Boeing Perrier Case Study
Boeing Perrier Case Study
Galbraith’s Star model, as described by Palmer et al (2009), identifies five key components of organizational change that must be in alignment for success. The Star model notes that strategy, structure, processes and lateral capability, reward systems, and people practices are the five necessary elements to ensure an organization can adapt and thrive during implementation of change. In the case of Boeing, they could have benefited by having a set strategy in place that specifically focused on process and people.
Strategy, according to the Star model, is the vision, direction and competitive advantage an organization has in their respective industry. Vision must be bought off on at the highest level and must be explained and pushed down throughout the organization. The direction of the organization during and after the change must be clearly defined as well. In order to maintain success in the business environment, the organization must also maintain their competitive advantage, executing strategies to continue to grow and remain viable in their business.
The structure of a business, when examined under the Star model, establishes the organization’s power and authority, reporting relationships and roles within the organization. The chain of command is the power and authority, granting the decision makers ability to determine what is best for the company and allows for the reporting relationships, or hierarchy, within the business to be defined. Clearly defined roles within an organization encourage accountability and establish a framework for teamwork and collaboration across departments.
The Star model explains processes and lateral capability as the internal and external networks, processes, teams, integrative roles and matrix structures. All of these elements directly contribute to the formal and informal activities within the organization, or the flow of information. A horizontal flow of information directly impacts the workflow and relationships within an organization, while a vertical flow of information would be more inclined to affect budgeting or planning. In the Star model the reward system and people practices are very closely related.
Rewards systems influence the motivation of an organization’s members to make employees’ goals in line with the organization’s strategic objectives. People practices influence and define employee mindsets through training and development, rotation and promotions within the organization. These two aspects of the Star model contribute to the morale of the workforce and directly impact the productivity of the organization. By investing in their team of people, a company will ensure their success is shared and appreciated by the entire organization.
The five elements that make up the Star model, clearly define the steps to setting up a strategy to prepare for and embrace organizational change. Defining the roles of each element of the organization allow for communication throughout the organization and encourage employee buy-in, thus promoting the success of the organizations need for change. Boeing definitely needed to undergo some changes to remain viable in their industry and had they had a strategy in place to counter the fears, their transition period could have been much simpler and easier to digest by the workforce.
Question #2 Numerous studies have been conducted on how implementation of organizational change impacts a business. One of these noted by Palmer et al. (2009) is the Boeing study of the change in leadership and the internal and external influences that affected the change in this organization (p. 153-54). After reviewing the Boeing case, it appears the Star model may be best suited to help identify and rectify the issues that caused turmoil at Boeing approximately ten year ago.
The Star model is described as a framework that guides the evaluation, planning and execution of an organizational change to guarantee sustainable performance improvement. The Star model is made up of five elements that direct the assessment and planning for organizational changes. The elements are strategy, structure, processes, reward systems, and people practices. Strategy is understood to be the new direction an organization is taking in response to environmental forces, which can include a set of strategic business goals and a high-level vision for achieving those goals.
For example, the main change at Boeing occurred in 1994 when the Airbus booked more orders than Boeing, which become a major competitor of Boeing. In order to improve their business, Boeing’s strategy need to change, and they needed a high level vision for improving the competitive ability. Structural changes to the organization’s design naturally fell in line with the new strategy, such as the redistribution of power. For example, the organizational chart needed to be changed.
Boeing implemented a new system that allowed their suppliers to examine stock levels and restock supplies when they dipped below a predetermined level. Changes to the processes that guided Boeing’s operations were also part of the new strategy. For Boeing, it was evident that the process of automating the production line was an obstacle, so Boeing had to seek out a new system that would help achieve the goal streamlining internal systems and centralizing their informational technology.
In response to the low employee morale, it was crucial that Boeing develop a reward system to motivate their employees and raise morale. Raising morale through motivation of the organization’s workforce assisted in buy-in of the employees’, encouraging their goals to be in line with the organization’s new objectives. In the Boeing case, before the changes were implemented, the low morale was a big problem that inhibited Boeing’s ability to remain competitive. Implementation of a reward system can aid an organization with improved employee satisfaction.
