Purpose Of Change Model In Multinational Firms
In the global economy, multinational firms prove to be the most persuasive type of firm. There are more than 61,000 companies that qualify as multinationals who control nearly half a million subsidiaries worldwide. With an enormous growth in the last few years, MNCs have proved to be an important part in global economy and their prominence is increasing day by day. (Guillén, n.d.) With changing in time and requirements, there is a necessity for change in management processes so as to utilize and maximise the profits and stability of the organisation. According to the nature of business, a management can apply a change model which includes a structured approach headed for effective transition of group or an organisation. There are mainly three tools which facilitates effective transition of a management in a firm. It not only helps in understanding the need for change but also provide with a framework for the executives who are responsible for effective management. By understanding the basic economic strategy along with organisational and socio-political issues, the change process will help to provide links between company head office in home country with its foreign subsidiaries. During the process the relationship between multinational firm and concerned groups in foreign countries like government, labour, suppliers and distributors is taken into consideration and the progress is made keeping in mind not to hamper their relation as it may result in resistance among them. While implementing a change model, a multinational firm can choose any change model which suits the present condition of the firm and can incorporate the opinion of all its executives. (Martin Dewhurst, 2012)
Elementary changes in operation are demanded in today’s world without which a company may find difficult to rise. According to Richard Pascale, a successful business requires to reinvent themselves for a persistent change which means strength of yesterday can become a cause of today’s weakness. To overcome the situation, an organisation can create processes of self renewal that is based on positive divergence (Richard T. Pascale, 1997). It can also be stated that a regeneration of individual responsibility and creativity can result a lasting renovation of the company both internally and externally. Although there are few exceptions in the large organisations due to vast divisions in operations, it is not possible to escape resistance in every case. For example, a strategy or process can be uncomfortable among the employees and the shift in the corporate structure may create havoc within the company. On the other hand some employees feel positive and freshness in work along with a leap in ability of firm to exceed industry standards. A change process must be considered as an effective method in attaining feasible goal by altering shifts in a firm. According to recent survey, it have been confirmed that executives are giving revitalization a top priority. With a rapid change in technology, it has become necessary to impose new data and innovative method which can be made by acquiring new employees or educating the present employees with new technology. Since change is a complex process, it requires a planned model otherwise which it may result in an immediate disadvantage from the beginning. (SMITH, 2013)
John p Kotter 8 Steps Of Leading Change
According to Kotter, to run a firm successfully it requires to transform rightfully with the help of eight steps. For a successful change management, an executive can relate and utilize this model which involves steps necessary in obtaining an unbeaten organisational change. The following figure represents the eight critical success steps of John P Kotter and also represents factors resulting in errors while implementing change. (Nilsson, 2006)
First step deals in establishing a sense of urgency in the organisation. In order to amplify the level of urgency, the causes of self righteousness needs to be decreased. This may include lack of observance in terms of emergency, decorative talks with the management, average performance skills, too many noticeable resources and lack of response from external sources. The second step involves in creating a powerful guiding coalition. This means to eliminate obstacles and build quick achievements by creating strong association which can handle the change progress jointly and as a whole. The members of the coalition needs to support each other and must have strong positions in the firm. They also need to have a good knowledge and be consistent in work so that they could gain faith among the persons who are affected by amendments. Therefore it must be started by the leaders or top management who already hold comprehensive authority and are more committed to the firm. (Mulder, 2014)
In the third step developing a vision and strategy is done. The purpose of this step is to clarify and simplify the decision making process. It also helps to motivate people towards right direction in order to line up with the change. The vision needs to be stated by giving a clear idea about future and enhance the communication with the employees, suppliers, stakeholders and customers. Thus by clearly describing about the company visions and missions, the problems, if any, may be avoided and with a clear vision the risk of failing will decrease. In the fourth step the executives needs to communicate the change vision. Under this step employees are informed about the purpose of change and the process which will be undertaken to implement the same. The information needs to be clear and simple which can be communicated with all other foreign communities with the help of group meetings, magazines, posters and impersonal meetings. A successful change process involves two way communication i.e. top-down and bottom-up approach. It helps in answering questions arising regarding the change process which can be discussed and create a new vision.
