research paper

Proceedings of the 34th Hawaii International Conference on System Sciences - 2001During the nineties an increasingly competitive world drove the use of business process re-engineering (Hamer, Champy, 1993) and business restructuring to improve profitability and return on capital employed. Substantial, and in some cases, traumatic restructuring and downsizing took place in many organisations to reduce costs and management layers. The challenge was to structure a leaner, more customer focused and flexible organisation to meet the competitive challenges in the global economy. This paper covers a period of 2 years (from project initiation to post-implementation review) in the nineties when Mobil Oil Australia (MOA) was completely restructured and re-engineered. The entire

business divisions. The International Division, responsible for the Marketing and Refining business conducted outside the USA, was organised into regional management companies that coordinated the country-based businesses in their geographic region. See Figure 1.

MOA was a significant asset of Mobil Corporation with its head office in Melbourne and 2,500 people employed at 2 refineries, various manufacturing facilities, plants and offices throughout the country. MOA operated in all states and territories of Australia with a market share of about 20% (a market leader in some niche products but second or third overall behind the market leader).

Change Management

Ian MLecturer, School of Business Syst

Email: Ian.Martin@i

Dr YenSenior Lecturer, School of Business

Email: Yen.Ping.Che

Abstract To remain competitive many businesses in the 1990s have undertaken business process reengineering projects reorganising one or more parts of their operations. This paper results from a case study of the enterprise-wide review of Mobil Oil Australia Limited to increase profitability and change the culture of the organisation. A radical (to the Oil Industry) business unit organisation structure was designed, populated and implemented. The project was an immediate financial success and reenergized the company. Income after tax was six times higher after the reorganisation than in the previous year notwithstanding a continuing recession and the uncertainty caused by the restructuring. Return on capital employed increased from 2% to 7%. Lessons can be learnt from the way the project was initiated and developed, the deployment of the project management structure and improvement methodology, the approach to the implementation of the new structure and the findings of the post implementation review.

1. Introduction 0-7695-0981-9/01 $

at Mobil Oil Australia

artin ems, Monash University. 3800. Australia. nfotech.monash.edu.au

Cheung Systems, Monash University.3800. Australia. [email protected]

organisation was reviewed with dramatic results. A totally new organisation structure was designed to improve the focus on profit, customers and the core business, and then populated from the top down.

The paper first describes the multinational structure of the Mobil Corporation, within which the Australian Company operated, and indicates the driving forces behind the review. The initiation of the project and the preparatory steps are outlined including the management structure used to conduct the review. The natural work team (NWT) process, which involved the commitment of a significant number of key employees to the project, is then described in some detail. The implementation of the enterprise-wide changes that resulted from the recommendations of the review and the impact of those changes follow. Finally the review conducted 12 months after the changes were implemented, a discussion of the critical success factors and the conclusions that can be drawn from the case study complete the paper.

2. Corporate structure

The Mobil Corporation (until its recent merger with Exxon) was a large multinational corporation with 4 or 5 line of 10.00 (c) 2001 IEEE 1

Proceedings of the 34th Hawaii International Conference on System Sciences - 2001

Figure 1: Corporate structure

3. Motivation for the review

The size of MOA had increased significantly in the late eighties following the acquisition of Esso Australia Limiteds Marketing and Refining assets which boosted MOAs market share by 50%. Results since the acquisition had been very poor despite the economies of scale flowing from the merged business and successful integration of the two entities. The low profits were very disappointing and, although Australia was in recession, the cost of doing business (expense/capital) was escalating. Competitors were also implementing initiatives to improve their positions. It was therefore decided in conjunction with the parent company to undertake a company-wide review focused on improved financial performance to capitalize on the acquisition. While it was felt that the MOA organisation was well staffed and individuals did their jobs well, success in terms of return on capital employed (ROCE) was not being achieved. This analysis suggested process problems

were inhibiting the achievement of competitive returns. According to Porter and Miller's value chain model [Porter & Miller, 1985], the internal operations in a company can be analysed to increase its efficiency, effectiveness and competitiveness. MOA decided to review its processes based on similar reviews in other key markets.

