Leading Change under Uncertainty: Lessons from a Multinational Automotive Company

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(1)Leading Change under Uncertainty: Lessons from a Multinational Automotive Company. by. Elias Gustav Borgelius. A Master’s Thesis Submitted to the Graduate Faculty in Partial Fulfillment of the Requirements for the Degree of. MASTER OF BUSINESS ADMINISTRATION. Major: International Human Resource Development. Advisor: Wei-Wen Chang, Ph.D.. National Taiwan Normal University Taipei, Taiwan July, 2020.

(2) ACKNOWLEDGEMENTS The process of writing this thesis has been a long but exciting journey, filled with many new learnings. I want to give my deepest appreciation to my coworkers in the automotive company who has become dear friends during this past year. They have always been there to help me no matter how many questions I threw at them, and this thesis would not have been possible without them. I also want to thank my advisor, Dr. Vera Chang, who has always been very caring and patient with me, no matter how confused and frustrated I was at times. Dr. Chang must have read dozens of my drafts and always manage to carefully go through each one and give constructive feedback. I also want to thank my committee members, Dr. Ryan Hsu, Dr. Cheng and Dr. Hwang, for reading my thesis carefully and taking time to attend my proposal and defense. Thank you all for your unwavering support..

(3) ABSTRACT The modern business environment is high paced, and organizations has to adapt in order to keep up with the technological advancement of its industries. The Automotive industry is currently facing a technological shift towards electrification which has disrupted the industry for many manufacturers, and many are undergoing change management. This study investigates the change management efforts of a multinational manufacturer of commercial vehicles through four different aspects; planning, implementation, communication and employee experiences/perceptions. 15 in-depth interviews were conducted with managers and employees of a Taiwanese subsidiary, currently in the process of change management. The findings showed that the change management planning was executed in the Headquarter of the mother organization while it was the responsibility of the subsidiary to implement concrete actions to match the plans, as well as communicate the new strategies to the local employees and stakeholders. The local employees raised issues about the change management, such as lack of transparency, language barriers, fear of leading change and cultural differences between mother organization and subsidiary. By investigating the change management of a multinational automotive manufacturer, it becomes evident that there are many problems faced by both management and employees. My research highlights the issues in this process which could be of interest for organizations currently undergoing change management in the same industry, or under similar circumstances.. Keywords: Organizational change, organizational change management, Organizational culture, automotive industry. I.

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(5) TABLE OF CONTENTS ACKNOWLEDGEMENTS………………………….……………………………………I ABSTRACT…………………………………...…………………………………………... II TABLE OF CONTENTS……………………………………………………………… III LIST OF TABLES……………………………………………………………………… V LIST OF FIGURES…………………………………………………………………… VII CHAPTER I. INTRODUCTION………………………………………………………1. Background……………………………...…………………………………………… 1 Problem Statement…………………….……………………………………………... 3 Research Purpose……………………….……………………………………………. 4 Research Questions……………………………….………………………………….. 4 Definition of Terms…………………………....…………………………………….. 5. CHAPTER II. LITERATURE REVIEW…………………………………………. 7. Organizational Change………….…………………………………………………7 Organizational Change Management………………………....................... …............. 8 Organizational Culture………………………….…………………………………. 10 People Issues in Change Management………….………………………………….... 11. CHAPTER III. RESEARCH METHODS………………………………………… 13. Research Questions…………………………………………………………………. 13 Case Description……….………………………………………………………….. 13 Research Approach….…………………………………………………………….. 14 Research Framework……………….……………………………………………... 15 Research Procedure…………….…………………………………………………. 15 Participants………….…………………………………………………………….. 18 Data Collection………….……………………………………………………….... 19 Data Analysis………………………………………….……………………………...20 Research Quality…………………………………………………………….……... 22. CHAPTER IV. FINDINGS AND DISCUSSIONS………….………………........ 25. The Planning Phase of the Change Management……………............................. 25 The Change Management Implementation……………............................ ..….......... 27 The Change Management Communication…………….........……………..……. 29 Employee Experiences of the Change Management……………......... ..………... 31 III.

(6) Discussions……………………………………………………..…………..……… 39. CHAPTER V. CONCLUSION & IMPLICATIONS…………………………...... 43. Conclusion…………….........…………………..................……………............... 43 Implications…………………………………………………………………………..44 Practical Implications………..……….…….........……………............…………. 44 Theoretical Implications……….…………….........…………….........…………… 45 Research Limitations…………….........………………………….........……………. 45 Suggestions for Future Research…………….........………………………….........… 46. REFERENCES…………………………………………………………………………… 47 APPENDIX……………………………...………….…………………………………….. 51. IV.

(7) LIST OF TABLES Table 2.1. Bullock and Batten’s (1985) four-phase model of planned change…………... 8 Table 2.2. Kotter’s (1995) eight steps for leading change……………………………….. 9 Table 2.3. Cummings and Worley’s (2001) six steps for cultural change……………….. 11 Table 2.4. Schein’s (1996) list of methods to increase psychological safety….………….. 12 Table 3.1. Participants’ Information……………………………………………………….. 18 Table 3.2. An Example of the Coding Process……………………………………………...21 Table 3.3. An Example of the Categorizing process…………………………………… ….22. V.

