Running Head: PORTFOLIO PROJECT 1

Portfolio Project

Jennifer A. Bylan

Managing Organizational Change and Conflict

September 25, 2011

Gail Cullen

Southwestern College Professional Studies

PORTFOLIO PROJECT 2

Cessna Aircraft Company

Cessna Aircraft Company began its aviation journey almost 85 years ago. Since the

flight of its first aircraft in 1927, Cessna has continued to build an outstanding reputation for

general aviation that remains untouched by any of its competitors. Cessna has the largest fleet of

business jets in the world today, totaling over 6,100 Citation business jets. Add to that the

number of Caravan single engine utility turboprops and single engine piston aircraft delivered,

Cessna has designed, produced and delivered more than 192,500 airplanes around the globe.

The span of Cessna aircraft worldwide is unmatched by any other original equipment

manufacturer (OEM) in the industry.

At the top of the industry peak in 2008, Cessna delivered a total of 489 Citation business

jets. They were well on track to meet their unprecedented forecasted delivery schedule of over

520 jets in 2009. In addition to the aggressive production schedule, Cessna had a backlog of

over $16 billion. This backlog assured the future production and success of Cessna for well into

the next decade. It was during this time that Cessna had its largest workforce, numbering a little

over 16,000 worldwide including service centers located both domestically and internationally.

Of those employees, approximately 12,000 were based at the production facilities in Wichita,

KS. At that time, Cessna was the largest employer in the “Air Capital”, employing more than its

local competitors. These competitors included Hawker Beechcraft, Bombardier, Spirit and

Boeing.

At that time, the mood at Cessna matched the overall temper of the country. The

economy was on a cyclical upturn that no one had ever seen. It was this booming economy that

fueled the success at Cessna. Even with the tragic World Trade Center attacks still lingering in

the minds of most Americans, the future for the country looked exceptionally hopeful. The

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feeling of unity that was the new American way was pulling inward toward the employees of

most companies, including Cessna. Employees that worked for Cessna were motivated and

rewarded for their efforts in producing to the numbers that had never been produced before. The

same unity demonstrated by the country was seen on a more micro level in the employees of

Cessna. Teamwork became the norm, with everyone working together for the “greater good.”

The relations between upper management and lower level employees were exceptionally

agreeable. The external changes that impacted the company toward the end of 2008 would ruin

these magnanimous relationships within a very short time.

Cessna’s Reactionary Change Strategy

The highs of early 2008 where crumbled by the economic recession toward the end of the

same year. While most Americans had already begun to feel the crunch of the Great Recession

already, Cessna did not particularly feel the effects until October. The financial crisis of 2008

changed the ability of corporations and individuals to get financing for large purchases,

especially business jets. The new tighter restrictions mandated on credit companies made it

more than difficult to get credit approvals to purchase Cessna’s products.

While the economy played a large role in the shift of Cessna’s outlook, there were other

factors that weighed in as well. First, there was the negative public perception of the private

aircraft. Jets were seen as lavish and excessive expenses only afforded to the very wealthy. The

public outcry was fueled by the three large auto manufacturers flying to Washington D.C. on

their private jets to ask for taxpayer money to help their companies stay afloat. The taxpayers

could not understand why, if the companies were hurting so much, could these same leaders

afford these planes. To add gas to the flame, the President spoke often of the “fat cats” using

these same private aircraft to fly off to their luxurious vacations while the people bail them out.

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The same business aircraft industry that supported many Americans now became a political

target to improve Presidential popularity. Many corporations, in order to assure that they stayed

in the good graces of the public, delayed or even cancelled plans to purchase a business jet. Not

only that, but if they were close to take delivery of a plane ordered years before, they were

walking away from it as well. They were willing to lose the millions invested to that point of

purchase rather than jeopardize public favor. Finally, many lawmakers were working on

different laws that would affect general aviation usage, including fees for flying and fuel

utilization. As if adding salt to an already gaping wound, these last measures assured that

potential business jet users would walk away from any possible chance of helping the drowning

industry.

