Transformation can be challenging for any organisation, regardless of its size, the target market, or experience. To assist the management in the process of transformational change, scholars have developed a number of models that help to plan and implement change in any organisation. The two organisations that will be considered as examples of change are Zurich UK Life and General Motors.
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Although they operate in two separate markets, both companies have undergone a significant transformational process impacting their organisational culture and operations. Applying relevant models to each case allows determining the nature of change and outlining its critical drivers in these organisations.
Zurich UK Life is an insurance firm serving customers in the United Kingdom with general insurance, pensions, and investment policies. Since 2010, the company has become slow in growing profits and its market share, which made it susceptible to the changing market conditions (Chartered Institute of Personnel and Development [CIPD] 2015).
The management of the firm decided to undertake a change effort aimed at improving the corporate culture and re-structuring the company to make it more efficient. From the viewpoint of the McKinsey 7-S model of change, Zurich UK Life addressed both hard and soft elements as part of the change process, focusing on strategy, structure, shared values, and staff. Such measures enabled the company to reduce bureaucracy, improve individual autonomy, and introduce a strategy focused on customers and staff rather than on profits.
General Motors is a global car manufacturer that had a long history of success in North America. The company owns several popular car brands, including Chevrolet and Cadillac. However, in the early 2000s, the corporation was experiencing a decrease in sales due to pressure from competitors (Khan & Hashim 2014). One particular rival that disrupted General Motors’ business was Toyota, which became popular in the North American car market at the time. Despite the support of American and Canadian governments, General Motors faced bankruptcy in 2009, which prompted the company to discontinue several car brands and eventually resulted in it being sold to Chinese investors (Khan & Hashim 2014).
The arrival of the new management meant significant changes for the organisation, particularly with respect to costs, operations, and culture. For instance, cost-cutting was the first step towards recovering the company’s shaky financial performance. Cultural change, on the other hand, involved changing the power structure to promote fast decision-making and enhancing the individual autonomy of employees (Khan & Hashim 2014). Therefore, based on the 7-S model, transformational change at General Motors also involved strategy, structure, style, and staff.
As indicated by the analysis above, there are a lot of similarities in the nature of change in Zurich UK Life and General Motors. With regards to structural and cultural changes, both businesses focused on reducing decision-making time by enhancing employee autonomy and increasing the number of people with decision-making authority. As a result, they also managed to enhance internal collaboration and decrease bureaucracy to avoid delays in communication.
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Nevertheless, there are still some differences in change strategies adopted by the two organisations. First of all, the approach used by Zurich UK Life put significant emphasis on developing an empowering and inspiring corporate culture to motivate employees (CIPD 2015). In contrast, General Motors focused on applying performance-based rewards to motivate employees and reduce costs (Khan & Hashim 2014).
Another difference can be observed in the companies’ new approaches to strategic planning. Whereas Zurich UK Life introduced an externally-focused strategy to improve customer and staff satisfaction, General Motors applied cost management tools to win customers over with lower prices (CIPD 2015; Khan & Hashim 2014). Hence, even though organisations took similar steps to achieve transformational change, the nature of the change in the two cases differed significantly.
There are several reasons for the dissimilarities in the nature of change in Zurich UK Life and General Motors. In particular, the drivers of change were different in each case. According to the Burke-Litwin model, there are two categories of variables that create the need for a transformation: internal and external (Burke & Litwin 1992). The authors explain that most companies use change to respond to shifts in the external environment, such as emerging competitors or new market regulations. Some firms, however, might be motivated to change due to internal factors, including negative employee attitudes, high turnover, and low individual performance (Burke & Litwin 1992).
Another change model that is crucial in planning and implementing transformations is Kotter’s 8-Step Model, which explains that a sense of urgency plays a critical role in initiating the change process (Bucciarelli 2015).
Hence, in order to understand the drivers of change in the two cases, it is essential to look at internal and external factors that prompted for an urgent change. In the case of General Motors, the key drivers of change were competition and the declining market share (Khan & Hashim 2014). The company lost its favourable position in the market due to the entrance of new rivals from Japan and Korea, and thus was suffering financial losses. A reduction in profits created a sense of urgency due to the threat of bankruptcy. Based on this information, the change in General Motors was motivated by external factors.
In the case of Zurich UK Life, the situation was different. As mentioned by CIPD (2015), the insurance market in the United Kingdom was influenced by changes in regulations in the 2010s, which required a major cost-cutting initiative. In addition to that, there were also internal factors that created a need for change. Staff complained about the lack of recognition, bureaucracy, and poor cooperation. As the cost-cutting efforts resulted in significant redundancies, the change was needed to ensure that the remaining employees could run operations smoothly. Therefore, the key drivers of change in Zurich UK Life were both internal and external, and they included organisational culture, financial performance work unit climate, motivation, and market policy changes.
