Lenovo: Chinese Computing Company - Case Study Example

Change Management Name Course Tutor Date Change Management Executive summary Lenovo is a Chinese computing company formerly called Legend Group. The company was established in 1984 with an aim to bring the benefits of information technology to Chinese citizens. It first launched personal computers to homes and later promoted it’s in the whole China through its retail shops countrywide (Liu, 2007). In 2003, the company launched a self-designed collaborative application which indicates the significant role this company will play in 3C market that is computer, communications and consumer electronics. These strategy propelled Lenovo to a technology market leader in China for a period of eight successive years with more than 25 percent share of the market in 2004 (Liu, 2007). Liu (2007) States that due to competition and with an aim to solidify its position Lenovo acquired IBM Division at a cost of US$1.25 billion. The company changed it’s headquarters to New York, US and posted some of IBM employees to different countries. Table of Contents Change Management 2 Executive summary 2 Table of Contents 3 1.0 Introduction 4 2.0 The role of leadership during management change 5 3.0 Managing change 10 4.0 Culture and change management 11 5.0 Managing conflicts during organization change 14 6.0 Conclusion 15 7.0 References 16 1.0 Introduction Demers, Giroux, Chreim (2003, p.224) argues that the impacts of acquisitions and mergers on the morale of an employee can greatly affect an organization if the re-structuring of that business is not carried out effectively. At the time of acquisition, normally there are two types of employees that take part, the ones coming from companies with distinct and unique styles and cultures. Learning this new culture could prove challenging especially when staff faces uncertainty regarding what the future could hold and their job security. In 2004, Lenovo Group stated that they have reached an agreement to acquire Personal Computing Division of IBM. Liu (2007, p.577) contends that the company acquired the division of IBM in 2005 and it did not take because in March of 2006 they decide to lay off 1, 000 of its employees. Yet again they in 2007 the company announced it will start another reduction of employees while transferring others to their stores in emerging markets. In this exercise 650 people lost their jobs (Liu, 2007, p.576). Based on this realization, this paper will outline how a leader should manage the change or improve the change process. This paper will use leadership theories, change management strategies and organizational culture to contextualize this discussion. 2.0 The role of leadership during management change Robbins et al (1998, p. 397) define leadership as the capability of influencing social influence on people in order to common goal. The role of a leader is actually to influence in order to bring change to the organization and eventually to the society. Bringing change is not usually welcomed however it is critical for companies to remain competitive. However, change must be planned through various models. According to Kotter's change model, managers must create urgency for change because it could assist in sparking motivation to make things change (Kotter, 1996). Kotter also states that a manager must form a strong coalition with employees and convince them why change is needed. In this way a manager articulates that company vision which will be easy to follow once the change process has started. In communicating the intended change the manager must clarify short term plans and long terms (Kotter, 1996). It should be noted that a person’s traits play a key role in the manner they lead. A manager who understands employees’ personalities can use this as a benchmark of allocating tasks and forecast job performance (Daft & Lane, 2008, p.333). The Big Five Model of Personality can be used to assess whether an individual is stronger with regard to surgency, adjustment, agreeableness, openness to experience or conscientiousness. Surgency consists of extraversion and leadership traits (Daft & Lane, 2008, p.333). Surgency is that the need for power. Individuals having a high desire for control are portrayed as desiring to control positions and benefit from competition where they will win since they feel bad by losing. It should then be recommended that when leading change, the manager should also select a team that has a high surgency so has to help him or her push for change. It is true that Lenovo was leading the market share at the time they acquired IBM, but the need to solidify their lead prompted them to this company which had also made a name in the global market. Daft & Lane (2008, p.333) argue that managers with high need for control tend to take his or her time influencing employees and not concentrating on what others say about them. Extraversion is considered the degree to which a manager is sociable, outgoing, talkative, and calm during a meeting and talk with new employees. A manager can only know that change is taking in the industry though experience. Experience is realized though outgoing and socialization. Agreeableness is a trait that makes managers to relate well to other employees. To get along with means a manager must be cooperative, understanding, trusting good-natured and compassionate and forgiving (Daft, 2004). Relating well with others gives a manger an opportunity to articulate ideas efficiently to employees making them not just accept these ideas but encourage them to execute required changes. According Daft (2004) conscientiousness traits are associated with achievement. To create change a manager must show a desire for achievement and