4. A CRITICAL EVALUATION OF THE CHANGE PROCESS
After the arrival of the new general manager in 1992, hierarchical structures were torn down and the need for change was made public. A teamwork approach was adopted where the information would flow from the bottom-up. The following was the new structure under Phase 3:
GM ONC S & W
GM ONC S & W
GM ONC S & W
*GM – Glass Making
ONC – On-line cutting
S & W – Stacking and warehousing
This current flatter setup of organizational hierarchy is the first feasible positive step by Pilkington towards change. Though this setup was implemented in the last phase, it was the most logical option amongst all three options.
The main problem with Pilkington Australia was it over eagerness to introduce change in the Dandenong plant.
It is clear that the roots of the problem stemmed due to the authoritarian style of management. Since, its start in 1972, the power distance in the organization was immense and over the years, employees have been working under these conditions. It is only in the recent past, due to competition etc. that Pilkington has realised that there is an issue within their company. Due to its initial orthodox beliefs, the organization was breeding grounds for individuals looking for a job for life; hence, the average age was so high. The point being made here is that the organization itself is to blame for all problems occurring internally.
The problem with Phase 1 was the fact that Pilkington did not anticipate the magnitude of change that was required. The aspects relating to organizational structure change and introducing training programs etc. was a start but definitely not enough. The key characteristic towards success was realized in this Phase and that was of the bottom-up method of contact.
Phase 2 was a definite mistake. Again, Pilkington took a hurried approach towards furthering the change process within the company, which meant no employee feedback or suggestions were considered while developing the change processes. This was a main catalyst in the failure of the plan. Apart from this, the training programs developed to broaden employee skills under Phase 1 were scraped under Phase 2. This was the final straw and the plant closed down for a strike. What Pilkington did not realize was that their style of introducing radical change was too much to handle for all within the company. Also, taking away the trainings program once it was operational and being used was an irrational move. Employees cherish resources, if an allocated resource is removed; reactions are bound to be aggressive.
Another problem that Pilkington Australia has faced since change has been implemented and is an ongoing process in the organisation is that of lack of commitment between senior management and middle management, primarily due to the lack of involvement of the Managing director.
The effectiveness of change in terms of:
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Employee morale- Over the year, employees have come to realize the trial and method approach of Pilkington when introducing change. Humans do not like change and in this case they have had do it more than once. This has created uneasiness and uncertainty. From 1995-97 employee number reduced by 27% which cements the comments made above. The 5.8% absenteeism rate indicates a low level of job satisfaction which may be a direct result of this aggressive change process.
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Productivity- It is stated that a profit of 31% was achieved after the change process. This figure is deceptive as the Return on Investment was a mere 6%. The profit figure is a direct result of diminishing manufacturing costs. Hypothesizing that the tangible manufacturing components remained same in terms of prices, it is evident that a significant drop in the wages and salaries (due to employees leaving) component of manufacturing costs amplified the profits.
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Quality- The customer satisfaction rate of 97% solidifies the notion of the bottom up communication model. It is clear that the shop-floor employees were able to communicate their need to the management efficiently, thereby providing effective outcomes.
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Safety- The development of teams increased the level of safety for all employees.
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Cost per tonne- Again, the bottom up approach of communication has been effective in this field.
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Employee Productivity- The figures of 51.7 units per employee may again be deceptive. Targeted results are being surpassed not due to higher level of productivity but due to a high level of employees leaving their jobs. Therefore, production remains same but productivity per employee goes up.
The discussion above shows that the problems lay at the core of the organizational culture which developed over year through contributions from both the management and the employees. Culture cannot be changed overnight, and a mere common dining area for both management and employees will not create understanding.
5. ALTERNATIVE SOLUTIONS
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Identify a real capacity for change and then approach it credibly.
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Employee feedback/ideas essential before considering any type of change that may affect the organization.
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Management needs to develop a positive approach towards change.
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Immediate minimization of power distances.
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Guarantee employee’s ‘job-security’ through all parts of change.
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Encourage communication at and between all levels.
6. ALTENATIVES EVALUATED
- The management needs to evaluate the real need for change. Just because everybody around is changing is not reason enough for implementing change. The need should arise from within the organisation for change in order to maintain sustainable development and gain competitive advantage. Once the need for change has been identified, the organisation needs to introduce change at an extremely slow pace. In Pilkington, the change process was introduced abruptly (not once but twice) and caught all employees off guard. Like all humans, the comfort zones of all employees were threatened, eventually resulting in high rates of absenteeism and employees quitting their jobs. The best way to approach the change process would be to implement it systematically in different phases and once each phase is completed, it needs to be evaluated and attitudes of all within the company should be measured to judge the impact of change and approach the next phase accordingly.
- Absolute employee opinion, feedback and involvement are central to the entire change process. At no point in time did Pilkington consider the needs and wants of the employees. The change was just forced onto the employees and their reaction was that of demotivation. This was again evident through the strikes that took place in protest of the bulldozer approach of management for implementing change. The essential element required here is complete employee involvement, as it provides another perspective to approach the change process. This perspective need to be give careful attention as it is the perspective of those who will be most affected by this change. Involvement will definitely result in higher levels of morale.