4. Project management

The project was divided in phases as follows: Initiation Diagnosis Process reengineering Organisation design Implementation Post implementation review

Region

Mobil Oil Australia

Region Region

Mobil Corporation (US Based)

Exploration & Production

Division

Marketing &Refining Division

ChDi

International Division

(Outside USA)

Mobil South Mobil Europe M

0-7695-0981-9/01 $10emical vision

Other Divisions

obil Africa

.00 (c) 2001 IEEE 2


5. Initiation

The first step was the appointment of a senior Australian Mobil executive, then resident in the USA and working for Mobil Corporation, to drive the review. The executive had an in-depth understanding of the business and had previously held a number of key positions in Australia. However, for the most recent five years he had worked outside Australia. He began by reviewing relevant material from Australia including organisation charts, competitors organisations, competitive data, current studies and a managing of change paper. A team charged with implementing SAP (Systems, Applications and Products in Data Processing) in the Australian and New Zealand businesses had produced the paper. He then developed an action plan for the first two or three months of the assignment and a set of objectives that were agreed with the Managing Director of MOA and the Parent Company. When the executive returned to Australia the Managing Director announced the appointment in a bulletin addressed to all employees encouraging them to share your ideas and contribute to this crucial review.

The terms of reference for the review were a company-wide, zero based, cross-functional study, resourced modestly (to start) with a clear time horizon, responsive to other major changes impacting the organisation and targeted to the expectation of performance in the medium term. The emphasis was on the review of existing business processes/practices highlighting strengths and weaknesses. Employees would be used to review processes and facilitate change while the use of consultants was to be controlled. The project was named Phoenix to symbolise corporate rebirth, transformation and revitalisation with the objective to fundamentally transform the company. Detailed objectives were as follows: Financial: a net improvement of 3+% in ROCE

(over the current year) with the aim to become the low cost producer in the industry.

Behaviour: customer focused, internally as well as externally, and profit-driven.

Cultural: a team oriented, motivated, and committed workforce.

Enhancing shareholder value was to become the focal point for all key programs. Excluded from the review were those areas of the company where the jobs were performed by represented employees i.e. covered by industrial awards.

6. Diagnosis

The executive driving the review optimised experience from organisation reviews that were being conducted in 0-7695-0981-9/01 $1other parts of the corporation. Studies were underway in Europe, the USA and New Zealand, for example, and the opportunity was taken to learn from the successes and failures of those projects in developing a plan for the review of the Australian business. The benefits of real changes were recognized. Leadership and the early planning/analysis/diagnostic phase were critical. Quality resources and the right mix of people, including consultants, were required. The consulting company and the lead consultant were selected from a short list of consulting firms that had been used for similar studies in other parts of the Mobil Corporation. At the same time the executive traveled to the various offices and plants in Australia listening to employees to gauge the mood of the organisation, its strengths and weaknesses. He developed a very tight but manageable time line for the project, carefully screened potential consultants and seconded another four senior executives from different parts of the MOA organisation (Marketing, Logistics, Manufacturing and Administration) to help drive the project in a full-time venture team.

The venture team worked with the consultants to diagnose the major process issues that needed to be analysed further by NWTs. The NWT process used cross-functional employee teams to redesign and simplify business activities and workflow. The venture team interviewed and selected a consultant to support each team. The consultants were selected from the one firm but individual consultants were appointed based on their ability to contribute to the particular teams issue/objective. The venture team wrote charters for the natural work teams and nominated employees to populate each team and a part-time analysis group to support the NWT process. The roles and responsibilities of the executive leadership team, venture team, NWTs, consultants and the analysis team were all defined and documented.

Employee team members were nominated from different departments and locations in Australia and at different levels in the company, on the basis that they were able to contribute knowledge and ideas, were involved in some way in the issue, and had a stake in the outcome. They were junior enough to know the detail of the business but senior enough to understand the big picture. They needed the ability to design creative solutions and the potential to provide credibility to the process. A shop floor representative and a distributor were also nominated as it was felt they could make a significant contribution to the customer service team process.

