In the modern constant changes business environment, company needs to change constantly to remain competitive in the market. If not, the company will be facing survival risk. There are no mercy and exception for Cox’s Container Company (‘CCC’). CCC faced increasing competitions over the past 5 years and profits are in declining trends due to reduce in margins. Harold Cox was clueless on how to rectify the problems. He has delegated the task to Erica Wilson to review CCC’s operations and oversee organization changes. Under her control and management, new central administration department was formed to implement budgeting system and company-wide information system. First time in the history of CCC, Wilson recruited external appointees to hold managerial post in the new central administration department. However, no one seemed very keen on the new system and encountered strong resistance from Abdul Aziz, manager of production department who incharged 2/3 of CCC’s total staffs. After so many years since CCC was established, Harold Cox had done not much changes to CCC’s structure and culture.
CCC still practicing simple structure with flat hierarchy and decision-making is highly centralized in the hand of the Cox family. This allows Cox to run the operations flexibly, direct communication to avoid message being misinterpreted and wrongly manipulated, wide span of control as all managers reporting to him and expedites the decision-making process without going through layers of people. However, simple structure is more suitable for start-up or small firms for flexibility, control early growth and developments whereas centralization discourage innovation and no creativity. As CCC grows larger in size, it also more difficult for Cox to control and coordinate them effectively. According to General Sir Iain Hamilton once said ‘No one brain cans effectively control more than 6 or 7 other brains’. Moreover, when information and data are overloaded, he may not has sufficient times to handle and analyze to make full use out of it.
Culture and authority of CCC is power culture and traditional authority.
With Harold, there are addition of charismatic authority found on his supports to ethnic minorities. Power culture (Handy, 1993) depends on a central power source, few rules, informal system and decision are based on a balance of power rather than logic whereas traditional authority are the ability and right to rule is being passed down, i.e. CCC being passed down to Cox family member. Similarity of those are being very dependent to a single person and capability of that person are very much to determine the direction and successfulness of the company. In the history, many of the family businesses that stagnated and were eventually annexed in Britain after the Second World War were power cultures that had die in the centre. Hence, CCC might has going concern issues if successor of Harold is not as good as him and not supportive towards ethnic minorities.
Besides retirement of Harold, majority of staffs in production department have worked for CCC for more than 10 years will have similar timing of retirement. This might be a risk of CCC facing shortage of production staffs in the future and affect productivity. Internal promotions have advantages of saving in times and costs of induction program for new staffs, boost morale and motivate staffs to perform. But, all senior positions in the production department have been filled through promotion of shop floor employees with no proper evaluation on competency and professionalism will affect company performance. It is not only no new ideas being introduced, it might be challenges for them to adapt to new technologies and working practices, i.e. new system implemented by Erica. Most importantly, senior manager are the person that make decision on behalf of the company and the effect that decision outcomes have on the lives of all organization members (Henry Mintzberg, 1989 cited in Huczynski and Buchanan, 2013).
Another areas to pay attention under Cox management will be informal group formed due to empowerment for each functional department as form of motivation to improve performance. As Aziz being the manager of production department and ethnic minorities relying much on Aziz to safeguard their interests and benefits. This dependent relationship created Aziz as transactional leader. A leader who treats relationships with followers in terms of an exchange, giving followers (ethnic minorities), what they want (safeguard their interest and benefits) in return for what the leader desires (Aziz had easily established his identity and enjoying autonomy within the production department) following prescribed tasks to pursue established goals. Indirectly, Aziz has the capability to influence his staffs’s behaviour and contribute to mutual need satisfaction.
In the other hand, in the opinion of Aziz, there are informal group being formed under John Straw to run the whole company on his own interest without knowing the complexities of production which was a formal group created consciously by management to carry out a specific task (implementing new system) and accomplish CCC’s goal (improve CCC’s operations). According to Homans (1951 cited in Huczynski and Buchanan, 2013), informal group formed according to their self-interest which may not work together to achieve the common goal. As Wilson was given the authority to make changes to CCC’s operations. She has her own management style to run the whole process of changes. She is an autoratic leader by accomplished the task entirely on her own and conclusion drawn based on her own judgement with no consultation and input from anyone.
