Sample HR Management Essay Paper on Organizational Development and Change

Organization Development and Change

Introduction

Organizational development is a system-wide use of behavioural knowledge to improve, plan, and reinforce processes, strategies and structures that a company needs in order to realize effectiveness. Globalisation of technological and economic processes has seen companies come under increased external and internal forces to remain change their current organisational processes in order to remain competitive (Worley, Rothwell & Sullivan, 2016).  Organizational change can be as a result of various external and internal factors influencing a company. They include: competition, change in technology, economic shocks, and knowledge management, among others. Change in technology bring with it the need to change organization structures, and jobs. Technological change is an ever evolving phenomenon. As a company gears itself to embrace new technology, soon enough, another newer technology emerges, and it has to align itself to also adopt this new technology, or risk perishing (Cummings & Worley, 2012). Since not all companies are in a position to afford such constant change, many end up lagging behind.  An effective organizational Development Change (ODC) intervention endeavors to link a company’s strategies by aligning organizational goals with the individuals in such a company. One of the companies that has successfully implemented ODC is General Electric (GE). In this case, Jack Welch, the former CEO of GE was instrumental in the implementation of various types of changes at the firm when he was at the helm.

ODC factors at General Electric

When Jack Welch was appointed the CEO of GE in 1981, the company was faced with various internal and external factors that acted as a big hindrance to its quest for success and in particular, the realization of a competitive advantage in its various markets of operation. To begin with, there was high level of controlling bureaucracy at the firm and this was a hindrance to the firm’s quest for productivity. More importantly, this bureaucracy was a hindrance to transfer of ideas, decisions and people (Grant, 2008). This was an old fashioned and destructive practice that stifled on the firm’s competitiveness. Bureaucracy stifles innovative business strategies as firms do not respond quickly to change as they should. Conversely, companies that have managed to successfully remove bureaucratic impediments in their organizational structures are responsive and flexible to change. 

Another hindrance to GE’s competitiveness when Jack Welch assumed leadership was that the company was characterized by a communication gap between lower management and top management (Burnes & Cooke, 2012). This lack of sharing information meant that it became harder to define and clarify GE’s objectives and goals. Bridging this communication gap is vital for improving the pace at which ideas and decisions are implemented, thus contributing towards the realization of a competitive advantage (Worley & Mohrman, 2015).  Advancement in technology was yet another factor that was instrumental in the decision by Jack Welch to institute organizational change at the company. The growth and adoption of technology by competitors meant that GE also had embrace the latest technology in its operations to remain competitive (Kotabe & Helsen, 2009). This was necessary in order to add agility to GE.

Implementing ODC at GE

One of the strategies adopted by Jack Welch in order to make GE competitive was to restructure the management and processes at the company. This move was informed by the need to minimize defects or errors. Towards this end, the company adopted the ‘six sigma’ quality program. This is a quality control program that was first designed by Motorola in 1986 with the goal of minimizing manufacturing defects and realizing cycle-time improvements (Grant, 2008). Over the years, the program has transformed into a general philosophy of business management whose focus is on enhancing customer retention, fulfilling customer requirements, and sustaining and improving business services and products. A restructuring strategy adopted by GE under the Six-Sigma program was to close down redundant facilities as a means of cutting down on production costs. Additionally, the company relocated some of its production facilities to markets with cheaper labor (Yang, 2012). This was out of a realization that process defects had led to a build-up of waste and this resulted in slowed down operations, stifled potential and lost revenue. Consequently, the adoption of Six Sigma was intended to streamline the firm’s operations, improve its productivity and efficiency, and eliminate waste. To implement Six Sigma, it was necessary to train GE employees on the use of its methodologies in the workplace. The company also hired mentors to aid in implementation of Six Sigma and conduct staff trainings. Strong leadership was also required in order to ensure effective implementation of Six Sigma. In the case of GE, Six Sigma largely proved to be a major success because they had an able and visionary leader in Jack Welch.

It was also necessary to transform GE’s human resource as a means of improving the company’s performance and development. Even when Welch took over the management of the company, there was already in place a well-defined and functional system of human resource development and appraisals (Zaldivar, 2016). This was retained as it would encourage development of managerial talent. Nonetheless, it was deemed necessary to encourage enhanced performance and risk taking, and this necessitated the adoption of powerful incentives. Consequently, the bonus system at GE was redesigned to also encompass the middle management. Also, the top management introduced stock options that were hitherto the preserve of the top echelon of management to also include technical and managerial employees. Eliminating organizational boundaries has been shown to entrench diversity into the organization, enhance learning and facilitate transfer of best practices. This enhanced openness improves external learning and is hence another basis for achieving a competitive advantage.

