Restructuring strategy

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  • 1.Strategic change leadershipFiona GraetzBowater School of Management & Marketing, Deakin University, MelbourneCampus, Burwood, Victoria, AustraliaContext of the studyAgainst a backdrop of increasingglobalisation, deregulation, the rapid pace oftechnological innovation, a growingknowledge workforce, and shifting social anddemographic trends, few would dispute thatthe primary task of management today is theleadership of organisational change(Jackson, 1997; Stace and Dunphy, 1996;Kanter et al., 1992; Limerick and Cunnington,1993; Naisbitt and Aburdene, 1990; Ulrich andWiersema, 1989).Key words in the lexicon of the newlyemerging organisational model includenovelty, quality, flexibility, adaptability,speed, and experimentation. In view of theserequirements, the traditional organisationalstructure, with its hierarchical, top-downapproach, centralised control andhistorically entrenched values of stabilityand security, is an anachronism. Theimpetus now is towards flatter, more``flexible and agile organisational forms(Bahrami, 1992, p. 33) in which theboundaries are ``fluid and permeable(Useem and Kochan, 1992; Kanter et al., 1992).These changes have triggered a radicalshift in the role of senior managers from thetraditional authoritarian, command andcontrol style to a more open, participativemanagement style. With the emphasis nowon cooperation, collaboration andcommunication, managers need to hone acompletely different range of leadershipskills. Traditionally, managers focused onthe technical or operational dimension ofmanagement. However, to be effectiveleaders in an environment of change andflux, a second, interpersonal dimensionbecomes critical (Goleman, 1998; Javidan,1995). This suggests that change leadershipinvolves two roles:1 instrumental; and2 charismaticintegrating operational know-how withstrong interpersonal skills. While the tworoles perform distinctive functions, theycomplement and strengthen each other.Charismatic leadership is personalisedleadership and is underpinned by stronginterpersonal skills. It is crucial forenvisaging, empowering, and energisingfollowers. The key elements of instrumentalleadership are organisational design, controland reward which ``involves managingenvironments to create conditions thatmotivate desired behaviour (Nadler andTushman, 1990, p. 85), putting in place theenabling mechanisms that reinforce therequired new values way of working. Keydimensions of the charismatic andinstrumental roles include:. Challenging the status quo and creating a``readiness for change (Kouzes andPosner, 1995; Stata, 1992; Kotter, 1995;Tichy and Devanna, 1990).. Inspiring a shared vision and personallycommunicating the future direction withclear and honest answers to the what,why, and how questions. Not only must allemployees in the organisation ``find thegoal emotionally compelling, they mustalso clearly understand how they willcontribute to achieving that goal(Jackson, 1997; Hamel and Prahalad, 1994).. Creating additional sponsors at differentlevels of the organisation, involving asmany people as possible to buildcommitment.. Enabling others to act: by energising,empowering, building teams, providingtangible support with appropriateresources, and putting in place theappropriate systems and structures.. Symbolic and substantive actions: usingrewards and recognition to gain support;recognising short-term gains or successstories to emphasise recognition of thenew behaviours; and taking decisiveThe current issue and full text archive of this journal is available athttp://www.emerald-library.com[ 550 ]Management Decision38/8 [2000] 550562# MCB University Press[ISSN 0025-1747]KeywordsStrategic management,Leadership, Distributed control,Instrumentalism,Organizational changeAbstractAgainst a backdrop of increasingglobalisation, deregulation, andthe rapid pace of technologicalinnovation, the primary task ofmanagement today is theleadership of organisationalchange. Seeks to examine the roleof leadership in managing thechallenge of deliberate large-scalechange and whether it is possibleto pinpoint factors that are criticalto leading change effectively. Alsoinvestigates the view thateffective change leadershipinvolves instrumental andcharismatic roles, integratingoperational know-how with stronginterpersonal skills. Uses aqualitative, case study approach,involving three multinationalcompanies operating in Australia.Cross-case analysis indicates thateffective change leadersrecognise the importance ofblending the charismatic andinstrumental dimensions ofchange leadership. The ability toconciliate and balance the tworoles depends primarily onwhether a leader possessescertain qualities and attributesrequired for effective changeleadership. Strong interpersonalskills permeate these key changeleadership qualities and attributesand provide the nexus betweenthe charismatic and instrumentalroles.

