Organisational Change and Development - Case Study Example

ORGANISATIONAL CHANGE AND DEVELOPMENT Student Name Course Name Date Table of Contents Table of Contents 2 Introduction 3 Organisational Change and Development at GSRTC 4 Consequences of deregulation 4 Change initiatives 5 Operational Parameters 5 The Revenue and cost initiative 6 Cost Controlling 6 The strike 7 Initial change reaction 7 Recommendations 9 Recommendations based on the failed changes 9 Implementation of the Change model 10 Change model and GSRTC 11 Additional recommendations 12 Conclusion 13 Bibliography 15 Organisational Change and Development Introduction Gujarat State Road Transport Corporation was established in 1960 due to Bombay State Road Transport Corporation undergoing bifurcation as a result of State Reorganisation Act.1 The corporation grew dramatically under a period of five years from its modest state to having seven divisions, 1,767 buses, 126 deports, and 1,554 pick-ups in the 2011/12.2 GSRTC also structured a three-tier repair facility at Naroda near Ahmedabad. In addition, it incorporated a ticket printing press and a body building plant and hired over 42,600 employees who received inflation-adjusted salaries. The organisation was a state undertaking and followed all set statutory norms. The corporation has operated for over 45 years and since its establishment, it has proved to be a capable and effective transport organisation serving the public people of the state. Over the years, Gujarat State Transport Corporation has grown to be one of the largest transport companies in India.3 After economic liberalization that took place in India, a good number of state government started deregulating hitherto-owned sectors such as the transport sector.4 This took place with an aim of mitigating government failure that resulted from constraint resources capabilities of the public sector undertakings.5 From this decision, it was expected that engaging private equity would improve the resource allocation of the public sector undertaking. Thus, private transports were therefore allowed to participate in operation as stage carriers. Partial deregulation by the government thus resulted to a number of consequences that affected GSRTC’s performance.6 This paper will analysis the processes, strategies and actions that were used by the GSRTC during the change process that took place after deregulation by the government. This paper will also present a number of recommendations that the corporation would have implemented to avoid the problems that resulted from the change process. Organisational Change and Development at GSRTC Consequences of deregulation After the government permitted the private transport on the roads, it led to a huge competition for GSRTC. The introduction of competition in the transport sector disrupted the cross subsidy used by the GSRTC.7 Also, the 17.5% P-tax of the GSRTC puts the company at a disadvantaged as compared to the private transport operators. GSTRTC paid a total of Rs499,000 tax per bus compared to Rs184,000 paid by the private sector.8 This led to financial disincentives for GSRTC. The private transport sector and legal stage carriers incorporated dynamic ticket prices that led to revenue increase. However, GSRTC could not resort to the use of dynamic ticket pricing since being a public sector, the corporation required government approval. In addition, since GSRTC was a public utility, it was closely supervised by the government exposing it to rules and regulations that affected its finances.9 Problems faced by GSRTC also were as a result of the ambiguous public transport policy that highly affected the role of the corporation under changed economic conditions. The management of GSRTC generally believed that the set regulatory issues directly or indirectly affected its productivity and operational effectiveness. 10 Change initiatives In order to cater for the external competition and the existing regulatory impediments, GSRTC introduced a number of initiatives that were fundamentally set to contain the incurred costs and enhance operational effectiveness and productivity. The management explained that the restructuring exercise would affect the stakeholders hence decided to start with operational concepts that outcomes and results would be apparent. Operational Parameters The restructuring of the Gujarat State Road Transport Corporation started with the introduction of new buses that took place in the period of 2006/07 before Rajgopal occupied the position of managing director.11 Approximately 5 years after the introduction of the buses, the corporation made apparent improvements in its operation. The first initiatives introduced by the Gujarat State Road Transport Corporation in terms of operations parameters included aggregation of successful kilometres taken by the buses, daily buses utilization, fuel effectiveness, maximization of the passenger load factor, minimization of mechanical breakdowns per 10000 km and daily crew utilization.12 After Rajgopal became the managing director, he introduced additional parameters with penalties such as fleet utilisation, matching the percentage of buses and non-tariff income as a financial measure of the alternative means of generating income for the corporation. The Revenue and cost initiative Gujarat State Road Transport Corporation established an e-Ticketing system in the period of 2009/10.13 The system was aimed at enhancing the effectiveness and administrative control by efficient information flow and seamless real-time data transfer. E-Ticketing system would be possible with the introduction of solid and integrated IT system that would assist in minimizing the duplication taking place and also minimize the administrative paperwork that occur and thereby increasing efficiency. Another cost reduction initiative that took place involved the improvement of the bus terminals.14 This initiative involved the construction of new infrastructure and upgrading and restructuring of the important terminal points. Another cost reduction initiative involved the selling of scraps by means of reverse auctioning.15 This minimized on the wastage that initially took place and therefore saving on cost. GSRTC also generated revenue by carrying out advertising on Buses and also at terminals in order to create awareness and by increasing percentage bus cargo capacity rate and selling the spaces to the third party. The