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Galaxy, a German company manufacturing a wide range of air conditioners; heating equipments; refrigerators, etc, management of which has decided to close down its several plants in European nations. Due to this reason, many of the employees would lose their jobs. The present research will discuss about different internal and external challenges being faced by the company, like increasing costs of manpower, increasing competition in European countries, etc. Leadership is such an activity that has to be carried out in business organizations, as leading a group of people is one of the most effective ways through which the employees can be made to work in an efficient and effective way. This report would also shed light on various leadership & change management models as well as theories, along with recommending some of them to the top management of the company.
Galaxy, one of the leading companies in manufacturing of household appliances, is losing its ground in many European nations due to a wide variety of reasons. Although, through the years, company has been able to maintain a competitive position in the market, but has not been very effective in coping with that of the various firms with substantially low manufacturing costs.
There are a lot of internal areas that the organization is lacking in and that too by a considerable margin. In this regard, it may not be wrong to say that weaknesses of Galaxy are plenty. Some of them are as follows:
This is one of the most difficult challenges that management of the firm would have to face if they decide to bring about change in the company. If they take the decision and implement defined change in the organization, then there are chances that stakeholders may get dissatisfied and also lose their interest in the firm. It is in this context that authorities would have to communicate with variety of stakeholders. But since there are numerous forms of communication, selecting any one of them would be a very difficult decision for the authorities. In this context it can be said that selecting the most appropriate communication channel would be a very difficult task for the management.
It is a well known fact that humans tend to resist to any kind of change at first. When authorities in the organization would try to bring about and implement change in the organization, then the very first problem that they would have to face is resistance from the workforce. Staff members will not accept the modification that authorities might want to bring at workplace, for which they may resist to it. This would create a lot of troubles for the company, as after it authorities would have to interact with staff members, try to convince them and then gain their support for change. But this task in itself is very difficult to be accomplished.
In addition to the numerous internal challenges being faced by the company, there are various uncontrollable or external factors as well which yield their impact on the firm. Through the analysis, some of the external challenges to the company are as follows:
Today, there are a lot of companies operating within the geographical boundaries of European Union, plenty of which are the low cost manufacturers. Due to this reason, it has become very tough for Galaxy to effectively function in the present market conditions. Since cost of production of many companies is low, their profit margin is high, because of reason that they sell the products at cheap prices which in turn help in attracting large number of customers. Furthermore, since both productivity and quality of goods offered by company are declining at
rapid pace, successfully operating in the industry has become a very tough task.
In the past some years, there has been a substantial change in the legislations that govern the operations of companies producing household goods. Due to this, surviving and carrying out different processes has become very tedious and difficult for Galaxy. Therefore, it can also be said that this is one of the main reasons for decline in performance of the company. Such changes in the industry have to be complied with by the organizations, which, if not done, would lead to serious repercussions and could be drastic for the company. It is because of this very reason, the firm might face some or the other kind of trouble, when they would enter the two markets – India and China.
Leadership is one of the important facets of business organizations that have to be nurtured and paid attention to by the company. It has a significant impact on the working of the company and productivity of the employees. Introducing and managing change at workplace is another vital activity to be performed by the management. It basically is a technique through which changes and developments can be implemented in the company. But for the management, it is imperative that it be developed and carried out in such a manner that it is well accepted by the employees and does not de-motivate them. Over the years, authors and experts have developed various models of change management and leadership which can be considered by the management at Galaxy.
Numerous change management models have been developed since a very long time. Some of them are as follows:
This model of change management was developed and propagated by Kurt Lewin in 1940s and since then it has been one of the major tools when it comes to introducing and implementing a change at the workplace (Burnes and Cooke, 2013). Though this model was initially developed for the purpose of aiding social scientists in understanding the behavior of people, but nowadays is used as a tool by business managers to bring about a change in the company. According to Bozak (2003) it basically consists of two factors or forces which describe as to whether the change would be accepted (helping forces) or rejected (hindering forces) by the staff members. The main concept or philosophy that goes behind the model is that according to Lewin, decision making and accepting a fact or process for an individual depend on internal and external stimuli’s. He believed that to make a person accept change, there must be continuous interaction and exposure between internal and external stimuli, as it is one of the most effective ways through which such an act can be done (Kruglanski, 2012).