Autocratic leadership will be good when time is short but lack of creativity. She also moved CCC’s structure towards mechanistic structure with standardization, many rules and little autonomy, i.e. budgeting system to replace the rather informal system and requires all departments to inform the central administration department twice daily basis of work in progress. Different structures give rise to different culture (Handy, 1993). Thus, culture also change from power culture to role culture. Role culture also emphasize on the importance of rules, procedures and its operation are driven by logic and rationality. Authority of CCC will be legitimate authority that based on formal and written rules. According to Weber (1947 cited in Huczynski and Buchanan, 2013), an organization based on legitimate authority would be more effecient than one based on either traditional or charismatic authority. This was because its continuity was related to formal structure and the position with it, rather than to a particular person who might leave or die.
Since Wilson is the sole decision maker on what and which area needed for change to improve CCC’s operations. She had conclusion drawn based on her own judgement and interpretation from her personal experience, expectation and belief with no feedback obtained. Feedback will be important and enable for her to complete the survey more holistic. According to John Mezias and William Starbuck (2003 cited in Huczynski and Buchanan, 2013), management perceptions are often wrong due to selection of information that fits their expectations and pay less attention to information that does not. Generally, group decision are better than individual decision. It will be more advisable to involve relevant CCC’s staffs like Aziz contributing their diverse skills, knowledge and experience in production process for Wilson to understand the situation clearly to make better decisions and more alternatives to solve problem faced by CCC. In addition, staffs particularly Aziz felt recognition and respect through participation, understand the decision better and wider acceptance of decision make by Wilson.
Likewise, if CCC’s staffs knew that Harold is more interested in finding issues that fit into causing declined in profits of CCC rather than finding out the facts with no further verification of the accuracy and basis of the report and conclusion drawn as Harold also unsure how to proceed. In addition, many people believe that making the right decision late is the same as making the wrong decision as Harold is anxious to improve the profitability of CCC. CCC’s staffs will be demoralized and demotivited, then CCC is infected with destructive cynicism.
Wilson also has not informing staffs on the needs, benefits and objectives of implementing the new systems. As no clear direction and understanding the need of change, staffs were not very keen on the new system and the degree of new system would affect their current working practices. They might also felt that they are being push out of their comfort zone and found it stressful and frustrating to cope with the new system. As a result, readiness for change from staffs will be low and leads to high in resistance to change. With no support and collaboration from staffs these make implementation more difficult. Wilson has had making it worst with the survey was being conducted in some secrecy way created negative atmosphere in the company.
The intention of Wilson to recruit John Straw, Eric Long and Simon Pedder to hold managerial post in the new central administration department is to have new blood to bring in innovation and creativity. With their experienced in previous company, they will be able to contribute an effective operational and cost controls for CCC. However, due to background and experience of them have no relevancy in manufacturing or production, it may not be convincing enough for staffs to trust and follow their instruction. Later encountered strong resistance from Aziz which has worked more than 10 years in production line and very defensive of production department has no issues on getting orders out on times and achieved zero defects. They may also have different culture and shared different values as other staffs.
Communication climate (Jack Gibb, 1961 cited in Huczynski and Buchanan, 2013) exercised by Cox and Wilson was one way and closed communication climate where information was withheld, no sharing of the finding of the survey, strategies and problem faced by CCC have make no awareness to staffs. Staffs might felts discrimination, distrust and doubtful on self worthiness after long services of contribution to CCC. Misunderstanding easily created between staffs and management might led to minimum staffs engagement and supports to comply with changes implementation and making it more difficult and may not align with CCC’s objectives. During the process of implementing the new system in CCC, there are no top management briefing conducted which is considered one of the best way to encourage staff engagement especially it is from Cox as he is regarded highly within ethnic minorities. With his traditional and charismatic authority, he is able to influence staffs behavior and engagement to comply with the changes implementation. 5
Once there are no effective communication internally within CCC and due to differentiation in culture, perception, politic and staff’s legitimate interests. Conflict between staffs is inevitable as each attempts pursue its own objectives. A company needs conflicts as a positive forces for managers to think, critisicism for self refection and innovation for effective performance. However, if conflict do not handle properly between Aziz and Straw team under Wilson new management. As perception of Aziz towards implementation of formal system and tight reporting is form of threatenning their’s interest and change of structure also changes the balance of power and autonomy possed by Aziz. It will be turn out to be dysfunctional conflict and hinders company performance as Aziz has the ability to influence behavior of 2/3 of CCC’s total staffs on level of productivity. If failure in resolving the conflict, CCC will have survival issue in the long run due to deteriote of company performance.
