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You are here: Home > Current Topics > Mind your Business > 09 February 2004 |
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The Chartered Institute of Personnel and Development (CIPD) announced the winner of their annual 'People Management Award' in November 2003. It went to a car manufacturer. Yes, before you say it, it was not a British car manufacturer, but the company was located in the UK. The 'Mini' brand was one of the few parts of the former Rover group to be retained by BMW following its takeover in 1994. The 'Mini' was seen as a valuable brand by BMW and they developed the brand following the introduction of the new mini in 2001. Production of the car was transferred to the Cowley plant in Oxford from Birmingham in 2002 and the company spent £230 million on improvements to the production facilities. The plant currently produces 140,000 vehicles a year but BMW want to increase that to 200,000. 
The new Mini - a success story in British manufacturing. The Cowley operation received the plaudits from the CIPD following a major change programme introduced by BMW, moving away from the traditional 'production line' format to a team based approach. What captured the CIPD attention was the way in which the whole culture of the organisation has been altered. The motor manufacturing industry in the UK has suffered from a poor reputation as a result of the disputes that seemed to occur every week during the seventies and early eighties. Those days are long gone and the whole industry has had to adapt to a rapidly changing market; technology has replaced workers, cell production has replaced the production line and the emphasis at Cowley is on self-managed teams. This has helped to replace the conflict culture at Cowley with one where the workers viewed themselves apart from the management. The 'us and them' culture created misunderstanding, communication problems, poor productivity and a reluctance to change that led to many car manufacturers in the UK falling behind their competitors abroad. The consolidation of the industry saw major manufacturers in the US, Germany and Japan merge or takeover the 'British' car industry. 
A production line in 1977 - individual tasks, labour intensive and hierarchical. 
The award to Cowley comes as the organisation re-organised its workforce into a series of self-managing teams, each between 8 and 15 people. The teams can make production decisions, have job rotation schemes, and put the responsibility for achieving plant wide targets in the hands of those teams. Each team therefore has more stake in the way the business develops rather than a hierarchical system where workers feel alienated from decision making, stifling initiative and leading to a dependency culture. The organisation also introduced fortnightly team talks where plans, decisions, suggestions and points of view could be aired. Many of the ideas generated through this process have saved the company money - those who actually do the job tend to be able to see where the inefficiencies lie! Management and directors also had to spend time working on production tasks. An assembly line in the 1990s - capital intensive, more efficient but still hierarchical. Since the programme started three years ago, BMW has put into practice over 8,000 ideas from its staff, saved £6.3 million over the past year as a result and seen production targets exceeded by nearly two thirds.The whole workforce is now seen as being less divided and more cohesive with a greater degree of respect all round and a willingness to contribute and be involved. Such empowerment is a process that others have tried but not always succeeded in doing! |
Managing change is seen as a key leadership function at many businesses. How you introduce changes that impact on the whole organisation and the people who work in it is not easy. There are a number of issues surrounding the process, how to re-organise the operation, motivate staff, change the corporate culture, change the decision making structure of the organisation, and the quality of communication are perhaps the vital ones.
So called 'fat cats' - the heads of major corporations - are often accused of earning obscene amounts of money. One argument in support of such large sums is that these people have a skill that is so rare that to secure this skill, large sums are required and, in terms of the performance of the company, fully justified. The skill that is in such short supply is the ability to manage large-scale change.
Human nature tends to view change with a degree of suspicion; it is unpredictable, exciting, unnerving and we do not know where it will lead. As a result, the human resources implications in bringing about change to a production process such as that in the case study can be massive and highly unpredictable. To manage such change, people throughout the organisation need to be given a clear vision of where the company is going, they need to be convinced that the vision is for the ultimate benefit of all, that the vision is capable of being implemented and that those involved are going to be consulted and feel part of the vision and the process that will bring about that change.
Successful leaders do not impose change - they take others along with them on the change process, convincing them of the righteousness of the process and the goal. The ability to combine all the skills of people management, communication, drive, energy, and enthusiasm whilst maintaining a guiding hand in the overall direction of the change are skills that few people have.
One key feature of managing change is to have trust in the workforce. Traditional UK working practices suffered from poor industrial relations; change was viewed as a means by which management could reduce costs and increase profits and their own wealth and status at the expense of workers; there always appeared to be a hidden agenda as far as the workforce were concerned, partly because they simply did not know enough about the purpose of the change and the process by which the change would be brought about.
One aspect of the BMW experience was the use of quality circles. Quality circles give those involved in production the opportunity of being able to contribute to the decision making that will affect their job, the output and the success or otherwise of the company. By giving people such responsibility, the change managers would hope that motivation would be increased, that they would have a better understanding of their role in the company and how important their role is in contributing to the success of the company. Quality circles empower staff - it gives them the opportunity to make decisions that affect them and the business and places the responsibility for the success of that business in the hands of everyone not just the management.
The management of change is increasing in importance in management studies. The focus on leadership is increasing at all levels of business, both in the private sector and in the public sector, and with globalisation creating massive organisations, the skill of being able to lead such organisations will become even more challenging. When done well, it can result in significant improvements but when it fails it can be calamitous.
Even when things are looking as though they are improving, good leaders know that this is the time to think about the next phase of change; resting on laurels will invariably lead to decline. This is explained by using the 'sigmoid curve'.
Charles Handy, who basically suggested that change might result in improvement and progress but that progress will plateau and eventually decline, highlighted the sigmoid curve in relation to management studies. To avoid such decline, decisions have to be made about further improvement at the point where success is growing and before the business starts to experience this plateau. For many in business, this is a difficult thing to get staff to do; many may have just been through testing and anxious times and just when it appears that there might be time to relax and bask in success, the management are asking for further sacrifices and effort to be made.
The diagram above illustrates the concept. Follow the blue line. Initial change is likely to result in a dip in progress as the business comes to grips with the changes, but eventually, progress will be made. Without further change, the business will eventually witness a decline in progress around point Y. For many businesses in a rapidly changing global market this may be too late. However, if the business looks at its position at point X it can look back to see how far it has come and could sit back and reflect on its success. If it looks ahead, it can try to forecast the likely dip in progress and begin to implement changes that will take it onto a new sigmoid curve (the gold line). This period (indicated by the shaded area) is a very difficult time for leading change, there may well be anxiety, confusion and cultural change required before the successful transition to the new curve. The leadership skills here could make or break the change process and it is this skill that many corporations are willing to pay big money to acquire!
Imagine that Sony is planning on introducing 'cell production' for the production of the 'Playstation 3' in 2005.
The content of your report will depend very much on what you choose to put in it - obviously - but the important thing to remember is the structure. You only have 1000 words to play with so what you say must be logical and coherent. The report is divided into two sections - one, the problems and two, the benefits.