Identifying the key stakeholders can aid organisations in the process of change, as stakeholders are responsible for support or resistance to change. In the case of Zurich UK Life, the transformation occurred at all levels of the organisation, which means that there were at least six groups of stakeholders. First of all, customers were among the key stakeholders of change in the company.
This is mainly due to the nature of the transformations that took place in the business. On the one hand, the company aimed to improve internal processes and communication, which allowed it to provide services more efficiently and at a lower price. On the other hand, the focus of the new strategy was on customer satisfaction. This enabled the company to design new products with its target customers in mind, thus becoming more effective in fulfilling the customers’ needs.
The second group of stakeholders included the company’s staff, who remained in their positions after redundancies. As was identified in the previous response, the dissatisfaction of employees with internal processes and leadership became one of the critical drivers of change in the organisation. The change process aimed to ensure that employees felt valued and motivated, thus achieving a higher job satisfaction among employees. The opinions of staff were also taken into account when planning and evaluating change, which means that workers could provide their input and express their wishes with regards to different issues. The change also provided employees with more authority and autonomy, thus contributing to their motivation and improving the opportunities for career growth.
Thirdly, the stakeholders of the change process were the company’s managers, who were tasked with planning and executing change. This group was interested in the transformational process due to their position in the company, as well as because success would help to improve the financial performance of Zurich UK Life. For the same reason, shareholders of Zurich Group and Zurich UK Life can also be considered the stakeholders of the change process. Since improved efficiency of the organisation and customer-centred strategic decisions would help to acquire a larger market share, shareholders would receive more in dividends. However, if the process of change was unsuccessful, they could lose money, and thus this group of stakeholders also represented a possible area of resistance to change.
Lastly, Zurich Group as a whole was a major stakeholder of the transformational change. On the one hand, the corporation was interested in financial profits of its UK branch, which could have been enhanced as a result of the change process. On the other hand, the example of Zurich UK Life could be applied to other companies that were part of Zurich Group and experienced similar issues with bureaucracy and individual effectiveness.
In order to identify the main areas of support and resistance to planned change, the senior management could have performed an analysis of the key stakeholder groups. This process would have helped to outline the interests of the main participants. For example, while customers are interested in high-quality services, additional costs associated with the planned change could have been worrisome for the shareholders. Therefore, customers were a potential area of support, and shareholders could have been slightly resistant to change. The management could have also evaluated employees’ opinions on the planned change through internal surveys or interviews.
This activity would be beneficial for the change process since the attitudes of employees to change in the organisation could be mixed. Employees who have been working in Zurich UK Life for several years and are used to the company’s internal operations could represent major areas of resistance. Nevertheless, younger employees who have worked in organisations with a simpler structure would probably embrace and support the change process.
Overcoming resistance to change is a major step in the implementation process as it helps to achieve positive results and ensure smooth implementation. There are several strategies that assist managers in responding to resistance efficiently and improving employees’ attitudes toward the change process. The first strategy is to identify the key agents of resistance, which are usually employees who openly share their negative views on the planned change, and apply the principles of business negotiations to achieve a compromise. According to Blount and Carroll (2017), it is essential for employees to feel that the management listens to them and appreciates their input.
Therefore, if a resistant employee shares their views on the changes, the leaders should take them into account. Ideally, the managers should have tried arranging conversations with resistant workers and asking them for suggestions about improving the plan of change.
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The second strategy of managing resistance to change is improving internal communication and providing a transparent plan of change. This strategy would have been helpful, as employees often resist change out of fear (Blount & Carrol 2017). They could fear that they will have more responsibility after the implementation of change or that their role will be made redundant or that the change will complicate internal operations within the company. Therefore, before implementing any changes, the managers should show why the current situation requires intervention, as well as provide their vision of how operations will be organised after the change is implemented. The management should also encourage employees to come forward with any questions regarding the transformation and respond to their concerns promptly.
The last strategy that should have been used by Zurich UK Life to prevent and reduce resistance to change is participatory decision-making. Regular employees are usually excluded from the process of change planning, and thus they might view it as something unfamiliar and threatening. According to Bringselius (2014), this prompts for including participatory decision-making frameworks in the discussion of change management. By involving staff in the process of discussing and planning change, the management of Zurich UK Life could have ensured that employees receive full information about the plan and are able to contribute to it, thus promoting acceptance of change.