Hence, changes and continuing to change within internally is a must for CCC to survive in the long run to cope with complexity and be responsive to environment uncertainty. Do nothing will not be an alternative and choice for CCC. As globalisation and expansion of CCC, simple structure with flat hierachy and power culture may not be as responsive to opportunities and challenges in the long run.
Second alternative will be remain with Wilson’s coercive change strategy to implement the change even though without support of Aziz. According to Doug Stace and Dexter Dunphy (2001, cited in Huczynski and Buchanan, 2013) , where organizational survival depends on rapid and strategic change and short of time, dictatorial transformation is appropriate. In the later or appropriate stage, Wilson may implement technology into producing containers using the techniques of mass production to standardised quality of products, elimination of waste and reduction costs which will go well with mechanistics structure. Mass production has characterics of boredom of repetitive of works and low morale led to high levels of absenteeism and complaints.
The solution to boredom were job rotation and job enlargement in term of installation of machine, enhancement, integration and inspection. Third alternative of change management strategy will be the role of the change agent. This approach will need involvement of top senior management who are credible and acceptable. In this case, Harold Cox will be the most appropriate and suitable person. He with his power and charismatic leadership, he is able to influence and motivate ethnic minorities to support and cooperate with him for fact finding and proceed with the changes make to CCC’s operations. He may also appoint professional consultants to carry out the investigation or combination of both.
The first alternative is not preferred due to successfulness and survival of CCC very dependent on one person whereas third alternative also not the most preferred but still workable but will be time consuming. If involving external consultant then Harold needs to manage the external consultant of their own commercial interest as well as costing issues. As there are no correct way or one way solution, the most preferred will be the second alternative. The second alternative will be able to achieve the company objective and long term goal as explained above. For making the transitional more harmony and smooth, Wilson should be more sensitive on culture differences. She should educate staffs with training and practice open two ways communication as well as get more participation and encourage more involvement of staffs in carrying out the survey and implementation. Besides implementing rewards system will be able to motive staffs to performance and aligh with company to achieve common goal.
According to Meaney and Wilson (2009 cited in Huczynski and Buchanan, 2013), the successful rate of planned change programmes is less than 40% and that estimate may be optimistic, and 2/3 fail to achieve their objectives (Gardini et al., 2001 cited in Huczynski and Buchanan, 2013). In order to meet company’s objective and successful with change. The following plan of action is recommaned by John Kotter (2007 cited in Huczynski and Buchanan, 2013).
1. Create urgency
Wilson should inform all staffs on problem faced by CCC with evidence. Developed scenarios and consequences, if no full cooperations and supports from staffs.
2. Form a powerful coalition
Wilson should involved Aziz to form a coalition, for him to lead the change on his production department to achieve maximum results.
3. A clear vision
• A clear vision of change must be developed by Wilson with achievable startegies and realities plans to inspire all staffs to change, to align with company’s goals.
4. Effective communication
• Vision must be communicable and communicating in two way and openly, this can be done through compulsory training to ensure familiarity and responsive from staffs.
5. Remove obstacle
• Harold and Wilson should have an honest dialogue with Aziz to problemsolved resistance from him and seek for collaboration. If not, backup plan must be in-hand for Aziz leaving for change to be implemented successfully.
6. Motivation and rewards
• Carry out change in stages to avoid unbearable failure. Once short term milestone has achieved, recognized and rewards those involved as motivation to more forwards.
• Periodic assessment needed to ascertain improvement, enhancement and amendment in placed to cope with changes from environment and market to achieve company’s goal.
8. No anchoring
• Even though tradition is a powerful force but management should walk their talk to ensure new changes and culture are planted. Making it happen and making stick.
The above should take placed in sequence and staffs need time to adopt and familiarised with the new of structure and culture. Thus, Wilson should understand that changes can only be carried out in stages and not to rush in order to change effectively and efficiently.
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