The model prepared by Lewin states that there are two forces involved in the change management process – Driving and Restraining forces (Cameron and Green, 2012). Driving forces are the ones that support the change to be implemented at workplace; while restraining are the negative sides of a change, as described by Baulcomb (2003). Considering the fact that management at Galaxy is facing a troublesome time in the industry, there would be many factors which might prove to be an obstacle to bring about change in the organization. One of them would be that of reduction in the number of jobs. As many people would be laid off and many may be transferred to other locations apart from the European Nations. As per the case study, some staff members would be retained for a time period of two years so that the production does not stop completely while it is being relocated to some other country, their pay would also be reduced by a great margin, so as to reduce the expenses of the company. This way, already disturbed motivation levels of the employees would further go down (Schein, 1995). On the other hand, some factors that may work in favor of the change are the ones that the employees who would be transferred and relocated can see a hike in their salaries, position in company along with various other benefits.
This is another model which was proposed and developed by Dr. John Kotter which states eight different steps and stages which if followed would help the management of a company to bring about change (successfully) at the workplace (Quinn and Blackmore, 2012). Following are those steps:
Creating a sense of urgency: This is the first stage of this model. It describes that the management and authorities must create a sense of urgency at the workplace so as to make the employees understand its need in a much effective manner. In view of Mento, Jones and Dirndorfer (2002) it should be done as if it is extremely essential for the organization and in its absence, survival can be very difficult. This would help the authorities to motivate the staff members, to effectively and easily accept the change in their daily routine (Appelbaum and et. al, 2012). Herein, opportunities would have to be identified along with threats and developing such situations at workplace which would support implementation of the change.
Forming a powerful coalition: In this step, the management would be tasked with building strong relations and associations with employees and different stakeholders. Here, authorities would have to convince the staff and other parties who can get affected by the decision (Guzmán and et. al, 2011). Finding and developing strong leadership can be the key to it. Change agents and change leaders, should be recognized, who would lead and bring about development and modification at the workplace, as found by Todnem (2005).
Creating a vision for change: In the next step, a vision for change should be developed. This means that the top management would have to link together different ideas and concepts behind the change, so as to justify it and make it easily acceptable by different parties (Smith, 2011).
Communicating the vision: It entails that vision related to the change would have to be informed to the various parties who may be interested in and get affected by it. Meetings and conferences can be conducted as well as organized for the same purpose.
Removing various obstacles: After vision related to the change is communicated to the parties who may be interested in it, management at Galaxy may come face to face with different kinds of challenges and obstacles. This may be related to reluctance and rigidity of employees and other such parties associated with the change in some or the other way (Cohen, 2013). In this regard Armenakis and Bedeian (2009) have rightly said that for the same purpose, leaders and different individuals would have to be hired who can remove all such roadblocks and clear the path for implementation of change.
Creating short term wins: It entails that short term goals and objectives should be prepared in relation to the change. Main concept behind it is that if such short targets are achieved, then bringing about change would become a lot simpler process.
Building on the change: Next key to bringing about an effective change is being patient and not declaring too early that the change has successfully been brought about at the workplace (Farkas, 2013). After each short goal is attained, evaluating and analyzing it can prove to be very useful to the company. This would provide useful information related to what all areas further need to be improved and the likes of details.
Anchor the change in corporate culture: Here, change leader and change agent would be required to embed the change into corporate culture. To be able to do so, modifications would have to be made in policies, rules and regulations of the company.
ADKAR model developed by Prosci is world’s one of the widely used and sought-after models of change management which are used by companies very extensively. It consists of five stages that have to be carried out by the management in this regard. They have been described as follows:
Awareness: This is the stage where efforts have to be put in by the management so as to be able to bring about and implement change in the organization. Herein the authorities have to decide as to why they are looking to bring about a change in the company, in view of Hiatt (2006). This means that they have to identify and assess the main reason behind development and implementation of change at workplace.
Desire: The next task here is to generate a desire for the change or development that they are looking to bring about. It entails that the management has to interact with their workforce so that a desire for change can be instilled in them and can also be made to agree with the change that management wants to introduce in the company.
Knowledge: The next stage of this model states that management must develop a knowledge base through which they gain an understanding on how the change has to be implemented in the company. As recorded in study by Creasey (2003) this is a very important stage of the process. If the authorities will not have any knowledge about how change has to be implemented in the company, then it becomes very hard to effectively manage it.
Ability: Herein on part of the authorities it is required that they conduct a thorough assessment of skills of the organization, sos as to gain an understanding of how the change has to be implemented in company. If the company does not possess necessary skills set, then it will become very hard to implement the change. In this case, required abilities and talents have to be developed by the authorities, as said by Haley, Watson and Prism (2003).