It was at this point that Cessna underwent a metamorphosis, completely changing its

strategic direction and vision. The change was similar to a transformational change. Like the

stages of transformational change, through the years, Cessna had experienced exceptional growth

since the birth of an idea from Clyde Cessna. Cessna barely had a chance to plateau as they were

still planning for increased production rates. They planned for a steady production rate by 2010

and on. However, they never reached the steady rate before they were blindsided by the chaos

that ensued from the recession. Much like the death of a close relation, Cessna had to say

goodbye to the euphoric times and scramble to find a way to survive in the failing industry. It

was at this point that the strategy of focused continued growth became a strategy of cost cutting

and survival. This message of the dire need for change was communicated to the remaining

work force by Cessna’s CEO, Jack Pelton, via e-mail:

“Our strategy is to defend and protect our current markets while investing

in products and services to secure our future, but we can do this only if we

succeed in restructuring our processes and reducing our costs. This is not the

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responsibility only of one organization or department; it means every Cessnan

must keep a watchful eye on costs, focus on continuous improvement and quickly

and decisively eliminate processes that do not add value.” (Pelton, 2010)

Like the definition of transformational change, Cessna switched their vision quickly to a

new direction. Cost reduction became the reactionary strategic direction of the company.

Transformational change “is typified by a radical reconceptualization of the organization’s

mission, culture, critical success factors, form, and leadership.” (Jick & Peiperl, 2011, pg xxi)

As part of the initial knee-jerk reactive change, the first cost reduction action utilized by Cessna

was employee layoffs. From November 2008 until September 2010, Cessna reduced its

workforce by over one half. Cessna laid off 8,100 employees, 6,500 of which were Wichita

employees. The rest were part of a reduction of Cessna’s carbon footprint and included the

closing of its Bend, OR facility.

The employees that remain have since spent the past 3 years in constant chaos and

change. After the reduction in workforce, Cessna began to implement other changes that are

fairly typical with a transformational change. During the same time that Cessna was laying off

employees, management was also restructuring the organization to accommodate for the

decreased resources. The final restructure happened after one ultimate change – a change in

leadership. Senior leadership at Cessna’s parent company, Textron, decided to let the current

CEO go and move in another leader. This change agent has since totally shaken up the company

and left the change recipients in a state of shock. With the continued shaky foundation upon

which these employees feel that they are working under, any new introduction to change would

need to be handled by a change agent that understands their needs. These feelings mirror Jick &

Peiperl:

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“Finally, people are simply more alert to change then they used to be.

Given “streamlining,” “downsizing,: and “restructuring” – all euphemisms for

layoffs (itself a euphemism for being fired) – people are more wary of change

because of its inferred adverse consequences….employees at all levels in

organizations psychologically defend against change, and reactions can be both

more hostile and less predictable than the phrase “resistance to change” might

imply.” (Jick & Peiperl, 2011, pg xxv)

The 5,500 employees of Cessna are tired. No matter how open someone is to change, these

employee’s limits have been tested beyond normal. Everyone is on guard and is ready for some

stability. It would be very imperative, therefore, that any new initiative be managed with the

utmost care.

The Conflict within Cessna

As the employees of Cessna continued to witness co-worker after co-worker be let go,

they soon began to think of the possibilities that they could be next. No longer was there any

guarantee that lengths of employment or, in some cases outstanding performance, were going to

promise continued employment. The psychological contracts – “those unwritten commitments

made between workers and their employers” (Jick & Peipler, 2011, pg 298) – had been broken.

