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Case: Managing Organizational Change
Introduction
Change is necessary in the evolving business world, but only effective management leads to success. In my view, the likely root cause of Acme corporations organizational issues (increased turnover and decreased profitability) is ineffective change management by the HR function. The disagreements and strategy deficit at the senior leadership level stemmed from HR-related factors: a lack of a structural foundation for hiring new leaders and poor handling of the changeover. The employees readiness for the major staffing change was low, suggesting poor top-down communication and limited employee input or involvement in the initiative from the start.
After the changeover, low workforce engagement led to high turnover, causing heavy workloads for the remaining staff and productivity decline. The new leadership team was also not well integrated into Acmes corporate culture, which contributed to change resistance manifesting as high turnover. Incompatible cultures, including the transactional management style, micro-management, and poor motivation of the sales staff, led to low morale. As a result, the average monthly staff sales and profit declined from $322,800 and $103,296 in January to $247,700 and $79,264 in June, respectively. Further, the decision paralysis in the senior management level signifies the resistance to the changeover and uncertainty over long-term goals.
Organizational Change Model
Applying an appropriate change framework can help explain the challenges impacting Acmes operations after the changeover. Kotters eight-step process can help explain the errors committed to implementing the new change (appointment of new leaders) leading to the current crisis. The model addresses paradigms, attitudes, and beliefs in the business that affect communication during change (Anson, 2011, p. 3). It supports a structured, proactive approach to implementing a transformation, managing resistance, and promoting communication to increase buy-in and support across the corporation.
Applying Kotters model will reveal the critical mistakes in implementing leadership change. First, Acme failed to create a sense of urgency, which is achieved by exploring new competitive realities (Kotter, 2007). It appears no frank discussions were done with the sales associates to demonstrate the necessity for the leadership change. Further, Acmes new CEO not a guiding coalition unilaterally appointed the sales management team, including the vice president, directors, and managers. A vision was also lacking since a guiding coalition was not constituted. Additionally, barriers to the new vision were not addressed. Employees self-interest was inconsistent with leadership change; hence, an obstacle to the leadership transition. The change was not anchored in the organizations culture HR practices related to workloads and motivation. Group behavioral norms and shared values were lacking, contributing to the crisis.
Solution and Plan of Action
Acme should address the specific challenges resulting from a poor change management process. Among them are communication breakdown, resistance, low morale, and staff turnover. The solution proposed involves a structured, proactive approach that includes enhanced exchange, a plan for the transition, and training to deal with the crisis. Acmes leadership and CEO need to be active and visible in the transition to deal with HR-related issues. They should address incompatible cultures between employees and the new sales leaders, leadership style (micro-management), poor communication, and distrust of the departments management. Communicating the transition decision, addressing employee needs (high workload, motivation, and benefits), and managing the emotional impact of the turnover on the sales staff is needed.
A plan of action based on Kotters model can help Acme through the change management process. The first step is establishing a sense of urgency by explaining the current crisis and having honest discussions throughout the corporation (Kotter, 2007). The aim is to demonstrate that the status quo is untenable to gain the employees cooperation. The second step is building a guiding coalition with adequate power to lead the transition. Its membership should include the HR director and manager to ensure the sales staff concerns are addressed. Thirdly, the guiding coalition will create a strategic vision and initiatives for the sales departments leadership transition. The general overview should give a clear direction and reflect the staffs agenda. Fourthly, extensive communications about the transformation should be made focusing on how the new leadership will improve the department. They should involve feedback through multiple forums to address staff concerns.
The fifth step is removing barriers to the leadership change at the department. The obstacles to be addressed to support the transition include the new managers who micro-manage every aspect of the sales associates, poor staff-management relations, low engagement and motivation, and transactional management style. The sixth step is generating short-term wins to maintain urgency. Once sales start to improve, high performers should be rewarded to sustain the momentum. The seventh step is consolidating the gains leveraging the short-term wins to address systemic, structural, and policy issues inconsistent with the change vision (Anson, 2011). For Acme, in-house hiring and promotions to the management level can address the crisis. The last step is embedding the change in the organizational culture by promoting positive group behavior and shared values. Leadership changes should be linked to productivity and long-term performance goals.
Completed Table 1: Expected Sales and Profit Forecast
Discussion
Kotters model will help streamline the transition at Acmes sales department and address organizational issues causing high turnover and decreased profitability. As a result, staff sales and profitability are projected to increase steadily. The eight steps of the model fall into three phases. First, a climate for the transition will be achieved by creating a shared understanding of the need to reduce turnover and increase profits. This phase will take about a month; hence, Julys sales will be lower than those in June.
Once a guiding coalition and strategic vision for the change have been developed, a turnaround is expected due to buy-in and support from associates. Additionally, in phase two (August and September), most current organizational issues, including poor communication, inadequate motivation, and complaints about transactional leadership that impact sales, will have been addressed. The final phase will entail implementing and sustaining the transition based on short-term wins (Anson, 2011). As a result, a reward system for high-performing associates, internal hiring of managers, and intrinsic motivation will become a part of Acmes organizational culture, leading to profitability gains from October through December.
Conclusion
Ineffective change management can lead to organizational issues that manifest as high turnover and decreased profitability. Kotters change model provides a structured, proactive approach to managing a transformation through eight steps. Applying it to Acme reveals the fundamental errors made in the change initiative, including a lack of a sense of urgency, guiding coalition, and vision. Additionally, obstacles to the change poor communication and resistance were not addressed. Based on Kotters model, a solution and plan of action that systemic and structural barriers are provided. Working through the steps can address the challenges; hence, sales growth is projected.
References
Anson, J. H. (2011). Leaders are the critical element in the network: Applying the KotterChange model in shaping future information systems. Army Communicator, 36(4), 20-27. Web.
Kotter, J. P. (2007). Leading change: Why transformation efforts fail. Harvard Business Review, 85(1), 96-103. Web.
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