The next step is empowering broad-based action. Under this step, problem in structures, skills, systems and managers are considered and dealt with. A well suited structure is demanded in order to support the change otherwise it may obstruct while performing the change. Without proper knowledge the employees may feel powerless and thus require proper training. Managers who oppose the process need to be tackled deftly as they may give a negative feeling. In the sixth step it is stated to generate short-term wins. A process of change requires a lot of time but still some people demand quick results especially those who doubt the change process. Thus it becomes very essential on the executives’ part to show some short term wins which create energy among employees and encourage them to work harder. For example groups can be created and equipped with proper skills and resources and then allow them to prove that change works. With their success, others will also want to emulate and can become a part in internal change model. (Swe, 2011)
The seventh step states consolidating gains and produce more change. An executive must wait to declare the victory too early and risk momentum in alteration. In the last step the firm needs to anchor new approaches in the organisational culture. When the new way of work seems as a routine work and has become common and comfortable with everyone, the change is deemed to be successful as new working condition will sink with the organisation only if it is proved to be a better one. (Carlson, n.d.) In all the above mentioned steps it is clearly seen that Kotter’s model of change is very effective and reliable but the drawback which lies is that it takes lot of time during the change process. Since there are many steps involved, tendency of skipping steps is also possible depending on its urgency. The model follows top down process and scope for other reforms relating creations or employee participation is very difficult which can lead frustrations and forcefulness among employees. Thus to implement Kotter’s change model, the management must consider the urgency first and discuss with its employees so that it can provide effectiveness to its fullest. (Swe, 2011)
Kurt Lewin’s three stage model expresses how to change a firm from one point to another by generating persuasive ways. The three steps involved in the process provide a sketch that assists to envisage, plan and supervise each stages of change. The steps include unfreezing the problem, and then it requires to be implemented with appropriate changes and at last execute the plan with better proposed routine and freeze the same. In a multinational firm, Kurt Lewin three step change theory can provide an effective summary that will help to predict, plan and manage the organisational strategy according to the demand for changes. (Kritsonis, 2005)
As shown in the above figure, during the unfreezing stage the firm needs to give time and perform consultation with the employees to eradicate their worries by applying restraining force. In this stage the issues regarding hurdles in the present operations are discussed and the top management, generally the executives, takes the lead and creates a vision and mission statement. After consideration, driving force has to be applied in which the management can provide the employees with suitable working conditions along with proper training and observance in resources. This method will not only connect all the people to work together towards positive driving direction but also reduce the restraining force. In order to apply the model, a multinational firm may arrange for a cross table meetings and conferences to understand their personal views and inconvenience.
In the second stage of change model the actual change that includes both planning and implementation in the organisation takes place. In this stage the employees are cultured and trained according to their changed organisational structure and direction. Along with making them comfortable with new ideas and strategy, it is observed and supervised by a team leader who provides the employees with necessary information. This model requires time and endurance as it is centred on the personnel evolution thesis regarding change of work environment. The employees need time to recognize the benefits of change along with proper bonding with the changed management. (Morrison, 2014)
In the final stage of Lewin’s theory i.e. the refreezing stage takes place when the changed practice is believed completed and fulfilled. Force field analysis can be used to identify and eliminate obstructions and help in focussing on installation of new work. Once the two stages are completed successfully and the employees have become comfortable with the new surroundings and new strategy, an assessment has to be made regarding problems came upon, success accomplished, and challenges met throughout the process for future orientation. (Levasseur, 2001). Although this change management model provides great assistance to the leaders as it is graph oriented and very realistic but while implementing, it may lack consideration of human opinion and experiences which can affect their self morale and thus can increase negativity. Any sudden change can also increase excitement among the employees and can inculcate resistance or lack of enthusiasm among them. With strategic management and an effective leadership control this disadvantage can be eliminated and prove beneficial for the firm.
McKinsey 7-S model was developed 1980s and is used widely by practitioners and organisations and is admired in strategic planning. The objective of the model shows the seven elements in a company that includes structure, skill, strategy, system, style, staff, and shared values. All the elements need to be associated together to achieve effectiveness in a firm. This model can also sometimes prove to be static and inactive as it may lack few areas where execution or strategic conception takes place. With its rigidity, it becomes sometimes difficult to fit this model in MNC’s whose operations are widely spread. While elaborating each point it is understood that each element requires to be modified according to other elements otherwise which it may result in a hit back. Strategy is a plan which is developed by a firm to attain substantial competitive improvement and a strong market capture. In order to achieve the same, it is very important to be clear in vision and mission of a company and to express them properly within the organisation. (Anon., 2008)
Structure is the chart which displays business units and its divisions. It also informs who is accountable to whom and gives powers to the leaders to assign new work to the employees after necessary changes are made within the firm. Third element, that is systems, reveals daily activity in a firm and gives knowledge about the firm’s procedures. It is the main focal point for the executives during the change management process as it determines how business is carried and decisions are made within the firm. Thirdly, skills are taken into consideration which means the capability and techniques used by the employees of the firm. To reinforce a new strategy or structure, desired skills are inculcated by performing training sessions and discussions in order to develop the firm employee performance.
