Organizational Changes-Down Sizing
Any radical, wide scale reorientation of the operational or management mode of any organization is termed as an organizational change. Organizational changes bring about differences in the manner in which business organizations operate. The term organizational change is at times used interchangeably with organizational transformation. Organizational change as a concept differs with smaller scale systemic changes that only affect a small portion of the population within an organization.
Therefore, small scale changes such as the modification of a program or the addition of an employee do not constitute an organizational change. Organizational change may be exemplified by changes such as introduction of new technologies, mission changes, new mergers and collaboration or a restructure of operations through steps such as lay offs, right sizing or re-arranging management into self managed groups.
Companies should restructure goals and productive processes in order to enhance their conformity to their operational environment. There are dynamic changes that ever occur in the business environment and these may include behavior change in consumers, external influence from government or competitors or a general change in the industry within which the organization operates. This may elicit a call for changes within the working force, resource structure and other organizational systems such as the management. In this paper I will highlight the resultant organizational changes that will be experienced in Palm Incorporation after an acquisition by Hewlett Packard.
There are expected structural changes as the two companies merge as well as an anticipated and possible down sizing as Hewlett Packard tries to avoid duplicating some operational and management tasks. These changes are meant to help the New Hewlett Packard (merged with Palm Incorporation) to streamline and centralize most of its operations for enhanced efficiency and profitability. However, this has to be done with great care. The anticipated down sizing on mainly on Palm Incorporation’s staff may have adverse effects on the employees within Palm Incorporation.
The lay off of some of Palm Incorporation’s employees after the acquisition is likely to negatively affect employees that remain as well as those within Hewlett Packard. The question to be answered in this case is: How well should Hewlett Packard re-organize itself after the acquisition to mitigate the effects of the resultant organizational changes? The restructuring and possible down sizing should be carried out professionally so as to mitigate the possible negative effects that may result from this activity.
The acquisition of Palm Incorporation by Hewlett Packard necessitates a restructuring of the management and employee work force so as to enhance efficiency of operation and centralize the two entities operations now that it will be one business entity. The two business entities have sections of their operation teams that also need to be merged. For example the accounting and marketing teams exemplify two teams from the two entities that need to be merged in order to create one singular accounting and marketing teams for the new company after the acquisition.
This is necessary because maintaining two marketing or accounting teams for the sake of maintaining earlier organizational set ups may not prove healthy financially. This activity may actually require some of the employees within such teams to be laid off in order to maintain lower operational costs within the due course of running the company’s operations (Anderson, 2010).
Other activities may also need to be centralized; these may include the research activities, facilities and the workforce. Palm Incorporation (a smart phone and other high end electronic communications device manufacturer) and Hewlett Packard (an office electronic machine manufacturer) have research units that provide research and design expertise. Since these units will consume a common resource fund after the acquisition, it is important to centralize their activities to avoid duplication and higher costs in the research section of the new organization (Anderson, 2010). This may also require lay offs to avoid duplication of service provision. Therefore, definitely there has to be some down sizing within the new organization after this acquisition.
The key stakeholders in this restructuring and possible down sizing mainly involve the top management within Hewlett Packard. They have a direct responsibility and great duty to design the overall restructuring of the work force as well as in effecting the lay offs while down sizing the combined workforce from the two companies. The management team from Palm Incorporation may have lesser mandate in the effort (because Palm Incorporation was actually bought out by Hewlett Packard), but it is notably important that they should be included in the process so as to a void seclusion that may result in future complications.
Therefore, it has to be an all inclusive process for the management from both companies. The affected people will mostly include the work force in departments whose duties are duplicated within the organizational structure of Hewlett Packard. These may include the research teams, accounting and financial management teams, the marketing teams and the sales team.
This is the workforce that operates in sections that may need to be centralized and streamlined to form one unit that will serve the whole new company after acquisition. Other teams are less likely to be affected by the acquisition. For example, the production team may totally be unaffected because they will still be wholly required for the production line of the new line of products that Hewlett Packard has acquired from Palm Incorporation. Therefore, for such groups they are likely to be affected by the new structural arrangement rather than the downsizing experienced in some departments.
The maintenance of teams such as the production team will ensure the employees with the right expertise for production of the new line of products are maintained to sustain production. The lay offs from down sizing are also supposed to be beneficial for Hewlett Packard in helping streamline its operations and cut expenditure by avoiding duplication of business processes and centralizing common operations that are necessary for the running of the company.
According to Anderson (2010) down sizing through lay offs is likely to have a negative impact on the employees performance. Firstly, employees anticipating such a possibility are likely to lose concentration in their work as they train the eyes for a job search. Employees expecting a possible lay off are likely to start seeking for other employment opportunities and lose concentration on their work because they do not expect to be working with the same organization for any longer.
Secondly, employees will be demoralized, and the low morale is likely to hamper efficient working and production. Employees that are left behind after the restructuring and lay off may also be uncertain about their relevance, they may be suspicious that soon their services may be found redundant, and as a result they may be working under the fear of losing their jobs. This kind of working attitude demoralizes and makes employees to feel un-secure and as a result, they may fail to deliver efficiently because their focus will be laid on acquiring a better and secure job.
