Introduction
This essay applies different diagnostic instruments in the analysis of Nestle Company case study. It aims at encouraging students to discuss company cases provided. It also provides students with an opportunity to utilize the diagnostic processes along with change factors in the evaluation of change impacts on an organization.
The essay identifies the main possible causes of change in Nestle Company, and the reasons for reaching at such conclusion. It uses the guide questions to discuss the types of change that have occurred in this company.
Changes in Nestle Company
In looking at change in Nestle Company, the six-box organisational model will be used. This model was developed by Marvin Weisbord with the aim of assessing organizations’ functioning. This is a generic model that can be applied across wide varieties of companies (Hughes, 2007).
This framework was chosen as it represents particular means of analysing the company design and structure. It concentrates mainly on issues such as planning; roles played by support functions like personnel, remuneration standards, competition in company units, partnerships, control of organizations, accountability as well as performance assessments. In addition, the framework has the ability of following basic systems approach to the functioning of any company.
Some of the factors that have led to change in Nestle Company history include purpose, relationships, helpful mechanisms and leadership. Concerning purpose, the company had to undergo changes for it to experience growth. It reached a point the company’s infrastructure had to change to take in the expanding client base and industry changes.
The company had to look for markets particularly in the U.S., improved technological ways of reaching the target markets, like moving manufacturing plants outside production markets to replace sales agents. Change was also driven by helpful mechanisms to maintain competitive advantage.
The company merged and acquired other companies for it to be dominant hence enjoying low production costs. In addition, acquisition helped the company to diversify its production lines from food industry to non-food industry. This enabled the company to diversify its risks.
Relationship is another factor. The corporate culture embraced by the company’s management is one that embraced change. This aimed at gaining the employees’ confidence hence having free flow of ideas (Feldman, 2000). This is because there was need for the company to embrace good relations between employees, departments and the management. Lastly leadership did contribute to change since there was need for the company to have leaders who can apart from defining the purpose can also embody purpose in their programs. This is the reason the CEO Brabeck-Letmathe overhauled ten executive from the board.
Nestle company has undertaken both first and second order changes. In the first-order change, there are some changes which can be termed as being reversible. These changes have paved way for old stories to continue being told; for instance organizations’ strength development, changes within existing structures like overhauling the executive board and replacing it with ten members. Another example includes managements’ longevity maintenance other than improving short term operation profits.
The second-order change includes gear shifting, like changing from the use of sales agents in markets outside home markets to global expansion as well as the purchase of local subsidiaries in foreign countries. Another example is transforming to something different from previous operations like diversifying from food industry to non food industry.
The specific transformational change experienced at Nestle Company is type 1 transformation. This is based on the fact that, the organization transformed from entrepreneurial management structure to professional management structure.
For instance, the change of management structure by CEO Helmut Maucher focused mainly on financial improvement by the use of diversification strategies as well as acquisition strategies. This type of management ended up selling lots of nonstrategic and non-profitable businesses, and emphasized on acquisitions like the purchase of Carnation Company in 1984. This has been transformed to professional management structure under Brabeck-Letmathe.
This management structure emphasizes on critical thinking before making any change in the Company. This makes the company to depend much on managers’ commitment on corporate culture, instead of improving the organization’s short-term operating profits; the management has preferred maintaining organization’s longevity. This management structure concentrates on different ways of reinforcing and sustaining company strength other than ways of changing the company strength.
To some extent, I tend to agree with CEO Brabeck-Letmathe that he has used incremental approach in the companies change. I concur with him when he claimed that change should only occur gradually and where necessary. Companies should not just change because there is change, but they should change with reason.
The issue of introducing corporate culture in the organization is fundamental for incremental approach. It is true that for incremental approach the company should not focus on short-term profit operations rather long-term operations. This proves his fact that changes at Nestle are much focused and conscious. This is the best way of carrying out incremental changes.
However, I beg to differ with him on matters concerning the implementation of new technologies as being the company’s central direction. This is based on the fact that, the role of technology can only be realized after a certain period of time so rejecting its implementation currently, will mean that at one time the company will have to make a drastic change in technology if not it will be left behind by other companies (Hughes, 2007).
Lessons from Frontline
The three major lessons are as a result of downsizing as being organizational form of restructuring, new technology implementations along with acquisitions & mergers. First downsizing entails the process of reducing the number of employees in an organization permanently.