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(9) LIST OF FIGURES Figure 2.1. Cummings and Huse’s (1989) four elements of organizational culture………… 10 Figure 3.1. Organizational chart including the Taiwanese subsidiary……………………… .14 Figure 3.2. Research framework……………………………………………………………. 15 Figure 3.3. The Research Procedure………………………………………………………. 17 Figure 4.1. Findings overview…………………………………………………………….. 25 Figure 4.2. Flow of communication……………………………………………………….. 26 Figure 4.3. Target and KPI setting process……………………………………………….. 27. VII.

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(11) CHAPTER I INTRODUCTION 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 fastpaced 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. 1.

(12) 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. 2.

(13) 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 electricvehicle 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 3.

(14) 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?. 4.

(15) 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).. 5.

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(17) CHAPTER II LITERATURE REVIEW Organizational Change Change is a feature of the organizational life that is becoming more present than ever before. The frequency and magnitude of change is becoming greater (Burnes, 2004), and organizations need to adapt in order to stay competitive (Nadler & Tushman, 1997). Disagreements among scholars have resulted in different models to describe the nature of change that organizations are currently experiencing (Bamford & Forrester, 2004; Burnes, 2004). Two major approaches to change are dominating the literature, the planned and emergent approach to change. The planned approach to change was first conceptualized by Kurt Lewin (1947), who viewed organizational change as a process which moves the company from a fixed state to another fixed state. Lewin’s (1958) “three-step model” describes three stages of organizational change; freezing, unfreezing, refreezing. Freezing is the old pattern of doing things, unfreezing involves the process of change and exploring new ideas, refreezing is establishing the change as the new habit. Rosenbaum et al (2018) reviewed Lewin’s model and deemed it just as relevant today as when it first was conceptualized. Kanter et al (1992) reveals that organizations are never frozen or refrozen, but more like a fluid entity with many personalities. Bullock and Batten (1985) developed a four-phase model of planned change based on an extensive review of existing change models in the field. The model describes planned change using two dimensions; change phases and change processes. Change phases are the different states an organization moves through during planned change, and change processes are the methods used to move the organization through the different states. The four phases are explained below in table 1.. 7.

(18) Table 2.1. Bullock and Batten’s (1985) Four-phase Model of Planned Change Change phases. Change processes. Exploration. ● ● ●. Need Awareness Search Contracting. Planning. ● ● ●. Diagnose Design Decision. Action. ● ●. Implementation Evaluation. Integration. ● ● ●. Stabilization Diffusion Renewal. The planned change approach has been very dominant in the field of change management, but has also received critique. Carnall (2007) argues linear models of change possess simplicity, and have shown limitation both in theory and practicality. Today’s turbulent environment makes it rather difficult to change from one fixed state to another (Garvin, 1994). The planned approach focuses on isolated change and cannot address radical change (Schein, 1985). The emergent approach to change accounts for the uncertainty of today’s environment. This approach focuses on the characteristics and processes of successful change rather than providing a linear prescription. Instead of specifying specific goals, the emergent approach identifies the direction of development and long-term goals of being a successful company in its industry (Burnes, 2004). Even though these goals need to be planned, the emergent approach focuses on the process rather than a planned model of change.. Organizational Change Management Kotter (1995) defines a model to transform an organization which he derived from his consulting experience in over 100 companies. The lessons from Kotter’s experience was converted into an eight-step model (see table 2). The model focuses on creating a felt need for change as well as keeping a strong organizational vision and high levels of communication. 8.

(19) Table 2.2. Kotter’s (1995) Eight Steps for Leading Change 1 Establish a sense of urgency 2 Form a powerful guiding coalition 3 Create a vision 4 Communicate the vision 5 Empower others to act on the vision 6 Plan for and create short-term wins 7 Consolidate improvements and produce still more changes 8 Institutionalize new approaches Making the changes seem urgent attracts attention and the organization becomes more focused and motivated to change when there is a felt need. The cooperation of a powerful group is needed to go through with the changes. Creating a clear vision will guide the change efforts together with strategies for achieving it. Kotter (1995) puts great emphasis on the need for communication, and recommends using various ways to communicate the change efforts. Getting rid of obstacles helps to empower others to act on the vision. Create short-term improvements that are visible and reward people who contributes to the goals. Keep rewarding those who work towards the vision and fuel the change efforts with more projects and resources.. Institutionalize. the. changes. and behaviors. created. from. the. change. management. Doppelt (2017) thinks it is essential to respond to stakeholders to create successful change. Nadler and Tushman (1997) developed a congruence model which describes the different factors which influence the success of the organizational change process. This model helps understanding the organizational dynamic when change is initiated. The congruence model explains the transformation process using four components: the work, the day-to-day activities; the people, the skills and characteristics of the employees; the formal organization; the organizational structure and its systems and policies, and finally the informal organization; unplanned and unwritten activities including values and norms. These components are 9.

(20) dependent on each other, and all of them needs to be attended during a transformation process. Cameron and Green (2009) resembles the congruence model with reaching an organizational homeostasis by aligning the four components. Nadler and Tushman (1999) suggest that strong congruence between the components results in strong performance. Cremer et al (2018) stresses the importance of integrating organizational theory into the decisions making during change management. Akram et al (2018) states that leadership style also affects the success of the change management.. Organizational Culture Organizational culture has been described as a set of values, beliefs, customs and systems that are unique to an organization (Kotter & Hesketh, 1992). It has been argued that it is one of the prime determinants of organizational performance (Peters & Waterman, 1982). Organizations can be seen as a miniature society and is therefore likely to to show its own cultural characteristics (Silverman, 1970). Cummings and Huse (1989) define four major elements of culture; basic assumptions, values, norms, and artifacts. Basic assumptions about how to solve organizational problems represent the deepest level of cultural awareness. Values define what is important and what needs attention in the organization. Norms are a set of unwritten rules which guide the organizational behavior. Artifacts are the observable manifestations of the cultural elements, such as behaviors, structures, systems, procedures, rules, and other physical aspects of the organization. Chatman and O’Reilly (2016) states that it is possible for the organizational culture to generate both positive and negative outcomes from a social and organizational perspective.. Figure 2.1. Cummings and Huse’s (1989) four elements of organizational culture.. 10.