Since Palm Incorporation has been acquired, any rising blame may be laid on Hewlett Packard. As a result of the restructure and possible lay offs, Hewlett Packard may lose its credibility as an employer in the present and the future. Potential employees may deem the company un-secure to work with, and thus shy away from its job offers. The human resource department may thus eventually, find the hiring process to be a difficult task. Realizing these potential negative effects of the process, the management at Hewlett Packard should formulate a clear strategy that will ensure the down sizing is carried in a professional and appropriate manner that will reduce the negative impact it may have on the employees of the company as well as in the operations of the company itself.
These changes in structural arrangement and collective behaviors in relation to operation of the business’s activities are not easy to initiate in a scale as large as that anticipated within the acquisition process and restructuring. Therefore, a systematic approach has to be designed that will ensure a smooth transitional flow.
A change strategy that is effective should be people centered, failure to center changes on people may result in failure because the affected people may feel that they are not part of the changes, and thus fail to cooperate towards an effective change process. The best identified change approach that can be applied is the Booz Allen’s change approach. This is a top down sort of approach that initiates change from the top of the organization’s management (Hamilton, n.d).
Change apparently unsettles people at all levels of an organization, however; whenever there is a change all people have especially at lower levels have to always look to the top of the management for an explanation. In such instances the upper management team is supposed to offer supportive advice, strength and direction. The leadership is also charged with making strategies for design and implementation. Leaders must be identified in each level or strata of the organization as the precursors for change down the pyramid. Therefore, a change procedure has to start with engaging the top management and initiating their leadership for change in a top down structure.
Thereafter, the leaders have to be convinced and well aware of these changes in order to transmit the changes to the lower levels of the organization because that is actually where the actual changes take place. The chosen and prepared leaders than take the task of facing reality and doing subsequent articulation of the imminent changes as well as the compelling factors that necessitate it (Hamilton, n.d). Thereafter, the leadership has to demonstrate faith in the changes and show the employees down the pyramid that indeed there is a future and hope for the organization.
These leaders should also provide a road map to the workforce which outlines how they will move towards the upcoming changes that are being proposed. The leaders should strive to get the employees to feel that they own the process rather than just attain a buy-in. This process may be called a cascading down process where barriers to changes are slowly broken down to facilitate the movement off changes down the organization pyramid.
The first procedure should involve the following activities-creation of a leadership team, establishment of a vision and the necessity for changes, diagnose the cultural elements involved and finally incorporate the change elements into the change program formulation. The earlier mentioned second step, should involve the designation of a team that foster the development of the wind of change down the pyramid. This also involves the creation of cross-functional groups and the actual rolling out of the communication plan.
The third step should initiate the creation of ownership within the workforce through communication and teaching. This being the final step, it has to involve the roll out of the change plan at the bottom of the workforce base that is involved both directly and indirectly. Support and training programs also have to be initiated to support the efforts of change (Hamilton, n.d). Knowledge sharing has to be fostered as well as top-down communication and vice-versa so as to allow the changes to be tracked and measured for effectiveness.
Whilst carrying out these steps the propagators of change have to take the following steps in helping in order to ensure that there is a smooth transition in the organization. Firstly, there has to a clear communication framework and proper education. The lack of information or misinformation often leads to resistance to changes. Early educational programs and communication on changes form some of the essential steps that can lead to success in initiating changes. Another important step is the involvement of employees. When employees are involved in the actual formulation of the changes strategies, they are more likely to feel a part of the process and thus accept and internalize the process of change (Green & Cameron, 2004).
This involvement helps in reducing resistance because employees do not feel foreign to the process. Managerial support provision during changes should also be observed as a step towards assisting employees to adapt to the new changes. Whenever the management is supportive of employees during difficult management times, they are not likely to resist changes. Negotiations and agreements may be employed in employees of groups of employees that may feel that they are losing out. Some groups of employees may have a significant resistance force which may hamper the process.
In such cases it is prudent for the management to engage the employees in meaningful dialogue and if possible offer incentives that would help in reducing their resistance and possibly embracing the change process (Schlesinger & Kotter, n.d). Offering of incentive such as send off packages may help the laid off employees in stabilizing their lives or starting businesses, therefore; the negative effects of the process and fostering a good image for the company. The observance of these steps will help reduce resistance and foster faster changes within the organization (Green & Cameron, 2004).
The initiation of organizational changes always unsettles most people, and many at times it elicits resistance from the people involved. This may be due to the negative effects that arise from some changes such as down sizing or restructuring. However, these changes at times are actually necessary in cases such as during acquisitions or mergers as exemplified by the case of acquisition of Palm Incorporation by Hewlett Packard. Therefore, in order for a company to effect organizational changes it has to seek for the best possible methods to use that can help mitigate the negative effects of these changes. The company should adopt processes that will involve the employees and make them feel part of the process as well as make them feel that the organization has their interests at heart. This process should involve use of appropriate communication and education of employees and involvement of those involved directly and indirectly.
Anderson, D. (2010).Beyond Change Management: Advanced Strategies for Today's Transformational Leaders, 2nd edition. John Wiley and Sons.
Green, M. and Cameron, E. (2004). Making sense of change management: A complete guide to the models, tools & techniques of organizational change Kogan Page Publishers.
Hamilton, B, A. (n.d). An Overall Approach to Change management. Retrieved on 26th October, 2010 from, http://www.boozallen.com/media/file/139773.pdf.
Schlesinger and Kotter (n.d). Dealing with resistance to change: Explanation of six change approach steps of Kotter and Schlesinger. Retrieved on 26th October, 2010 from, http://www.12manage.com/methods_kotter_change_approaches.html.