Construction Case Study
Construction Case Study
Resistance to organisational change is a natural reaction to those who want to protect their self-interests in the organisation. However, it is clear from the case study that the employees of XYZ Construction showed little resistance to the change implemented by the incoming managing director.
The primary reason that change was welcomed was due to the former Managing Director’s management style which was not widely accepted in the organisation. Employees feared him and it was not acceptable to speak openly and honestly. Employees were aware that this behaviour was often counterproductive, and created a negative impression with the former Managing Director. As the newly appointed Managing Director had previously worked at the organisation, he was aware of certain of the issues and concerns of the employees. The experience gained from working at other companies, and the reputation he built from his career prior to returning to XYZ Construction ensured that the employees had faith in his leadership ability.
The new Managing Director’s first step in developing relationships with managers and employees was to incorporate key employees into Senior Management Team activities. His actions made it clear that he was willing to retain the current workforce and promote from within the organisation. This created a positive environment which encouraged employees to work harder and produce results Employees and managers did not fear loss of employment with the new Managing Director, but rather felt included in the decision making process.
The new Managing Director’s attitude and actions were clear and concise which addressed the problems within the organisation. His actions were collectively moving in the same direction, to achieve a clear goal of improving internal and external relations and improving the organisations performance. He correctly identified problem areas such as relationships, communication and the structure of the organisation. An incorrect diagnosis of the problems within an organisation may result in incorrect changes being implemented, which can lead the organisation into complete disarray.
The new Managing Director identified two crucial activities to be performed in conjunction with each other to enable the transformation of the organisation. The two activities identified were:
To introduce new practices and techniques to improve service to customers and thus improve the organisation’s performance.
To change the attitudes and behaviour of employees
By identifying the two activities above, the new Managing Director identified crucial steps to improve its performance. Only through improving services to customers can the overall organisation’s performance improve. A satisfied customer is likely to return and recommend the organisation to others. This is directly linked to the growth of the organisation. The new Managing Director is aware that to provide better service to customers, the employees will have to develop and learn new practices and techniques to ensure superior service quality is provided to customers.
The implementation of the second activity is critical to the success of the overall goal of improved customer relationships. The employees and managers attitudes and behaviours are to be transformed to ensure the best results are achieved. Employees and managers who were unhappy under the former Managing Director are more willing to adhere to the recommended changes. The willingness to adhere also stems from the approaches presented being feasible and there is no fear for loss of employment. The changes bring new opportunities for employees and managers to develop in their current roles and possibly grow into new roles. The potential positive outcomes as a result of these changes are a contributing factor in the lack of resistance experienced by the Managing Director.
The cost effectiveness of the changes implemented also contributed to the lack of resistance from employees. The new Managing Director introduced a
small-scale Kaizen programme. The programme was introduced with the four goals namely (Burnes, 2009, p. 162);
Improvements could be achieved on a quick low cost/no cost basis
Build manager’s confidence such that they can delegate work
The goals above are all positive resulting in the support of employees and minimises resistance to change.
An additional contributing factor was the Managing Directors’ communication regarding his commitment to this initiative. This eradicates any confusion regarding the implementation of this change, and strengthens the “buy-in” of employees and manager.
3 Introducing a new management style
This section will discuss the following statement and to what extent I agree or disagree with the statement; “the new Managing Director has not changed the culture of XYZ Construction but has merely introduced a new management style”.
3.1 Organisational Culture
To understand the statement clearly, the term organisational culture needs to be defined and understood. Organisational culture is defined as “the collection of basic assumptions, values, norms and artefacts that are shared by and influence the behaviour of an organisation’s members” (Burnes, 2009, p. 600). Organisation culture is also commonly defined as “how organisations do things” (Watkins, 2013). 3.2 Management Style
The management style of XYZ Construction changed from an autocratic management style to a participative style when the new Managing Director was appointed. The former Managing Director was feared by his colleagues, where open and honest relationships did not exist. Autocratic leadership is an extreme form of transactional leadership, characterised by a manager who makes decisions on his own without input from colleagues. This type of management style has the advantage that decisions can be made quickly and efficiently, however this approach is not suitable in all organisations and is limited in its application. The disadvantage of this approach is that it leads to high employee turnover, demotivated employees and poor performance (Unknown, 2013).
The autocratic management style of the former Managing Director was not suitable for XYZ Construction and was identified by the parent company. The parent company’s view was that the company was underperforming due to the poor management and lack of cooperation within the organisation. Once the former Managing Director retired he was replaced by a new Managing Director with the primary objective to improve the overall managerial competency and improve the performance of the organisation. The new Managing Director displayed a Participative management style, which was required for the necessary operation, culture and structure changes in the organisation. A Participative management style is characterised by managers that “use various decision procedures that allow other people some influence over the leader’s decision” (Yukl, 2013, p. 115). This is clearly displayed in the New Managing Directors action of inclusion of key employees who were not directors to participate in Senior Management Team. This action has a significant impact on relationship building within the organisation and an impact on the structure. The organisation under former management was hierarchical conscious which hinders the development of relationship and the sharing of information and ideas. The new approach in management style results in a culture change in the organisation.
I agree with the statement, with the effect that a culture change has taken place in XYZ Construction under the new Managing Director, however this was achieved by the change in the managerial style rather by changing the culture.
The new Managing Director’s participative managing style, has allowed for a culture change. Employees and managers are able to speak openly and honestly changing the norms within the organisation. The transformation is a long-term change with initiatives rolled-out in intervals. This allows for employees and managers to acquire and develop the necessary skills and characteristics at each level before moving to the next step of the transformation. The new Managing Director’s management style requires that the attitude and behaviours to be changed of both employees and managers to meet the demands of the initiatives aimed at increasing the organisation’s performance. My agreement with the statement is not significant, as the new Managing Director has brought upon a new management style however the initiatives that he proposed require a change in culture. A culture change of the employees and managers supports that new Managing Director’s management style.
