Management models related to organizational change

2.0 Literature Review

This subdivision will discourse different old research related to this class work, like organisation alteration theoretical accounts.

2.1 Organizational Change

Page described alteration as the beginning of all human advancement and all human hurting ( 42 ) .The word ‘change ‘ in concern organisation, refers to external alteration as a engineering, clients, rivals, market construction, or societal and political environment, but besides refers to internal alteration, like a plan of reform or re-engineering.

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Darwin ( 32 ) described the alteration as a “ endurance ” . He associates his thought with the ability of reacting to alterations that have been taking topographic point in the environment. Beer and Nohria describe as, from the survival position of alteration, organisations are seen as species in nature and the endurance in concern environment has been interpreted as the necessity to follow or to decease ( Beer & A ; Nohria 2002 ) . Thus organisations should set themselves to the concern environment in order to increase their opportunity to last on the market.

Depending on the certain degree of analysis, alteration can be defined as:

1 ) As a general prospective degree, “ alteration is a phenomenon of clip. It is the manner people talk about the event in which something appears to go, or turn into, something else, where the ‘something else ‘ is seen as a consequence or result ” [ 34 ] ;

2 ) As a degree of organisation “ alteration involves difference in how an organisation maps, who its members and leaders are, what organize it takes, or how it allocates its resources ” [ 35 ] ;

3 ) At the organisational development degree, “ alteration is a set of behavioral science-based theories, values, schemes, and techniques aimed at the planned alteration of the organisational work puting for the intent of heightening single development and bettering organisational public presentation, through the change of organisational members ‘ on-the-job behaviors ” [ 36 ] .

2.2 Organizational alteration theoretical account

There are as many positions on alteration as people in the organisation affected [ 47 ] and Burnes [ 48 ] has emphasized that there is no best manner to pull off alteration. There are the most good known alteration theoretical accounts in order to acquire the best points from each one.

2.2.1 Kurt Lewin ‘s three-step theoretical account and force-field theory

It is one of the most quoted theories sing organisational alteration. Harmonizing to this theory, there are two forces-drivers for alteration and opposition to alter in organisations which are wholly opposite with each other. When drivers and opposition forces are in balance in the organisation, no alteration is possible to do and the organisation is in a province of inactiveness. In order for an organisation to be able to alter, forces for alteration should be more than opposition to alter. Therefore, directors should concentrate on minimising opposition and increasing the forces for alteration [ 54 ] .

Referees

Examine position whether lessening or increase

Move

Make Change permanent

Take action brand alterations, Involve people

Unfreeze

Fig. 1 Three-step theoretical account of Lewin ‘s ( Cameron & A ; Green [ 33

2.2.2 John Kotter ‘s eight measure theoretical account

In this theoretical account Kotter has identified eight stairss, which are required to be followed for a successful alteration in direction, it ‘s focused on betterment of communicating during the alteration procedure [ 55 ] :

1 ) Create sense of urgency, analyze the competitory environment by anticipating future menaces and chances, and be cognizant and activate the organisational forces for the urgency of alteration.

2 ) Form a powerful alliance ; set up the power managerial squad for taking alteration.

3 ) Make a vision for alteration ; construct a clear vision for an effectual perceptual experience of the alteration among the employees.

4 ) Communicate the vision, communicating is the cardinal component in a successful alteration, therefore it is of import to hold good communicating tools to portion the vision.

5 ) Geting rid of obstructions, take attention of the opposition factors by empowers employees that can put to death the proposed vision.

6 ) Create short-terms wins, program short-run successes and reword employees to increase motive.

7 ) Build on alteration ; consolidate the alteration for advancing new merchandises and alterations

8 ) Institutionalize new attacks ; do certain that the organisation will be ready for approaching alterations.

In Kotter ‘s position we can see that, the communicating is the cardinal factor for a successful alteration. His mainly focal point on the importance of making clear and realistic visions utilizing an appropriate alteration squad, responsible with pass oning visions, thoughts, accomplishments and failures within the organisation [ 55 ] . This theoretical account could besides be helpful for pull offing employees ‘ immune behavior.