2. action in identifying and addressingresistance (Jackson, 1997; Useem andKochan, 1992; Kotter, 1995; Bertsch andWilliams, 1994; Kanter et al., 1992;Johnson, 1992, 1990).. Modelling the way: enacting the newbehaviours in deeds as well as in words;personally demonstrating seniormanagement involvement andcommitment. The involvement of seniormanagement is seen as fundamental to thesuccess of the transformation process(Kotter, 1995; Stata, 1992; Stace andDunphy, 1996; Kanter et al., 1992; Nadleret al., 1995; Bertsch and Williams, 1994;Blumenthal and Haspeslagh, 1994).. With the help of key stakeholders,communicating the message repeatedlyup, down and across the organisation toensure the momentum and enthusiasm forchange is not diminished over time.Communication by top management isseen as a powerful lever in gainingcommitment and building consensus torequired change. Successfulimplementation occurs in companieswhere executives ``walk the talk,teaching new behaviours by example(Kouzes and Posner, 1995; Kotter, 1995;Kanter et al., 1992; Hambrick andCannella, 1989).A qualitative, case study approach was usedto examine the change leadership style atthree organisations Pilkington Australasia,Ford Plastics, and Ericsson Australia against the ``critical roles outlined aboveand consider how they contributed to theoutcome of the change process. A series ofsemi-structured interviews using open-endedquestions was conducted on-site and ranfrom one to two hours. Interview transcriptswere forwarded to all participants forcomment. Follow-up calls and secondinterviews were conducted with someparticipants. Further data were obtainedfrom documents made available to theresearcher; published literature; andin-house publications.Pilkington AustralasiaPilkington Australasias core business wasthe manufacture, secondary processing anddistribution of flat and safety glass, coatedglass mirror and ceramically decorated glass.The bulk of its products were sold to thedomestic market, its main customers beingthe automotive, building and constructionindustries.From the beginning of the 1990s, Pilkingtonfound itself operating in an increasinglyuncertain, hostile environment. The newpriorities were increased flexibility andresponsiveness to customer demands whichPilkingtons autocratically controlleddivisional structure could not provide. Withthe collapse of its client industries as a resultof the recession in the early 1990s, Pilkingtonmoved to consolidate its position and focuson its core business of manufacturing,secondary processing and wholesaledistribution. The companys immediateresponse to the dramatic changes in itsexternal environment, therefore, was toembark on large-scale restructuring anddownsizing in a bid to increase operationalefficiencies and reduce costs.Between 1992 and 1994, the companysprogramme of change evolved fromimproving operations to redefining businessstrategy and culture. The externalappointment of a new general manager,human resources (HR), and the developmentof a new vision for ``world class glass,symbolised the true beginning of corporatetransformation at Pilkington. Managementsought to fulfil the new commitment to``excellence in customer service to beachieved through product quality, speed ofdelivery and flexibility in meeting customerdemands through operationalimprovements. It began by dismantling theold hierarchical structure, along with its top-down management style, redefining skillsand responsibilities, and redesigning workprocesses. With the support and commitmentof the management executive, the companymoved to establish team-based work groupsand aimed to develop a participativemanagement style within an open, learningenvironment.Creating a capacity for changePilkington Australasias senior managementhad no need to manufacture any sense ofurgency when its business nose-dived withthe collapse of its three major clientindustries as a result of the recession in 1990.Initially, however, while the traditionalcommand-and-control bureaucracy was stillfirmly in place, the potency of this crisis as amajor vehicle for communicating the needfor change was unrealised. As a result, whilethe workforce was well aware that thecompany was experiencing difficulties, it wasunprepared for the initial merging ofbusinesses and rationalising of the workforcewhich followed.All this changed with the appointment in1992 of a new general manager, HR. Hisappointment confirmed that organisationalchange was a top priority on the managementagenda and was a public admission by senior[ 551 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550562 3. management of the difficulties confrontingPilkington. The symbolic ``new blood alsohelped rekindle a sense of urgency byimmediately moving to dismantle the oldorder with its hierarchically focuseddivisional structure and autocraticmentality.Creating a vision and setting the directionThe new general manager, HR, aware of theimportance of communicating a clearlyarticulated, meaningful message, met withthe management executive to develop a newvision for ``world cla

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