Each work team was given a two-page charter by the venture team indicating the issue and a broad objective. The teams were also assigned a consultant as a full-time facilitator and one or two executive champions; i.e. senior executives to provide guidance 0.00 (c) 2001 IEEE 3


and champion the teams recommendations to the venture team. The following issues were assigned to the natural work teams. Business Planning and Optimisation. Management Information. Sales Force Effectiveness. Customer Service Improvement. Alignment of Marketing Staff Support and Services

(General Administration) Engineering, Technical, Environmental and

Occupational Health and Safety Support Services. Conservation of Expenditure Logistics/Operations Effectiveness

A small office building in Melbourne was used to accommodate all the project teams. Each team had a room with a personal computer. The offices were imaginatively decorated and signed with the project logo to encourage a creative and positive atmosphere. Team members were assigned full-time to the project for eight to nine weeks. A computer expert with access to the companys mainframe data was onsite to rapidly service requests for data and dedicated secretarial services were provided.

A meeting at the project location attended by all natural work team members, the venture team, the analysis team and the executive leadership team, kicked off the project. The Managing Director opened the meeting and the Planning Director made the key address outlining the financial results since the acquisition of Esso Australia Ltd. Many of those present were unaware of how poor the results had been in the recent years (despite the Esso acquisition) and the presentation served to emphasise the need for action to correct the situation. The presence of the executive leadership team and the size of the gathering demonstrated the management commitment to change.

Teams were empowered by an undertaking from the Managing Director to implement 90% of the recommendations thrown up by the teams. Employees in the NWTs felt that they could have a significant impact on the ways things were done. They were excited and proud to be selected to undertake the review. Their voices would be heard and their ideas would not be lost to an unwillingness of management to change. This realisation generated energy and enthusiasm, and the teams went to work with a very positive approach. The NWT process was carefully structured with specific objectives and charters, set milestones and completion schedules, and deliverables clearly defined.

7. Process reengineering

An aggressive natural work team program was initiated. Week 1: team training and the planning of activities. The training sessions included the importance of a shareholder 0-7695-0981-9/01 $10value focus, team building, work process redesign, and breakthrough thinking especially breaking paradigms. Week 2: interviews and data collection. Weeks 3 & 4: issues confirmation and documenting the AS-IS case. Charting was used to display current processes. Weeks 5 & 6: data analysis, including benchmarking and the design of alternatives (TO-BE case). Week 7: alternatives were tested with the organisation. Week 8: recommendations were finalised and presented. Week 9: implementation steps were developed and documented. The cross-functional, multi-disciplinary nature of the teams meant a great deal of learning took place in documenting the AS-IS models. Employees from different functions and levels in the organisation, who had never worked together, had the opportunity to understand complete processes across the different functions. The level of process understanding increased markedly even for experienced employees with a solid knowledge of a particular process prior to the project. Teams went through the normal forming, storming, norming and performing stages to a greater or lesser extent depending on the complexity of the issue and the composition of the teams. One team took a conference room at a local hotel for a day looking for a change of environment to help them through the teams storming stage. Management was extensively involved in the NWT process. The executive champions visited the teams regularly to keep up with teams progress and provide guidance as necessary. See Figure 2.

Members of the venture team were available daily for consultation and met weekly with the teams. Weekly integration meetings of a representative from each team facilitated coordination between teams and cross-fertilisation. Areas of overlap were identified and allocated to particular teams by mutual agreement. The consultants from each team also met together weekly to discuss progress with the lead consultant and identify ways they could further facilitate the project. Two social/mixer nights were also held to facilitate communications between teams

The major issues that emerged from the natural work team process were: Lack of profit and customer focus throughout the

organisation. Poor communication to employees of the profit

position. Many functional barriers to an integrated operation

(silo effect). A very complex and unresponsive set of processes that

did not meet the customer/organisation needs - a simple business made complex.

.00 (c) 2001 IEEE 4

Proceedings of the 34th Hawaii International Conference on System Sciences - 2001 Ineffective strategic planning and optimising. Ineffective product forecasting. Poor management of expenditures (inadequate

ownership and control). Unresponsive/inadequate customer service.