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Management needs to develop a proactive approach in order to carry through the change process. A flatter version minimizes power distances and thereby increasing the approachability (boss) factor. The lack of involvement of the Managing director in this case is again a demotivating factor for all the employees. Pilkington’s management needs to make sure that the employees become aware of the active involvement of the management. Management must set an example by approaching the change process through real and tangible actions. Such actions can have an extremely positive effect as it solidifies the notion of “Earlier we lead and you followed, but this time we walk together hand-in-hand” from an employee’s perspective. In simpler terms an approach towards ‘empowerment’.
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Change in any form makes individuals uncomfortable and nervous. This was the case at Pilkington, as the employees were not secure about their jobs. This is evident again through the strikes that took place, which demanded a level of job security for all employees through the change process. Pilkington’s aggressive attitude towards hurriedly implementing change forced the employees to react accordingly. The approach of Pilkington to drop the average age of 48-50 of all employees definitely fueled the assumptions (of retrenchment) of all employees, thereby reducing their job security, which finally impacted attitude and morale, resulting in employees quitting. Management needs to assure the workforce that there jobs would be in minimum or no jeopardy throughout the change process. Such an assure will again boost employee morale and confidence.
- Pilkington’s autocratic style of management had created clear distinctions between different levels of management. This created an aura of inapproachability towards superiors. This style impacted and frustrated the employees and they developed their own retaliation/defensive mechanism by creating a culture of ‘expected overtime’. In simpler terms, the lack of communication between management and employees resulted in a negative culture. A solution to this would be to encourage communication through informal processes for a start, such as company outings etc. Once the formal barriers are broken down, communication within the company will become more effective and regular. A combination of flexibility, approachability and effective communication is an exceptional way to empower employees and derive optimum results and if implemented; introducing change will not be required as the company itself will turn into a learning-organization.
7. RECOMMENDATIONS
There is no guaranteed method of introducing change and deriving maximum benefits. Following is a brief combination/simple method of recommendations that Pilkington can use to introduce change within the company, without having major adverse effects and outcomes:
Pilkington needs to start of with identifying reasons to introduce and implement change. The ‘them vs. us’ company culture is a direct result of management styles. Management needs to identify why this culture has developed over the years and most essentially the management must be ready to face all sorts of criticisms.
The integral issue here is that of communication. Before initiating the change process, the management must research employee opinions. Employees must be given enough opportunities to express their sentiments towards the change. Management must also assure that the change process does not hinder the smooth running of the company and this can only be achieved if the change process is slow and abrupt. Employee awareness of the change process also makes it easier, as the employees are not caught off-guard and therefore do not react in ways that are undesirable for the organization.
The next step would be that of the management taking the initiative to implement the change process through their own actions. Such leadership commitment would encourage a teamwork approach towards achieving goals and also provides the opportunity to really empower the workforce. It is imperative to realize that if the management is not keen to implement change, there is no way the employees can be expected to embrace change. Change needs to take place on a communal basis there by creating the “Organisational Culture”.
The final step would be to constantly monitor the change process and analyse reactions of all individual affected by this change. This in turn would provide further opportunities to improve and mould the process accordingly.
8. FINAL THOUGHTS
It is evident to me that Phase 1 was a mistake from the start. Before implementing changes through Phase 1, management should have converted their structure to a flatter one, thereby, creating an initial example for the workforce of management’s willingness to change.
Pilkington’s biggest error was to enforce change many times resulting in disorientations of the employees. Disorientation occurred because the employees were never actively involved in the conceptualization and the implementation processes of change.
Pilkinton had no real idea or concrete plans till Phase 3, on the different ways change could have been introduced within the company.
Pilkington did not require Phase 1 and Phase 2 at all. Their over-enthusiasm back-fired, as their plans for change were not thought through and its impacts were not measured. It took strikes etc. to make the management aware that their ideas were not working. It was only then that Pilkington realised its blunders and has been trying to recover since.
Finally, Pilkington Australia could have avoided all these issues and problems from the start if the “CHANGE PROCESS” had been carefully developed.
“A common dining area is definitely a great step forward.”
9. REFERENCES
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Pilkington Website available at:
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Pilkington Australia Website available at:
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“Pilkington glass workers expected to end strike” available at:
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“A Look at the History and Highlights of Pilkington” available at:
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Ford, Pilkington and Ericsson ring in the changes, April 2002, Strategic Direction. Vol. 18, Issue 4.
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Robbins, P. & Marsh, T. 2001. Organisational Behaviour: Leading and Managing in Australia, 3rd edn, Prentice-Hall, Australia.
Adapted from Pilkington Australia Website:
Adapted from Journal:
Ford, Pilkington and Ericsson ring in the changes.
Adapted from Journal:
Ford, Pilkington and Ericsson ring in the changes.
Adapted from Journal:
Ford, Pilkington and Ericsson ring in the changes.
Adapted from Journal:
Ford, Pilkington and Ericsson ring in the changes.