(21) It is possible for organizations to undergo a cultural change, but it is a slow and difficult process. Cultures are open to external and internal influences, such as changes in the organizational environment and structure (Burnes, 2004). Cummings and Worley (2001) suggest six practical steps for achieving cultural change:. Table 2.3. Cummings and Worley’s (2001) Six Steps for Cultural Change 1 Formulate a clear strategic vision 2 Display top-management commitment 3 Model culture change at the highest level 4 Modify the organization to support changes 5 Select and socialize newcomers and terminate deviants 6 Develop ethical and legal sensitivity. People Issues in Change Management Leaders and managers can sometimes face situations where the employees are not embracing the changes in the organization, a behavior the literature calls ‘resistance to change’. Employees can resist change for various reasons, and the reasons will differ from individual to individual (Caruth et al, 1985). Edgar Schein’s (2004) depicts an experience of a manager involved in a change process: As managers, when we try to change the behavior of subordinates, we often encounter resistance to change to an extent that seems beyond reason. We observe departments in our organization that seem to be more interested in fighting with each other than getting the job done. We see communication problems and misunderstandings between group members that should not be occurring between reasonable people. We explain in detail why something different must be done, yet people continue to act as if they had not heard us. (p.9) 11.

(22) Fear and imagined threats are common reasons for resistance and are based on the fear of the unknown, reduced job security, suffering economic loss, reduced job status and changes in group work relationships (Caruth et al, 1985). Schein (1992) suggests two types of anxiety that affects each individual who is undergoing change. Learning anxiety is the reluctance to try new things for the fear of failure, and survival anxiety is the realization that you must change in order to survive. Schein (1992) describes survival anxiety as a driving force which needs to be increased, and learning anxiety is the restraining force which should be decreased in order to facilitate the changes. Managers have the responsibility to introduce and control change within the workplace, and poor implementation may lead to serious morale and productions issues (Caruth et al, 1985). To achieve successful change, managers have to be able to overcome the potential resistance that may arise among the employees during the change management (Kreitner, 1992). Coch and French (1948) went through various experiments able to conclude that employee participation in the design and development of the changes leads to reduced resistance. As a result, they recommend managers to communicate the need for change and involve employees in the change process. Schein (1996) stresses the importance of increasing the psychological safety of the employees, and lists different ways to achieve this.. Table 2.4. Schein’s (1996) List of Methods to Increase Psychological Safety 1 Compelling vision about the future 2 Formal training 3 Involvement of the learner 4 Informal training of relevant family groups/teams 5 Practice fields, coaches, feedback 6 Positive role models 7 Support groups 8 Consistent systems and structures 9 Imitation and identification vs scanning and trial and error. 12.

(23) CHAPTER III RESEARCH METHODS This chapter begins with the case description, then the methodological decisions and procedures are presented and analyzed. Lastly, the data collection process is discussed and the study’s credibility is evaluated.. Research Questions 1. How does the company plan their change management? 2. How does the company implement their change management? 3. How does the company communicate their change management? 4. How do the employees experience the change management?. Case Description ABC is a world leading provider of transport solutions and manufacturer of commercial vehicles with focus on heavy trucks and buses, as well as heavy diesel engines. The company was founded a century ago in Europe, where the Headquarter remain today. ABC employs around 50 000 people and operates in about one hundred countries. Production facilities and assembly plants are worldwide The automotive industry is currently spending massive amounts on new-mobility programs, such as electric vehicles, which means significant profit drains throughout the whole industry. The situation has been called a pivotal moment in the industry’s evolution, where dramatic transformations of operations and business models will determine who emerges successfully (Alixpartners, 2018). Since the whole ecosystem of transport and logistics is evolving, ABC will undergo a profound transformation in the next decade in order to stay successful in the future. As a response, ABC developed a new strategy for 2025 and prepares itself for a period of disruptive trends that will fundamentally change both industry and business. The new ways of mobility in the near future will radically change the way ABC is currently doing things, and managing the change will be an important aspect of the transformation. New jobs and new skill-sets will be needed as well as continued advancements in order to stay relevant. Employees have to think about fitting in an industry that is going to feel and operate much differently than it does today. The Headquarter has begun to prepare itself and its subsidiaries for these coming changes, and is focusing on change management 13.

