Organisation Change

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ORGANISATION CHANGE

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Organisation Change

Each economic entity conducting international business faces numerous external threats.

The most common threat for the companys welfare is an activation of competitors business

operations. In particular it is an improvement in the technology of the manufacturing thus

enhancing the quality of goods and ratio of price-cost for each manufactured item. The case

study on Stanley Australia concerning implementation of the organisation change due to

increasing competitive pressure in a global business environment is in the focus of this essay

writing. It analyses a case study based on the organisation change experience of Stanley

Australia and Stanley Bostitch subsidiaries of Stanley Works, US-owned Company operating

throughout the world, employing more than 550 employees together. The Corporation

manufactured diverse portfolio of hardware consisting of more than 50000 products. High

quality of the companys products was the most important value that provided high business

reputation of the company.

Organisation change in the global environment

Organisation change is the response to the changes in four market forces defining the

globalisation of industries and markets: economic, social, political and technological.

Understanding of the global forces assists a company to identify the critical success factors in a

global industry and market (Drori, Meyer & Hwang 2006, p.309).

Becker and Freeman (2006) point that understanding and transforming global trends into

the corporate strategy is the core responsibility of the top management. It is highlighted that

factors of global business environment such as innovation in goods and services, technology

progress, elimination in trade barriers, labour and talent shift, increasing competitiveness and

demanding and sophisticated consumers tastes accelerate the pace of change. The authors


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describe ten major global trends that determine constantly changing both local and global

business environments:

- growing number of consumers and changing customers tastes;- activation of economic activity in Asia region;- increasing access to information, education, expansion of knowledge;- globalization of labour and talent markets;- stricter environmental regulation and constraint usage of natural resources;- improved communication and interaction among the business entities;- more frequent application of scientific knowledge and techniques to management of thebusiness activities.

Regarding the background of the change need in Stanley Australia, it should be underlined

that the period of the outstanding quality, which no competitors could reach, lasted until the late

1980s. Improved quality of Chinese products and much lower costs comparing to Stanley figures

were the reasons for losing market share and shifting the customers towards the cheaper goods

from China.

This situation demanded immediate response and complex of action from the US

headquarters and local entities. New CEO, John Trani, had to address the existing problems. He

decided to implement rapid and drastic changes including:

- the number of the companys manufacturing sites were cut from 123 to 70;- extensive personnel downsizing was conducted;- organisational structure was changed from divisional to matrix.

The leadership style applying by Trani can be described as authoritative. It is characterized

by giving strict orders and instructions to reach specific goals in a short time frame and ensure


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that no objections or personal opinions of subordinates will be expressed. It was chosen upon the

analysis of a critical situation in the financial figures and rapidly falling market share.

The main goals set before the local Australian firms representing Stanley Works were to

increase profitability and market share by costs cutting and additional or alternative products

proposing. Concerning the communication between US headquarters and Australian divisions it

should be mentioned that the detailed action plan and structured plan were not given. The

Australian CEO was recommended to cut costs and reach the expected level of profit.

It was decided to implement the needed changes in two ways:

- ceasing manufacturing operations by closing 4 plants and selling 1 plant.

- combining two Australian subsidiaries into one new entity.

Sourcing of alternative products revealed that particular Australian product lines such as

screwdrivers, knifes and hacksaw blades were unique thus this investigation helped to save 90

jobs during the major transformation. Changes were made in all areas of Stanley Australia and

Stanley Bostitch: people, structure, process and technology. The most radical change was made

in personnel area.

The reasons why the implemented organizational change was partially successful were

combined with the time pressure:

- insufficient communication;- employees affected were not fully involved in the process of change thus the understandingand supporting of the proposed procedures were met with resistance.

Isern and Pung (2007) argue that the business environment is constantly proposing modern

companies diverse possibilities for development but also testing their strength and readiness to

radical changes in accordance with the encountered obstacles and threats. They underline that


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radical organisation changes involves drastic changes in all or significant areas of operation in

the short time frame. Regarding changes implemented at Australian subsidiaries - decisive step

in closing manufacturing plants and firing more than a half of the employed workers over an 18-

month period, merger of two related but culturally different companies are the evidences of

radical changes.