2.2.3 Nadler and Tushman ‘s congruity theoretical account

Nadler and Tushman set a new theory for alteration in direction, which is rather similar with Carnall ‘s alteration direction theoretical account. Their theoretical account describes on the understanding the factors that have impact on the success of the alteration procedure. Harmonizing to the congruity theoretical account, an organisation is a system of sub-systems, which sorts out and translates the alterations from the external environment. The organisation ( the system ) diagnoses the inputs from internal and external alteration drivers, puts them into the transformational procedure ( composed of sub-systems ) and acquires end products that can be used at the person, squad, and organisational degree. The sub-systems are non independent from each other. The interactions and dependences among sub-systems are cardinal for the success of the alteration direction procedure. [ 56 ]

Informal organisation

O/p Individual, squad and organisation

I/p Strategy resort environment

Formal organisation

Peoples

Work

Pull offing Change, transmutation procedure

Fig. 2 Nadler & A ; Tushman ‘s congruity theoretical account ( Nadler & A ; Tushman [ 56 ]

Nadler and Tushman [ 56 ] describe the sub-systems as follows:

aˆ? Work, day-to-day activities of employees in the organisation ;

aˆ? People, personality, capablenesss and outlooks of the employees ;

aˆ?Formal organisation, organisational construction, policies, and systems, officially organized ; written regulations

aˆ?Informal organisation, emerging constructions, systems, and norms among employees throughout clip ; unwritten regulations.

For an effectual and successful alteration procedure, Nadler and Tushman [ 56 ] propose that directors should pull off all four constituents at the same clip. They say that the beginning of opposition to alter could ensue from directors who ignore these sub-systems and interaction among them. Therefore, the most of import portion of this alteration theoretical account is that it shows the relation between an organisation ‘s sub-systems and direction and identifies possible beginnings of opposition for a successful alteration execution.

3.0 Organization

In this class work I have presented the informations collected from the company ( Petrom OMV ) .This will get down by presenting the company ( background ) , the alteration procedure, and so the information presentation will be related to the theoretical frame of mention, in order to detect similarities and different.

3.1 Background of Organization

Petrom is the largest oil and gas manufacturer in South Eastern Europe. With activities in the concern sections of Exploration and Production, Refining, Selling every bit good as Gas, Petrom has proved oil and gas militias of 823 manganese boe, a maximal refinement capacity of 8 million dozenss per twelvemonth, about 550 make fulling Stationss in Romania and over 260 filling Stationss in Moldova, Bulgaria and Serbia.

In 2009, the turnover of the company was EUR 3,029 manganese and EBITDA was EUR 696 million. After its denationalization in 2004, the company recorded positive consequences. The modernisation procedure initiated in 2005 is still underway. As a member of the OMV Group, Petrom has embedded in its operations the ‘3plus ‘ scheme. The company ‘s nucleus activities are represented by the three concern sections – Exploration & A ; Production, Refining & A ; Marketing, and Gas & A ; Power – and operated with a focal point on their sustainability. As a regional Centre within the OMV Group for South-eastern Europe, Petrom plays an indispensable function in presenting concrete economic consequences in one of OMV ‘s three growing markets – CEE, SEE and Turkey. Additionally, Petrom focuses on the three values of the OMV Group – Pioneers, Professionals and Partnership – , “ which distinguish us from our rivals and beef up our competitory advantage in proficient and commercial activities ” .

Until 1989, the activity of the company has been carried out in the conditions specific for that period. The organisational construction and the activity have been carried out based on a national scheme of economical planning, through the alleged ‘five-year ‘s programs ‘ which were based on the vision of the national economic system as a alone corporation.

After 1990, the society has undergone a series of reorganisations within a procedure of passage to a market economic system. In December 2004, the company was acquired by the transnational company OMV Austria and, from that minute on, a series of plans have been carried out in order to implement a wholly different organisation and development scheme, based on investings and strategic plans of long- and medium-term development, with a fiscal subject and a rigorous cost direction, with the purpose of maximising the operational efficiency and consolidating the net income. In the minute of the acquisition, the company had 7 chief divisions ( see Appendix 1 – Petrom organisational strategy 2004 ) , and through a bit-by-bit alteration procedure, implemented over a few old ages with reorganisation, restructuring, new company policies, new ordinances and new processs, the company became an about new organisation ( see Appendix 2 – OMV Petrom organisational strategy 2010 ) .

Before denationalization, Petrom was the market leader in Romania ; after denationalization, the company received the place of regional Centre for Southeast Europe within OMV Group. Due to its economic public presentation, it plays an indispensable function on Southeast Europe market, one of the three emerging markets of OMV: Central Europe, Southeast Europe and Turkey severally.