(24) which includes a new business strategy and goals which need to be communicated to everyone throughout company. It is not easy to implement successful change management and change initiatives can result in complex situations. Considering that ABC is a traditional automotive company which has more than a hundred years in the industry, sudden change can be challenging and require excellent change management to make transformation possible. ABC has a fully owned subsidiary of in Taiwan which sells new trucks and buses and provides maintenance and repair services for ABC vehicles. This subsidiarity has started to receive directives from the Headquarter about the change management and the subsidiary is now in the process of implementation.. Figure 3.1. Organizational chart including the Taiwanese subsidiary. Research Approach Patton (2002) suggests that research that examine a process or implementation is most suitable for the qualitative approach. The explorative nature of the research questions requires detailed and in-depth information, such as the beliefs of the participants, which makes the qualitative method the most appropriate for data collection (Patton, 2002). The research was conducted as a case study since it provides a lot of details which are not obtainable through other research methods, such as perceptions and descriptions (Patton, 2002). A case study will is an in-depth description and analysis of a bounded system (Mertens, 2005; Patton, 2002; Smith 1978), and investigates a phenomenon within its real-life context (Yin, 2008). 14.

(25) Research Framework The research framework is based on the purpose of this study and the research questions presented in chapter one. Organizational change is the external force which drives the company to change. Change management is how the company deals with the change from a process-, implementation-, and communication-perspective. The company change efforts was analyzed through theories in the change management field. The employee perceptions of the changing environment as well as the change management efforts by the company will then be analyzed. Finally, suggestions on how to improve the change management efforts in the company were discussed.. Figure 3.2. Research framework. Research Procedure 1. Identify research topic During a first meeting with the company the researcher introduced the idea of writing a case study of their situation. After getting a positive response the research questions were developed with guidance from the supervisor. 2. Review literature An assessment of the literature was made to determine the state of change management research. A critical literature analysis provided an overview of key concepts and a solid background to conduct the research. Research gaps became clearer and the significance of the study became more evident. 3. Clarify research purpose and questions. 15.

(26) The research purpose was continually refined during the research process. Consultation with thesis advisor and company supervisor led to a better clarity and scope of the study. The purpose became apparent and the research questions were set accordingly. 4. Determine research method A review of literature on research methodology found that the qualitative approach was the most suitable to answer the research questions of this case study (Merriam, 2009; Mertens, 2005; Yin, 2008). 5. Develop research framework The research framework was developed based on the change management theory and relevant change aspects of the company. 6. Design interview questions The interview questions were prepared based on the research questions and literature review. 7. Conduct expert review, peer review and pilot test The interview questions underwent a peer review and expert review to check their reliability and ease to be understood. Suggestions were given and modifications were made accordingly. A pilot interview was conducted and the questions were further modified as a result. 8. Conduct interviews The interviews were made in the company office building. Questions were sent to the respondents beforehand to give them a chance to prepare their answer. 9. Analyze data The data was be gathered from interviews, observations and field notes. The data was analyzed through open and anxial coding and sorted into categories according to the identified themes.. 16.

(27) 10. Present the findings and suggestions After the data analysis, the findings are presented and suggestions will be given based on the literature review.. Figure 3.3. The research procedure. 17.

(28) Participants This study focused on the employees and managers of ABC in its Taiwan subsidiary. It included personnel from the main office as well as the workshop and factory. The total number of participants was 15, including five managers and ten employees. The participants were chosen based on availability and recommendations by the division manager. It was made sure that the participants had at least one year working experience in the company or experience in the industry. Thirteen participants were local Taiwanese employees, and the last two were the Managing Director (MD) and Chief Financial Officer (CFO), Western expatriates from the Headquarter. Table 3.1. Participants’ Information Participant (Pseudonym). Title. Gender. 1. Mimmi Svensson. Managing Director (MD). F. 10. 2. Magnus Samuelsson. Chief Financial Officer (CFO). M. 17. 3. Daniel Wang. Business Development Director. M. 40. 4. Cecilia Chou. Marketing Deputy Manager. F. 15. 5. Janice Chen. HR Director. F. 9. 6. Monica Li. Sales. F. 15. 7. Emma Liu. Sales. F. 5. 8. Fanny Huang. Sales. F. 7. 9. Johnny Zhao. Technician. M. 10. 10. James Chen. Technician. M. 16. 11. Judy Lin. IT. F. 13. 12. Philip Yang. Business Development. M. 3. 13. David Yang. Business Development. M. 4. 14. Jeremy Chou. Marketing. M. 2. 15. Susan Chen. Marketing. F. 7. 18. Years of working experience.

(29) Data Collection The data for this study was collected in three different ways; in-depth interview, participation, observation and internal documents. This section will go into to depth about each one of them and the process behind each data collection method.. In-depth Interview To get as rich data as possible, I decided to conduct interviews with both managers and employees. This covered the whole spectrum of the change management, the process as well as the experience aspect. The interview questions were developed based on Kotter’s (2008) article about leading change as well as internal documents, observations and explanatory meetings conducted with the company division supervisor. Information consent from the participants were prepared orally before the interviews, by informing each individual about the reasoning behind the research. Interviews were held in English, Chinese or a Western language depending on the participant’s language abilities or preferences. The interview questions were sent to each participant before the interview, in both English and Mandarin Chinese. Manager interviews focused on the process and implementation of change management, while employee-interviews were focused perceptions of the change management. The interviews were semi-structured to give more room for expression. General topics were prepared in advance as a guideline for the content of the interview. Questions were formulated based on the topics and reviewed by a co-student. A pilot interview was conducted with one of the managers, who afterwards made an expert review to help refine the interview questions. In order to get richer data and avoid repeating questions, the questions concerning the process and implementation were built upon the data from previous interviews. All the interviews were conducted face-to-face, recorded and transcribed. Transcriptions were sent to the participants for potential corrections.. Observation & Participation Observation includes data that can be heard, felt or seen by the researcher (Stake, 2010), and used for defining the context of the problem (Merriam, 2009). I was an intern at the company for three months from September to December 2019, which allowed me to immerse myself in the company’s setting and environment. Direct access to the research phenomena made the data collection flexible and field notes could be taken consistently. Notes could be 19.

