od case study at gm

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Journal of Business Administration and Management Sciences Research Vol. 3(1), pp. 001-005, January, 2014Available online athttp://www.apexjournal.org

ISSN 2315-8727 2014 Apex Journal International

Review

Organizational change: Case study of GM(General Motor)

Muhammad Hashim*

Government college of Management Sciences Peshawar, Scholar at Preston Islamabad, Pakistan.

Accepted 24 January, 2014

The main purpose of this article is to elaborate and bring to light the core concept of the organizationchange, how it works, different factors which moves organization to change, steps for change,resistance for change, change forces, change management approaches and last an example of GeneralMotor (GM) has given that how change was taken place in the organization and what was the strategiesfor change management. Recommendations and conclusion forms the last part of the paper..Key words: Organization change, factors, resistance, GM.

ORGANIZATIONAL CHANGE: A BRIEF INTRODUCTION

The business world today are going very fast and newtechnology new method of product and new taste ofcustomer and new market trend as well as new strategiesfor best control of the organization and motivation of

employees are emerging and taking place from old to newmethods, because the customer are the kings of marketand most of the company now spending billions of amounton research and development in the organization, bykeeping in view all these things the manager and expert ofthe today business now compel to decide about thechange management in the organization, becausebusiness activities now become are globalize, and everyorganization strive to sustained the loyal customer, trainedthe employees, introduce and adopt new method ofproductions and best control the activities of theorganization, so from here the concept of changemanagement or organization change start. When the

company feel that the activities which they are doing, themanagement, the way of administration, the use oftechnology, the human resource policies, the culture of theorganization, the liking and disliking the contents andcontext of the organization by the employees, organizationstructure, group concept ,the product quality arecontinuously destroying the image and reputation of theorganization the question arises that how will change theorganization present scenario, so when the expertspecialist decides about all the situation and preparing forchanging the organization it leads to the concept of

organizational change or change management (Daviddecenzo, 2005). In the word of Coetsee, it is the ability othe management to get maximum benefits and supportchange which reduces resistant from the side o

employees and encourage acceptance and support. Theprocess of changing the activities of the organization aswell as the implementation of the procedures andtechnologies to achieve the desire objective of theorganization, in simple words to change the environment othe business organization and to achieve a high profit fromthat change, usually change management includesdifferent aspects such as control change, adaptationchange and effecting change. The final goal of the changemanagement is the long term sustainability of theorganization. Organizational change simply means tochange the activities of the organization concern it mayincludes to change the culture of the organization

technology, business process, change of employees, rulesand procedures, recruitment and selection, design of jobsmethod of appraisal, and human resource techniquesphysical environment of the organization, methods otraining and development, job skill and knowledge etcwhen the change of the concern organization isfundamental it is called organization transformationsChange management means when all the needed actionsare taken to improve the present situation for future toimplement the change strategies to get the maximumadvantage, and also see that the objectives of the


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organization is achieved or not (David and Andrzej, nodate)

Factors behind the organization change

As earlier said that organization change occur due to some

factors that factors may be external or internal, suchfactors may also bring change in the activities of theorganization and may also create problems to harder thechange process, as everyone know that change createsresistance, and this resistance may create huge problem,resistance to change is also from the old employees ormiddle level manager or people as they always maybeoppose to the change strategies due to their own way ofthing and perception regarding the change concept, thismay be due to lack of knowledge about the situation or dueto the self interest of the old employees but what ever maybe the reasons but it is the fact that change always bringresistance, now it is up to manager to decide on how they

reduce the intensity of the resistance and implement thewhole change strategies business model in theorganization (Bechard, 1969).

Change forces

The following are the main forces which bring change inthe organization. These are but may depend on theorganization environment and the context of theorganization. Change in new government policies andlegislation, Change and development in new materials,Social and culture value change, Change in national andglobal economic condition and trade policies and

regulation, Technology development, Change in customertaste and requirements, Development and innovation inmanufacturing process, New product and service designinnovation, New ideas about the products that how todeliver customer value and satisfaction, Office and factoryrelocation closer to customer, supplier, and market, natureof the workforce, technology, economic shocks,completion, social trends, and world politics (Robbins,2005).

Resistance to change

Change creates resistance to change in every

organization. It is the response from the side of the oldemployees. When change strategies have implemented inthe organization the employees quickly respond by voicingcomplaints, engaging in work slowdown, threatening to goon strike, etc. but care should be taken by the changemanagement expect to overcome the resistance

Major force for resistance to change: Resistance tochange forces categorize into two main heading.

a) Individual sources

b) Organizational sources

Individual source resistance to change includes thefollowing: Habit, security, selective information processingeconomic factors, fear of the unknown.

Organizational sources for resistance to change includethe following: Limited focus on change, organizationstructural inertia, threat to expertise, threat to establishedpower relationship, group inertia, threat to establishedresource allocation.