Employees no longer had the sense of loyalty and cooperation that was the company norm in

early 2008. Employees that had been with the company over 20+ years were being let go. It

seemed no one was immune, no matter seniority or managerial level. This is not to say that some

of the less stellar employees that were let go weren’t justified. “After all, ‘zero percent turnover

is not the thing to aim for.’ You want to retain your high performers and strong matches and

gracefully part ways with your worst performers” (Spiro, 2010)

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The effect that this culture has had on the labor force at Cessna has been detrimental for

the future of the company. As employees were let go, the employees that were left behind were

expected to pick up the workload left on the empty desks. As the company continues to ask

more and more of its employees, it is doing so while making directional changes that are

confusing and frustrating for these same employees. During a time when most of these

employees feel as though they are on personal shaky ground, the multiple changes at work are

magnified to a point that nearly all feel broken. The depth of changes that have been

implemented over the past three years has been extreme. While senior leadership might have felt

the need due to the crisis mode under which they were working, it might have been too much.

“The high risk / high reward approach is to simultaneously blitz an

organization with a large number of consistent changes to ensure maximum

impact. But there is probably a limit to how much change can be absorbed before

resistance is mobilized – actively or, possibly, passively and negatively.” (Jick &

Peiperl, 2011, pg. xxiii – xxiv)

Cessna is now at the point of mobilized resistance from a large majority of the remaining

workforce. This has been witnessed through the large number of employees that are now

voluntarily leaving. Many talented employees have abandoned the downtrodden Cessna ship

and have jumped over to a direct competitor to Cessna. Others are so disgusted with the industry

altogether, that they are making drastic moves to completely polar industries. One extremely

talented employee, for example, recently gave his resignation to move his family to Las Vegas to

become a director of purchasing for a demolition company. More and more of opportunities are

going to open up outside of general aviation before the employees within the industry are going

to feel any relief. Since the general aviation lags the economy by at least six months, Cessna

employees are more likely to seek opportunities as they open up in other industries rather than

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waiting for the “rebound” about which aviation experts keep speaking. Up to this point, Cessna

senior leadership has recognized that it is an employers’ market. One manager even told an

employee that if he didn’t like his job, that there were “plenty of other people out there that

would take it.” The leverage power of being the employer has been overplayed and broken the

trust of these employees.

“In a down economy, employees have fewer opportunities to take a job at

another company, but entrepreneurs would be remiss to take their fingers off the

pulse of the company morale simply because employees have fewer options.

Companies that don’t think about [employee retention], that basically rest on their

laurels and think ‘the economy will take care of us, where are they going to go?’

Those are the companies that, as soon as the labor market picks back up, their

turnover rates are going to go from 5 percent to 50 percent and it will happen

overnight.” (Spiro, 2010)

Cessna senior leadership needs to recognize quickly that they are going to continue to lose the

talent that has made them the leader that they are today. And without that talent, then they will

most likely lose the leader position they have enjoyed very quickly. This is especially true if that

same talent moves to competitors, giving Cessna rivals information that was once almost solely

Cessna proprietary. In order to maintain the integrity of Cessna’s competitive advantage, it

becomes necessary for one more change to be initiated. This will need to be conducted in a

manner that limits resistance but keeps in mind the current mind-set of Cessna employees.

The New Focus

As the economy begins to show some new lines of promise, Cessna needs to prepare

itself for this recovery. Recovery will happen. And it has already begun for other industries that

become more and more attractive to neglected Cessna employees.

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“Ironically this good news may not portend good times for employers. An

employee migration has begun from those businesses that reduced labor cost by

massive downsizing and squeezing every last bit of productivity out of the

survivors. As the economy improves, an employee exodus will accelerate,

especially for employers who aren’t paying attention.” (Wolfe, 2011)

As the economical forerunning industries begin to increase their labor base, it is time for Cessna

to turn its focus back onto their employees and employee retention. If this is not done quickly,

Cessna will find itself in a state of increased product demand, and limited human resources to

meet that demand. Soon, displaced aviation workers will begin to get called back. This will

include Cessna employees that were laid off. However, word of mouth will spread and Cessna

could possibly be faced with employees that do not want to come back or work for Cessna.