Concerning the cultural change inside a company, it should be mentioned that the

management of a company put an emphasis on giving more rights to the employees in decision

making and delegating the responsibility for the actions taken. Moreover, it was recognized that

communication inside a company and involvement of each individual in a team work should be

improved. The main aim of such a direction was to integrate employees from two related but

diverse companies. Management decided to give employees more freedom in decision making in

particular it concerns the employees from Stanley Australia used to the culture of rules and total

control.

Processes were also altered during the organisation change. Drastic ceasing in

manufacturing and focus on the overseas purchase rather than on domestic production made

significant changes in organisational processes. New carrier opportunities were opened for

marketing and logistics specialists. Concerning the technological side of the organisational

process it became more advanced, but there was also accident that caused the injury of the

worker connected with increased storage space and lead times. The processes became more IT

supported, and management hoped to hire more skilled professionals in the future to operate new

systems.


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Purchasing and forecasting functions along with the planning procedures took the leading

positions in the organisational structure. Consequently, marketing and sales department were

increased and got more responsibilities and strategic influence.

Problem Solving Skills and Effectiveness of Management Process

Change leaders should understand the adaptive behaviour stages that employees can

demonstrate. It is vital for managers to understand that individuals unconsciously use well-

developed and habitual defence mechanisms to protect themselves from change and from the

feelings of anxiety change causes (Bovey & Hede 2001, p.534).

It is proved that many companies failure to implement change due to active resistance of

the employees. Each change leader regardless of context should understand that there are

following stages of employees reaction to the threats and uncertainty of the change: discovery,

denial, passive resistance, active resistance, exploration, commitment, and broadcast. True leader

faces the potential negative reaction of the employees and is able applying his persuasiveness,

charisma, confidence, perfect communication and psychological skills to transfer passive and

active resistance into further stages that show the understanding and readiness of the employees

to be an active part of the change process (Burns 2004).

Change Management Skills in a Global Context

Communication skills are one of the most vital skills that are required to be applied by a

change leader during the transitional time of organisation change. Clear communicating of

companys vision and objectives that are established and must be achieved increases the chance

for success. Organisation change is effective if the employees:

- are aware of the need, importance and urgency of change;


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- feel themselves as members of a united and high-spirit team that is responsible for theimplementation of the new procedures and processes;

- show the desire to participate in a change process and understand the steps to be taken;- apply all the skills and knowledge to reach set goals;- are motivated to sustain the change (Elving 2005).

Moreover, it is emphasized by Aitken and Higgs (2010) that understanding the scope of

change, the reasons determined its need, the level of responsibilities given and goals to be

achieved increase the level of employees commitment. Unfortunately, time constraint was the

main reason why these two key factors of a successful organisation change were partially

implemented. Sudden merger of Stanley Australia or Stanley Bostitch with two radically

different cultures, closure of 5 plants, shift from domestic manufacturing to the overseas

purchases were the cardinal changes that had to be communicated to the employees to involve

them into the change process and increase their commitment. The management of the company

tried to communicate the reasons and necessity of such cardinal changes with the aim the

employees understand the reasons and urgency. Naturally, there was no time for participation

and involvement of the employees. All the decisions were made by the management, and

employees had only to accept them.

Stanley Australia managers also use the negotiation tool to decrease the level of

dissatisfaction and resistance of the employees. According to Bovey and Hede (2001)

employees go through four phases during the change process: initial denial, resistance, gradual

exploration and commitment (p.534). Negotiating as an effective managerial tool should be

applied by the managers to shift employees from the stages of resistance through motivating,

explaining and facilitating to the commitment stage. Stanley Australia managers tried to motivate


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employees who survived after the cutbacks with the aim to increase their efforts in helping the

company to meet the established goals. They put an emphasis on the importance of each

employee in the future commonwealth of the company and consequently the increase in their

bonuses and wages level.

Leading organisational change

The most essential skills for the leaders who are responsible for successful change

implementation are an ability to aspire all members of a change process that is to create unique

transformational vision and communicate this message to them. Another noteworthy aspect is to

understand that each employee especially in case of a rapid and cardinal change fears the

potential change and resist it if he does not understand the depth and background of the problem,

proposed solutions and expected results (Isern & Pung 2007).

