Page 198 - Managing Change in Organizations

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Introduction

be resolved. The directors provided very detailed information showing productivity,
cost, pay, quality and other relevant data. They gave guarantees that no cut in pay or
redundancy would result from a review of the bonus system and that employees would
be involved in any effort to resolve the problems. However, they made it clear that they
were determined to improve both productivity and quality, and that, in the long term,
factory numbers would depend on performance. The position of the company was
becoming increasingly uncompetitive. Something needed to change.
It was agreed to bring in the consultants to work to the following brief, agreed between
these two directors and the union representatives:

1 To undertake a survey of attitudes in the production departments.
2 To provide an independent check on the problems of productivity and rising costs.
3 To design a wage system acceptable to management and employees and equitable
as between the process and industrial product groups.
4 To indicate any further areas where significant improvements to industrial relations
might be achieved.
For the first time for some years a more open management style was in use. This
appeared to be creating some ‘movement’ by both managers and employees.
The attitude survey revealed some surprises. Employees seemed to prefer higher basic
pay and lower, but still significant, bonuses. They felt that much of the low productivity
stemmed from inadequate control by supervisors and managers. There clearly was some
truth in this (see above). It was agreed to establish joint working parties to devise a
means of achieving the following amendments over a six-month period:
1 New working practices and improved quality.
2 A bonus system using the ‘added value’ concept to link company performance to
bonuses.
3 Revised standards based on methods study.
4 The introduction of new technology.
Now followed a period in which many of the initiatives were moving forward together.
In practice, there were many problems along the way. In general, however, a more

open approach by senior management and more effective team work involving various
functions and departments were leading to dramatic improvements. Increasingly, the
various initiatives were becoming mutually sustaining. The early success of the first
quality changes and more effective information and control meant that production
schedules were less disrupted, and manufacturing therefore somewhat more orderly.
This meant that production managers were under less constant pressure. That being
so, they were less autocratic, partly also because of the changing examples coming
from the finance director and the production director. The managing director, by rec-
ognizing that change was needed and by trusting the finance director, was also chang-
ing his style.
Over a period of four years (to 1993) productivity increased by 60 per cent. Costs were
first curtailed and then reduced. New machinery and new staffing could now more readily
be justified. Self-confidence began to build sustained by positive feedback, both informally
and through the performance appraisal system. The case raises a number of issues which
typically must be addressed when significant organizational change is needed.

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