Overcoming to resistance to change

Overcoming to resistance to change means to use thetactics to reduce the intensity of the resistance to changeThe change agents have the ability to use these tactics.These are under the following as:

a) Implementing change fairly.b) Selection people who accept changec) Education and communicationd) Participatione) Building support and commitmentf) Manipulation and cooptation

Organizational change managing approaches

When change management taken place in the organiza-tion, the question is how best one can manage changeThere are four approaches to change management

Lewins classify three step models of change processkotters eight step plan, action research, and organizationadevelopment.

According to the lewins model (Figure 1) the organizationmust follow three steps for successful changemanagement, that is.

Unfreezing the status quo, helps in changing to overcomethe pressure of both individual resistance and groupconformity. Movement desire end state is a changeprocess that transforms the organization from the statusquo to a desired end state. And refreezing the new changeto make it permanent, stabilizing a change intervention by

balancing driving and restraining forces (Robbins, 2005)

Kotters eight step plan

To more elaborate the Lewins model Kotters have developeight steps which can be adopted to implement changeAccording to Stephen (2005), these are:

1) Establish a sense of urgency that why a change isneeded.2) Form enough power to lead the change


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Figure 1.Lewins three steps change model.

3) Create a new vision to direct the change and strategiesfor achieving the vision4) Vision communication in organization5) Empower others to act on vision by removing barriers6) Plan for, create short term reward to move theorganization toward the new vision7) Continues improvement and make necessaryadjustment in new programs.

8) Reinforce the change by demonstrating the relationshipbetween new behaviors.

Action research

Action research is also a change management approach inwhich systematically data to collected and than change istaken according to indicated data.

Organizational development

Organizational development plays an important role in thechange management no change be best implemented without organizational development, it can be define as acollection of planned change interventions, built onhumanistic democratic values, that seek to improve theorganizational effectiveness and employees workperformance and well being (Robbins).

Organizational development techniques

The change agent considers the following technique tobring organizational development. Sensitivity training,team building, process consultation, survey feed back,

appreciative inquiry and inter group development. Theseare the important technique which should adopt by changespecialist to bring effective development in the organiza-tion, because organizational development is vital fororganizational change (French and Bell, 1995; Stephen,2005).

CHANGE MANAGEMENT AT GENERAL MOTORS (GM)

General motors were established in 1908 at that time the

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company was the sole car maker dealer in the region, e.gMichigan, first it was a holding Buick company, till 1920 iwas becoming the world largest motor manufacturingcompany, the company got a tremendous success in timeof Alfred Salon, due to his leadership the company wereproducing new style and design car every year, and he has

given the such concept to the company. The other brand othe company is Chevrolet, Pontiac, Buick, Cadillac. Thesewere the different brand cars which were producing bycompany that time, and this way there was no othecompetitor to compete in the company different cars. Buwith emerge of the japans automakers the company feltthreatened, specially the emerging of Toyota Japan, whowas with great extent disturb the profitability of the GMspecially in the north American market. In 2001 the salegraph of the GM was in decline trend, because the Toyotahave captured the market, this way the GM received loanform American government and Canadian government tosupport the company in that crises period. During 2009 thecompany had file a bankruptcy and has to close severabrand and sold out to china base company. Now thecompany again got his position in market by restructureand making change in the company. Now the company iscontinuing business in the core brands in America such asChevrolet, GMC, Buick, and Cadillac (Muoio, 2007)

Reason and forces for change of GM

The reason and forces behind the change in generamotors were discussed subsequently.

Forces for change

The main forces which affect the general motors includethe following:

External forces: In external forces the GM which wasgreatly affect by the Japans bases company, Toyota wasthe emerge competitors in time, the north America is stilthe biggest market place for GM where the company soldout in recent year round about 2.9 million and the nearescompetitor is Toyota and china base companies, thesecompetitors with great extent disturbed the total profitabilityof the general motors, and the second external forces

which the company faced a huge problem was financiacrises which with great extent collapse the cash flow of thecompany.

Internal forces: The another forces for change to GM wasthe high wages cost to employees as the company waspaying $74 per hour as compared to Toyota $44 per hourbecause GM was an agreement with trade union. And theGM has to run the plant with minimum 80% capacitywhether it need or not, these things play an important rolein the bankruptcy of the company.


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Types of changes

By keeping in view the aforementioned discussed thecompany ultimate decide to bring or make change in thecompany, so the company decide to bring change on somearea of the business, these were included, structural

change, cost change, process change and cultural change

Steps in the change management process of GeneralMotors

While going on change management the GM, the companytook some steps to adopt change these are the mostrecent change which the company have taken.