According to Pardey (2007) another important quality of a leader is the ability to change to

settle conflicts, to compromise and to be firm in making decisions. Employees need to

understand that the time of such drastic change will soon be in the past, and they are responsible

for the welfare of the company in the present and future. To form such an attitude, change leader

must be true inspirer and coach to lead a new team. It should be emphasized that initiative and

new ideas must be supported as they are the drivers for the successful organisational

development.

Complex Ethical Problems in Change Situations

The planning stage with the development of the detailed plan of change implementation,

practical recommendations were not given to the local Australian managers. US headquarters

showed limited approach to the preliminary stage of this change process. If one of the crucial

steps in radical organisation change is a process of extensive lay off, ethical issues concerning


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downsizing often emerge. Employees perceive downsizing as ethical and inevitable only if it is

the last attempt to cut costs after the variety of methods including wages decreases and bonuses

cuts (Smith 2006).

In Stanley Australia case radical process of manufacturing operations ceasing was

unexpected. 300 employees had to lose their jobs, and it is clearly that such procedure was

perceived as unethical and unfair. At the same time, the management of the company devoted

maximum efforts to reduce the dissatisfaction and show support and respect to these employees.

The management developed the strategy implying attempt to make it possible for the employees

to depart with dignity. This strategy aimed to decrease the level of internal resistance and

frustration within the company. The management also paid attention to the former employees

assistance with searching for the next job or support with the retirement process. The company

considered honesty and openness to be the essential virtues of the downsizing procedures. To

prove the chosen policy, employees were the first who found out the news about the cutbacks.

Such a privilege was half an hour before the media, unions and Commonwealth Employment

Service got to know the details of planned lay off.

Addressing the natural fears and resistance of employees, the company proposed several

programs. Special consideration was given to the employees older than 50, understanding that it

would be the most difficult task for this age group to find the job at the market. Professional

firms, Commonwealth Employment Service, Department of Social Security were involved in

providing outplacement advisory services to the employees.

Complex Sustainable Dilemmas in Change Management and Responsible Leadership

Taking into account sustainability issue, it should be mentioned that organisational change

in Stanley Australia was made very hastily with the emphasis on the short-term financial figures


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rather than implementing long-term strategy that includes broad vision of sustainable

development of the company. A special feature of the concept of sustainable development should

be consideration not only environmental components but economic and social relationships with

stakeholders, employees, suppliers and customers. According to Doppelt (2003) environmental

component of sustainability in the organisations should be displayed as a model borrow-use-

return rather than unsustainable scheme take-make-waste.

On the level of individual company, sustainable development means adopting business

strategies and activities that meet the needs of the enterprise and its stakeholders today while

protecting, sustaining and enhancing the human and natural resources that will be needed in the

future (International Institute for Sustainable development n.d.). The leader who is responsible

for the implementation of change procedures must understand that the company depends not

only on physical and financial resources, but also rely heavily on the natural and human

resources. Each economic activity of the company must be conducted in such a way these natural

and human resources cannot be destroyed and degrade.

Millar, Hind and Magala (2012) point the following key sustainability dilemmas:

- balancing short term goals and guaranteeing long term development;- implementing organisational change and supporting stability and reliability;- how to combine reaching strategic goals and daily routine operating procedures applying localand international responsibilities;

- how to manage corporate reputation and brand when implementing radical organizationalchanges.

Leading organisational change demands responsible leadership that implies making

business decisions taking into account not only shareholders interests, but also those partners


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and members of the company activity who are affected greatly due to the implemented decisions:

employees, clients, community, and environment (Ulen 2010). At Stanley Australia the efforts to

consider the interests of the employees and to behave respectively even with those workers who

had to be fired were made. The number of redundant employees at Stanley Australia was 300 out

of 400 presently employed. It was a complicated task for the managers to conduct such a wave of

personnel reduction without loud scandals and litigation.

Skills Required for Leadership of Others

One of the most crucial part in implementing new global strategy of Stanley Works in

Australia was the merger of two companies similar in production activities but different in the

internal organisational culture. The emphasis was made on applying communication skills and

creating the spirit of one unique team where each member either from Stanley Australia or

Stanley Bostitch will be equal and fully responsible for the decision making. The most essential

problem that had to be solved by the Stanley Australia managers was the cardinal difference in

organizational culture of both companies. Stanley Australia culture can be characterized as

traditional with strict rules, processes, high level of control and loyalty. In contrast, Stanley

Bostitch demonstrated a high level of support for its employees. Trust and high level of

belonging and commitment were part of its daily operations. It was made the decision during the

merger that at the individual level all processes of Stanley Australia will be utilised as the most

advance and efficient. Therefore, the managerial efforts that addressed motivating and

supporting former Stanley Bostitch employees to accept the new procedures deserved praise.

