The Essence of Leading Organisational Change at General Motors - Case Study Example

LEADING ORGANISATIONAL CHANGE Name Institution Professor Course Date Leading Organisational Change Executive Summary The main objective of this research is to examine the essence of leading change within an organisation with reference to the case of General Motors. General Motors was once a major entity in the global automotive industry. The organisation continues to make vital changes in its structures, culture, and operations to regain its global position. The research work focuses on evaluation of key change management models: McKinsey 7-S Model, Lewin’s change management model, and Kotter’s 8-Step change management model. The research also recommends the application of the Lewin’s change management model in the case of General Motors with the aim of overcoming diverse challenges while achieving critical goals and objectives. Introduction Organizational change theories and models are necessary in the evaluation and assessment of change at macro level, which enables institutional leaders to have an appropriate view of the organisation. The models are vital in revealing why change occurs, driving forces of change, how change will occur, what will occur, and mechanisms of measuring the impact of change within the organization. Furthermore, each of the change models and theories has different ideologies and assumptions making it essential for the implementation in diverse organisations. An organisation must decide on the ideological process rather than arbitrary approach towards adopting and implementing a change management model or theory. The main objective of this research is to evaluate the concept of change management within an organisation with reference to the case of General Motors. The research will focus on evaluation of the existing change models and theories towards the achievement of quality change management within the case of General Motors (GM). Literature Review Organisation change is one of the essential aspects towards the achievement of competitive advantage in relevant industries. Various research studies have focused on examination of diverse elements of organisational change: theories, success change management, role of sponsor and change agent. There are many diverse theories of organizational change within the context of multidisciplinary literature. Lewin’s three-step model One of the most studied change management models is the case of Lewin’s change model. A psychologist Kurt Lewin created the model in the 1950s. According to his observations, most people tend to focus on operating within the zones of safety under the influence of three critical stages of change (Levasseur 2001, p. 72; Rosch 2002 p. 10; Lewis 2012, p. 6). The first stage of change is unfreezing. During this stage, most individuals have the ability to make an active effort towards resisting change. Organisational leadership need to overcome this tendency through integration of a period of unfreezing under the influence of motivation. The second stage relates to transition. In the course of this phase, organizations tend to initiate change thus movement of the organisation into transition period with the ability to last for some time (Ford 2009, p. 310; Mueller 2009, p. 370; Coghlan et al, 2003, p. 35). In order for the phase to be successful, an organization must integrate quality leadership and reassurance techniques. Finally, the model focuses on integration of the third phase, which is refreezing. The company concentrates on becoming stable following successful implementation of the change thus enabling employees to work in accordance with the new guidelines. This theory comes out as the most applicable, in spite of its requirement for massive time during implementation (Elrod et al, 2002, p. 280). McKinsey 7-S Model This theory focuses on the provision of a holistic approach to an organisation in the course of initiating and managing change. The model has seven critical factors operating as collective change agents. These factors include shared values, strategy, structure, systems, style, staff, and skills (Kaplan 2005, p. 42; Peters 2011, p. 7; Njie 2003, p. 14; Singh 2013, p. 40). The model is an essential tool in diagnosing and understanding business entities. In addition, it has the ability to offer guidance to organisation change through combination of rational and emotional attributes (Korthuis-Smith 2002, p. 16; Zhao & Choma 2012, p. 5; Quiros 2009, p. 286; Shotter 2009; 28). On the other hand, the model proves to be complex in that one change in its part will require overall changes within the model because of the interrelation of the parts. Kotter’s 8-Step Change Model This is one of the critical change models with the ability to transform change into a campaign situation. John Kotter, Harvard University Professor created this change management model. According to the propositions of this model, leaders have the obligation of convincing employees on the need to buy into the change, thus the need to adopt and implement eight critical steps towards the achievement of change (Applebaum et al. 2012, p. 766; Sidorko 2008, p. 309; Rucker 2003, p. 135). The first step focuses on increasing the urgency for change within the