Cost cutting: The first steps which was taken by the GM isabout cost cutting, the company have reduce its cost ofsome brands to maintain the profit level, such as theSaturn and hammer, by keeping the other company cost.Similarly the company also cut pay of employees whichwas the major problem to company. The company hasachieved the target of cost cutting up to 15 billion in recentyear.

Cultural change: The general motor also change theculture of the company, the company changed, the GMremove it automotive product board, and automotivestrategy up to 8 man board decision making team whichwas responsible to report directly to CEO. The mainobjective of such change is to speed up the day to daydecision making process. The GM also changes theculture to improve the efficiency of the employees and

make accountable and responsible one.

Problems to change process

In change management process, the GM faced a variety ofproblems such as:

Problems in cultural change

The cultural plan was based on top down approach, whichignored totally the involvement of the employees as

compared to other companies, some suggest the companyhave not down top approach, in which employees feelsatisfaction, so this regard the company empowered theemployees by introducing in couture the down topapproach. Rather than merely telling to employees whatthey do.

Problem with cost cutting

As the cost cutting have an important place in the change

management but it was faces great problem form theagreement of trade union, as the company was anagreement with not lowering the pay of the employees andmaintain the capacity level.

Results of the change process

As earlier discuss GM have adopted changed previouslyalso but these changes are recent changes which wasadopt by the company in the year 2009. The results of thechanges were under the following:

Result of cost cutting

The result of cost cutting of GM seems from itsemployment figure of 1998 to 2009, it was reduce from226000 to 101000 workers, and now the company isconcentrating on sale rather than to further cut off, and alsothe company is deciding to reduce the worked force of thefactory from 60000 to 40000. And it will certainly lead tocost saving to the company. (Driving change at GeneraMotor, 2005; General Motor taking swift cost cutting action2008).

Result of cultural change

The general motors have also achieved good result fromcultural change, and the employees now becoming awareabout the responsibility and accountability, as well as thecompany also empowered the employees to give better

productivity.

Effectiveness of the change strategies

As earlier discussed, the general motors have adopted twomain strategies for change management, recently one iscost cutting strategy for change management and other iscultural change management strategy, the companyadopted two other change strategies but these are themost recent, by developing such strategies the companyhave achieve its market shares in north America again, asthe company was threatened by the emerging o

competitors in the automakers industry but the companydecide to bring change and now the company again inbetter position and again has maintain the brand of coreproducts, beside of these the company also achieve thecost benefits by implementing these change strategies inthe company (Driving change at General Motor, 2005)

RECOMMENDATIONS

How the GMs have made change in the company fo


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smooth running the company and increased in sale volumeand maintains market shares around the world have beenseen but it is not enough changes which was brought bythe general motors, the company need more attention andadopt several others changes to cope with the situationand to maintain the position of the business and compete

in the international market. The following are somesuggested recommendation for the general motor that itcan pursue to reach the turn arounds goal and increase insale and market shares.

Production of the right and fuel efficientautomobiles/poor product lineup

As it was the criticism in the brand of the GM product orcars that these are not fuel inefficient automobiles. Thecompany was in top sale in 1990 when the oil was at cheapprice but when the price raised in the international marketthe company brand have lost it reputation in the generalmarket, the company must produce such automobileswhich have fuel efficient, the company must also focus onthe battery volt cars and hybrid one. So it will maintain thecompany sale increasing as well as the loyalty of thecustomer and market shares.

Public perception improving

The general motor must improve the product quality andcustomer services. Because the public perception is mostimportant thing, if the company improve the publicperception than the public certainly believe that the money

of theirs not going in the wrong way, and they will great fullin the eyes of the general public

CONCLUSION

After facing the intense competition and bankruptcy thegeneral motor now improve again the company activities,and still the world largest car manufacturer company, thecompany have got changes recently which have alsoimproved the working condition of the company, but thecompany must see the weakness and public perception toincrease the sale and market shares.

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REFERENCES

Bechard, R. (1969). Organization development: Strategiesand models, Addison Wesley.

David, B., Andrzej, H. (2005) Organizational behavior, 3rdedition, prentice Hall.

David decenzo (2005). Human resource management, 8thedition, WileyDriving change at General Motor (2005). Online retrieved

15 December 2009www.cioleadershipnotes.com/p/gm/htm

French, W.L., Bell C.H. (1995). Organization developmentBehavioral science interventions for organizationaimprovement, 5th edition, Prentice Hall International.

General Motor taking swift cost cutting action (2008)Online retrieved 15 December 2009 fromdailymarkets.com/stock/2008/11/24/General

motor-taking swift cost- action cutting.Muoio, A. (2007). GM has new model for change, online

retrieved, 15 December 2009 from fastcompany.com/magazine/41/gmhtm.

Stephen P. Robbins, Judge, Seema Sanghi, (2005)Organizational behavior, 13th edition, prentice Hall.

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