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Opening the Books for change at Norwest Labs

Extracts from this document...

Introduction

Opening the Books for Change at Norwest Labs In 1991, Jean Cr�pin, the CEO of Norwest Labs initiated a series of events which would significantly alter the face of his company. Norwest had reached a point where it could no longer grow without becoming prohibitively inefficient. The decision-making responsibilities, which up to now had been centralized in the hands of its CEO, would now have to be delegated to subordinates in order for Cr�pin to address issues of a more strategic nature. With the help of external consultants, Cr�pin went on to modify his organisation with the hope of creating a decentralised, business-oriented company of empowered individuals. Unfortunately, by 1994, it was becoming quite clear that the transformation had not been entirely successful. The Symptoms Via the change process, Cr�pin had hoped to redirect certain behaviours to bring them more in line with his new company objectives. While the process did modify behaviour, it did not, unfortunately, lead to the desired ones. Worse, it even brought about undesired behaviours that had previously been absent. The clearest sign of the unsuccessfulness of the change process expressed itself in employee disorientation. Several behaviours attested this state including, confusion about the bonus system, new job descriptions, and Norwest's relationship with a former partner turned competitor. There seems to also have been clear apprehension as to the future of the company and confusion as to interdepartmental as well as hierarchical relationships. Perhaps the most disturbing sign that things were not going according to plan was the appearance of animosity at Norwest. Following the company's restructure, conflicts began erupting between the CEO and general managers who were clearly angry about losing some of their independence. Conflicts also appeared between the more business-oriented staff hired after the reorganization and the more technically oriented staff hired previously. At a broader level, the company even began to experience tensions across departments. ...read more.

Middle

This culture was implanted and encouraged by Cr�pin over the years and adhered to by Norwesters, most of whom were scientists. Because of the early success Norwest gained, we may deduce that this culture, if not supportive, was at least not obstructive to Norwest's objectives. However, after the organizational changes were brought about, we can see that the old culture was now more or less obsolete. First, apart from Cr�pin, few focused on the external environment and what it meant for Norwest. Second, Cr�pin's long-term plans alienated the employees' whose focus was on the short-term. Third, morale was low. Fourth, cynicism was growing. Fifth, group relations deteriorated as animosity and conflict among departments appeared and finally, Cr�pin, as the leader and the founder for Norwest and its culture, failed to play his role of being the hero of Norwest culture and, therefore, was objected and isolated by his subordinates with their negative reaction. Simply put, Norwest's culture was, considering the degree of resistance, disadvantageously strong. It failed to support the mission, goals and strategy of the organization and, thus, became a liability. In order to successfully bring about changes in an organisation, effective leadership is absolutely necessary. Unfortunately, in the case of Norwest, Cr�pin failed to achieve this. Not only did his leadership fail to mitigate the resistance to change, it may even have to some extent led to the undesirable behaviours currently displayed at Norwest. What Cr�pin possessed was good business sense and charm derived from his personality and experience; what he lacked was the ability to selectively and discriminatively project his objectives/goals onto Norwest and its employees. To be fair, Cr�pin's leadership was not always inadequate for Norwest. Considering that most Norwesters were scientists with little business sense and skills, Cr�pin tended to be more task-oriented and to tell them what to do instead of promoting self-leadership through empowerment and training. This pragmatic leadership style worked well until Cr�pin himself realized its limit, as Norwest grew larger and larger. ...read more.

Conclusion

The few new-hires should be given a clear message about the culture of the company and should be trained on the internal policies and rules. Relying on internal hiring has the advantage of retaining top performers by giving them the chance for promotions. Internal hiring will also reduce the difference effect felt by employees. Define goals and performance evaluations Lewin's third phase, the refreezing phase, involves building success experiences by setting change targets and having everyone work towards them. Consequently, each change-process team or any empowered individual should be given clear and objective goals. Goals should be set slightly over the reachable level and bonuses should be proportionate to the effort. Most important is that whatever bonus is defined for teams and/or individuals; strict rules must be set to let everybody know when and how they are evaluated. To implement such a change, coaching and evaluating processes that reinforce desirable behaviours with clear verbal and material messages must be defined. In such processes Cr�pin could even credit the work that has been accomplished during the first change in 1992. Setting an appraisal and coaching process enhances corporate culture and cohesion; it helps to stabilize changes and to keep everyone on the right track in the new system. Define a Reward System Lewin's refreezing phase also encourages the rewarding of the desired behaviour. In the case of Norwest, an inadequate bonus program is presently in effect. Cr�pin should first address the issue of the old bonus plan and recognize its major flaws. Doing so will address the past resentment of employees. Discussions concerning the timing and approach to a new reward system could be handed over to the change-process team. Gain sharing could certainly be an option. The important idea is that the choice of the reward system should involve the employees. In the end, the bonus plan could even be inserted in a cafeteria-style benefit plan, where employees can choose to opt-out or not in exchange for higher salaries. ...read more.

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