4 South African context
South Africa as a country has been transforming during the post-apartheid regime. The most significant transformation that is currently taking place in organisations is the implementation of various BBBEE initiatives, one of which is to increase in females in the workplace. The BBBEE initiative focusses on reconciling indiscretions of the past and allowing for the workplace to be balanced based on race, gender and disabilities. There are many examples of organisations in South Africa where this transformation has taken place. An example of this transformation is in PPC Ltd. which appointed Ketso Gordhan as the new CEO effective 1 January 2013 (Allix, 2012). Ketso Gordhan’s extensive experience in multiple industries such as his role as director-general in the Ministry of transport, serving in the Presidency and head of private equity in FirstRand makes him extremely capable and suitable for the position. His experience in the multiple he roles he has fulfilled has provided him with knowledge as to how to bring change to an organisation. The cement industry had faced a major fall in sales during the financial recession coupled with competitive forces. These factors had started to be addressed by the former CEO with the goal of growing the business and earning a significant portion of profits through operations in Africa (Allix, 2012).
It was at this point that Ketso Gordhan was appointed with the crucial task of growing operations into Africa. The approach that was taken by Ketso Gordhan to achieve this goal is based on two key strategies of expanding business into Africa and to keep current operations in South Africa to operate efficiently (“keep the home fires burning”) (Allix, 2013). Ketso Gordhan made the goals and the direction taken very clear to ensure a collective drive from employees. His actions are the same actions taken by the newly appointed Managing Director of XYZ Construction.
Ketso Gordhan made he’s commitment to PPC Ltd. clear through his actions as well as through the acquisition of PPC Ltd. shares summing a total of R30 million (Shevel, 2014). This action indicated internally and externally he’s commitment and faith in the organisation to achieve a significant improvement in the organisation’s performance (Hasenfuss, 2013). Ketso Gordhan’s management style has brought a culture change in the organisation. The culture change has included a more hands-on approach from the CEO with constant interaction with employees and managers. This once again reinforces his ideas and motivation in the workplace.
Earlier in 2014, Ketso Gordhan reduced his salary by R1m in an effort to support the reduction of salary gap between the highest and the lowest paid employee in the organisation. He took grievances from the lowest paid employees and acted to resolve the items. He approached the top 60 managers, asking whether they would volunteer their increases to be distributed to the lowest paid employees. This approach enabled the organisation to increase 1 200 of the lowest paid employees salary by R10 000 per year and an interest related increase later in the year (Shevel, 2014).
This initiative received great response from employees, which was primarily attributed to the feeling that grievances were heard and action was taken. The initiative allowed the CEO salary to reduce from 120 times the lowest paid employee to 48 times with the clear goal to reach 40 times in future. This was achieved through the decrease in the highest paid salary and the increase in the lowest paid salaries (Shevel, 2014). The initiative has an impact external to the organisation. In South Africa which currently is facing numerous problems, one clear problem in the large economic gaps that exists. The actions of Ketso Gordhan are an encouragement to fellow JSE-listed organisation’s CEO to follow suit and attempt to reduce the large salary gaps that exist in many organisations. Collective actions will enable the country to reach goals of social development at a faster rate. Ketso Gordhan is a participative leader which is clear through his engagement with the organisation’s employees and through the initiative he has developed. He has initiated the “I Care, PPC Cares” programme coupled with the Kambuku philosophy in the organisation (PPC Ltd, 2014). This philosophy and initiative is aimed at addressing the following (PPC Ltd, 2014):
Disparity between the cost of living and salaries of lower-level employees
Substandard housing and access to housing for some employees
Effectiveness of first-line managers and team members
Individual development plans and organisational climate initiatives
Improving the perception of employees in terms of job satisfaction
The philosophy is aimed at not only improving the internal environment but also the external environment of the organisation, such as the assistance in providing housing for employees. The approach is very fitting in the South African context.
Allix, M., 2012. Ketso Gordhan to replace Paul Stuiver at PPC. [Online] Available at: http://www.bdlive.co.za/business/industrials/2012/10/11/ketso-gordhan-toreplace-paul-stuiver-at-ppc [Accessed 3 May 2014].
Allix, M., 2013. Safika deal to help PPC ‘keep the home fires burning’. [Online] Available at: http://www.bdlive.co.za/business/industrials/2013/08/08/safika-deal-to-helpppc-keep-the-home-fires-burning [Accessed 3 May 2014].
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Available at: http://www.investopedia.com/terms/k/kaizen.asp [Accessed 16 April 2014].
PPC Ltd, 2014. Our People. [Online]
Available at: http://www.ppc.co.za/about-us/our-people.aspx
[Accessed 3 May 2013].
Shevel, A., 2014. Ketso Gordhan: Laying the foundations for a fairer workplace. [Online] Available at: http://www.bdlive.co.za/business/management/2014/03/23/ketso-gordhanlaying-the-foundations-for-a-fairer-workplace [Accessed 3 May 2013].
Stroh, U., 2005. Chapter 3: Approaches to Change Management, Pretoria: University of Pretoria etd.
Unknown, 2013. Leadership Styles. [Online]
Available at: http://ofd.ncsu.edu/wp-content/uploads/2013/01/Leadership-Styles-1_11_13.pdf [Accessed 30 April 2014].
Watkins, M., 2013. What Is Organizational Culture? And Why Should We Care?. [Online] Available at: http://blogs.hbr.org/2013/05/what-is-organizational-culture/ [Accessed 30 April 2014].
Yukl, G., 2013. Leadership on Organizations. 8th ed. Essex: Pearson Education Limited.