At times, it becomes necessary to restructure a firm’s business portfolio in order to enhance its profitability and competitiveness. By focusing on a few business portfolios, a business becomes attractive in terms of growth and profitability. GE therefore had to let go of its non-core business functions such as mining, consumer electronic and semiconductors. Additionally, GE acquired several major firms like NBC and RCA.  The acquired firms would then be integrated into GE’s systems and structures. Some were a disaster, while others proved successful, such as the acquisition of firms in insurance consumer credit and leasing. The change in GE’s portfolio also led to a change in the company’s product-market face, thereby resulting in enhanced growth potential. Nonetheless, achieving the desired potential demanded a revamping of management style and management systems to realize ambition and drive.  a change of structure at GE was thus necessary.

Welch instituted an organizational restructuring of GE that led to the elimination of various administrative positions and layers of management. GE sectors were disbanded and their leaders now had to report directly to Welch.  the CEO also eliminated additional organization layers both within the businesses and at headquarters. The process of decision making was also relegated to individual operational units as opposed to the top management. 

GE’s quest for business acquisition was also driven by the need to exploit business opportunities as a result of globalization by taking advantage of enhanced learning opportunities and economies of scale. Thanks to global diversity, GE was able to deal with economic challenges that affected specific regions or countries, thereby exploiting opportunities brought about by economic downturns. For instance, while most of Asia was affected by an economic crisis in 1997-98, GE went about pursuing acquisition opportunities in the region. GE was more concerned in investing in the future as opposed to the present. In this way, acquiring business opportunity during an economic downturn enabled GE to restructure such businesses and to take advantage of the firm’s diverse knowledge base, human resource expertise, and financial resources to become competitive once more.

Conclusion

In sum, firms frequently encounter various internal and external factors in the form of technological development, globalization and economic downturns, which suppresses their competitiveness, growth and development. This is turn stifles their competitive advantage. GE was faced with such a predicament before Jack Welch became the CEO in 1981. He proceeded to restructure the company’s organizational structure to involve junior employees in decision making. The company also sold off non-core businesses and acquired other firms to increase its growth potential. Adoption of Six Sigma was also instrumental in reducing operational errors, while elimination of organizational boundaries added diversity in GE’s operations. However, it was not always smooth sailing for the company, as some business that were acquired never really picked up and had to be sold at a loss. Nevertheless, having a visionary leader in jack was instrumental in the realization of ODC.

References

Burnes, B., & Cooke, B. (2012). Review Article: The past, present and future of organization

development: Taking the long view. Human Relations, 65(11),1395-1429. Retrieved

from https://globaltransforming.files.wordpress.com/2017/03/the-past-present-and

future-od.pdf

Cummings, T.G., & Worley, C.G. (2014). Organization Development and Change. Stamford,

Mass.: Cengage Learning. Retrieved from

https://books.google.co.ke/books?id=IuXKAgAAQBAJ&printsec=frontcover&dq=Or

ganization+Development+and+Change&hl=en&sa=X&ved=0ahUKEwjB6q22rK_

AhVDthQKHXGlAqQQ6AEIJjAA#v=onepage&q=Organization%20Development

20and%20Change&f=false

Grant, R.M. (2008). Jack Welch and the General Electric Management System. In

Contemporary Strategy Analysis (6th edn). Hoboken, New Jersey: Blackwell

Publishing. Retrieved from

http://www.blackwellpublishing.com/content/GrantContemporaryStrategyAnalysis/6

h_Edition/case_resources/CTAC17.pdf

Kotabe, M., & Helsen, K. (2009). The SAGE Handbook of International Marketing.

New York: Sage.  Retrieved from

https://books.google.co.ke/books?id=6a6BsYTls3wC&pg=PA242&lpg=PA242&dq

Focusing+on+Core+Competencies+and+Divestment&source=bl&ots=mOyehXn7v

&sig=2AG7vuO0mrs6P_qmSLR1ebS6z4E&hl=en&sa=X&ved=0ahUKEwi4z7220

XAhVEzRQKHaWxA3oQ6AEIWTAJ#v=onepage&q=Focusing%20on%20Core%2

Competencies%20and%20Divestment&f=false

Worley, C.G., & Mohrman, S.A. (2015). A new view of organization development and

change competencies: The engage and learn model. Retrieved from

http://ceoprogram.usc.edu/downloads/papers/pt2/(15)_A_New_View_of_OD_&_Ch

nge_2015.pdf

Worley, C., Rothwell, W., & Sullivan, R. (2016).  Practicing organization development. New

York: John Wiley & Sons. Retrieved from

books.google.co.ke/books?id=23VXCQAAQBAJ&printsec=frontcover&dq=Practici

g+organization+development+3rd+edition&hl=en&sa=X&ved=0ahUKEwixps2Sra

XAhUGxxQKHQcVBJcQ6AEIMTAC#v=onepage&q=Practicing%20organization

20development%203rd%20edition&f=false

Yang, C. (2012). The Integration of TQM and Six-Sigma. Retrieved from

http://cdn.intechopen.com/pdfs/38091/InTech

The_integration_of_tqm_and_six_sigma.pdf

Zaldivar, S.M. (2016). The Global OD Practitioner. Retrieved from http://inspired

inc.com/wp-content/uploads/2015/06/GlobalODPractitioner.pdf