(30) referred to later and follow-ups were made for clarity. Observations were unstructured and conducted in an open and free manner with no predetermined objectives. Participant observation was also used as a way of data collection. Participant observation requires the researcher to take an active role as an engaging participant (Stake, 2010), and is suitable for the early stages of qualitative research (Merriam, 2009). Seeing things first hand allowed to directly interpret and record what is being observed (Merriam, 2009). I was able to actively participate in various activities, which resulted in a rich foundation and understanding of the case company. I wrote notes to document the mood and the setting of different events, for example, during a webinar I made the following notes: Observations: Climate day webinar We participated in a climate day workshop. All the managers gathered in the conference room to take part of the training which was held by the Headquarter. The Headquarter wanted to increase the understanding of the importance of company sustainability through a quiz. After the webinar the managers thought it did not feel serious since the Headquarter kept laughing and seemed unsure about what to do during the call. It did not feel like usual. Research notes. Internal Documents A guest account with access to the company intranet was provided. The intranet gave access to internal documents and corporate information, as well as internal marketing. This resource was very helpful in understanding the company communication system, planning and strategy.. Data Analysis The data analysis was conducted in accordance with the directions given by Mertens (2005). The analysis occurred systematically throughout the data collection, and begin with reading the data and identified common themes. Mertens (2005) suggested an inductive approach, where segments of data are organized in a system derived from the data itself. The research questions guided the early analysis, but other themes and categories were also derived from the data. The data was compared to conceptual similarities, allowing more refined categories. The categories were refined as further data analysis occurred. Miles and Huberman 20.

(31) (1994) suggested coding the data and add personal reflections drawn from the data collection. Grounded theory is a concept developed by Strauss and Corbin (1990) for qualitative research, where a non-linear approach is adopted for theory building. The researcher moves back and forth between collecting and analyzing data. Strauss and Corbin (1990) list three steps in the grounded theory analytic process; open coding, axial coding and selective coding. Open coding is similar to what Mertens (2005) describes as finding themes and categorization of data. In axial coding, the researcher makes connections between the categories and explains the findings through theory. Selective coding is the process of building a main theme, a core category, which the other categories can relate to.. Table 3.2. An Example of the Coding Process Interviewee Johnny Liu. Original Data. Coding. The information from the Headquarter to the. I think the language. management level is okay but if you look at the front. barrier is still a big. line, such as technicians, I think the language. challenge in Taiwan. barrier is still a big challenge in Taiwan. After all the relevant data was coded, they codes were grouped into categories. These categories were then connected to identify themes. Table 3.3. presents an example of this process.. 21.

(32) Table 3.3. An Example of the Categorizing Process Code. Category. Theme. I think the language barrier is still a big challenge in Taiwan In the Taiwan office, most of the people can't really speak English well I wish information was more transparent. Language barrier Communication Wants transparency. Information shouldn’t only stay at management level. Research Quality It is important to include a critical appraisal of the findings in each research. In this section the trustworthiness of the data and its limitations are examined. Lincoln and Guba (1985) suggest the following four criteria to be included in the assessment:. Credibility Multiple strategies were used to increase the internal validity of this study. The researched had prolonged and substantial engagement with the company and was able to spend a significant amount of time on sight studying the case. To avoid a premature closure, I remained on sight until the observations were sufficient and contact was maintained with the company after the internship. Formal and informal member checks were made to verify that the data accurately reflected the respondent’s position. Employees received a verbal summary of their interview and the managers got their transcribed interview sent to them for corrections. There is triangulation across the data since it has been collected from multiple sources including interviews, observations and document reviews.. 22.

(33) Transferability This study provides a detailed description of a company which is undergoing and managing change. Whether change is happening in the automotive industry or any other industry, the process of successful change management remains very similar (Kotter, 2008). Change efforts are often similar regardless of industry, and the recipe for successful change management can therefore be learned and implemented by most companies. Even though many companies can learn from these results, this case is about a manufacturing company and their change management could be of particular interest to companies in the same industry, or with the same structure, or facing a highly disrupted business environment.. Dependability Dependability refers to the consistency and reliability of the research findings (Merriam, 2009). This study has applied multiple methods of collecting data to ensure consistency in the findings.. Confirmability Confirmability refers to the degree to which results could be confirmed or corroborated by others (Merriam 2009). Transcriptions and field notes have been reviewed by peer student to make sure the conclusions are supported by the data. The research procedure and the data analysis process has been carefully documented to enhance the study’s confirmability.. 23.

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(35) CHAPTER IV FINDINGS AND DISCUSSION The purpose of this study aimed to address the main finding responding to four research questions: 1. How does the company plan their change management? 2. How does the company implement their change management? 3. How does the company communicate their change management? 4. How do the employees experience the change management? In this chapter, the findings responding to each research questions are presented and explained in the following sections.. Figure 4.1. Findings overview.. The Planning Phase of the Change Management This section presents the findings about the planning phase of the change management in two different themes: the initiation and the creation of targets.. Initiated in the Headquarter Strategic questions are initiated in the Headquarter of the mother organization. The CFO explains the initiation process:. 25.