seeks challenges while assuming the role for solving providing solutions to problems. A good manager ought to perform well in challenging, competitive and non-routine situations. Openness to experience trait is associated with willingness to change, attempt new situations, creative, imaginative and seeing a wide range of experiences (Daft, 2004). Relating it to Lenovo, the aim of the managers was “to bring IBM’s business-class to the customer market and to enable Lenovo to reach different marketplaces outside China” (Fallon, 2005, p.10). Leaders must also combine various leadership styles can minimize resistance while improving the chances of realizing organizational goals. Leadership styles that encourage change in an organization include participative, transformational and partly transactional (Daft, 2004). Participative leadership style empowers employees by making participate in the decision-making process and also meeting them occasionally and listening to them. This is important during the change process by resolving various conflicts and challenges in adapting to the new system. Participative leadership needs and roots for participation from everybody and while allowing them to take part in decision making for improvement of the organization. The study shows that using participative leadership increases occupational satisfaction, organizational commitment, ownership behavior, labor-management cooperation, employee performance and apparent support (Kotter, 1996). Barker & Coy (2005) contends that transformational leader motivates employees to exceed their personal ambitions for the betterment of the entire organization. This kind of a leader does not maintain status quo, but concerned with “bringing revolutionary change into human service and organizations” (Daft & Lane, 2008, p.133).Lenovo leaders can be termed as futurist and visionary and had put mechanism in place for change which was a proactive approach to the company. Acquiring IBM and creating a change confirms how transformational leaders have the commitment to satisfy the well-being of its customers in China and beyond regardless of the culture (Fallon, 2005, p.10). On the contrary, transactional leaders are recognized to set performance requirements and ensure they are achieved with a specified deadline. A business must take time factor and accuracy into consideration whenever they are undergoing change (Dalglish & Miller, 2010). Normally products have time span within they have to be in the market so as to have a competitive advantage over their rivals. Lenovo operates in technology industry which is very competitive in terms of innovation; if the time factor is not considered, they can find themselves overtaken by their competitors. Transactional theories affirm that employees will follow managers who inspire through motivation, vision and manner in which they lead (Dalglish & Miller, 2010). Successful companies do well since they have a clear mission, vision and strategy but when undergoing change they rapidly to take action. They thrive because they know their customers’ demands, give the response to their staff and counter changing times. One aspect of success is the manner in which a leader manages organizational change. Change is almost unachievable with no support from leadership and a solid and experienced management team. Daft & Lane (2008, p.333) argue that leadership must define direction, tone and pace and offer clear reliable rationale which brings everybody together under a single goal. The consequences of an acquisition like the one that took place between Lenovo and IBM “normally results to employees having a powerfull sense of uncertainty, lack of commitment towards the organization and lost of identity since they do not understand when they may be retrenched or transferred” (Demers, Giroux, Chreim, 2003, p.141). Rumors of layoffs could circulate bringing more fear to the employees. Therefore, it is the work of that manages to ensure that change is communicated to the employees in advance. According to Kitchen & Daly (2002, p.178) a good leader will use his or her communication skills to convince employees that change is for the good of the organization and even them. To some extent possible companies must make efforts to share adequate information concerning what is taking place and, most significantly, how the intended changes will have an impact on individual employees. Concise and clear communications on a daily basis guarantee employees of their future in relation to job so that they can start preparing psychologically for the new challenges (Kitchen & Daly 2002, p.172). Failure to communicate by the manager in fact will lead to complaints and resistance. Use of charismatic leadership style during change management is important because this style tends to motivate employees about the importance in relation to competition. Motivation will help employees cooperate with the manager in order to achieve the intended goal (Dalglish & Miller, 2010). Trait theory came up early at the time of leadership research (Daft & Lane, 2008, p.339). Leadership traits have emerged to be of importance in determining the prospective for efficient leadership in during management change. Current leaders undergo a dynamic business setting in which change is regarded as a continuous issue. To successfully handle change, followers have to share the manager’s vision and keen to entrust to completing the manager’s direction. The trait theory is still applied in identifying qualities of outstanding leaders (Dalglish & Miller, 2010). Barker & Coy, (2005) offers a number of traits which are crucial for a leader to find out effective followership, which he or she can use to achieve the change