Organizational Change

Organizational Change

Organizational transformation is required with major business change initiative and it impacts most of the organization. It fundamentally changes the structures and ways of doing business. Since it is large in scope, it is difficult to accomplish. The success of the business initiative is dependent on the success of the organization transformation. For the organization transformation to occur a change process must be utilized. The change process insures that there is acceptance of the new way of doing business. The sooner there is acceptance and commitment, the sooner business results will occur.

There are three levels involved in the change process. The three levels are leadership, business improvement project teams, and individual / group transformation (stakeholders). In order to lead change, each level has to experience their own change process. In order to change, there must be dissatisfaction with the current state, a vision of the improved future, and a plan to achieve the future state. All of this must be greater than the resistance to change.

Each level has a key role to play in the change leadership process. Leadership must provide the understanding of why we must change. The project teams provide the what. The stakeholder must provide the detail of how.

All the levels should be considered from the beginning and throughout the transformation. All three levels must interact for the change to be successful. If one level is ignored or not integrated to the other two, the loss of business results and failure of the organization transformation occurs.

Resistance to the change is to be expected by some stakeholders but not accepted. Compliance to the change is no longer sufficient. Commitment to the change is what is required of each stakeholder to achieve the business results. The basic goal of transformation is to change the context of the stakeholders from fear/resistance to engagement/involvement. The individual level steps are: Engage and Involve, Respond to results, and Reward for change.

Several years ago a major electronics manufacturer, Radio Shack, decided to try to improve the quality of its manufacturing. An important source of problems was the company’s wave soldering machine, which put solder on components of printed circuit boards.

Engineers studied the situation and recommended to management that new soldering equipment should be purchased. The older equipment had a defective rate of .4%, while the latest soldering equipment was built to produce less than a tenth as many failures. The new equipment would pay for itself in a year because less rework would be necessary.

It was a tight year financially for the company. Money would probably have to be borrowed at a fairly high interest rate to purchase the equipment. But the executives had said they wanted better quality.

Here’s what the company actually did. The managers of this company bought the new equipment. They were committed to improving the quality of their product and they believed the new equipment would solve some of their problems.

When the new equipment arrived, they put the old equipment into surplus. Managers at a subsidiary company heard about the old equipment and were able to pick it up before it was scrapped.

Employees at the subsidiary went to work installing the old equipment in their operation. Once the equipment was up and running, the subsidiary had the same .4% defect rate that the parent company had had. So what did they do?

The subsidiary had trained all its employees to use basic quality improvement methods to identify and remove causes of problems. The subsidiary’s employees studied the soldering process and the assembly process as a whole, and made a series of inexpensive improvements.

What kind of improvements did they make?

• They found that many of the frames used in the process were beat up, or out of alignment and, therefore caused problems. They straightened some of the frames and replaced any frames they could not repair.

• They changed the preheat temperature so the boards were hotter when they went across the solder.

• They found that some components in the product were too close together. A minor design change allowed them to move the components a little further apart.

In short, the subsidiary made numerous