Leadership and Change Management

Question :

This module will be assessed through an individual report on a case study called “Organisational Change Development Plan” which you will be provided with in week one.

The assessment will be based on case study material which will be provided electronically via Moodle or download instructed via email. Please read the “Assessment case studies brief” that is provided on Moodle for further administrative details.

The report will require you to investigate a situation of organizational change, analyzing the multiple causes, organizational and social consequences, using academic and professional literature to support your findings. Your report will also include recommendations to lead and manage organisational change, reflecting on appropriate leadership styles, employees’ engagement and organisational development.

Answer :

Introduction 

The report has been developed to critically analyze the given study, identifying the causes that push an organization to change or initiate change, their consequences, and how organizational change can be adopted effectively and efficiently. The purpose of this paper is to study the concept of the organization change, its causes, and impact on the organization. Apart from this, the paper also intends to study the strategy that could be employed to initiate as well as implement the change within the organization effectively and efficiently. Organizational change can be defined as a movement of a firm from one state affairs to another state affair. There could of several types of organizational change such as organization-wide change, transformational change, personnel change, remedial change, structural change, etc. (Yousef, 2017). A change within the organization is needed because of the change in its internal or external business environment. With the rapidly increasing competition in the market, dynamic markets frequently change in the business environment, an organization needs to make changes accordingly in order to sustain and survive in the market (Petrou et al., 2018). Change is inevitable or it can be said necessary evil and hence every organization should go through the change whenever it is needed for the sake of growth and development of the organization. 

Overview of the case scenario 

Aesch AG is one of the largest suppliers of medical equipment to the healthcare industry in Germany. The organization has played the role of the leader in the market in terms of advanced diagnostic imaging system IT healthcare system, as well as molecular and in-vitro immunodiagnostic system. The organization was always focused on advanced technology in order to ensure innovation in its research & development department, marketing as well as the sales department. The organization has experienced a significant level of success. However, the things are changed now that are forcing the organization to initiate change within the organization. For example, the German market and most importantly customers of the organization were changing. There was a significant shift in customer decision making. The growth rate of the Germany market is also one of the biggest concerns of the organization because the expected growth rate of the organization was lowest. It was also estimated that the total spending on medical devices was only $11.8 billion in Germany that was equal to $145 per capita. However, it is also important to consider that Germany was the third-largest market for medical devices after the United States of American and Japan. Thus, it was a highly important market for organizations that were providing medical devices. The German market for medical devices was highly competitive because almost every global player was present and operating in the market. 

Anna Frisch, the marketing director of Aesch AG found that the marketing strategy of the organization is needed to be changed considering the change in market and shift in customer decision making. She also found that instead of focusing on the features and benefits of individual systems that address the needs of the clinical user, it is important to address the need of the "C-Level" such as CEO, CFO, as well as CIO with the help of marketing. Anna Frisch made a proposal of the concerned change necessary for the organization and presented to the top executive for their consideration. But she faced strong resistance from their side. The top executive of the organization did not acknowledge the importance of implementing the change within the organization. 

It is very important to convince the top executive of the organization to consider the change initiative proposed by Anna Frisch. So, she needs to adopt an effective leadership style with the help of which she can convince and motivate the top-level executives of the organization (Stouten et al., 2018). Transformational leadership style can help to convince the top executives of the organization to implement the change and lead the organization through the change effectively and efficiently. Transformational leaders are the ones who work with the team in order to identify the change required within the organization so that the organization can adopt and implement the change to cope with the environmental change and ensure the growth and development of the organization. The transformational leader creates a vision in order to guide the process of change through inspiration. 

A transformational leader can inspire the employee to embrace change by fostering workplace autonomy, ownership, and a culture of accountability within the organization (Thibault et al., 2019). Hence, Anna Frisch needs to adopt a transformational leadership style in order to influence and motivates top executives and peers to adopt the proposed change. She has identified that the organization is going to face a tough time if the top management of client organizations starts taking all strategic decisions of the organization. If it happens, the organization may significantly lose its customer. Currently, the organization is focusing on features and benefits of individual system while ignoring the needs of C-Level. Going with the same perspective would result in losing a customer as the perspective of the organization was too narrow to deal with the expected change.  