organisation. The second step requires leaders and managers to build essential teams dedicated to the achievement of the desired state. The third step requires the organisation to generate an appropriate vision for change (Schulte 2010, p. 4; Knight 2012; p. 267; Smith 2011, p. 114). Fourthly, the change agents and leaders must communicate the need for change to the relevant stakeholders and shareholders. This will enable the organisation to empower staff with the ability to change in the fifth stage. The sixth step would require the organization to generate short-term goals while staying persistent in the seventh step. Finally, the organisation will concentrate on making the change permanent in the course of the eighth step. Most organisations prefer this change management model because of its simplicity in relation to being a systematic model focusing on preparation and acceptance of change rather than the actual change (McGuire 2006, p. 270; Counsell, Tennant, & Neailey 2005, p. 16). This makes it easier for organisations to experience transition. The Process of Transition John M. Fischer also focuses on the development of a change management model in relation to the process of transition with diverse steps and stages. The first stage of this model is anxiety. This relates to the awareness of the events lying outside one’s range of understanding as well as control (Hendriks 2009, p. 343; Kezar et al. 2008, p. 72). This is because of inability of the change agent to picture the future adequately with reference to lack of substantial information for change. The second stage is happiness. According to this model, the second stage relates to awareness that other persons leading to a twofold impact recognise one’s viewpoint (Shortell et al. 2000, p. 37; Marangos 2004, p. 443). In the first instance, people feel that something is going to change and not continue as before. In the second state, there is an increased satisfaction of knowing that some of the thoughts of the old system were correct and something is going to occur about it (Cinyabuguma 2005, p. 18; Olfert et al. 2012, p. 553; Dunaway 2010, p. 16; Gilpin et al. 2007, p. 1490). The third phase is fear, which relates to the imminent incidental change in one’s core behavioural system leading to diverse action in relation to self-perception and viewpoint of others on the individual. The fourth phase is threat, which relates to the awareness of an essential comprehensive change in one’s core behavioural structures in relation to lifestyle change (Reed-Lewis 2006, p. 19; Prince & Beaver 2001, p. 189, Kriauciunas 2004, p. 126; Erwin 2009, p. 33). Another component of the process of transition is guilt, which is the essential dislodgement of self from one of the core self-perception (Gotts et al. 2003; Smith et al. 2009, p. 278). In addition, the model also focuses on integration of depression phase, which relates to lack of motivation and the presence of confusion. The other phase is the aspect of disillusionment relating to awareness of one’s values, goals, and beliefs, which are incompatible with those of the organisation. The model also focuses on implementation of the phase of hostility. This relates to the tendency of individuals continuing to validate social factors and values already termed as a failure (Schraeder et al. 2005, p. 493; Eriksen 2008, p. 625; Varney & McFillen 2000, p. 107; Peus et al. 2009, p. 208). Finally, there is also the essence of denial relating to lack of acceptance of change with reference to lack of perceived impact of change on an individual or organisation. Success Change Management In order to achieve successful change management within an organisation, it is essential for the leaders not to delegate large-scale organisational change to the middle management. In addition, leaders should focus on realisation of active solicit of feedback from the employees prior to implementation of change (Rampersad 2004, p. 47). It is also vital to adhere to the organisational culture with respect rather than utilise it to dictate the intensity and breadth of change. The organisation should also communicate its strategies and reasoning behind the change concisely and clearly to the relevant stakeholders (Vacarro 2007, p. 16; Piskurich 2009, p. 206; Moran & Brightman 2000, p. 68). Technology has a massive influence in realisation of the aspect of sustainable change. This is through improved effectiveness and efficiency in the operations as well as communication of the strategies and reasoning behind the desired state within the organisation. Change agents and sponsors have the obligation of understanding their positions and roles within the organisation in the course of achieving change (Marshak 2004, p. 13; Song 2003, p. 19; O’Brien 2008, p. 138; Kohen 2004, p. 77). These elements are vital towards the achievement of quality and sustainable change with the aim of realising competitive advantage in the industry and markets of operation. Case Study The purpose of this research is to examine the components of organisational change, how it works, different factors moving the organisation to change, steps for change, resistance for change, change elements or forces, change management models or approaches with reference to the case of General