Gujarat Road Transport Corporation also developed their personal lands by means of Public-Private Partnership. Cost Controlling Although the implementation of the IT system served dual purpose; generating additional revenue and saving on the utilization of costs, the managing director, Rajgopal, wanted additional changes to be implemented.16 He stated that structural changes were required especially in the human resource and administrative departments.17 The structural changes considered outsourcing buses and drivers, installing electronic ticket machines, implementing additional workers on a contractual basis, renting repair facilities to the external private operators and merging divisions and deports with the aim of reducing administrative costs.18 The strike The corporate restructuring of GSRTC involved a number of changes that took place continuously for approximately five years.19 These change initiatives were as a result of introduced competition from the private transport sector for Gujarat State Road Transport Corporation. As a result of a good number of changes that took place, a strike occurred and over AUS $890 Million of unpaid wages were demanded by the employees. As much as the demand was very much justified, it negatively affected the corporation, approximately 2.2 million passengers and the government and could lead to a dramatic crisis if not taken care of.20 Initial change reaction It was clear that some change initiatives were not welcomed by the state corporation’s especially public sector corporations and could potentially account for the failed changes processes carried out by the Gujarat Road Transport Corporation.21 GSRTC undertook various changes that have an effect on all the regions of operation of the corporation both internal that was attributed by the introduction of e-Ticketing and external that was attributed by minimization of government taxes. These effects were witnessed after a short period of time. According to the Gujarat State Road Transport Corporation’s case study, it was evident that the change initiatives that were implemented did not utilize any structures methodology. This can mean that the changes that took place were implemented with little or no structures and planned change methodology.22 According to Burnes, for any corporation to carry out successful transformational change, it should make sure that it has substantial time to carry out the change initiatives.23 This time is required in order to overcome fear and resistance that go hand in hand with any change process. Lack of substantial time allocated for change process may lead to failure. GSRTC did not allocate enough time for the change initiatives. Change resistance by the employees is paramount and thus, according to Burnes, in order to overcome change resistance, a number of initiatives should be carried out before the change process takes place24. These initiatives include education of the employees, participation and involvement, facilitation and support, negotiation and agreement, co-optation and coercion. The main reasons for the occurrence of strike of Trade Union workers in Gujarat State Road Transport Corporation included; demand of removal of a number of initiatives that reduce employee relevance and demand for the initiative provisions of the 6th Pay Commission.25 The strike ascertained that the Trade Union workers were already satisfied with the initiatives not associated with condensed employee relevance. The corporation reacted to the strike by implementing immediate action that allowed payback of the amount of capital owned by the workforce. Recommendations Recommendations based on the failed changes In accordance to Gujarat State Road Transport Corporation, some questions could be asked: would the Trade Union worker strike have occurred if the workers took part in change management on issues termed as “reduce employee relevance”?, would the issue of 6th Pay Commission be an issue in an event where the GSRTC was at system thinking capacity? And how should the Gujarat State Road Transport Corporation deal with change processes in the future? The probability of the strike from happening would have been minimal if the failed change processes were managed. Although any change is often implemented for the good of an organisation, employees tend to respond negatively to any change process and may resist the efforts put forward for change.26 The resistance to change and the negative reactions of the employees can be attributed to the fact that change often brings increased pressure and uncertainty for the employees. According to Jones, there is one major reason why change initiatives fail; the resistance portrayed by the employees towards the change process.27 The significance of the resistance is enhanced by the high probabilities of change failure. For this reason, the creation of positive beliefs and attitudes among the employees is very paramount for the success of change intervention.28 Implementation of the Change model Creation of the positive believes and attitudes among employees require an integration of change management model. Many literatures have highlighted some important change models that are important in the change management. For this case study, the suitable change model that can apply is the John P. Kotters model. Kotter has established eight steps that assist in transformation of an organisation.29 They include: 1. Importance of instituting a sense of belonging with regard to the need to achieve change since individuals cannot change if they do not see the need for doing so. 2. Establishment of a guiding coalition that involves a group of individuals with will power and influence in a particular organisation in order to lead the change process. 3. Development of vision and strategy of what exactly the change is all about by telling the employees the importance of carrying out the change initiative and how to go about it. 4. Communication of the change vision is very essential. People should be involved in the change process. This can start by explaining to people about the why, how, who and what of the changes. 5. Empowerment of the broad-based action- this can be done by getting people to think about the change process and how to attain this instead of thinking about the impossibilities of the change and why they don’t like the changes. 