Analyzing the causes of change

There are several factors that usually induce an organization to adopt and implement change within the organization. In order to be competitive and survive in the market for a longer period of time, the organization should always analyze its internal as well as external business environment and initiate change within the organization if necessary (Xiao & Yun, 2018). For example, if competitors are using advanced and up to date technology in order to improve their business process, the organization should also go for updated and advanced technology otherwise the competitors will kick the organization out of the market. Similarly, there could be several other factors such as economic condition, level of competition, state of technology, changes in the taste and preference of customers, etc. that could induce an organization to initiate change in order to be effective and efficient to address the needs of the customer. 

The external business environment of Aesch AG is one of the significant causes of change within the organization. The external business environment of the organization possesses several threats for the organization. The expected market growth rate in Germany is very slow. Thus, it is very tough for the organization to grow in this market with the same strategy. So, the slow growth rate of the market is one of the leading causes of change within the organization. The healthcare organizations in the market of Germany are facing difficulty as the costs have significantly improved while income has been reduced. Thus, Aesch AG needs to analyze its strategy and identify the changes that could be implemented to respond to the ongoing change within the organization. 

Changes in the decision-making process of the customer are also a key reason for the change within the organization. It is expected that if the organization will not change its strategy to meet the needs of the C-Level of the client organizations, it will lose some of its customers (Habib et al., 2018). Currently, the organization is only looking for and focusing on the needs of the individual system that addresses the needs of clinical users. But as top-level management will start involving in the decision-making process, the organization will lose its customer. The political system of the country is also a key concern for the organization to initiate change. The political view is considering to further reduce the spending on medical devices. Already many of the healthcare organizations are running in deficit. Almost every global player is operating in the market. It has significantly improved the level of competition in the industry. 

Reduction in government spending on medical devices states that healthcare organizations have to make use of the current state of technology instead of investing in new and innovative technology. Therefore, it has become necessary for the organization to analyze its current strategy, allocation of resources as well as budget and make the appropriate change in order to deal with the changes in its business environment (Nadia et al., 2020). 

Role of power and politics in organizational change

Organizational change is a very complex process and requires effective cooperation and collaboration among the members of the organization. Without effective cooperation and collaboration, it is very tough to adopt and implement change within the organization successfully. Implementing change within the organization requires a positive attitude of the top management of the organization and proper support from the employees at the bottom level (Powell & Tilt, 2017). Resistance to change is one of the significant barriers to organizational change. Employees are generally resistant to change within the organization considering the complexity of change. Therefore, there is a need to use power and politics to motivate and induce employees to accept the change ready for the growth and development of the organization. Thus, power and politics should be used to implement change within the organization and manage it thoroughly in order to get the desired result. If the change will not be managed with power and politics, it is very hard to realize the goals and objectives of change (Tang, 2019). However, power and politics may also demotivate the employees and hence the change cannot be implemented successfully in the organization. So, it is required to maintain a balance in power and politics for generating a better result.  

Leadership plays a very effective role in implementing change within the organization. Leaders are required to focus on building a healthy organizational culture because without a healthy organizational culture implementing change is very tough. Healthy organizational culture motivates employees and encourages employees to accept change. It creates a sense of challenge in the mind of the employee and hence they accept the change (Feng et al., 2016). Cultural values such as integrity, inclusion, recognition, reward, etc. should be focused on. Employees of the organization may respond differently to the change. Thus, the leader needs to work with employees and gain their trust. It is also necessary for the leader to show confidence and ensure that one will lose their job if the change is implemented (Packard, 2017). Apart from this, the leader also needs to create a sense of urgency in every member of the organization. The leader should also make them understand the importance of change for the growth of the organization as well as the personal growth of employees.