Motors. General Motors came into being in 1908 when the organisation was the sole carmaker dealer within the region. The organisation benefited under the influence of effective leadership to become the leading automotive operator across the globe until its latest problems. In the course of 2009, General Motors filed a bankruptcy and sought to close its operations with reference to other car brands sold to China based entities. In the current state, the organisation has attained its position in the global market and industry through extensive restructuring and making changes in relation to its operations. Now the Company focuses on continuing its productions in core brands in the United States such as Chevrolet, GMC, Buick, and Cadillac. There are various reasons and forces for the change in the case of the General Motors. In discussion of the changes and forces affecting the change in the case of General Motors, it is ideal to focus on the external and internal analysis. In the external forces, the emergence of Toyota and China based entities as major competitors in the context of North America proves to be a threat to the realization of the goals and targets of the organization hence the need to restructure its operations. From this perspective, the competitors are a threat to the profitability levels of the General Motors at the end of the fiscal year. The second external force in relation to this organisation change relates to the financial crises with reference to the economic crisis of the United States in 2007. On the other hand, the organisation faced internal forces and reasons for the change to take place. One of the essential reasons for the change is the increasing wage costs to the employees. The organisation had to pay employees $74 per hour in comparison to the case of Toyota paying $44 per hour. The huge payments were essential because the organisation was in agreement with the trade union. In addition, General Motors has had to run the plant with minimum 80 percent capacity. These factors played critical roles in the bankruptcy state of the company hence the need for change. These issues prompt the organisation to make substantial changes within its operations. Analysis In the course of deciding to change, General Motors had to overcome seven critical objectives: i. Rationalization of the product portfolio through reduction of duplication, overreliance on light trucks, and creation of more cars to gain increased profits ii. Uneven position of the company with reference to technologies of the future iii. Need for improvement of the product development processes iv. Reduction of the costs of operations to adhere to the minimum market share across the globe v. Need to maintain enough capital with the aim of getting through the depression vi. Essence of creating different and more beneficial relationships with foreign automotive competitors as well as the government of the United States vii. Change in the organisational structure and culture In order to achieve these objectives, General Motors decided to make some critical changes in the structural, cost, processes, and cultural elements within the organisation. The implementation of the changes within the organisation took systematic approach with the aim of maximizing the existing opportunities within the industry and markets of operation. Steps in the Change Management Change management process in the case of General Motors was systematic towards the achievement of the goals and objectives. Some of the most recent changes the organization has made in the course of enhancing its positions within the global market include cost cutting and cultural change. The first step towards the achievement of the stated objective was the implementation of diverse mechanisms towards cutting down the operational costs. This is through reduction of the costs of some of the brands with the aim of maintaining the profit levels. Some of the affected brands include Saturn and Hammer. In addition, the organisation sought to cut pay of the employees, which was one of the major problems affecting the company towards the achievement of its goals and objectives. The approach could be a success because of the ability of the organisation to reduce its operational costs by 15 billion. The second step focused on making valuable changes to the organisational culture through elimination of the automotive product board replacing it with an automotive strategy with an 8-man board decision-making team. The team is responsible to report directly to the Chief Executive Officer. The main aim of General Motors in making such changes is to speed up its daily decision-making process. The organisation also focuses on the improvement of the efficiency of the employees in the course of offering their services to the company. The changes in the organisational culture also require employees to be more accountable and responsible in accordance with the policies, vision, mission, and values of the company aiming to regain its global positions within the automotive industry. Problems to Change Process In the course of implementation and realisation of the goals and objectives of the change management process, General Motors faced variety of problems with reference to cultural and cost cutting