Finally, people practices were put in place to transform the employees’ roles and responsibilities to adhere to the new organizational strategy. In the Boeing case, a new system was needed and all the applicable employees who were required to learn about the new system were provided with the necessary training and education, which increased the efficiency of the company while supporting the employees morale by assuring them they were needed assets for the success of the organization.
Overall, the Star model helps identify and counteract the main problems Boeing encountered and allows for a strategy to avoid the situation Boeing ended up in. Implementation of the Star model in this case would have ensured that change initiatives at Boeing were driven by a set of strategic business objectives and would have cultivated a strong employee buy-in and an increased success rate. Perrier Question #1 Perrier has been a well-known brand for many years. However, despite their popularity in the 1980s, they have experienced declining sales since a dangerous chemical was found in a bottle in the 1990s.
Nestle acquired the Perrier brand in 1992 and has struggled to implement developmental changes to the organizations since the acquisition. The majority of people are somewhat resistant to change; however, the CGT Union, primarily responsible to the resistance in the changes in the Perrier-Nestle merger, is deeply committed to the resistance. The workers’ discomfort with uncertainty, perceived negative effects on interests, the attachment to the established culture and identity of Perrier and the lack of clarity as to what is expected has made the implementation of changes for Nestle very difficult.
Discomfort with change and uncertainty is a natural response and with limited knowledge or understanding of the reasons for the change or undefined goals, the process of changing can be difficult. Without fully understanding the strategy prompting the changes, the perceived effects on the interests of the organization and its workforce can be determined to be negative. Rumors and misinformation can quickly fuel a fire of negativity within an organization leading to increased resistance to the changes.
As with Perrier, a long-standing culture, deeply rooted in a rural area, had much to be hesitant about pending changes. Nestle is in the business of making money, while the employees of Perrier have likely been generational and the Perrier name has been part of that community for many years, Nestle needed to implement changes to grow the business. The Perrier employees had an attachment to their culture an established identity of what Perrier was as a community, not just a brand. Lastly, the lack of clarity in what will be expected of employees may have played a part in the resistance to change.
The text does not give a clear description as to whether or not the new ideas and strategies were clearly communicated to the workforce, but if not this could have contributed to their inability to conform to the new standards. Change is not always smooth and effortless, on the contrary, organizational change is generally full of lessons learned and obstacles that must be overcome. Nestle’s acquisition of Perrier was a business move to grow the Nestle family of brands and was a lifeline to the struggling Perrier brand, but part of that transition required change.
Change that the CGT union fought hard against and has caused undue hardships on the workers and managers from the top of the organization to the very bottom. Question #2 Implementation of a solid, well-planned change management strategy is key to success in execution of organizational change. In the case of Nestle and Perrier, no strategy was clearly defined; therefore when resistance occurred, there was no protocol to follow to combat that resistance. Bolman and Deal’s Four Frame model for change would fit the Perrier Company’s need for change.
While the Four Frame model deals with four elements of the organization, it’s up front recognition of the human resource component make it a great fit for Nestle and Perrier. The biggest resistance to change at Perrier is the human element. By acknowledging the need for recognizing the benefits to both parties, the corporation and the employees, the Fur Frame model will yield the most immediate results in winning over the employee half of the equation.
Addressing the political frame will also dispel rumors and define the goals of the organization throughout the workforce, including top-level managers. This will also help to alleviate the idea that Nestle is trying to undermine the current employees’ knowledge base and years of experience. According to Bolman and Deal it is not the changes that are most important, but what those changes mean to those who are affected by the changes (p. 130). References Palmer, I. , Dunford, R. , & Akin, G. (2009). Managing Organizational Change. New York, NY: McGraw-Hill/Irvine.
Subject: Strategic planning,
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 27 September 2016
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