A particularly interesting case of transformational change where the organisation focused on knowledge management is the case of Global Applications Management (GAA). The chosen company is a large business that operates as an outsourcing division of Siemens IT Solutions and Services. GAA provides services to corporate customers using applications as part of their internal operations, and thus the company depends largely on innovation and successful knowledge sharing.
In 2007, the management of the company realised the need to build a robust knowledge management system to foster innovation and win a larger market share in the Asian market (Siemens AG 2010). The company also had other goals for the change process, such as improving operational efficiency, promoting talent retention, and enhancing collaboration among employees.
In order to plan the change process, GAA first assessed its needs with regards to knowledge, which was a correct decision based on McKinsey’s 7S model. It was found that the company needed to implement knowledge management as part of all aspects of business operations, including projects, human resources, performance measurement, skill-building, processes, and documentation (Siemens AG 2010).
Therefore, the company required a large-scale transformational change to achieve its business goals and objectives. Based on the needs assessment, a plan of change was designed, which included a number of steps. First, the company aimed to use its “corporate brain” by creating and maintaining a pool of knowledge, ideas, and best practices (Siemens AG 2010). Secondly, GAA sought to improve internal collaboration in order to enhance knowledge sharing. Thirdly, the company wanted to avoid duplication of ideas by making best practices accessible to all employees and updating them regularly.
GAA also aimed to improve employee resilience and foster a culture of creativity and openness (Siemens AG 2010). These goals were reached by establishing two-way communication, internal support systems, and initiating regular training. A separate knowledge management team was created to oversee the process and consolidate changes. The process of change in GAA reminds the steps in Kotter’s 8-step model of change, although the organisation has changed it slightly to suit the management’s needs.
In order to evaluate the success of GAA’s change process in terms of knowledge management, it is essential to determine how knowledge was produced, maintained, and accessed by employees in the new system. The primary point of interest for the company during the change implementation process was to develop an IT-based service that all employees could use as a tool for sharing knowledge (Siemens AG 2010). As a result, GAA installed several applications to facilitate document sharing: GP Portal, GAA Portal, and Doc-Central.
Each of these tools was responsible for storing and providing access to different types of documents. For instance, the GP portal focused on past resolutions, the GAA portal contained links to relevant best practices and standards, and Doc-Central contained operational documents required for day-to-day functioning and project management (Siemens AG 2010). All employees received training on how to use each tool in order to avoid confusion and improve change acceptance.
One clear benefit of the system chosen by GAA is that it enables fast knowledge tracking. By creating a unified pool of knowledge that could be easily accessed by all employees, the company enhanced the availability of information. As a result, employees received the resources necessary to conform to relevant standards and best practices and could avoid duplicating ideas.
However, the fact that the company used a separate tool for each type of documents is somewhat concerning. Even with specific training, employees could have found the new system confusing, leading to low utilisation of knowledge-sharing opportunities. Given the goals of the project and the significant complexity of operations in GAA, it would be beneficial for the company to consider the possibility of creating one corporate knowledge portal, which would contain links for access to all types of information.
This would have provided for a smoother implementation process and improved knowledge tracking and knowledge management by easing the process of locating and viewing information. Thus, while the decision to implement several different tools is understandable, it was not the best option for the company to achieve its knowledge management objectives.
The second essential aspect of the transformational change in the company was the enhanced teamwork, which provided opportunities for strengthening internal collaboration. According to the report by Siemens AG (2010), the company installed a separate tool for social collaboration in the workplace called SharePoint, as well as a Wiki portal for shared document creation. The strategy also involved improving employees’ skills in teamwork and conflict resolution.
These aspects of the planned change had a positive impact on knowledge management, tracking, and migration. On the one hand, they enabled employees to share ideas by establishing collaborations in creating documents. On the other hand, it contributed to knowledge tracking, as the two systems allowed to determine the owners and creators of different documents and locate the required information quickly.
The final component of the planned change in GAA was the cultural transformation. As identified by Siemens AG (2010), the company had a complex hierarchal structure, which complicated internal communication. As part of the cultural change, GAA sought to establish open, two-way communication channels, which would be used by both managers and employees. For managers, transparent communication channels provided an excellent tool for knowledge migration, as they could deliver the required documents and information to employees quickly and efficiently. For workers, two-way communication provided opportunities for sharing ideas or concerns. While this also supported knowledge migration in the company, the most important aspect of this change was that it facilitated creativity and innovation in GAA.
Furthermore, the creation of two-way communication channels facilitated the smooth implementation of planned changes. Employees who were resistant to change received the opportunity to shared their concerns. In contrast, those who were enthusiastic about change could contribute their ideas and suggestions for improving the plan and achieving better results. All things considered, the change in GAA had a positive effect on knowledge management, migration, and tracking within the company. Although some aspects of the plan could have been improved, the changes provided numerous benefits for staff and managers and helped to create and maintain a culture of creativity and innovation throughout the company.