Negative reaction and resistance due to the fear of new procedures and uncertainty about

the future should be transferred into the support and involvement in new team activities due to

efficient management strategy education, support, communication and listening (Kavanagh &


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Ashkanasy 2006). The most challenging task for the top management of the new amalgamated

company was to motivate and inspire the new team of the best professionals that won the

imaginary battle for the recognition of their unique abilities and talents and the possibility to

work for the new company.

In such a turbulent time, where uncertainty, fear, resistance are govern the attitude and

behaviour of the employees, the most crucial task for the managers were to show confidence in

the decisions made. They had to find ways to set clear goals with achievable results, to unite the

diverse cultural and professional team into one mechanism where the roles and responsibilities

are strictly divided, where each understands the goals set before him and has appropriate

knowledge and tools to achieve them (Goehrig 2008). Internal policy of Stanley Australia was

reoriented towards an emphasis on marketing and logistics areas. Employees of Stanley Bostitch

were given additional instructions and training to reach the needed level of knowledge and

experience in these fields and to become the equal members of the new team.

Conclusion

The Australian division of US-based Stanley Works Company underwent a number of

significant changes in all areas of its activities: people, process, structure and technology. The

most significant and challenging tasks for the management of the Stanley Australia company

were to deal with the drastic changes in human resources. Extensive downsizing, merger of two

culturally different companies, new direction towards the sales and marketing functions required

wise and balanced application of change management skills. The most significant skills needed

during such radical change have to address the initial fears and resistance of the employees.

Managers of Stanley Australia


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Unfortunately, time constraint and the obligation to implement all necessary innovations in

the shortest term led to lack of employees involvement into the change process and insufficient

communication. Managers tried to communicate a clear message about the reasons and the goals

of this change with the aim to decrease the resistance and integrate employees in the new more

skilled team. The management give them incentives and trust to take responsible decisions.

Trusting environment should be created to assure that communication and cooperation are the

background for the successful implementation and fulfilment of sophisticated tasks during one of

the most difficult times in companys history.


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Reference List

Aitken, P & Higgs, M 2010,Developing change leaders: the principles and practices of change

leadership, 1st edn, Butterworth-Heinemann, Oxford.

Becker, WM & Freeman, VM 2006, Going from global trends to corporate strategy,

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Bovey, WH & Hede, A 2001, Resistance to organisational change: the role of defense

mechanisms,Journal of Managerial Psychology, vol. 16, no. 7, pp. 534-548Burns, B 2004,Managing change, Prentice Hall, NJ, Upper Saddle River.

Doppelt, B 2003, Overcoming the seven sustainability blunders, The Systems Thinker, vol. 14,

no. 5, pp. 1-7.

Drori, GS, Meyer, JW & Hwang, H 2006, Globalisation and organisation: world society and

organizational change, Oxford University Press, Oxford.

Elving, WJL 2005, The role of communication in organisational change, Corporate

Communications: an International Journal, vol. 10, no. 2, pp. 129 138.

Goehrig, R 2008, The role of leadership in building high performing, sustainable organisation,

Government Finance Review, vol. 24, no. 6, viewed 24 September 2012,

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International Institute for Sustainable Development n.d.,Business strategies for sustainable

development, viewed 26 September 2012,

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Isern, J & Pung, C 2007, Driving radical change,McKinseyQuarterly, viewed 28 September

2012, .

Kavanagh, MH & Ashkanasy, NM 2006, The impact of leadership and change a management

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British Journal of Management, vol.17, pp. 81 - 103.

Millar, C, Hind, P & Magala, S 2012, Sustainability and the need for change: organisational

change and transformational vision,Journal of Organizational Change Management,

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Pardey, D 2007, Leadership in turbulent times: Effective leadership during times of

organizational change, Strategic HR Review, vol. 6, no.5, pp. 16 - 19.

Smith, I 2006, Continuing professional development and workplace learning - 15: Achieving

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Ulen, TS 2010, Responding to change: internal and external factors in organizational success,

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Organisation Change

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