Communications with the broader organisation were developed in a number of formal and informal ways. Since 60 or 70 key people were involved in the project, informal communication back to their usual workplaces took place automatically. The venture team issued formal bulletins, normally signed by the Managing Director, during the project and open days were held in the various workplaces around the country. At the open days natural work team members displayed the AS-IS charts their team had produced. Local employees were invited to view the charts, discuss issues with the team members and suggest ways that improvements could be made to the processes displayed. Post-it notes were available for employees to write suggestions or corrections to processes and attach them to the displays. These open days had the effect of opening the review to the broader organisation, involving interested employees in the process and in effect brainstorming ideas for improvement with the workforce. The open days also, to some extent, served to ameliorate

As TO-BE recommendations were developed, they were documented, discussed with the team champions and presented to the venture team. When the teams and the team champions were satisfied with the recommendations the venture team arranged for all the natural work teams to make formal and fully documented presentations direct to the executive leadership team over two days in the MOA board room. Subsequently a further (ninth) natural work team was put together to review the Information Systems process. The team, again, was cross-functional and included a venture team member. After a two-month study its documented recommendations were separately presented to the executive leadership team.

8. Organisation design

The venture team proposed a new organisation design (and a second alternative) consistent with the projects customer focused and profit driven objectives. They recommended that the company move from a functional structure to business units with profit and ROCE objectives. The business units would be supported by service units and charge the line units for their services. The proposed structure represented a radical departure from the typical functional organisation used in Australia

Figure 2 Project management

Ineffective management information characterised by excessive reporting.

ExecutiveLeadership T

Venture Tea(Steering Comm

AnalysisTeam

Ongoing SAP Implementation

Ongoing Award Restructuring

Activities 0-7695-0981-9/01 $10the fear, uncertainty and doubt that an organisational review engenders in employees.

eam

m ittee)

Consultant(s)

Natural Work Teams

NWT Champions .00 (c) 2001 IEEE 5

Proceedings of the 34th Hawaii International Conference on System Sciences - 2001and other parts of Mobil (and the oil industry) throughout the world, where profit objectives and measurement were

Figure 3: Business unit organisation

The venture team also recommended delayering the organisation by taking an average of two management levels out of the structure and increasing spans of control typically by between two and four positions. This recommendation reduced middle management but had very little impact on shop floor or field personnel. See Figure 4.

The venture team leader and the lead consultant discussed the plans to obtain functional and parent company endorsement of the major changes proposed with the Managing Director and an action plan to obtain that endorsement was agreed. An implementation plan and an interim organisation, to action the changes, was recommended. Following endorsement of the new organisation design, senior executives visited each workplace location in Australia, to provide documented details of the new structure and explain the rationale behind the reorganisation to all employees, via a coordinated series of seminars and presentations.

The venture team consolidated and integrated the recommendations identified by each team including the savings that could be harvested immediately (quick-hits and early actions). Expense budgets for the next year were cut in a broad range of categories by 10%, other categories by 5%. The entertainment budget was reduced by 60%. The travel budget was cut by 20%. TV advertising was reduced significantly. Mobile phones, which had proliferated and were costing $1million per year, were recalled. Other significant, and in some cases

Chairman & Managing Directo

Fuels Business Unit

Lubes Business Unit

LBus

Pacific Islands Business Unit

0-7695-0981-9/01 $1at the company level only. The two-sales/marketing business units proposed were products based. See Figure 3.

symbolic, budget reductions were implemented to promote a leaner culture

9. Implementation

The Managing Director, Venture Team Leader and Employee Relations Director (Implementation Committee) managed the implementation. The consultants did not participate in this project phase. An employee issues natural work team, to facilitate staffing of the new organisation structure, was appointed. An action work team was also formed to implement the 10 expense quick-hits and 14 early actions, which were not organisation dependent, to harvest the savings as soon as possible. The review had identified potential improvements to cash flow that exceeded the original project objectives by 100% in the first and second years, and by almost 50% in subsequent years.

There were many employee issues to be addressed in implementing the new structure and culture. The selection/staffing process was a cascading process where the level 2 and level 3 managers (level 1 being the Managing Director) were selected first, followed by level 4, level 5, etc. As each level was populated there was a written communication to the organisation announcing the appointments. This gradual staffing process took three months to complete and was probably the time of greatest stress for employees.

