Organisational Overview
Change within an organisation is a part of the continuous growth and overall success of the business. Every organisation that endures to go through several changes on different levels in different ways (Dzwigol et al. 2019). When a particular company as a whole is unable to manage change, it can result into stress and unnecessary work. An effective change management can help every level of an organisation to manage as well as succeed in the context of both major as well as minor adjustments (Jayatilleke & Lai 2018). As the changes are introduced within the workplace, it guarantees that the staffs understand their new tasks and can accomplish the tasks accordingly. In addition to this, the change management also helps the business to remain practical due to its capability to prosper and adapt to the current market trends in order to remain competitive within the industry (Cameron & Green 2019). The main aim and purpose of this report is to discuss about a change that is ongoing within an organisation in order to deal with its financial downturn. The report will also put emphasis on the organisational overview along with its vision and mission. The strategic issues faced by the organisation will be explained along with the changes required to deal with financial downturn. A detailed analysis will be made for the description of change and lastly the report will provide recommendations or action for improvement so that the company can effectively perform their business within the industry.
The selected company for this assignment is Ford Motor company which is commonly known as Ford. It is a multinational automobile manufacturing company based in United States of America (Ford, 2022). The company was founded by Henry Ford and it was established in the year 1903 (Ford, 2019). The company markets and sells automobile along with commercial vehicle under the name of Ford and the luxury cars under its Lincoln luxury brand. Apart from this, the company has even introduced several approaches for last large- scale manufacturing of cars along with large scale management of industrial workforce with the help of engineered manufacturing classification that are tied by moving assembly lines (Vargas, 2020). These particular approaches are known as Fordism across the world. Ford is the 2nd main automaker in the United States behind General Motors, and the 5th largest across the world behind Toyota, Volkswagen, Hyundai and General Motors as of 2015 vehicle production. Ford was the fifth largest automaker in the regions of Europe as of the year 2010 (Christensen, 2021). The company has been a well- known brand across the world however by the year 2005, both Ford and the GM’s corporate bonds were reduced to junk status due to a high healthcare cost in the United States for ageing workforce, mounting gasoline prices, corroding market share and overdependence on the deteriorating sales of SUV (Collier & Horowitz 2021).
The mission and vision statement of Ford company focuses on the efficiency of product along with corporate leadership within the industry of automobile. The organisation’s strategic position plays a vital part in the worldwide automobile market and it is linked to the accomplishment of corporate mission and vision. The corporate mission of Ford is to benefit their target customers by providing mobility. The organisation’s products are designed in order to identify the needs of mobility along with the issues in the transportation sector. Conversely, the corporate vision statement of Ford focuses on attaining the top performance within the overall industry by considering competition as well as the other related variables (Ruff et al. 2019). The company competes against General Motors, Toyota, Tesla, Volkswagen, Hyundai, Honda, Nissan and other manufacturers. This particular market condition executes a strong competitive rivalry within the overall industry of automobile. Ford’s mission and vision statement influences its strategic management decisions for improving its business performance despite the challenges within the automobile industry (Ruff et al. 2020).
Vision and Mission
During the year 2006, when Alan Malally was selected as the President and CEO of Ford, he noticed a set of unambiguous drivers of change. There were several issues that the company was facing related to management which includes, employee turnover, lack of skilled and experienced workforce and issues in the procedure of designing automobiles. For instance: Ford Fusion Sedan was presented in the year 2006 and it was not prepared with navigation or side airbag notwithstanding the fact that most of their competitor brands of the same class were equipped with such accessories. During the period, the quality, innovativeness and the total competitiveness of cars provided by Ford where declined (MacDonald et al. 2015). In addition to this, the employee turnover was also at its peak as there was an ineffective work culture. The overall issues caused the company of Ford Motors to lose around $17 billion in the year 2006 (Tang, 2006). Despite of the tough situation that the organisation was facing, the upper level management and Heads of the regional and other dissections were cautious in distributing this important news to the rest of the employees during the meetings. Apart from this, the company even lost market share to the rivals of Asia as the company lacked in focusing on the brands core identity.
Overall, the organisations performance was declining as they were failing to meet the needs of their customers and the challenges within the market were also increasing. The company of Ford had lack of managerial approach within the organisation due to which there was a huge number of employee turnover (Clark, Howard & Early 2006). As the skilled and experienced employees were leaving the company, it was difficult for the organisation to attract potential workers within the organisation. Employee retention has become one of the serious concerns for the modern organisation. In the previous times, the employers did not concentrate on retention as the workers contended for an unusual employment resource. However, as the current labour market is tight, and owners have become the competitors and thus, competition is fierce. The organisations lose an average of around $1 million for every 10 expert and executive employees who leave the organisation (Applegate, Austin & McFarlan 2006). This estimate is based on the analysis of the retention cost of potential customers, sales and marketing spent in order to fascinate new clients and the employee- based costs. However, these situations required a noteworthy and methodical changes to be familiarised in relation to several business practises.