needed. These traits consist of “self-confidence, intelligence, determination, sociability and integrity” (p. 19). A leader has to be intelligent to establish environmental factors that make the change and have a self-confident to make major organizational changes. According Dalglish & Miller (2010) cultural intelligence will also help the manager to solve cultural issues during the change process. The acquisition between Lenovo and IBM was followed with great keenness since Lenovo has its origin from Chinese culture and initially made products just for the Chinese market while IBM was international company. Critics were skeptical concerning Lenovo’s ability to manage international business (Fallon, 2005, p.7). Both the organizations were experiencing completely different culture and business models and this acquisition and merger was taking place in a fast growing and the most competitive PC sector and therefore was a strong challenge (Fallon, 2005, p.8). Through cultural intelligence managers can be able to bring into line and flexibly restructure organizational cultural diversity to suit new staff through sincerity to dialogue. A leader having cultural intelligence helps the employees to integrate different environmental and social cues and properly understand these cues in relation to contextual surroundings (Dalglish& Miller, 2010). Managers must carry out change with intentions of bringing out real change and not trying to cover up some fishy activities. Authentic leadership requires that individual credibility and integrity, trust and commitment are shown during the change process while upholding ethical values. 3.0 Managing change Organizational change is defined as the progress of a company from its current situation towards the needed future status to boost its effectiveness (Edwards, 2004). Change in an organization is normally part of corporate planning. To implement change, CEOs often cooperate with departmental executives to create a corporate culture which accepts change. This is done by enhancing and maintaining communication between managers and employees (Kitchen & Daly, 2002, p.182). Even though no dramatic developments should be needed within a short period of time, it is critical for an organization to form short-term success to motivate spirit, authenticate the aim of change planned by management, encourage trust between the management and employees, and impact cultural loyalty of organizational employees to a new structure in an optimistic manner. 4.0 Culture and change management Personal culture and organizational culture are one of the factors that affect both managers and employees in most multinational whenever change is executed. The employees may not be comfortable with the new systems because it may distract their personal or comfort zone. Cox (1991) defines culture as a people’s style of life; the behaviors, values, systems, beliefs and symbols that are acceptable to them. Culture is passed from one generation to another through communication and imitation. On the other hand, Schein (1992, p.9) defines organizational culture as the actions of people who form part of the organization and meanings which those individuals connect to their behaviors. Organizational culture includes dress code, policies and systems. Leaders and organizational culture are considered two surfaces of a coin in which one cannot survive alone. There important responsibility of managers is creating or maintaining the organizational culture; managers cannot be separated from the issue of dealing with organizational culture (Cox, 1991). This is because their duty is to establish and sustain a positive culture. When change is effected in an organization and new employees are brought into the system cultural differences could emerge in different manners and at the diverse degree of depth. Therefore it is important for a manager to understand culture for effective leadership. This is because cultural differences also influences leadership style and its application in an organization– what could be correct in one situation may be perceived as incorrect in another situation. Schein (1992, p.9) claims Organizational culture is instilled in managers and prospectively motivate by them. Good managers build and shape the cultures in their organization by entrenching their suppositions in goals, structures, missions and work processes (Callan, Latemore, Paulsen& Eliza, 2004, p.12). Every organization has a unique culture that establishes how they react to external problems, internal cohesion and performance. The concern becomes even more with an acquisition or merger between a company from the east and the west. Cox (1991) claims that Cultural diversity is frequently considered as the basis of collapse of acquisition and mergers. For that matter the managers concerned with acquisitions and mergers must put in place measures of how to deal with cultural differences. Managers must give new employees time to adapt to their new culture though process of training, team cohesion and team building. After Lenovo stated it will make their English their internal language from Chinese, “it was claimed that majority of the Chinese staff struggled before adapting to the English environment” (Ching, 2009, p.152). Although the case for the expatriate Chinese managers in US have improved because the chosen expatriate managers are proficient English, communication still remains a barrier particularly for the managers holding technical positions (Ching, 2009, p.152). A former staff portrayed culture at Lenovo as very Chinese. Due to globalization the company needed to neutralize its culture in order to compete fearlessly. Following the acquisition of IBM Personal Computer division in 