It is widely recognised that transformational change is a complicated process, and thus various scholars have put forward models that can help leaders to implement changes successfully. One of the most famous models of change is McKinsey’s 7S model, which is useful both for analysing the organisation’s need for change and for creating a plan for change. The model presents any organisation as a set of seven key elements, including hard and soft elements.
The hard components are the ones that can be clearly identified and defined on paper (Ravanfar 2015). For instance, the strategy is considered to be a hard element, since most organisations have a well-established strategy that they use to increase profits and achieve a larger market share. Other hard components are structure, which represents the hierarchy of an organisation, and systems, which refer to internal operations and processes.
As opposed to hard elements, the soft ones might be more challenging for the organisations to identify. For example, shared values are a soft element in McKinsey’s model, as most organisations do not define their values or do not ensure that they are compatible with the values of their staff (Ravanfar 2015). Skills, style, and staff are also soft elements that should be analysed as part of change planning. In applying McKinsey’s 7S model, the management should evaluate the current state of every element, noting any gaps or inefficient components (Ravanfar 2015). Then, the managers can create a vision of how these elements need to function in order for the company to be successful. Based on the current and future visions of the elements, the company should plan and propose changes.
Another useful model of change that is commonly used in different organisations is Kotter’s 8-step model. It includes a set of actions required from the management to achieve successful change. The steps are as follows (Bucciarelli 2015):
- Creating a sense of urgency;
- Building a guiding coalition to support the change;
- Developing a vision and a strategy to achieve the goal;
- Communicate the vision to employees continuously;
- Empower employees and leaders to act in accordance with the vision;
- Providing opportunities for short-term wins;
- Consolidating successful change;
- Institutionalising new practices in operations, leadership, and other areas.
Based on the above description of the two models, there are several significant similarities between them. First of all, both models stress the importance of creating a vision of change, which should be specific enough for all employees to follow it. Secondly, the identified change models both appreciate the role of employees in the process of planning and implementing change. Kotter’s model acknowledges the need for guidance, transparent communication, motivation and empowerment, all of which are addressed in specific phases of the model. Similarly, in McKinsey’s 7S model, employees, their skills, and values are among the key organisational elements that need to be assessed at the planning stage.
Thirdly, both models show that change cannot be implemented in just one department or team of the organisation. Both Kotter and McKinsey view change as a comprehensive process requiring the participation of all employees, regardless of their position. Lastly, both models assume that change cannot be achieved by a single manager or leader. In McKinsey’s model, the assessment of the current situation requires the participation of a leadership team, whereas Kotter’s 8-Step model involves creating a guiding coalition to support change implementation. Therefore, the two models have certain similarities based on their view of change and their interpretation of the change process.
Despite being somewhat alike, Kotter’s 8-Step model and McKinsey’s 7S model have a lot of differences. The first significant difference lies in the intended use of each model. While McKinsey’s model can only be used during the planning stage, Kotter’s model serves as a guide for leaders throughout the change process, from planning to maintenance. Therefore, the two models can be used together to diagnose the issues and implement transformational change to remedy them successfully.
Another point of difference is that Kotter’s model does not consider the influence of workforce characteristics on the success of a change process. In the 7S model, employee skills and values are among the key elements that require assessment and need to be included in the vision of change. Kotter’s approach, on the other hand, does not involve providing training or assessing employee skills, which is a drawback of this model.
In a similar manner, the models disagree on the influence of employee motivation and empowerment on transformational change. The application of the 8-Step model will assist leaders in creating an empowering organisational culture while also motivating employees through small goals and short-term wins. This means that, if a change is planned an implemented in accordance with Kotter’s approach, leaders are less likely to face resistance to change and will have the opportunity to enhance individual productivity. In contrast, McKinsey’s 7S model does not target internal communication regarding change or advise for the active involvement of staff in change implementation, which could cause problems for the management.
All in all, while both models have some weaknesses, they can still benefit organisations on the path to change. One particular advantage of both models is that they help leaders to approach change planning and implementation strategically.
This helps to make transformational change faster and easier for the management. In addition, both models help to ensure that the plan of change is accurate and that each transformation will help the organisation to reach its goals in terms of operations, profitability, or efficiency. Kotter’s model also helps to engage employees in the change process and enhance their motivation to achieve common goals, while McKinsey’s 7S model assists in developing an organisational culture based on shared values. By using both models simultaneously, companies can experience all of these positive effects while also ensuring the success of a planned change.
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