As the company of Ford was facing issues related to management and designing of the auto mobiles, they faced huge financial downtown. In order to resolve these issues, a conclusive and significant change were introduced by the leader to advance the intricate situation for the organisation. A rearrangement plan was presented that engrossed on the idea of “One Ford” which meant that the organisation would only focus on its main brand. The initial initiatives of the leader were to derive $23.6 billion at the end of the year 2006 through forfeiting the company’s assets for the unanticipated events that might occur and to stabilise fund (Knapp et al. 2006). This particular initiative proved to be suitable and appropriate when the worldwide economic catastrophe started in the following year where the major participants of United States including General Motors and Chrysler had to plea government for a bailout; while, Ford already had the necessary cash to deal with the catastrophe. Apart from this, the change also included an enormous cost cutting initiatives which included the postponement of bonuses to its stakeholders, shutting down of around 17 plants and downsizing around 54,500 jobs that reported for 43% of the total personnel within the organisation during the year 2009 (Rindova & Courtney 2020). In addition to this, substantial changes were also familiarised in the corporate culture of the organisation with the purpose of endorsing a greater level of transparency as well as accountability within the workforce. The leader even started weekly meetings with his top executives and deputy which included reviewing of the issues that were identified.
Strategic Issues Faced by Ford Motors
The change management style of Director and CEO of Ford company, Allan Mulally is closely related with the perception of visionary leadership. From the preliminary point at his leadership within the organisation, he has devoted huge efforts in expressing a clear vision for the organisation and getting the organisation’s stakeholders in general, the members of personnel in particular to share the common vision of the company (Tesfom & Lutz 2006). Apart from this, he has even implemented an effective communication channel with the employees along with a high level of individual engagement while dealing with change. In addition to this, during the implementation of change, there were several occasions when the leader responded to emails from the workers, and he did it by attending in the office through in person or by calling to discuss the potential topics. The leader has always fortified the challenges with a smile and hopefulness throughout the difficult situation that Ford was into and he has even proved to be contributory in terms of enhancing morale among the employees as well as productivity (Kochan, Lansbury & MacDuffie 2018). Furthermore, the leader has efficiently served as a major agent of change for the Ford Motor company by communicating effectively about the reasons and advantages of each change proposal to the firm’s stakeholders. Therefore, with these changes, Ford Motor company was able to record a net profit of around $2.7 billion in the year 2009, despite of the fact that they had a forfeiture of around $12.7 billion earlier in the year 2006 (Sinclair et al. 2020).
The leader within the organisation of Ford Motor company was able to successfully implement change which resulted in increased revenue of the company. However, within the change management processes, downsizing of employees had negative impacts on the workforce. This is because a huge number of employees were cut down in order to save costs which might have been done in another way. If the company cut its employees in order to save cost, the employees will never feel safe in such a culture because there are possibilities that this type of uncertain situation might occur in the future which might lead the company to cut down costs and as a result the company will terminate its employees. As the cost cutting was significant for the company during such a challenging situation, they might have implemented an alternative for downsizing the employees. As the company has already implemented the changes, it is recommended that they must use alternative to downsizing in the future in order to gain the trust and loyalty of their customers.
The company must implement a comprehensive model for cost saving strategies which includes a sequence of steps that can be used as a substitute to downsizing. It is recommended that the company can set 50% of compensation for the employees and the rest 50% must be determined by profit or productivity measures. Apart from this, the company can also cut the number of hours that an employee works or a reduction in their salaries. Job sharing is a distinction of flexitime that is widely used in several firms. The individuals within the organisation can divide a particular job in between them so that each person can receive a balanced benefit. Wages can also be lowered to save money as a strategy of cost- cutting measures. Everyone within the organisation is a part of the salary lessening program where the supervisory compensation is minimised by a maximum percentage which is followed by the middle management and non-management staff suffers with the lowest percentage of loss. These principles and factors must be informed to the employees and if they are ready to work with such consequences then it can be said that the employees are loyal towards the organisation however, there are several workers who have a huge responsibility on them who would not be able to work if the wages are cut. These particular individuals must be allowed to leave the organisation; however, it is also important for the company to contact the employee after they have overcome the challenges. These particular strategies will help the organisation to maintain an effective work please relationship within the organisation. Also, the employees will feel valued and respected due to which they will perform with the best of their abilities.
Detailed Analysis of Required Changes
The above- mentioned strategies can help the organisation to develop and effective relationship with their employees due to which they might work with the company even if the organisation is facing challenges and are not able to provide with 100% of the wages. The recommended strategy for change management can be evaluated if the organisation observes a huge number of employees working within the organisation with less salary and reduced work hours and still performing with the best of their abilities and focusing on achieving the objective of the overall organisation.
Conclusion:
Lastly from the above discussion, it can be concluded that the change management strategy implemented by the leader of Ford Motor company was effective as it was able to generate revenue for the organisation. However, it has impacted several employees and their lives by terminating them due to cost cutting strategies. Therefore, the report has pointed out strategies that can be implemented by the company as an alternative of downsizing employees which will ultimately enhance the workplace culture and help the company in achieving a competitive advantage by being profitable within the overall industry. It has also been recommended to the company that if the company implements the change management strategy in the future, then they must think about the alternative of downsizing as it can help them to retain their employees so that they can be loyal in the coming years.
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