4.0 The organisational alteration of petrom

The acquisition of 51 % of the portion capital of Petrom by OMV Austria in December 2004, allowed OMV to guarantee the direction of Petrom in conformance with the vision and determinations of Petrom stockholders.

The alteration procedure that fallowed the acquisition had two major phases:

1 ) First 5 old ages phase – which was governed by the organisational positions imposed by the denationalization contract ( with limitations sing shutting of aims, reconstituting staff, staff wages and outsourcing ) ;

2 ) After the first 5 old ages stage – in which all determinations were put into pattern.

Within each of this two phases there were more sub-stages, practically the alteration was and is uninterrupted, making the feeling that the company “ lives and is invariably altering ” . The first phase included:

aˆ? The set up of seven regional Centres for leading ( managed by exiles ) which supervise 3-4 county subdivisions of Petrom

aˆ? The set up of the new direction construction – in this construction the cardinal places were occupied largely by exiles, the remainder being occupied in two years-time by selected employees from old Petrom construction or by new employees, from outside the company

aˆ? Gradual disintegration of the 41 Petrom county subdivisions ( in Romania ) and centralisation of all activities within the new Petrom construction

aˆ? Closing-down unprofitable aims ( terminuss, make fulling Stationss, extraction Wellss etc )

aˆ? Outsourcing some activities, such as transit, care, undertaking supervisors, preparation, IT services, confer withing etc

Within the 2nd phase of the alteration, which is undergoing at present, there are the undermentioned sub-stages:

aˆ? EAST undertaking – which comprises of: altering the name of the company from Petrom S.A.to OMV Petrom S.A. ; fall ining the Marketing and Refining divisions and rearranging the sections within the divisions ( the Supply & A ; Logistics section was moved from Marketing to Refining ) ; the inclusion of the OMV Romania S.R.L. forces in the new division and setting-up the new company OMV Petrom Marketing S.R.L. , under whose name OMV Romania S.R.L. still operates

aˆ? The SPIN OFF undertaking – which will get down in October 2010 with the soaking up of all activities of old OMV Romania, of Retail and Commercial sections from the existent Marketing and Refining division, every bit good as the activities of MPP Petroleum Distribution S.R.L. ( which manages over 30 filling Stationss acquired by Petrom from MOL Romania ) in OMV Petrom Marketing S.R.L.. This undertaking will besides connote the alliance of Downstream Optimizing and Supply Department ( Petrom terminuss ) to the working processs of the Refining division.

aˆ? IRIS undertaking, which comprises of implementing a new ERP ( enterprise resource planning ) system – IRIS ( replacing SAP ) ; IRIS system is used by OMV in all its companies.

aˆ? Reshaping the Corporate Centre undertaking – the undertaking was launched in November 2009 by OMV Executive Board in order to optimise the construction and working methods of the corporate maps of the OMV Group based on the 3plus Strategy. The chief advantage of this undertaking is the centralisation of all corporate maps. Basically, no corporate map will stay at divisional degree ( except undertaking direction ) and, therefore, optimum synergisms are created and utilized.

From this point frontward, I will mention to the company studied in this thesis as OMV Petrom, when mentioning to the existent company, and Petrom and OMV, when mentioning to the companies prior the acquisition.

All the above determined the direction squad to turn their attending on the possibility of uniting planned alteration with emergent alteration and adjust their aims so that they fit the Rumanian market, as one of the director states “ Of class non all of the things run harmonizing to program and accommodations were done on the procedures. Overall the coordination of alteration showed a strong chief end but besides flexibleness. ” ( Level 3 director, Logistics Process Transformation & A ; Implementation, R & A ; M BU Downstream Optimization ) . This was possible by placing the experient staff, holding a flexible organisational construction with the possibility of modifying it harmonizing to demands, developing preparation plans for the full staff depending on the place occupied and the demands, and reassigning cognition towards the employees in order for them to accomplish their established aims in good conditions.

4.5. SYMPTOMS OF RESISTANCE

Once the denationalization contract was signed and OMV Austria acquired Petrom, employees had to accept it, but that did non intend they were needfully satisfied with it or did non defy the alteration procedure. Armentrout provinces that is non easy to get the better of opposition to alter, but acknowledging some of the symptoms is the first measure in that way [ 58 ] . After questioning some of OMV Petrom ‘s employees, some indicants of opposition could be recognized. First, a differentiation can be made between the opposition employees showed in the beginning of the procedure and opposition employees are still demoing today.