(36) The change management is a strategic question, and strategic questions are discussed a few times per year in the Headquarter by the top management team and the CEO. All the MD’s from each subsidiary will attend these meetings to receive information straight from the CEO. After the meeting, each MD will go back to their subsidiary to spread the information to the local management team. The local management team will then spread the information further to the local employees.. Figure 4.2. Flow of communication. Create Objectives The MD explains how the messages from the Headquarter will be broken down to concrete targets for the subsidiary to fulfill. We can't just send the video which the CEO has recorded and expect everyone to know what to achieve this vision. The questions are too big and the level is too high, so there is no one who can understand how they can implement this in their work. The purpose of the videos is to inspire and communicate the long-term goals. The management has to discuss these goals to see what the goals mean for the Taiwanese subsidiary, and then see what it means for each individual department. For example, the sales manager will bring these new goals to the sales department and then it is up to each individual salesman to achieve the goals. Mimmi Svensson, MD The change management has become more prevalent in the recent year for the subsidiary, which has led to more targets to fill in the business plan. There are also different suggestions for the company to reach the new targets. One target is to reduce the CO2 footprint,. 26.

(37) and suggested actions regarding the vehicles, workshops, factories and venues on how to reach the targets. It is up to each subsidiary to decide which actions to take to fill these targets. We have more concrete and clear goals now than before regarding the change management. In our business plan it is now much more outlined what the new targets are for the next five years which makes it more obvious that we are undergoing change. Magnus Samuelsson, CFO. It is important to discuss how each action will affect the results of the company, and the KPI’s are monitored on a weekly basis. The KPI’s are discussed along with ideas on how to improve them though further actions. Mimmi Svensson, MD. Figure 4.3. Target and Key Performance Index (KPI) setting process. The Change Management Implementation This section presents how the Taiwan subsidiary implements change management in two themes; concrete actions and stakeholder involvement.. Concrete Actions The MD explains how they approach the implementation process: If I say, lets increase sales with 5%, this would not be possible to implement. You cannot just take a result and implement it in your business, you have to understand what creates 27.

(38) the result and then make changes in the process which leads to a result. You need to understand why we get the results we have today. It is like an equation which needs to work. We need to understand what we need to do differently to change the results. Mimmi Svensson, MD The Headquarter is implementing more policies regarding the sustainability. Some of these policies are about the energy consumption in each subsidiary. One action the subsidiary recently decided to take was changing the lamps to LED light in many workshops to meet the new sustainability targets. For the Taiwan subsidiary, we got more policies. You need to be greener and you need to have energy efficiency so we change that in the office, we changed to LED lights in the Taipei workshop and many other workshops are currently changing as well. It means that we want energy efficiency and that's the physical thing that people can see but, because we are in the business development division so we are in charge of alternative fuel vehicle sales, Headquarter is pushing us to sell more alternative fuel vehicle instead of diesel fuel vehicle because it is greener and can reduce the CO2. Cecilia Chou, Marketing Deputy Manager. Involve Stakeholders The company has also started to involve stakeholders into their change management. In order to put pressure on suppliers to meet the requirements of being sustainable, the company send out requirements lists which the suppliers have to meet. This is an attempt to involve the whole supply chain into the new strategy and vision. This is easier said than done as the CFO states the following, We have to live up to the criteria we set on our suppliers. When it comes to sustainability we have a huge list of criteria and policies the suppliers have to meet in order to qualify to be our suppliers. It is easy to set requirements on others but you have to be able to live up to them yourself too, and that is something we could get better at. Magnus Samuelsson, CFO. 28.

(39) In Taiwan it is quite new concept to set criteria for the suppliers to follow, and of course we can’t fire all the supplier who cannot make it, then we would be out of business. Our expectations are that these criteria are something they will start to incorporate in their business and have a plan to achieve them. We have to set the goals at a level where they can actually reach them, because our plan is that these criteria will help the suppliers to change alongside us. Mimmi Svensson, M. The Change Management Communication This section presents how the Taiwan subsidiary communicates the change management. The findings are presented in two themes; repositioning and training.. Repositioning The Headquarter has recently communicated to all employees though a strategic video which describes vision and goals for the following five years. This video was aimed to create motivation and inspire employees to join the change, as well as deliver a broad picture of the general concepts of the new strategy. The local marketing communication department needs to reposition the company both internally and externally, by communicating the new vision to the employees and the customers. In the past, the company image has been very robust, but that image is currently changing as the focus is shifting towards being more sustainable and greener. The marketing managers states the following, We need to reposition the company, in the past we talk about how we sell robust vehicle, king of the road, but currently we don't talk about that, and we have a new slogan that we are the leader of sustainable transport system. Right now, the marketing communications team will use the new slogan to talk to our customer and promote that we are greener and better for the environment. Jeremy Chou, Marketing. 29.