r

ogistics iness Unit

Manufacturing Business Unit

Support Units

0.00 (c) 2001 IEEE 6


Level 6

Level 7 Figure 4: Layer comparison - bulk fuels delivery

Those people who did not receive a position in the new organisation became redundant. A number of redundancies occurred at senior levels of the company and some senior executives were transferred to other parts of the corporation outside Australia. The reduction of levels in the organisation and the change to a business unit structure caused redundancies at managerial levels over and above the absolute number of positions that were eliminated. All the new jobs had to be documented and evaluated. Employees had the option of taking a lower level position at the same salary in the new organisation, when an equivalent position was not available, or of accepting a redundancy package. The underlying basis of selection was the matching of competencies, knowledge and skills required by a new position versus the individual. In the appointment process the opportunity was taken, where appropriate, to transfer 50 unionized positions to staff reducing exposure to industrial action in key areas such as distribution, order taking, and product testing. 17 contractors were also transferred to the

permanent workforce. The implementation committee met twice a week to review and audit organisational (staffing levels, work process improvements and behavioural change), profit and customer service performance.

Significant effort went into the redundancy issues such as cross-functional ranking of employees in similar jobs, the position of graduate hires recently recruited, the case for voluntary redundancies and the need for stay bonuses for people in transition positions. Outplacement contracts, communications with expatriates, the media and employees in the new organisation, the collection and distribution of 100+ company cars, relocations and office space considerations were some of the many logistical issues that had to be addressed.

10. Impact of changes

The project was an immediate financial success and re-energised the whole company. Income after tax was more

(State)

Supervisor Transport

Drivers

Previous

Level 1

Level 2

Level 3

Level 4

Level 5

Chairman & Managing Director

Director Marketing

General Manager Operations

Manager Terminal Operations

Manager Terminal

0-7695-0981-9/01 $10 Proposed

Chairman & Managing Director

Director Fuels Business Unit

Manager Distribution & Customer Service

Manager Distribution (State)

Drivers

.00 (c) 2001 IEEE 7

Proceedings of the 34th Hawaii International Conference on System Sciences - 2001than six times higher than in the previous year notwithstanding the continuing recession and the uncertainty caused by the restructuring. Return on capital employed increased from 2% to 7%. Expense savings from the quick-hits totaled $27.5 million in the first year. 275 positions, about 20% of the non-represented workforce, were removed from the organisation. One-time redundancy, outplacement and relocation costs were in the order of $20 million. The Managing Director declared the outcome an outstanding success in a bulletin to all employees thanking them for their efforts and providing details of the turnaround.

The new organisation was more profit-driven and customer-focussed. The business units were self-sufficient to the extent that was practical and aligned to the core business. The support units were focused on providing value to the business units and charged out their services. This charge-out philosophy reduced costs, as the line units became more discerning in their use of what were previously regarded as free services. The organisation was balanced better with direct support staff part of the business units and headquarters staff significantly reduced. The business unit leaders got their new teams together to build teamwork and develop goals. The flatter structure, the use of contiguous floor space to house the new units and the location of the business unit leaders (who were directors of MOA) with their units, improved communications and alignment. Business unit leaders were very visible to their organisations in head office and in the field. The new units were more inclusive of represented employees and those employees were more aligned to the business.

The allocation of all costs to the business units produced some surprises. Sections of the business, which were previously thought to be profitable, were found to be making losses. Plans to address these situations were immediately put into action. Each business unit took responsibility for its profit performance and reported its results and plans to the Managing Director and the senior management of MOA each month. The business units were able to focus even more on their processes, costs, customers and profits once they were living entities. They separately undertook further reviews to further improve processes, profitability and customer focus.

The employees, who had worked in the natural work teams, became messengers to the organisation of the need for change and the opportunity that Phoenix presented. The reorganisation, although stressful, galvanized the employees in the new structure generating action and releasing pent-up energy. New terms came into the companys lexicon: low value work, AS-IS, TO-BE, core business, shareholder value, ROCE, etc. The project provided news ways of understanding the economics of the business; focusing on shareholder value and benchmarking best practice. New ways of thinking were

0-7695-0981-9/01 $1developed such as problem solving using cross-functional teams, process mapping, breakthrough thinking and step changes.

The experience of working closely together in a hothouse atmosphere of change created a bond of shared experiences between the participants. This bond and the learning garnered during the project lasted for many years. The close, cross-business relationships developed were exploited many times during subsequent projects. Empowered employees attacked issues enthusiastically and readily formed teams to solve problems and make improvements. The solid working relationships developed during the process opened up communications throughout the company. This leap in the effectiveness of the informal network was a significant side benefit of the NWT process. This cooperative behavior was a long way from the behavior previously exhibited in the functional silos.