Overall, most employees ( 86,49 % ) agree that they have a positive attitude toward alteration, but what it is interesting is that merely 16,21 % of them comprehend other employees as holding a positive attitude towards change. Most of them ( 67,57 % ) see others as equilibrating between a positive and a negative attitude, or holding no sentiment – “ Romanians ne’er have a clear place ” ( flat 4 director – Procedure Manager Taxes, Chief Financial Officer ) ( see Appendix 6 – Change procedure in general ) .

Even if most employees did non hold positive attitudes towards the approaching alteration, none of them showed marks of what Petrini and Hultman [ 57 ] identified as active opposition. Most of them expressed their concerns in insouciant conversations with their households, friends or co-workers, but non frequently with directors or leaders. Some even tried to happen more information about the alteration procedure – “ I have tried to extinguish my concerns by seeking for more information about what the alterations consisted in and to happen out how this procedure could impact my squad, my organisational environment and me ” ( flat 2 directors – Undertaking Management Lead, Refining ) .

There were besides respondents that referred to the sort of opposition Caruth, Middlebrock and Rachel [ 15 ] call open/direct onslaughts. No 1 has deliberately slowed down on the occupation or sabotaged new equipment or processs to find the alteration to neglect, but some employees were so critical to the new organisation that they chose to vacate or accept the company ‘s offer of early retirement with a societal plan.

The other type of opposition defined by Caruth, Middlebrock and Rachel [ 15 ] – passive behaviour/dropping out – is the strongest index of opposition at OMV Petrom. Most employees had certain station acquisition outlooks, which were non satisfied, but really few complained about them openly. Alternatively, they preferred to maintain their ideas to themselves and merely complained to each other in the corridor or in the smoke room. One director identified a clear mark of inactive behavior: “ Employees resisted twenty-four hours by twenty-four hours, seeking to happen alibis and motivations for NOT making what they were requested to make ” ( Head of Technical Management, Marketing, direction degree 4 ) . Therefore, their negative ideas and their dissatisfaction with the state of affairs in the company could be interpreted as opposition to the alteration. This opposition arose during the alteration procedure, when employees became less and less satisfied with the effects of the acquisition and their outlooks did non fit the world. “ For some of the employees, the enthusiasm from the beginning of the alteration procedure turned in the undermentioned period into disenchantment and deficiency of satisfaction due to the extremist alterations within the company. This new organisational construction was non easy accepted by all the employees of the company, many of them non being able to appreciate the deductions of the new working system ” ( flat 3 director – Storage Development Manager, R & A ; M BU Downstream Optimization ) .

Finally, OMV Petrom ‘s employees could be considered a small misanthropic if we use Reichers and Wanous [ 11 ] definition of the term. 32.43 % of respondents stated that past alterations in the organisation were unsuccessful. There is besides the possibility that employees have lost religions in their leaders and directors, since the power and the higher direction degrees are now occupied by aliens ( see Appendix 7 – Sense of urgency ) .

4.6. CAUSES OF RESISTANCE

Despite the popularity of amalgamations and acquisitions schemes as options for organisations, research indicates that between 55 % and 70 % of amalgamations and acquisitions fail to run into the anticipated intent [ 106 ] . Thus, directors are get downing to recognize that keeping the morale of lasting employees is critical to a successful ownership conversion.

Resistance is an inevitable response to any major alteration. Following the types of opposition identified in the theoretical portion of this thesis, I will show farther the causes of opposition identified at OMV Petrom.

1 ) Fears ( see Appendix 7 )

A major cause of negative feelings that appear after a passage is the often resulting layoffs. About 90 % of the respondents mentioned dismissals and layoffs as a major concern after the acquisition. This turned out to be a founded fright, since the denationalization procedure has brought a complex plan of staff restructuring which has affected, since 2006 when it has begun, 22.540 employees. About 73 % of the respondents identified decreased occupation security as being the most of import consequence of organisational alteration.

Another ground for employees defying the alteration was that they were afraid of losing their places, their occupation rubric, duty and authorization, in other words their occupation position. 21.62 % of employees found cut down occupation position as a really of import consequence of the alteration, while 37.84 % identified it as slightly of import. As a consequence of decreased occupation position, employees started to comprehend the alteration negatively, and opposed it by saying out loud, even if among themselves, their displeasure with the alteration. The fact that they knew they would lose power and descend in the organisational construction influenced the manner they reacted.