(40) Training The subsidiary wants to provide more training to its employees in the near future. Recently they had a training which they called “Climate day”, where the local management team communicated the sustainability vision to the employees in a training for one hour. The marketing manager states the following: We need more training. Last month, our team visited each workshop to do a training for one hour. I feel the in beginning lots of people feel the head office push them to stay one hour and sit down and listen to something learn related, but after half an hour they start to get involved and share their ideas. I feel we need to arrange more training in the future, maybe just stand one hour to talk about the whole picture and the new strategy, and maybe a second hour for each department to talk about why they change and why they want to change. Then people will realize why the company is going to do things this way. Cecilia Chou, Marketing Deputy Manager The marketing manager wants to have more of these kinds of training which they could talk about the strategy and whole picture of the new business strategy with the employees. Cecilia Chou argues these training are costly, and it is not possible to have them too often. They want to deliver a new belief to both employees and customers that this company is the leader of sustainable transport. Cecilia did research and then booked several colleagues to listen to a speech from an author from America who came to Taiwan. The book was about decision making and this information was something we booked externally. Several people in my team got the book and have to read the book and listen to the writer who made the speech and explain their ideas. This kind of thing we probably have to organize more to help the team to improve faster. Daniel Wang, Business Development Manager. On the internal website there was a link to a video posted by the Headquarters about the basics steps on how to conduct change management. This video was not produced by the company and it was in English. Research notes 30.

(41) Employee Experience of the Change Management This section presents how the change management is experienced by the employees in the Taiwanese subsidiary. The findings are presented in the following themes; language barriers, concept grasping, change resistance, need for transparency, experience gap, fear of leading change and organizational culture.. Language Barriers The marketing communications manager is aware that it is the responsibility of the marketing team to deliver the message to all the employee and to increase interest in the change. It is easier to communicate to the employees in the local Headquarter in the subsidiary because they all sit in the same office. Communicating to the frontline workers is far more difficult since they are busy with repair jobs and customer complaints, with very little time to sit down to understand the whole picture of the company. The company is using the strategy video to communicate the new vision, but it only has an English version. Most of the employees in the Taiwanese subsidiary know very limited English and it is difficult for them to understand the message. The language barrier is still a big challenge in Taiwan, even so for the younger generation, teenagers and so, their English abilities are getting improved, but for the people 30+ it really depends on their background, some are okay, but many only have very basic English-speaking ability. Emma Liu, Sales The marketing manager wants to add Chinese subtitles to the video, but the Headquarter has not provided with subtitle files, referring to that English is the corporate language. Many of the activities in the company that are meant to spread the new vision of the company becomes confusing to many employees, since the reasons behind them does not get communicated to them in their local language. Many of the frontline workers are not ready to get the whole picture of the business plan, because they will be highly affected by the coming changes. The whole picture will scare them since they do not have the skill set or knowledge about the electric vehicle, and what they currently know will be useless. The challenge for the company is that they have to communicate the message to the frontline workers without scaring them. Since the management team also 31.

(42) knows very little about the new product, it becomes even harder to communicate. The company has invested very much into the driver service, if vehicles become autonomous in the near future they will lose their jobs.. Difficulties to Grasp the New Concept The Headquarter is trying to push the new business idea on to the subsidiary. The employees do not believe that the new business model will be successful in Taiwan and do not see the advantage it can create. This causes confusion among the employees and a lot of people struggle to see the whole picture of the new strategy. Marketing manager states the following, Currently it is like a puzzle, it's just one piece one piece, we don't know the whole business model yet. So far, right now some people feel a little but struggling, because this service is all quite new and it is not so convenient so far. The company is pushing us a lot to sell the new system. Fanny Huang, Sales Cecilia Chou is concerned with how the employees will view the repositioning of the company, especially regarding the senior employees. She addresses this in the following statement. Another issue I think is because a lot of people work in the company for many years, maybe more than 20 to 30 years, this is his or her first job, maybe their only job in their life. So it will be difficult for them to change. In their heart they believe we are the king of the road and we have very strong engine, and they already believe that for 20-30 years and it's very successful for them. So, in the future we talk about electric vehicles, and no engine, they will misunderstand. Cecilia Chou, Marketing Deputy Manager. Change Resistance The sales department has many experienced, senior employees. When the company suddenly wants to start selling products and services which are very new to them, they will feel this is a problem for them.. 32.

(43) If we are talking about change process and change of things, talk to the younger guy and they are quite okay about it, but if talk to the experienced senior employee, you will have to take some time to really get them to buy in the new concepts and new ways of doing things. Fanny Huang, Sales. There is a worry in the office that the senior employees will not accept the change, and not see the benefit. Many senior employees also feel that they do not have to change, they will retire before the change will start to affect them. For the younger employees it is easier to accept the change, but for the older it will take more time to buy in. As a leader you need to have sense of urgency, but many employees are going to retire soon so of course they don’t think change management is important. They don’t have to change because they will retire in one-year time, there is no need for them to change. Other employees have a more systematic process of working and they don't like to change, they don't want to change. We try to make it as simple and stable as possible for them. Daniel Wang, Business Development Manager There is a worry that the changes in the industry will cause work overload in the office since a lot of the work for the change management will be put on top of the daily work.. A Need for Transparency Some employees think the videos have been a big help in understanding where the company is going. The Headquarter is communicating in a very broad way with big concepts, and some employees would like to see a more detailed approach which the Headquarter can guide and lead the subsidiary how to get there. It is difficult for each employee to know how they can contribute to the change management, and some would like to see a clearer picture, with a step-by-step action plan.. 33.