Next is staff element that states what type of staff will be required in the change management. New staff with fresh knowledge can be appointed to inculcate modern facilities. Also present staff can be motivated by recruiting, training and giving rewards according to their performance under new and changed management. Next is Style element, which represents the process top level management follows and how they interact with the employees. This refers to the management style in a firm which represents the symbolic values that have been adopted and whether it demands any amendment or not. Lastly in the McKinsey 7-S model of change management, the shared values element is the one which is the core of all other elements. It resembles the norms and standards that direct employee’s behaviour and firm’s activities. It represents itself as the foundation in every MNC. (Jurevicius, 2013)
In order to implement the 7-S model in an MNC, it is important to identify the areas or elements that are not aligned effectively. The same needs to be considered and proper measures have to be taken accordingly. After analysing the element required to be worked on, proper goal has to be set. The executives performs research and then after states mission and vision to remove the hindrances. According to the mission, decisions are made and a firm’s structure is reorganised so that the management style of the company works properly and effectively. Necessary changes are made and implemented in the next stage of change process for which a firm can hire consultants that are best suited to implement changes. After all the seven elements are reviewed and analysed, newly designed firm is presented and is believed to be successful if smooth running is visible in the firm is visible. Change must not stop; it must be recognised as a major element for future as it is inevitable. (Scalera, 2012)
Coca-Cola- The change management in Coca Cola directs towards fundamental values and motivation of the employees by engaging the employees in the management process. It had brought an alignment in its operations worldwide successfully. The company is planning to bring a thoroughly integrated system of communication and creating a brand relationship with their employees. The company enhances an integrated approach which means all employees would engage themselves in the values and would inherit a part of the company in personal level. In order to highlight the areas need to be changed, the company conducts employee engagement survey twice a year and according to the survey, actions and implementations are executed. (Anon., 2015)
Nokia- It had been one of the most popular devices in the last decade and was one of the largest suppliers of mobile phones. But with the emergence of smart phones, the company missed the opportunity to lead the smart phone revolution. The company survived, as it understood the change required to sustain. Nokia reinvented itself and hired a new CEO to take the wheel. The new management decided to sell the company’s phone division to Microsoft like it had done in past years so many times. Thus by applying new strategies in technologies and building a strong network the company proves to be a successful in change management. (Son, 2017)
British Airways- In 1981, The British Airways formed a new board and appointed a new chair person who noticed that the company’s resources were not utilized properly and resulted in the inefficiency. The chair person decided to restructure the organisation by applying change management methodology plan. The company began to reduce its work force as the leader was successful in making the employees and other executives understand the reason for restructuring and privatisation was a necessary change. Thus with a proper leadership and communication within the organisation, he directed his company through complicated time that could otherwise was going towards destruction. (Faucheux, 2015)
Google- It is another example which proves how change in management in a multinational firm is essential. The company faced many challenges in compelling the employees that the effective management was an important part to gain a success worldwide. To do so the executives performed quantitative approach and hired top consultants to smoothen its operations by educating its employees with modern techniques. Today the company believes in team work and is happy with the changed management and also imply new changes with positive approach. (Frick, 2014)
Conclusion
The theoretical contribution in the above thesis show step by step models which are cross referenced by various opinions from different authors. In all the models, a summary concerning a strategic change process has been created. With the help of change theory employee’s opinion along with executive’s responsibility have been investigated and a solution regarding changes have been provided. By Kotter’s eight step models, complex situation in the firms can be handled as it demands to create a lot of communication and hence is mostly preferred by big companies. (Venkateswaran, 2014) While talking about the situation where the firm visage resistance among employees due to change process, Kurt Lewin Theory of change model proves to be the most suited as it involves the entire team and engages them towards positive approach. It highlights the significance of gaining knowledge and acceptance among employees and describes the reason for change (Wang, 2009). In situations where the firm losses its interconnections, it becomes critical to handle as change will not work if not recognised from all perspective. McKinsey’s framework is the tool which can solve the problem as it gives a detailed insight in all the elements present in the organisation. And therefore provides a convenient method of cross checking within the organisation and finds out the necessary conditions for implementing strategy. (Hanlon, 2014) There are few areas which require to be considered during implementing a change model process as there are few drawbacks also in each model. Since without assistance, management will not be able to provide successful change in organisation, the above three models can prove as a great backing for the leaders. Thus with the help of change models, a multinational firm can implement necessary changes that is most desirable for a sustainable and profitable business.
References:
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