6. Generation of the short-term goals- it is very important to establish the small achievements that result from the change process and recognise the work done by the employees in achieving the change. 7. Joining the gains and yielding more change-this involves developing the momentum for change by creating on the successes resulting from the change and developing individuals as change agents. 8. Coming up with new techniques in the organisational culture in order to obtain long-term success and establishment of the changes. If an organisation does not do this, changes achieved successfully through hard work may slip away due to employees’ tendency to turn to the old ways of doing things. According to Kotter, the eight mentioned steps should follow each other during institution of change since failure to do so may compromise change success.30 This means that each step is essential to one another. Kotter also highlighted that failure to institute the first step may lead to difficulties in instituting the next steps. Change model and GSRTC In Gujarat State Road Transport Corporation, the eight Kotters steps were followed and assisted in minimizing resistance to change among the employees but may not have entirely influenced a good number of TU workers. For instance, a change initiative established by the corporation aimed at hiring various staff on contractual basis proved to be effective.31 The initiative used Kotters’ method of targeting individuals who had no problem being on contract basis. This created opportunities for employees who wanted this change initiative and may have led to a win. According to Appelbaum (2012), for any change process to be successful, there should be an appropriate agent of change who would take part in all the eight steps of Kotter’s model.32 This is a very essential approach since appropriate agent of change may be persuasive in preparing employees in readiness for change. An agent of change is expected to create attractiveness of the change process, involve the employees in the change process, and build a positive attitude and belief to change. Many change initiatives fail due to poor and weak leadership.33 Lack of leadership and planning was the main reason for the TU strike. Additional recommendations After the TU strike, GSRTC would undergo other change initiatives that would determine if the corporation would continue with its operation. To ensure that the change processes would be successful, Stanley (2007) highlights that leadership is very essential in management of organisational change.34 Therefore, the corporation should improve on its leadership and management to prevent change failure. In addition, a clear change model and plan just like the eight steps presented by Kotter would ensure involvement of the entire stakeholder in the change initiates.35 The corporation change plan should contain key elements such as seeing the big picture; deepening qualities of all the employees, building shared vision and team learning. For instance, the change model in GSRTC would involve deepening qualities of every employees by training them IT related fields. This would assist the corporation change vision towards e-government and e-ticketing36. In addition, before a change is implemented, employees’ acceptance is very essential in order to reduce resistance.37 In addition, the changes proposed should also be in line with the government acceptance.38 Also, monitoring and reviewing approaches should be put in place in order to trace the program of the change process. In terms of measurement of the success of a proposed change process, the success of each change initiative has a direct financial effect that can be easily measured. For instance, the success of a change process can be ascertained by the reduction of passenger tax. Additionally, measuring and evaluating the revenues received and cost saving through a particular change process can assess whether a change initiative was successful or not.39 Conclusion According to the case study, Gujarat state road Transport Corporation went through various changes due to government allowing competition and payment of unpaid wages. The change processes that took place almost crippled the whole corporation. The implemented change initiatives led to TU strike. Through the change processes that took place, some resistance were met among the employees. According to the paper, such resistance can be reduced by setting up change management model such as Kotter’s eight steps of change process. Also, improvement of leadership and management of the corporation would have increased the involvement in the change process by all the stakeholders leading to success. Generally, before a change initiative is implemented a number of factors should be considered first in order to avoid failure. Bibliography Appelbaum, Steven H., Sally Habashy, Jean-Luc Malo, and Hisham Shafiq. "Back to the future: revisiting Kotter's 1996 change model." Journal of Management Development, 2012, no. 31 (8):764-782. doi: 10.1108/02621711211253231. Basu, Professor Shubhabrata. Corporate Restucturing of Gujarat State Road Transport Corporation. 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Leadership & Organization Development Journal, (2008) 29 (4):294-316. doi: 10.1108/01437730810876122. Murray, P., Poole, D. & Jones, G. Contemporary issues in management and organisational behaviour. South Melbourne, Vic: Thomson Learning, 2006. N. Ravichandran, M.V.N. Surya Prasad. Reviving Gujarat State Road Transport Corporation: An Agenda for Action. Indian Institute of Management Ahmedabad, Research and Publication Department, 2007. S. I: Pearson. Pathak, Harsh. Organisational change. S. I: Pearson, 2010. Pollack, J., & Pollack, R. Using Kotter’s Eight Stage Process to Manage an Organisational Change Program: Presentation and Practice. Systemic Practice And Action Research, 2014, 28(1), 51-66. http://dx.doi.org/10.1007/s11213-014-9317-0 Prabhu, C. E-governance : concepts and case studies. New Delhi: Prentice-Hall of India, (2005). Radin, Jennifer. Driving Large Scale transformation: Positioning leaders to mobilize complex organizations, (2011). Shah, H., & Gopal, R. Training needs analysis for bus depot managers at GSRTC. Euro J Of Training And Dev, 2012, 36(5), 527-543. http://dx.doi.org/10.1108/03090591211232084 Shanley, Chris. "Managing change through management development: an industry case study." The Journal of Management Development, 2007, no. 26 (10):962-979. Read More