“For employers that have used the economic downturn and scarcity of jobs

to justify putting it to employees by freezing wages, cutting benefits, and reducing

resources, the party is about to end.  For employers who took this tactic, voluntary

turnover is almost certain to rise dramatically as their employees learn there are

new outlets for their efforts and talents. In addition, these employers likely will

have a more challenging time making new hires as word of their actions gets

around and impacts their reputations.” (Wolfe, 2011)

It is for this reason that it is time for Cessna to switch its strategy from complete cost

reduction to that of employee focus. Many companies, including Cessna, are focused on Theory

E change strategies. It is the focus of most to through resources at ways in which they can

increase shareholder value. This is especially emphasized with the lower dividend returns given

at an unsurpassed low stock market performance on Wall Street. The change strategy suggested

here is more Theory O based. This includes the opportunities of employee empowerment,

improving company culture, engaging employees, and focusing on ways in which to improve

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employees’ behavior and attitudes. “Businesses that invest in employees and have high

employee engagement have a competitive advantage in their ability to make it through a

recession. These companies will emerge from the recession stronger and healthier unlike the

companies whose workforce has been decimated.” (Lico Reis, 2011)

The challenges faced by Cessna in their current state could make any simple hint of

change cause an immediate negative wave of resistance through the company grapevine. It will

be important to plan for such barriers and address them head on as they arise. It is understood

that the changes proposed will need to be implemented with the Theory E strategies already in

work. Therefore, the strategies of employee retention will need to be implemented in such a way

as to not add costs to the company that is doing everything it can to cut expenditures. There are

many ways that Cessna can focus on employee retention without subtracting from the profit

bottom-line.

First, and most importantly, is to implement methods upon which communication lines

between employees and management can be open. By encouraging employees to open up about

what it is that is concerning them allows for trust to be rebuilt. This trust can be strengthened by

management sharing with employees their concerns. Two-way communication promotes

candidness and confidence between all parties involved. Cessna management used to facilitate

“round table” meetings where management would sit down with smaller segments of divisional

employees. It was at these meetings that employees could hear, first hand, that true state of the

business. They also had the ability to air some of their concerns and provide possible

improvements to get their jobs done. While it would be beneficial to resurrect these meetings

again, it will be vital that suggestions made by employees be seriously considered and addressed

by management. Otherwise, employee participation will diminish as they realize that

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management is only giving the impression of caring – talking the talk, but not walking the walk.

It is up to management to react to employees not just on a business level, but to connect

emotionally with them as well. The typical “lip service” that has been provided over the past

three years will no longer be accepted by these employees.

As part of communication, it is time for Cessna leadership to implement a change

strategy of employee empowerment. It is through employees’ engagement levels that

organizations can expect an increase in performance and a large reduction in employees’

probability for departure. With the addition of information sharing to empowerment, employers

can increase the likelihood that employees will return the same level of organizational

commitment that they possessed not too long before. This commitment equates to employee

retention. During the past years, Cessna employees have undergone a grieving similar to that of

the loss of a family member. This includes mourning for the loss of security and, for those

middle employees impacted by the de-layering of the company, a loss of status. “Loss of control

and certainty typically accompanies changes, but can be offset by involving individuals in

planning the changes that will affect them.” (Jick & Peiperl, 2011, pg 304) It is this

involvement that equates to empowerment. It would allow for employees to make some of their

own decisions. This includes decisions on day-to-day activities all the way input on some of the

larger strategic decisions made by senior leadership. Some of this input can be presented in a

diplomatic fashion including employee voting. This allows employees to feel that they are part

of the decision making process. “Even people who don’t agree with the final decision, the fact

that they were able to participate in the process is good. It makes it easier for them to get behind

the decision.” (Mathews, 2003)

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There are other non-monetary changes that upper management can implement that

demonstrate to employees that they are valued and respected. While it could possible take some

training for the managers, the return on investment is much greater than the expense of a couple

of training courses and training materials. Some of the management training could include

courses the methods of how to:

Be a great motivator, innovator and leader : this includes methods to inspire,

encourage employees to broaden their ideas outside of their comfort zones, and

ways to recognize employee capabilities.

