with the changes that occurred.

GM also did a good job at creating teamwork in this process. As stated in the text Implementing Organizational Change Theory Into Practice (Bert Spector, 2010) there are four design factors for creating effective teamwork; 1) Shared Purpose, 2) Shared Responsibility, 3) Team Empowerment and 4) Team Enablement. Shared Purpose was established by communicating the idea that working against one another was not beneficial and that working together was the way to go.

Smith knew that by combining the efforts of all four auto makers in one would alleviate competition in the company and would bring together their efforts to better the organization. Shared Responsibility was achieved when required all four divisions to operate using the same computer software, and when they required all engineers to know each others Organizational Change 7 designs. By doing this GM was able to resolve some of their communication problems they were having between divisions, and brought everyone together. Team Empowerment was established by combining the efforts of each division.

Instead of having four separate divisions with their own operating systems and ideas, you now had one collective group operating together and understanding each others abilities and creativeness. Also by bringing everyone together and having everyone master new skills and learn each others operations, GM has created Team Enablement. Another thing I did was compare GM’s change to Kurt Lewin’s Three Stages of Change Implementation; Unfreezing, Moving and Refreezing. Lewin states that in the unfreezing stage “group members become dissatisfied with the status quo.

” GM was able to do this by showing how working against one another was not beneficial. This made the idea of change easier to implement due to the fact that the employees were not satisfied with GM’s current state. Lewin describes the moving stage where the “group members alter their patterns of behavior. ” GM completed this stage by bringing the organization together as one and getting everyone working on the same system. The employees needed to learn a new set of skills which were the same across the board, and the designs of each group were shared amongst the others.

The third stage, or the refreezing stage is where the “group members institutionalize the new patterns of behavior into a new status quo. ” GM is currently in this stage. Their Organizational Change 8 employees are working together, their operational costs have decreased and communication in the organization has improved. Jack Smith realized that GM could not withstand the effects of the economy by continuing in the direction they were going. Smith knew he needed to change the face of the company, realized that GM was in need of some sort of strategic renewal.

So when the opportunity presented itself, Smith took the chance and began process of change implementation. As stated in our text “strategic renewal requires wide-scale invention, reinvention and a redesign of business processes. ” Smith did this by inventing the idea that working together was better than competing against each other, he reinvented the company by bringing them together as one, and the redesign was done by streamlining their factories and discontinuing certain automobile lines.

Organizational Change 9 As the CEO of GM, Jack Smith felt that the company was going in the wrong direction. He took his ideas and set in motion a plan which he felt could completely change the look of GM. The change that was to take place was not done without first understanding some of the obstacles that they may encounter. Things like employee resistance, down-sizing and community relations were all thought of and ideas were created to help deal with those obstacles.

Once the change was set in motion GM didn’t just throw it out there and let it go, they did the things necessary to ease the transition. Things like building a support system to assure the successful implementation and creating an Automotive Strategy Board which was charged with keeping the CEO apprised of the on goings of the corporation and kept him informed on the progress of the transformation. GM has proven that by taking the proper actions to implement change, a company can successfully continue to grow.