Reinforcement: This is the last stage of this process and entails that the management must bring some or the other kind of reinforcement in place, so that change can be sustained. These are necessary from view point that they would enable the management to make sure that the change is well implemented in the company and also it is well accepted by workforce.
Leadership is another very important aspect of business operations which has to be given a lot of attention by the management, as it has a direct impact on motivation, morale, performance and productivity of the employees (Viviane, 2012). There are numerous leadership theories which the management of Galaxy can look forward to in such times.
It is one of the many leadership theories and approaches developed over time. It basically states that there is no particular way in which individual or a group of individuals can be lead in organizational setting. Furthermore, it also describes that those leaders can be far more efficient and effective in their working who adapt to the scenario they may be stuck in (Avolio, 2007). According to this theory, leaders must not develop any kind of preconceived notion in their minds about what style they have to use and how to use it. Instead, they must be flexible enough to mould as per the situation they may be stuck in. In view of Bass and Bass (2009), the theory, as developed by Fred Fielder in 60s followed the idea that effectiveness of leadership styles is dependent on interaction and relation between two factors: the leader’s task; and the situation (Northouse, 2012). The main concept or philosophy behind this theory is that since organizational systems are very much open to
their environment, any situation may arise at any given point of time and the leaders must be ready to face them.
Another theory of leadership which can be considered by management at Galaxy is that of transformational leadership (Avolio and Yammarino, 2013). It is mainly used to motivate the employees, improve their morale and also their on-job performance along with productivity. Although it is one of the complex leadership approaches, but the effect that it has on employees is unprecedented. Herein, leader is required to act as a role model, so as to inspire his followers and enable them to improve their productivity by a great margin. According to Eagly and Schmidt (2003), transformational leadership basically is concerned with bringing a transformation into the lives and performance of the employees. Many authors and industry experts have touted it to be one of the best styles when it comes to leading people, as it improves and enhances them on various levels. But there are some sections as well which criticize it stating that leaders excessively abuse the power that they possess. Since it has a profound impact on the followers, some narcissist leaders may use it in the wrong way, thus having undue influence on subordinates (McDowelle, 2009).
Through the above analysis, it can be suggested to the management of Galaxy that they use the Lewin’s Force Field Model along with Contingency Leadership style, as it would enable the management to bring about change at workplace and effectively lead the employees.
Considering the environment and situation that the company is stuck in, it is imperative for the management to develop and implement a change management program. The main reason behind preparation of this change management program is that the authorities have decided to close numerous plants within the European Nations and relocate them to developing countries such as India and China. Objective of the company is to shift their plant to China in the next two years. In this regard, one of the many steps that they would have to undertake is to identify the factors which would help the company in bringing change at the workplace. Through such an analysis, they would be in a position whereby those facets can be evaluated which may support the change process or prove to be an obstacle for it. One of the factors that would help the process is the opportunity to travel all around the world and also get increased salary. While, factors such as chance of being terminated from the job can prove to be a hindrance in implementation of change. Consequences or results of the process can be seen on improvement in the morale and motivation of the staff. The next step which would have to be taken by the organization in this context would be to convince employees so that the management can gain their support and change can be implemented or brought about at workplace in an efficient and effective manner. It is a very tricky task to be carried out by the authorities as convincing employees will be very difficult for the management. This is mainly because of reason that gaining the support of employees for a change involves that the management provides them with some or the other kinds of benefits or advantage which would help them to work in the organization for a long term. The next stage that would have to be carried out is to pay attention to small details of aspects that may be included in the change management program. In this regard it can be said that since the management is looking to enter new markets such as India and China in the next two years, they would have to study in detail environments of these two nations and then take whatever necessary steps that are required to be taken. The last stage here would be to implement the change at workplace. This entails that authorities uses some or the other kind of change management models and programs. There are a wide variety of such programs which can be used. It can be suggested to the authorities that they can use the technique of Lewin’s Change Management Model.
One of the main concepts which have the most significant impact on a business organization is that of the leadership and implementing a change. Importance of both of them can be understood through the fact that they can affect an organization in both positive and negative manner, along with affecting their productivity. In the study, it was observed that there are numerous internal and external challenges which the firm would have to face while in the industry, it includes the likes of rise in cost and expenses of manpower and increase in level of competition put up by low cost manufactures in the industry. Furthermore, for the purpose of relocating to China within the next two years, Galaxy can use Lewin’s Force Field Analysis along with Contingency Leadership style. The change management model would enable it to recognize the factors that may support in the process, and negate the ones which may be harmful. On the other hand, contingency leadership style would help in making sure that the leaders are ready to face any kind of problem during implementation of change.
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