(44) An employee expressed how the company has explained the general direction and vision, but they did not explain what to do now. If they want to do something ten years later, they should plan for each year now. The Headquarter should tell us what we should do every year from now up to ten years, but this information is missing. The Headquarter has explained their goals, but they didn't tell us what to do every year to achieve them. It is not balanced if only top managers know this information, since most of the work has to be done by the lower level employees they should also be briefed about the change management. Judy Lin, IT What kind of training and information about the issues the company is facing, these things need to be more transparent. I think that will let the people who work here feel that they know everything, and understand every direction. Philip Yang, Business Development A marketing employee describes that the main channel he receives information about the change management is from the marketing deputy manager. The marketing deputy manager will have meetings with the Headquarter, and then brings back many new ideas to the Taiwan subsidiary. Another channel is through web meetings with the Headquarter, but direct information from the Headquarter is often broad and general, not very detailed or specific for the subsidiary. The marketing employee wants the management team to share more information on what is happening in the company, and in particular the reasoning behind the many activities associated with the change management. When the workshops changed to LED lights, he was only told that this is a part of the sustainability project, but he would like to know more indepth information. About the lights in the office room, we changed to LED, some workshops also did this, but we don't know how much it cost to change lights to LED, and how much money we can save because we changed to LED, this we don't know. We only know that they changed the lights and now we have LED, we know we changed because of the. 34.

(45) sustainability, but we don't know if we save the power or how much we spend, and how much it costs. Susan Chen, Marketing Susan continued and mentioned that is possible that the management team think this is not a part of their job, or the job of another department. Managers in one departments will not tell other departments, so if managers could share this information it would be a great help. The CFO claims that the managers get access to much more information than a regular employee and can sometimes take certain things for granted, assuming regular employees naturally will understand the reasoning behind it.. The Headquarters held a webinar training for all the managers in each subsidiary throughout the company. Managers were encouraged the ask questions in the live chat during the training. Many managers were asking about the new business model and the strategies for electrification, but the Headquarters kept avoiding these questions. The managers in Taiwan thought this was strange because usually the Headquarters always go through the questions one by one. Research notes. Experience Gap Employees are not only worried about what the future holds for the industry, but also who will lead the change efforts. Currently there is a big age gap between the employees and the managers, which will become problematic in the near future. Many managers are senior and will retire within a very short time span, and the company needs to find potential successors. Several managers will retire in a few years, most of them, including myself, we are almost the same age. It means that we are going to retire almost the same time, then you can see that there is a quite big gap between us and the next generation. We don't have proper successor yet, so that is an internal challenge. Daniel Wang, Business Development Manager. 35.

(46) Since the age gap is so large between the senior and younger employees, it makes it a difficult task to find a suitable leader. Employees are worried that they will lose the experience from the managers when they retire and might not find someone who can replace them, especially since the next replacement from the office will be twenty years behind in experience. This is a specific concerning for the employee, because they need an experienced and knowledgeable leader to guide them through the difficult times ahead. This is a big upcoming internal challenge for the subsidiary.. Fear of Leading Change Sometimes the subsidiary is not convinced by the Headquarters’ new change initiatives and it becomes a hard sell to the local employees. The HR director tries to tackle this issue by first convincing the key managers, which in return will influence other managers in their teams. She mentions it is important that everyone is moving towards the same direction, even though some people can move in different pace. The most important for the HR-director is a clear goal, and to know the benefit of the change management, otherwise it is very hard to convince others to join the change. Some colleagues can be very stubborn and do not want to change or cooperate. In these cases, it is important to have good relationships which allows them to trust the HR-team. The business development manager describes how in the past there has not been much room for change, and employees could only improve a little bit here and there. Recently it has completely changed and he finds it interesting working in this new environment. He notices some resistance, and he explains that it is easier to accept change if you know what is coming. Currently it is hard to navigate the change since it is not clear exactly how the industry will change. In the recent years, he sees lots of changes in his department, and many new concepts has been introduced in the business development. The business development manager shows that the mindset in the subsidiary has been very traditional in the past, with a high hierarchy. Whenever he received corporate messages he tried to keep it secret and only reveal around twenty percent to the employees. He explained that this is very typical for Asian companies. Last year, the subsidiary received an MD from the Headquarter, which has helped to spread the Western culture more, which has made the information more transparent. Currently he reveals around fifty to sixty percent of the 36.

(47) communication he receives, but he wants to make this number even higher. It can be difficult for him to communicate the change management to his department, because people feel this is what will happen in five years, and it does not relate to them at this moment. Employees feel busy with their daily job and do not have time to care about what will happen in the future. In the past, what you do now would remain exactly the same five years later, so it is understandable the employees feel resistant to the sudden change. He wants to gradually change this mindset. I think that change management is quite new for us, so basically, we know that we need to change, we have to change, but how to change, I think that we still need to have more this systematic training on that. Otherwise if you don't change well that probably will be suicide. So that is main challenge we are facing now. Daniel Wang, Business Development Manager In the past, the business development manager could get all the information and resources he needs internally. Now it is a different situation, the Headquarter is changing and everybody needs to learn to change, which has resulted in seeking information externally instead. Now he constantly visits other companies, not necessarily competitors, but companies from various industries to learn from them. He tries to encourage his team to do this as well. Recently he invited a speaker who talked about obligated decision making, which is a highly relevant issue right now in the company. For some managers you have to understand that more change mean that they probably have to change more than the frontline people. Frontline people you just need to tell them what to change and they will change, but a leader has to manage the change and that's why I think they are more fearful for this thing. Frontline people just want to be told what to do, if I do ABC just tell me if I need to do CBA tomorrow, and I just follow that. As manager you need to tell them why they are going to change and how to manage the change and how to monitor the change and for them I think that is what they fear the most at this moment. Daniel Wang, Business Development Manager. 37.