Treat employees fairly and respectfully : this includes the walk behind the talk. It

includes training management methods to show employees their contributions are

valuable to the company. This also includes a manager standing behind the

commitment to the employees.

Be an effective, ethical leader : manager training in this arena includes giving

credit to employees, keep promises made to employees, and keeping negative

employee comments to themselves. (Lico Reis, 2011)

While these seem to be common sense change initiatives, there are many managers at Cessna

today that do not practice these simple procedures. With very little enlightenment and training,

management would have the ability to engage employees, thus improving the probability that

these employees will not seek other avenues.

The last initiative that should be implemented is to have Cessna management provide

alternate work schedules for its employees. This would include implementing programs for

employees to work flexible hours. Some of these hours could be hours worked from home or set

4-day work weeks. Much of the remaining work force at Cessna is the more veteran employees.

These employees are at a stage of motivation that benefits do not necessarily need to be

monetary in nature. The ability to have flexibility as to how, where and when they work

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provides employees the benefit of finding a better balance between work and home life. One

possible avenue to allow for a flexible work schedule would be to allow employees to “bank”

their time. This time could be then accumulated up to 60 days for them to take time off as they

see fit. This would give employees the ultimate in variability in their work schedule. Rules

would have to be established to assure that coverage for absent employees is maintained. These

guidelines would need to be set into place to guarantee that customer service, both internal and

external, is not compromised by the flexible scheduled employees.

Conclusion

The economic recession of 2008 pulled the rug out from under most American

companies. Cessna Aircraft Company was no exception. The classic response by all was to try

to stop the speed train of production. The focus quickly switched from “do more faster” to “do

little with less.” As part of this philosophy was an endless cutback in resources, mostly human

resources. Now is a time of recovery. With that brings a greater focus on the retention and

recruitment of the talent that was let go. It is the earlier, more than the latter that is a greater

challenge for Cessna. Employees are tired of being expected to do more with less reward or

benefit. In order to keep existing employees, it will be imperative that Cessna develop change

initiatives to keep them from leaving.

There will be some personnel that will resist any more change introduced. Cessna

workers are basically at the breaking point of saying “no more.” That is where it becomes

important that training be conducted. This training would educate management on how to

communicate the right message that this is for the benefit of the employees. If employees

understand this strategic shift is now a focus on them, and that management wants to hear what

they have to say, resistance would be lessened. This change would not happen overnight, but it

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be could be accomplished in a fairly short amount of time. If the rate at which Cessna loses

employees is decreased even by 15%, then these changes could been measured as positive.

References

Jick, T., & Peiperl, M. (2011). Managing Change: Cases and Concepts. New York, NY:

McGraw-Hills Company, Inc.

Lico Reis, R. (2011, September 20). Employee retention strategies. Retrieved from

http://www.slideshare.net/licoreis/employee-retention-strategies

Mathews, C. (2003, February 3). Giving employees a say. Inc.com, Retrieved from

http://www.inc.com/articles/2003/02/25229.html

McMillin, M. (2010, September 21). Cessna boss pelton: 700 layoffs are result of a stalled

recovery. The Wichita Eagle, p. B1. . Retrieved from:

http://www.kansas.com/2010/09/21/1503631/cessna-to-cut-700-jobs.html#ixzz1YtI4Hvpi

Morgan, L. (2010, June 4). Driving performance and retention through employee engagement.

Retrieved from

http://www.lloydmorgan.com/PDF/Driving%20Performance%20and%Retention

%20Through%20Employee%20Engagement.pdf

Spiro, J. (2010, April 7). How to improve employee retention. Inc.com, Retrieved from

http://www.inc.com/guides/2010/04/employee-retention.html

Wolfe, I. (2011, January 10). The party's over, employee turnover on the rise. Retrieved from

http://www.perfectlaborstorm.com/2011/workforce-trends/the-partys-over-employee-

turnover-on-the-rise/

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