The Difficult but Vital Need for Business Change

By Suzy Bills

Often, for a company to become more successful, the company will need to make changes, such as to its structure or processes. However, though the changes may allow greater opportunities for success, it is likely many individuals throughout the company will resist the change, for a variety of reasons, such as the relative high cost of the change, lack of confidence in the feasibility of the change, and unsettling the status quo (Yukl, 2006). In order for the change to be successfully implemented, the company needs a change agent to lead the way (Westover, 2010). The following is a case study of a fictitious company, Gene One, and how the change process can be implemented successfully.

Gene One is currently considering changes that will allow for expansion and greater success but that also face considerable resistance from even the executive leadership team. Through the direction and motivation of the first CEO, Don Ruiz, the leadership team has established the goals of achieving 40% growth, developing new products, and issuing the company's initial public offering within three years. The changes required in order to achieve the company's new goals are substantial. As a result, the changes necessitate a more appropriate leadership style than currently employed by the leadership team members, as well as a specific change strategy.

The needed switch in leadership style coincides with the retirement of Don Ruiz, in turn necessitating some change in the membership of the leadership team. The leadership team and the executive board decided the best choice was to hire a new CEO from outside the company. Often, large organizational change initiatives are more successful when a new leader is hired to implement the change (Yukl, 2006). One reason is that the new leader can provide an objective, unbiased perspective of the change that is needed in order to achieve success (Robbins, & Judge, 2007). Further, the change is more likely to be implemented successfully if it is led by someone who demonstrates strong authoritative and transformational leadership skills (Goleman, 2000). Though each of the current leadership team members has unique and important skills and abilities that contribute to the success of the company, none of the leadership team members effectively employ authoritative and transformational leadership behaviors. Thus, hiring a new CEO who demonstrates authoritative and transformational leadership will help Gene One be more successful in implementing the change initiatives and achieving its goals.

Authoritative Leadership

Authoritative leadership is especially appropriate when changes necessitate a new vision or clear direction, such as is the case for Gene One. An individual demonstrating authoritative leadership behavior is self-confident but also demonstrates empathy. The leader is enthusiastic and articulates a clear vision. The leader inspires employees to believe in and work toward the vision by inviting the employees to embark on the adventure with the leader. Further, the leader motivates the employees by explaining how the employees' work helps the company achieve its vision. As a result, the employees understand that their work matters and why it matters. Additionally, an authoritative leader is flexible and gives employees the freedom they need to take risks, experiment, and innovate (Goleman, 2000).

Authoritative leadership is similar to transformational leadership, which has positive effects on implementing organizational change (Yukl, 2006). Transformational leaders obtain support for change through inspiring employees to reach beyond their immediate self-interests to identify with the company's new vision and the needed changes (Judge & Bono, 2000). The main aspects of transformational leadership include demonstrating charisma; presenting a clear, appealing, and motivating vision; stimulating employee creativity through challenging the company's norms and questioning assumptions; and demonstrating consideration behavior, such as caring about the individual needs of employees, being friendly, and showing respect for employees' opinions (Judge & Bono, 2000; Robbins, & Judge, 2007).

Company Vision

One of the reasons authoritative and transformational leaders are effective in change situations is because both types of leaders focus on articulating a clear, inspiring vision. A clear and compelling vision assists in guiding employees in organizational change. The vision links the past to a more successful future and coordinates and guides the decisions and actions of employees. A successful vision is simple, idealistic, challenging, and realistic. Transformational leaders tend to develop visions that are oriented toward the future and reflect high confidence and optimism (Yukl, 2006). As a result, employees believe the suggested vision and connected changes are desirable and achievable. A successful vision often reflects the contributions of multiple, diverse members of the company (Yukl, 2006). The authoritative, transformational leader leads the way in developing the vision but realizes the importance of involving other people and receiving their input. The leader encourages those involved to use judgment, analysis, creativity, and intuition to develop the vision. By involving other stakeholders, the leader will also likely gain strong support from these individuals in implementing the changes needed to achieve the new vision (Robbins, & Judge, 2007).

Gene One's CEO should involve all leadership team members in developing the new vision. Many of the current members of the leadership team have doubts about the feasibility and desirability of the company's new goals and the changes needed. As the leadership members participate in developing the vision, they will likely become more committed to the required changes. Support from these top company leaders is vital—otherwise, the large-scale change the company wants to achieve will likely fail. While it is beneficial to hire a CEO from outside of Gene One, it is also important to retain the current members of the leadership team because they have a clear understanding of the company's history, organizational culture, employees, and processes (Robbins, & Judge, 2007). They will serve as a vital source of information for the CEO, to help the CEO effectively lead the organization through the change. Members of lower levels of management also need to be included and need to support the change initiative. Managers play the important role of formulating strategies to implement the change and encouraging their subordinates to support the changes. Managers should provide their subordinates with support and resources but should not dictate the specifics of how the subordinates should implement the change (Yukl, 2006).

Resistance to Change

Despite including the leadership team members and other key stakeholders in developing the new organizational vision and other efforts to gain the support for the change initiative, some leadership team members may still resist the change. Research indicates that employees at all levels resist change. In general, people prefer predictability rather than the unknowns of change, senior leaders of an organization can be the largest roadblock to change. Some resistance is actually beneficial because it stimulates discussion of the proposed changes and results in the development of better changes or way to implement the changes. There are various ways to overcome resistance to proposed change.