11. Post implementation review

With the restructuring completed and success in terms of profitability achieved, the focus was on improving the organisational climate as a prerequisite to consistent long-term results. MOA invited the lead consultant back the following year to review the change efforts. His charter was to conduct a post audit of Project Phoenix results, including an assessment of the current operating climate.

The evaluation was conducted through a series of structured interviews with a sample of staff and selected customers. 114 people were interviewed (some in focus groups) at representative locations around Australia, in 85 interviews over eight days. The majority of employees interviewed were at or below level 4 in the new organisation. Benchmarking of best practice in change management was undertaken based on the consulting firms experience and interviews. Senior managers, who requested it, were given feedback on issues specific to their business units or management style. The consultants report was presented at an off-site senior management meeting at which he critiqued progress against the original project objectives, assessed the organisational climate, identified priority issues to be addressed and coached the management team on required behavioral changes.

The consultant reported that the results of Phoenix were mixed. He scored the implementation of profit strategies at 90 out of 100, customer strategies at 40-60 out of a 100, while employee strategies were given low marks. The company was half way to its original ROCE target and he suggested that the balance of earnings improvement would come from continuous improvement provided the customer and employee strategies were implemented effectively. A number of key

0.00 (c) 2001 IEEE 8

Proceedings of the 34th Hawaii International Conference on System Sciences - 2001issues were uncovered, which in aggregate were impeding the implementation of continuous improvement. Issues that related to customer service included a lack of understanding of customer needs, poor business processes and dysfunctional teamwork. Issues relating to employees were the lack of a clear vision post Phoenix, poor communication and poor career/personal development and reward/recognition systems. He proposed a number of initiatives to improve customer service, people management and the companys management style, which later became the subject of further substantial work in the vision, mission, customer and people areas.

12. Critical success factors

12.1. Project champion

The venture-team leader spent one full year on the project. He was the first person appointed to the task, developed the project objectives, learnt from other change management projects and made the initial contact with consultants. He then listened to the organisation at large and conducted the critical diagnostic phase. His ability to listen to different ideas, recall and integrate those ideas, organise the diverse groups of people assigned to the project, and communicate effectively with the managing director and the executive leadership team, was crucial to the success of a very sensitive and complex project. His personal qualities, local and international experience, and working relationships with the key players were important, as was his ability to forge the multiplicity of input he received from the project participants, the organisation and the consultants into a viable action plan.

12.2. Management commitment

Management commitment to change was demonstrated by the visible participation in the project of the managing director, by the full-time participation of senior executives as members of the venture team and as part-time executive champions, and by the secondment of so many key employees to the NWT process full-time. The managing director had the foresight to commit in advance to change initiated by the NWT teams, and play a non-directive role during the project. He made available the substantial resources needed for the project, particularly in terms of office space, support and people.

12.3. Project management

The project was managed with clear goals and deliverables. The project management structure itself evolved and changed as the project progressed. It started with one senior executive reporting to the Managing

0-7695-0981-9/01 $10.Director, evolved into a 5-person venture team, which fleshed out the project, nominated the NWT members and recruited consultants to work with the NWTs. The venture team then coordinated the NWTs and the analysis team. When the NWT process was complete and the venture team recommendations were accepted, a high-level 3-person implementation committee, including the managing director and the venture team leader, populated the new permanent organisation. Finally the business/support unit organisation replaced the old functional organisation.

12.4. Resources

The Phoenix project out of pocket costs were relatively inexpensive, about $2 million (excluding redundancy and outplacement costs), but involved a significant commitment of key people. There was a 7-member executive leadership team, a 5-member venture team, 17 executive champions, 9 natural work teams staffed by over 60 people, and a 5-member analysis team (part-time). 460 employees were interviewed and 63 customers contacted (20 participated in focus groups). 140 validation meetings were held and 54 companies were benchmarked. The benchmarking expanded knowledge and provided insights into alternative methods and processes.