changes. The organisation had to adopt and implement a top-down approach in the implementation of the cultural plan. The approach did not turn positive to the organisation because it did ignore the involvement of the employees totally in comparison to the case of other companies where employees are essential change agents. The organisation did not implement the concept of the down-top approach to enhance the satisfaction of the employees towards the achievement of the goals and objectives. This was essential in the generation of resistance to change within the organisation from the employees. Moreover, the organisation had to experience various challenges in the implementation of the cost cutting changes. The approach was crucial to the development of the company within the industry of operation. Nevertheless, the organisation had to go against the agreement with the trade union not to reduce or lower the payments to its employees thus the need to maintain its capacity level. It is essential to note that the organization had to face resistance to change under the influence of two critical categories: individual and organisational sources. Implementation of the change strategies contributes towards generation of opinions and perspectives from the employees with reference to the complaints, engagement in work slowdown, and diverse threats to go on strike thus the need for the management to focus on overcoming such challenges (Briody, Tracy, & Trotter 2012, p. 69). Some of the individual sources of resistance to change include security, fear of the unknown, economic issues, habit, and selective information processing. One the other hand, some of the sources for the organisational resistance to change include minimum focus on change, threat to expertise, group inertia, resistance to resource allocation, and organisation structure and culture. Outcome of the Change Processes In the course of 2009, the organisation was in a position to record and evaluate its progress with reference to the management of change in trying to reclaim its global position within the context of the automotive industry. One of the outcomes of the cost cutting change approach was the rapid reduction in the number of employees from 226000 to 101000 with reference to the cases of 1998 and 2009. This was substantiated with the reduction in the salaries for the employees for their working hours. In addition, the organisation focuses on reducing its workforce with reference to the factory workers to about 40,000 to operate within its capacity and the minimal market share. The approach will enable the organization to adopt and implement cost-effective techniques to achieve competitive advantage against Japanese and Chinese based entities (Hashim 2014, p. 3; Pineno & Tyree 2009, p. 468; Burt 2002, p. 184; Hot Topic 2006, p. 1). In the case of the cultural change strategy, the organisation has achieved the good result since employees are becoming more responsible as well as accountable. Furthermore, the empowered employees focus on increasing their level of production and efficiency in addressing the needs and preferences of the customers in diverse markets and industries across the globe. Currently, under the new CEO, General Motors focuses on integration of a large-scale change management with reference to its global operations (Gousssak & Webber 2012, p. 47; Smudde 2000, p. 6; Maniam et al. 2010, p. 29). This indicates that the previous change management did not achieve the goals and objectives of the organization in the market and industry of operation. The organization need to focus on the adoption and implementation of the most effective change management model. Conclusion Effective and efficient management of change in the course of General Motors should focus on the adoption and implementation of Lewin’s change management model. This is because of the simplicity of the model towards the achievement of the goals and objectives of the organisation in the market and industry of operation. The model focuses on integration of three steps or phases towards the achievement of quality change management within an organisation. The first step relates to unfreezing. During this stage, the organisation faces critical resistance to change from the employees and other sources. In order to overcome this resistance, the management should concentrate in the implementation of change in a fair and transparent manner. This is through informing the employees the essence of change. In addition, the management should select people who accept change to act as change agent. Other approaches in minimization of resistance to change include development of support and commitment, manipulation and cooptation, participation, education, and effective communication of the elements of change. This will provide substantial foundation for the transition and refreezing stages in accordance with the structural and culture of the organisation. List of References "Tips for Making Successful Change Happen", 2006, HR Focus, vol. 83, no. 3, pp. 7-11. Appelbaum, S.H., Habashy, S., Malo, J. & Shafiq, H. 2012, "Back to the future: revisiting Kotter's 1996 change model", The Journal of Management Development, vol. 31, no. 8, pp. 764-782. 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