It is evident from the case study that the personnel are not ready to go through the change. They may have a fear of losing their job or going through a very tough time due to the complexity of change. Their perception and attitude can be affected by using power. However, there are two types of power such as personal and positional. Personal power could be used for personal gain and hence it affects the morale and motivation of the employee. Therefore, the use of personal power should be avoided while initiating change within the organization. Positional power that comes by holding a position within the organization. It is generally used to ensure the growth of the organization (Rengarajan et al., 2018). Thus, positional power can be used within the organization to develop a long-term and healthy relationship with the peers and other members of the organization that is necessary for implementing change within the organization. Apart from power and politics, the leader can also use other tactics as well as implement the change successfully. Some of the key tactics that will be helpful while implementing change are the following;

The leader should extensively focus on defining the change and its goals as well as objectives. The change should be defined clearly so that every individual can understand what the organization will be going through. The goals and objectives of the change should be SMART because it motivates employees to work towards achieving the goals and objectives. Moreover, guidelines and policies are also necessary to guide the actions and activities of the employees of the organization to achieve the goals and objectives of the organization effectively and efficiently. 

Analyzing the consequences and reaction to change

As it has been discussed that change is a necessary evil, it should be implemented to make the organization able to cope with the changes in its external business environment. If an organization is not identifying the need for change, and not implementing the required change, it will fail to deliver the goods or services that can satisfy the needs and demands of the customer. If the organization is not going through the required changes, it will also lose its competitive advantages in the market and hence the competitors will gain more market share. The performance and productivity of the organization will reduce gradually. It will reduce the morale and motivation of every member of the organization and eventually the organization will fail in the market and maybe shut-down forever (Bustinza et al., 2018). Therefore, it is necessary to implement the required change. Aesch AG is also in need of change and the marketing director has already predicted that if the change would not be implemented, the organization will lose its customers.

On the other hand, if changes are being implemented in the organization, it will help the organization to gain competitive advantages against the key competitors of the organization. Aesch AG can significantly target its client organization that will help the organization to increase its customer base. As the expected growth rate of the market is very slow, the organization can improve its performance only by increasing its customer base. However, the proposal of Anna Frisch was rejected by the top executive of the organization. They rejected the proposal because they were not confident with the proposed idea as well as they were not able to see the importance and need for change (Chebbi et al., 2019). Thus, it can be said that power plays a significant role in the organization, and using power in the right direction can pave the way for organizational change effectively. Power can be used to motivate the workforce to accept the change. It has also been found that some of the employees are keen to experience change as they want to go through the challenges. They want to see what actually the organization wants to go through and hence they put their full effort to make things happen. Thus, with the help of the right set of power, organizational change can be realized. However, if power is not being used in the right direction, it may lead to loss of trust, and employees may start doubting the leader or the management. Thus, along with the right set of power, gaining the trust of the peers and subordinates is highly recommended for the successful implementation of change (Lenberg et al., 2017). The people in power should have the intention to affect the perception of the employees because generally, employees perceive that the change is very tough, complex, and dynamic and if the organization is going through the change, they may lose their job as well. Affecting such kind of perception and modifying their thoughts on change is a key step towards change. 

Political activities are an inevitable part of an organization and politics within the organization significantly affects the process of implementing change within the organization. There are several kinds of political activities that can take place such as competition, ethical misconduct, favoritism, association with a powerful individual, etc. Competition is good for the performance and productivity of the organization because as one employee competes with another both perform excellently that benefit the organization (Buchanan & Badham, 2020). On the other hand, favoritism and ethical misconduct are harmful for the organization because both significantly reduces the level of motivation and morale of the employees within an organization. Organizational structure plays a crucial role in determining power and politics within the organization. A complex and rigid organizational structure may lead to a higher level of politics and power that may result in delaying or refusing decisions regarding the change. It can be observed in the case of Anna Frisch whose proposal was refused as top executives did not consider it necessary. Thus, the complex and rigid organizational structure is a barrier to organizational change and hence it is necessary to make a flexible organizational structure. 