12.5. Natural work team process

The empowered NWT process lifted awareness in the whole organisation of the need to improve and change. The cross-functional, multi-disciplinary teams brought broad perspective and an in-depth knowledge base to the table. The process encouraged innovation and breakthrough thinking, and ensured objective and integrated recommendations. The teams improved business processes, reduced duplication, bureaucracy and low value activities. Communication, horizontally and vertically, was opened up and the organisation was refocused on the need to rebuild shareholder value. The process significantly reduced operating costs immediately and provided detailed recommendations forming the basis of major organisational change. The participation of large numbers of key employees in the process provided a launching pad for the message of change to permeate throughout the organisation.

12.6. Use of consultants

Experienced consultants with industry knowledge were important in the facilitation of the overall process. They provided the skill and team-based training, and a methodology to document findings and recommendations. The lead consultant was very valuable in consulting at the 00 (c) 2001 IEEE 9

Proceedings of the 34th Hawaii International Conference on System Sciences - 2001top levels of the organisation, locally and with the Mobil Corporation, particularly in the sensitive area of management behaviour.

12.7. Timeframe

The MOA project was managed on a tight timeline and took 12 months from the appointment of the senior executive, who led the project, to the full implementation of the new organisation. Three months were spent on the diagnostic phase, three months on process reengineering via the NWTs, three months on the organisation design and three months implementing/populating the new structure. The post implementation review was undertaken after another 12 months.

12.8. Lessons learnt

The nine weeks most NWTs worked together was found to be the minimum time needed while more complex issues required 10-12 weeks. The determinant of NWT size was the complexity and breadth of issues. 5 member teams were sufficient for more straightforward issues, but 7-9 member teams were required for bigger issues. The criteria for NWT member selection needed to be closely followed to get the right people into teams. Involvement of a broader group of people would have been productive i.e. more represented employees, more customers and parent company support staff. Communication to the larger organisation should have been started earlier, involved the NWT members sooner, and been more frequent.

13. Conclusion

Organisation-wide projects involving change management are major undertakings but very worthwhile exercises if effectively led, carefully planned with clear goals, developed in an inclusive manner, and implemented with the necessary focus on the people issues. Effective communication to influential employees of the threat to survival brought about by low profits can create the necessary motivation and resolve to face up to the often-painful changes, such as restructuring and job losses, that an organisation must implement to improve its competitive position.

One of the most sited reasons why many reengineering projects do not achieve the level of success the organisation expects is because they did not deal with the issue of organisation culture change. People have to execute the plans, perform the activities, and provide the interface to the customer. The project will not succeed if a plan of how to change the behavior of people is not

0-7695-0981-9/01 $10included in the improvement process. Empowered NWTs and innovative communications to the broader organisation in this case study involved the employees in the change process and promoted ownership of the changes proposed. Carefully selected team members, including represented employees, drawn from different parts and levels in the company, provided the necessary cross-functional and multi-disciplined input. Despite these efforts employee strategies were given low marks in the post implementation review demonstrating the difficulty of maintaining effective employee strategies during a period of major change and job losses.

A change management project, like other major projects, requires a project management structure, which may need to evolve and change itself during the project. The early planning and development phases do not require many resources. However, the preliminary diagnosis of issues is critical to the effective deployment of the bulk of the resources. While it may be difficult to release a large number of key people from their normal jobs they are crucial to the project success. The investment of key people and resources in a facilitated change process can pay out very quickly, develop a culture of change and result in an immediate performance leap.

Organisation change projects need to be completed as quickly as possible to minimize the disruption and negative impacts they cause. At the same time the major issues of process, organisation and people changes require that the project be progressed with due regard for the significant and sensitive matters that are being addressed. The staffing of a new organisation is a time consuming, stressful and exacting process. The method of selection needs to be fair to all employees, move as quickly as possible and be effectively communicated. It also has to safeguard the company from legal challenges. A comprehensive redundancy and outplacement program is required to support people who do not obtain a position in the new structure. Early consideration of the timeline and people issues as well as frequent communications to the wider organisation are fundamental to moderate the uncertainty that is inevitably created throughout the company during a period of major change.

References

[1] Hammer M. and Champy J. (1993), "Reengineering the Corporation: A manifesto for business revolution", Harper Collins Publishers, New York. [2] Porter M E, and Miller V E (1985), "How information gives you competitive advantage", Harvard Business Review, July-August. .00 (c) 2001 IEEE 10

research paper

Documents