Background
Change is an important aspect of the organizational life and enables companies to keep the pace of its competitors. The need for change has become greater than ever in today’s fast-paced and highly competitive business environment (Todnem, 2005). Major reasons for today’s change are globalization of products and services, technological development, unstable stock market, increased inter-organizational complexity and evolution of international trade agreements (Pasmore & Woodman, 2003). Companies are forced to cope with rapidly changing marketplaces, shifts in organizational alliances and structures, and even challenge their traditions (Moran & Brightman, 2000). The fast pace of the business environment requires continuous change from organizations to survive. The current change management efforts are mostly reactive, and seldom a continuous process (Todnem, 2005), with failure rates higher than ever at 70% (Balogun & Hope, 2004).
An industry that currently undergoing profound change is the automotive industry.
Electrification technology has disrupted the marketplace for traditional combustion engine manufacturers (Randstad, 2019). Companies are fighting to get ahead of the early competition to secure their share of the new market. In a study made by Alixpartner (2018), it was made clear that the automotive industry is faced with shrinking profits due to spending on new mobility programs, such as electric vehicles. It was also found that the traditional automotive components will see a value reduction of 85% once mass vehicle electrification begins. These drastic changes of the business environment results in 40% of the worldwide automotive powertrain plants being in the need for reconstructing or closing (Alixpartner, 2018). Director Andrew Bergbaum from Alixpartners claims we are in a pivotal moment in the evolution of the automotive industry, time is of the essence, and companies needs bold decision making with dramatic transformations of both operations and business models. When the risk of failure is this great, the tension within the workforce is something that demands the attention of the organization (Moran & Brightman, 2000).
The automobile workforce needs to prepare for drastic and continuous organizational changes over the coming years. The technological pressures coupled with increased global competitiveness make the study of organizational change a rather timely and relevant issue.
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Organizational change is an extensively researched field, with most academics focusing on the dimensions and steps of the change management (Pashmore & Woodman, 2004).
Organizations continuously move from one state to another, which makes it important to describe the organizational states and through which processes that planned organizational change occur (Bullock & Batten, 1985). Rapidly shifting environments demand for combined efforts between change academics and practitioners to better understand what creates long lasting organizational change (Manring, 2003). However, the high failure rates of change implementation indicate there is a lack of empirical research on change within organizations, and there might even be a lack of a valid framework for change management (Todnem, 2005).
Scholars argue that traditional change approaches are not fit for current demands (Pasmore &
Woodman, 2003). There is a need for explanatory research to increase the knowledge about the nature of change and how it is being managed (Todnem, 2005). One of the main difficulties of organizational change lies in the incorporation of the planned activities and processes of the change agents and organizations, which creates a need for change models where theory and planned intervention activities are parallel (Bullock & Batten, 1985). Nutt (2003) stresses the importance of studying the organizational change process, which consists of how to design the downright actions needed to carry out the organizational change.
Understanding the change process will help managers to better identify the appropriate method to implement the change efforts. Bamford & Forrester (2004) identifies a lack of research when it comes to variations of individual perceptions of change. Organizational change causes individuals experience uncertainty and fear when status quo is challenged (Coch
& French, 1948). This study explores how a company conducts the change management when experiencing a technological revolution in its industry. The study will also give an insight of the employee experiences during the change process, with the intention to help managers to better understand employee perceptions of change. The change process and experiences of a traditional automotive company during its technological transition is a valuable insight, and can provide significant information for companies on how to lead and navigate their change efforts.
This study was conducted in a multinational manufacturer of trucks and buses which operates in over one hundred countries. The company is currently implementing change management in order to adapt to its changing industry. This research will focus on the change management and experiences of its Taiwanese subsidiary which is an assembly plant.
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Problem Statement
Electrification of society has made it normal to see electricity everywhere in our daily lives, but it is not until recently that the automotive industry starts to catch up. For the past century, combustion engines have been powering automotives with fuel as the source of its energy. Uncertainty settles over the industry as combustion engines are replaced by batteries, and the introduction of electric mobility. Randstad (2019) claims it is likely that no other sector, on a global scale, is undergoing a more rapid transformation than the automotive industry.