2005, whilst Lenovo incorporated IBM’s 9000 employees globally with the US western culture, one approach that the Lenovo used was to move its headquarters to the US to distribute the management roles with its US team (Liu, C. 2007, p.569). The survey performed by Hofstede (1991) shows that the different dimension in the US culture and the Chinese culture was the Individualism. In this survey the US showed the wide range of individualism. Therefore different value in relation to Individualism will indeed lead to culture differences which the expatriate managers of Chinese origin sent to serve in the US must face and adapt to in order to get jobs done. Ching (2009, p.152) says that Chinese culture believes in team work (collectivism). Therefore for a manager to promote change he has to create teams in order to implement change rapidly bearing in mind that organization must consider time factor in their business. This one way an organization like Lenovo can use employee’s cultural difference as a competitive advantage (Ching 2009, p.152). If the managers are serious with regard to change in their organization, they cannot ignore the issue of cultural diversity. If the organizational culture is not in line with the needed changes, in that case the culture requires to be tackled head on. If managers decide not to harmonize culture during the change process, then they will stay with impacts of failure. The manager must also promote a learning culture in the organization so as to help employees who are new to the organization culture. There is a fundamental reality concerning human actions with regard to change. Learning results to knowing, and knowing results to a dedication to change (Atkinson, Scotland & Kamp, 2003, p.18). A manager, as a leader, should communicate the skills employees require to possess to realize organizational change goals and should articulate the desire for constant learning by everybody in their organization. This enables employees, processes and technology to be flexible to satisfy the ever changing demands and requirements of the market (Atkinson, Scotland & Kamp, 2003, p.19). A successful means to allow a company to adjust is by constantly articulating the changing demands of the market to the employees so as to appreciate why change is needed. 5.0 Managing conflicts during organization change Change is a basis for conflict among many employees that if not dealt with properly during management change can bring negative reputation the organization. Conflict often emerges at the time of organizational acquisition, and the manner in which an organization manages the conflict influence the achievement of that acquisition. Conflict was generally well managed by effectively handling economic rewards, the balancing of power, cultural changes, and emotional reactions to the acquisition. To manage conflicts during change, a manager has to know that conflict to change is expected and they ought to allow for that resistance when planning and executing a change, small or big (Edwards, 2004). When conflict arises, a manager must use his problem solving skills to rise above the problem. Managers and staff at Lenovo must know the factors that drive change and therefore develop a sense that acquisition is needed for the organization’s development. 6.0 Conclusion In conclusion, managers should realize that changes surrounding that are taking place are not just trends, but the operations of unruly and large forces; the increase of computer networks and information technology, doing away with hierarchy and embracing influential leadership taking shape and hence they should not be left out of the change process . Leaders must come to the forefront and use their leadership skills in planning and managing changing so as to build a competitive advantage. 7.0 References Atkinson,G., Scotland, I. & Kamp, D. (2003). Change management: Three perspectives. Training Journal, 18-19. Barker, C. & Coy, R. (Eds). (2005). Understanding Influence for Leaders at all Levels. McGraw Hill: North Ryde, NSW (Australia). Callan,V., Latemore., G., Paulsen,N & Eliza, M. (2004). The best-laid plans: Uncertainty, complexity and large-scale organizational change. Business Review, 7, 10-20. Cox, T. (1991). Cultural Diversity in Organizations: Theory, Research and Practice. Berrett- Koehler Publishers, Inc. California (USA). Ching, M. K. (2009). CFO Guide to Doing Business in China. Singapore: John Wiley & Sons (Asia) Pte, Ltd. p.152 Dalglish, C. & Miller, P. (2010). Leadership: Understanding its global impact (1st ed.). Tilde University Press. Daft, R. (2004). Essentials of Organizational Theory and Design, 8th Edition. Cincinnati, OH: South-Western College Publishing. Daft, R. L. & Lane, P. G. (2008). The leadership experience 4th edition. Mason: Thomson South-Western. p.333-342 Demers C., Giroux N. & Chreim, S. (2003). Merger and acquisition announcements as corporate wedding narratives. Journal of Organizational Change Management, 16(2), 223–242. Edwards, M. (2004). Future Positive – International Co-operation in the 21st Century. Earthscan: London (UK) Fallon, M. (2005). What can Lenovo IBM learn from other merged companies? China Staff, 11, 7-10. Hofstede, G. (1991). Cultures and Organizations. UK: McGraw- Hill Kitchen, P. J. & Daly, F. (2002). Internal communication during change management. Corporate Communications: An International Journal, 15(2), 169-83. Kotter, J. (1996). Leading Change. Boston: Harvard Business School Press. Liu, C. (2007). Lenovo: An Example of Globalization of Chinese Enterprises. Journal of International Business Studies, 38, pp. 573-577. Shein, E. (1992). Organizational Culture and Leadership: A Dynamic View. San Francisco, CA: Jossey-Bass. p. 9. Read More