The social and cultural dimension of change

Culture of an organization is the shared values, belief, as well as assumptions that govern the behavior of employees within an organization. The shared values and beliefs have a strong impact or influence on the employees. They also dictate how employees act, dress, and perform their job. Every organization focuses on a set of values, beliefs, norms, and assumptions to develop an organizational culture that guides the actions and activities of the employees within the organization (Naveed et al., 2016). Organizational culture plays an important role in ensuring higher performance and productivity. For example, a healthy organizational culture leads to higher performance and productivity of the organization whereas an unhealthy organizational culture leads to lower performance and productivity. Organizational culture is also important in implementing change. There is a significant link between organizational culture and change. In order to implement change within the organization, the management of the organization should be open or an open environment should be developed. It allows every member of the organization to take part in the decision making and present their valuable suggestion. 

In the case of Aesch AG, the marketing strategy was to change and seven different departments were involved in the process of developing as well as selling a single product. Therefore, it was necessary to present the idea of change on a platform where seven departments are all together. It is to make the idea visible to everyone and motivate them to initiate the change together to achieve the goals of change (Al-Ali et al., 2017). The culture of Aesch AG was not healthy because the top executives were not concerned about the motivation and morale of employees and peers. After all, when Anna Frisch presented her idea of change that was refused by the top executives, it made her extremely disappointed. In such an organizational culture, it is very tough to initiate the change successfully. Unhealthy organizational culture may lead to lower motivation and morale of the employees. It may increase the rate of employee turnover and hence the organization will face severe consequences such as lower performance and productivity, higher cost of recruitment and hiring, etc. 

Recommendations

Change is a complex and tough process. It requires skills, competencies, and strategies to implement change within the organization effectively and efficiently. Aesch AG should follow the following steps in order to initiate and implement change effectively. 

Effective leadership is the first and foremost thing in order to implement change successfully. Leadership is needed to motivate and inspire individuals within the organization to accept change and contribute to implement the change (Papadopoulos, 2016). The leader makes the people aware of the importance of change and creates a sense of urgency to implement the change for the organization as well as personal growth. The growth of an organization is directly linked with the growth of employees. Communication throughout the organization is as necessary to implement the change as the change itself. The leader communicates with every individual and motivates them to be a part of the change implementation process. The leader also creates a vision and communicate that vision with every member of the organization (Imran et al., 2016). Creating a vision is necessary to convince the top executives as it will allow seeing where the organization will reach if the change will successfully be implemented. In order to achieve the goals of the change, short-term objectives should be developed that can guide the team throughout the process. Thus, Anna Frisch should focus on these aspects to initiate and implement change within the organization. She needs to convince top executives along with motivating employees to accept the change. 

Employment engagement is also very important for initiating as well as implementing change within the organization. Employees tend to ignore or avoid change. They do not readily accept the change considering the complexity of the change. Hence, it is necessary to motivate them and engage them in the process of change. They should be emotionally targeted to be an active part of the change process (Elwyn et al., 2017). Thus, Anna Frisch should focus on employee engagement in implementing change successfully. A Reward system can also be very effective to implement the change within the organization because the reward system keeps employees encouraged and motivated. So, Anna Frisch should also focus on ensuring attractive rewards for those who perform and contribute to the process of implementing change.

Conclusion 

The external environment of Aesch AG induces the organization to go through the change because it is neither attractive nor seems to be growing. The organization is also going to face difficulty in the near future if it does not initiate the change. The organizational culture is also not supportive to initiate the change as the proposal of the marketing director was refused by the top executives. So, there is a need to focus on developing a healthy organizational culture. The marketing director also needs to improve in her leadership style so that she can convince the top executive as well as engage employees in the process of initiating as well as implementing change. The change is necessary to implement in order to improve and maintain the customer base.

References 

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