Regulations are becoming stricter and companies who cannot meet the carbon dioxide emission are getting fined. Tougher regulations affect the traditional powertrains, which are expected to see a decline in manufacturing (Alixpartner, 2019). According to McKinsey (2009), the electric revolution poses a massive threat to traditional automakers since they have been focusing on the core components, such as the internal combustion engine and transmission, while outsourcing many of the other operations. McKinsey (2009) reports automakers have to reinvent their businesses to survive, as electrons becomes the new fuel.
More companies are beginning to joining the electric revolution, and it is important to get ahead of the competition early (Randstad, 2019). The traditional manufacturers have to rethink the basic strategies of the company and pursue new strategies to survive the transition. The electric-vehicle supply chain leaves potential for new entrants, such as electronic companies and battery makers (Williams, 2019). Electrification will transform the auto and utility sectors and generate a new battery industry (McKinsey, 2009).
Significant profit drains are plaguing the industry as it contends with global stagnation in key markets and immense spending on development of electric vehicles (Alixpartners, 2019). Automakers are implementing cost-saving plans to prevent margin erosion and with plummeting profits, job security is likely to be weakened (Rauwalk et al, 2019). According to a study conducted by Bloomberg News (2019), automakers will eliminate more than 80.000 jobs in the coming years. Traditional automotive companies need to build new competence if they want to remain in control in the industry. Redesigning jobs, reskilling and increase the capabilities of the workforce are becoming a priority for the entire automotive industry (Kamat
& Seiberth, 2018).
The disruptive technological trend forces companies to initiate change and transformation efforts, which direct focus towards change management. How the change
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management can be conducted is a highly relevant and urgent concern for many companies throughout the industry, as it can determine who emerges successfully. Most transformation efforts fail, which indicates a need for more empirical research, and development of valid frameworks (Todnem, 2005). According to Pasmore & Woodman (2003), traditional change approaches are not appropriate for the current increasingly complex and uncertain environment. The change management of an automotive company can be a valuable insight on how to lead and navigate change efforts in a dynamic environment, thus, this study is examining the planning-, implementation- and communication process of the change management, as well as employee’s experiences of the process. Change management is a very time-consuming practice which can take years until the final result, which makes studying organizational change more difficult. This study is conducted in the very beginning of the change management process of the case company and will focus on examining and analyzing their actions to cope the early stages of change.
The study explores the perceptions of the workforce regarding the current state of the automotive industry and the organizational change management. The data will give managers and change agents guidance on how to lead change efforts and a better understanding of the employee perceptions during the change process. Insights into different aspects of the change process can provide other companies with a better grasp on how to maneuver their own change processes and give awareness to the potential implementation and people issues that can arise.
Research Purpose
The purpose of this study is to investigate the planning, implementation and communication strategies of the change management of a multinational organization, and to explore the employee experiences of the change management.
Research Questions
1. How is the change management planned in the selected case company?
2. How is the change management implemented in the company?
3. How is the change management communicated in the company?
4. How is the change management experienced by the employees?
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Definitions of Terms Organizational Change
Organizational change is the movement from one organizational state to another, initiated externally or internally by driving forces (Lewin, 1951).
Organizational Change Management
Organizational change management is a practice which belongs to the field of organizational development. According to French and Bell (1995), it consists of frameworks and theories derived from behavioral sciences for managing the change process of organizations. Moran and Brightman (2000) defines organizational change management as “the process of continually renewing an organization’s direction, structure, and capabilities to serve the ever-changing needs of external and internal customers.”
Organizational Culture
It is the shared assumptions, values and beliefs which dictate the behavior of people in an organization (Eldridge & Crombie, 1974).
Automotive Industry
An industry consisting of all the companies and organizations involved in the design, development, manufacturing, marketing and selling of motor vehicles (Encyclopedia Britannica, 2019).
Electric Revolution
Refers to the electrification of transport where an energy efficient powertrain is running on sources of energy other than fossil fuels (European Commission, 2017).
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