The new CEO and other change agents should clearly communicate the changes to employees and educate the employees on the benefits of the change. The CEO should promote widespread participation in examining the proposed changes, making decisions, and implementing the changes. Negotiation may also be an appropriate and effective method of overcoming resistance (Robbins, & Judge, 2007). For example, Teri Roberts is a key leader in developing new products for the company. However, she is not pleased with Gene One's goal of becoming a publicly traded company. To persuade her to continue working at Gene One, the CEO might offer Teri an incentive, such as a pay increase or a way for her to feel that the research she conducts is not directed by the stock market and other influences of being a publicly traded business. However, if leadership team members decide not to support the change initiative, it may be best for both the company and the particular team members if they resign from their positions. If this is the case, Gene One may need to hire new members for the leadership team, either from inside or outside the company.

Implementing Kotter’s Eight-Step Change Plan

There are various methods and theories regarding how to successfully implement change, from Lewin's three-step model to action research. For Gene One's current situation, an appropriate approach to apply is Kotter's eight-step plan, which is related to Lewin's model. The steps involve establishing the urgency of making the change; forming a group of individuals who have enough authority and power to guide the change; creating a new vision and strategies to achieve the vision; communicating the vision to all employees; removing barriers to change, encouraging innovative problem solving, and encouraging risk taking, all of which will empower employees to work toward achieving the vision; rewarding short-term achievements that help the company achieve the vision, reevaluating the changes and making any needed adjustments; and reinforcing the changes by demonstrating how the new processes and behaviors are tied to the company's increased success (Robbins, & Judge, 2007). These steps involve changing both attitudes and roles; making use of both in a mutually supportive way is the most effective strategy for introducing change. Gene One will also be more successful in implementing the proposed change if it provides the employees with multiple opportunities to learn new methods of doing things that support the change and the new goals and vision (Yukl, 2006).

Monitoring Progress

As Gene One's new CEO acts as the main change agent and builds a coalition of supporting change agents, it is important for them all to remember that large and complex changes generally require learning and experimentation. Though authoritative and transformational leadership are important and using a well-developed change strategy will increase chances of successful implementation, it will not be possible for the change agents to foresee all problems that will arise or to prepare detailed plans regarding how to accomplish all areas of the change (Yukl, 2006). Thus, the CEO and other change agents must always be attentive to the progress being made and to how stakeholders are reacting to the progress. Further, patience is important. Studies have suggested that major changes are more successful when they are carried out slowly (Le, 2006). If the change agents focus on making quick decisions, it is likely the decisions will be less innovative, effective, and efficient (Robbins, & Judge, 2007). The slower implementation allows the change agents to gain employees' trust and also allows for more collaborative discussion and problem solving regarding contentious aspects of the change (Yukl, 2006).

Organizational change, especially substantial change such as that proposed by Gene One, is difficult to successfully implement. However, the difficulty should not prevent the company from engaging in the change process. The company can be successful if it appoints the appropriate change agents and follows an established, effective method of implementing change. Gene One will be appointing the critically needed change agent by hiring a new CEO who demonstrates authoritative and transformational leadership behavior. This leader will be most successful in communicating the company's new vision and gaining the support of the company's employees. As the CEO and other members of the company follow Kotter's eight-step plan for implementing change, Gene One will be able to achieve its end vision of achieving high growth, expanding product offerings, and becoming a publicly traded business.

References

Goleman, D. (2000). Leadership that gets results. Harvard Business Review, 78(2), 78–90.

Judge, T. A., & Bono, J. E. (2000). Five-factor model of personality and transformational leadership. Journal of Applied Technology, 85(5), 751–765.

Le, S. A. (2006). An investigation of the impact of the pace of change in post-IPO governance on firm performance. DBA dissertation, College of Administration and Business, Ruston, Louisiana Tech University, Louisiana. Accessed June 21, 2010 at http://140.234.17.9:8080/EPSessionID=aa9ce056256b6a0f85ee02cbf48a5db/EPHost=proquest.umi.com/EPPath/pqdweb?index=0&sid=1&srchmode=2&vinst=PROD&fmt=6&startpage=-1&clientid=13118&vname=PQD&RQT=309&did=1031058451&scaling=FULL&ts=1277164390&vtype=PQD&rqt=309&TS=1277164432&clientId=13118  

Robbins, S. P., & Judge, T. A. (2007). Organizational behavior (12th ed.). Upper Saddle River, NJ: Pearson.

Westover, J. H. (2010). Managing organizational change: Change agent strategies and techniques to successfully managing the dynamics of stability and change in organizations. International Journal of Management and Innovation, 2(1)45–50. Accessed June 21, 2010, at http://140.234.17.9:8080/EPSessionID=90a26958cfb78f42a7ec5412e1325029/EPHost=proquest.umi.com/EPPath/pqdweb?index=9&did=1998592351&SrchMode=2&sid=1&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1277165576&clientId=13118. 

Yukl, G. (2006). Leadership in organizations (6th ed.). Upper Saddle River, NJ: Pearson.

 

 

Make a free website with Yola