Economic loss was non identified as a really of import consequence of organisational alteration ; merely 24.32 % of the respondents considered it as of import. This is because most of the employees that decided to remain at OMV Petrom really hoped for a rise of salary in

Alliance with the wages in OMV, so that the Rumanian employees who worked on the same hierarchal degree with the exiles to be paid harmonizing to the same system. Unfortunately, as respects the salary degree of the Romanians, the company merely takes into consideration the development of the Rumanian local labor market. This, in clip, led to dissatisfaction, which triggered further opposition. Harmonizing to Caruth et all. [ 15 ] , another ground to fear alteration is change of workgroup relationship. Many people feel the demand to belong to a group and to tie in with other people in the workplace, therefore doing workgroup relationship important. 29.73 % of respondents saw altering in workgroup relationships as a really of import consequence of the reorganisation, and feared that the alteration would do group members to be transferred and replaced by people with different personalities and accomplishments, dividing the bing workgroup. This made them oppose opposition to the alteration procedure.

2 ) Different appraisals

Kotter and Schlesinger claim that people resist alteration because they assess the state of affairs otherwise from their directors or those originating the alteration [ 61 ] . In the OMV Petrom instance besides, directors assess the state of affairs otherwise from other employees ; the information differs harmonizing to the degree of direction each individual occupies. Furthermore, directors and employees perspective on the alteration procedure varies.

While directors have the full image of the procedure, know all the phases and see that the alteration started with the pre-acquisition readying and will stop sometime in the hereafter, employees see the alteration procedure from their personal point of position, believing that the alteration started with the execution of the first phase, and visualizing the alterations from the last 5 old ages as separate alterations, non as portion of a whole. Hence, employees province that alterations go on excessively often and this can be a cause of opposition. Even more incredible is the fact that more than 27 % of the respondents province that they are non cognizant that a alteration procedure is taking topographic point in the organisation.

3 ) Misinterpretation and deficiency of trust

As Petrini and Hultman [ 57 ] province it is common for employees to defy alteration when They do non understand their deduction and believe that what they have to derive is less than what they will lose. More than 32 % of respondents province that they do non understand the vision the company is driving toward and over 40 % do non understand the aims and ends of the current alteration. Furthermore, 35.14 % do non understand how the vision affects their occupations Andover 27 % do non see a positive result of the current alteration. These all can be causes of opposition to organisational alteration. In add-on, the deficiency of trust that leaders have in local directors and employees may rag the forces and do them brood, kick, and defy the alteration ( see Appendix 9 ) .

4 ) Wrong methods

Even if most of the interviewed employees agreed that Petrom ‘s acquisition and integrating into OMV Group has been a success, they all think that this could hold been done better. Whether they refer to a shorter alteration procedure, better communicating, or better use of local human resources, all respondents agree that “ there is ever room for more ” . Although employees resist the methods used to implement the alteration and non the alteration itself, this can take to negative feelings from employees, which leads in bend to opposition.

5 ) Inertia and low tolerance for alteration

Employees ‘ tolerance for alteration depends on the ration between positive and negative results. Employees need to acquire a feeling of stableness and security at their topographic point of work in order to back up the alteration. Furthermore, as Kotter and Schlesinger [ 61 ] province, all human existences are limited in their ability to alter and some people are more limited than others. At OMV Petrom, 16.22 % of employees declare they do non accommodate rapidly to any alteration, which may turn into opposition to alter. At the same clip, more than 20 % do non hold adequate assurance in the company ‘s possibilities to alter and accommodate to a alteration. Some employees resist alteration because old alterations and reorganisations have come excessively frequently and some of them had been implemented to suddenly. For illustration, one of the interviewers stated, “ I have become more negative about the alteration because the restructuring has to halt! ” ( flat 4 director, Head of Technical Management, Marketing ) .

To sum up, the chief causes of employees ‘ opposition to organisational opportunity include fright of dismissal and layoffs, fright of economic loss, fring occupation position and alterations in the work relationship, the deficiency of trust in the existent leaders and the positive results for employees, every bit good as a low tolerance for alteration, triggered by the failures of past alteration processes. But the chief cause of opposition in the OMV Petrom instance remains the deficiency of information and the misinterpretation of the information.

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