This process might be achieved through various techniques like retrenchments, down-scoping and downscaling as witnessed in Nestle case. The reasons firms might take such action include closure or sell of particular business units that seem to be unprofitable, restructuring, reducing as well as saving costs, greater efficiency and effectiveness leading to higher productivity. It also aims at dealing with external pressures like stiff competition and change in technology.
However, it should be learned that downsizing by itself will not lead to productivity gains, when it has not been associated with other forms of change in business strategies. In addition, downsizing might be much expensive. This process might end up having some impacts on social as well as the psychology of employees remaining as well as those leaving. In addition, the process might make the company to lose very significant and skilled workers.
This is because by the time peers are leaving, the remaining employees will start doubting their future in the organization, and this might make them seek for secure jobs elsewhere (Hughes, 2007). In overcoming downsizing issues, managers have to ensure that they have addressed right issues in the right manner before thinking of job jettison. Managers have to explore all other ways of reducing costs before embarking on downsizing.
Another lesson is learnt from company’s technological change. Companies have introduced technological change in their operations as an effect of various reasons. Some have taken it as being a way of change facilitating tool and production increase due to communication coordination. Others have introduced technology since their business units have created their own systems, which need to be, synthesized (Cascio, 2002)
However, it should be learnt from Nestle company that, implementation of new technologies is not always a straight forward concept. This rests on various researches that indicate that most of expenditures on the implementation of new technologies do not attain their intended goal. In addition new technologies effects might end up taking lots of time before being seen. This is because during implementation, there is need for training, typical advice and consultancy (Cascio, 2002)
To overcome this issue of new technology, company managers have to pay more attention on long-term effects of new technology, other than basing on short-term profitable operations. Managers should be in a position of taking advantages of technological crisis like Y2K to alter their systems for long-term effects.
Concerning the issue of mergers and acquisition, though in some circumstances companies might be left to operate the way it used to operate before merging or acquisition, in most cases such companies might be subjected to “a complete overhaul in its governance structures, human resource systems, financial systems, and other operating systems, bringing these in line with the acquiring company” (Feldman, 2000). This is because; one company might be much more influential as compared to the other.
In dealing with such a situation before entering acquisition or any merger managers should first deal with serious issues that might affect the merger or acquisition. They should ensure that they have dealt with issues like merger and acquisition pricing, merger and acquisition consolidation as well as cultural alterations (Hughes, 2007).
Implications for Change Managers
By looking at Nestle Company, there are some implications that ought to be considered by change managers. First, there needs to take extra care when categorizing organizational change as being small, incremental and adaptive, as compared to transformational and large ones. It is the affected person who knows the real pain or advantage of such a change.
As an interpreter, the change manager states that “whether a change is adaptive, reactive, or transforming is not necessarily an objective “given” but will depend upon the perspective of the person doing the considering” (Wetlaufer, 2001). When reacting to such an implication, the management team should mould such perception in a manner that will bring sense for the company participants, to have an idea of what is going on in the company.
Secondly, the company has been concentrating on single organizational change, not putting in mind multiple changes that might occur at the same time. Apart from this, there are some changes which might require other changes to boost their efficiency and effectiveness. For instance, empowering staffs, calls for “changes in decision making routines, among others.
Singly, might be perceived as being small, however, collectively, have lots of impacts” (Feldman, 2000). In reacting to such a case, “whether a change is adaptive, reactive, or transforming is not necessarily an objective given but will depend upon the perspective of the person doing the considering” (Wetlaufer, 2001). Meaning, management team ought to avoid putting lots of concentration on a single change.
Change managers should have an idea that at an individual level, changes might have very small consequences but putting them together, the results might be unanticipated consequences in the company.
As a coach, there are chances that the management team just like a team coach might assume that in case employees have been coached well, then people might take the initiatives of altering the company’s routine practices (Maiese, 2003). However, in dealing with such a situation, the management team should provide conditions for exercising personal initiatives.
Lastly, at first sight managers might see what is happening as a paradox, as change is much important, for the company’s stability. This might end up framing the basic stability and change paradox, where “change may be needed to preserve or re-establish stability and stability must include change mechanisms to be adaptable” (Cascio, 2002).
When dealing with such a situation, change managers and directors, opt to provide directions for stability. They have to inform people things that will be changing, and those that will not be changing (Taylor, 1911).
Conclusion
In conclusion, this essay has analysed reasons for changes in organizations and different change orders that Nestle Company has undergone till now. The essay has also shown the implications which company managers can face, in case they fail to understand the significance of images as well as mental frames. Images in the essay include the director, navigator, interpreter and coach. Finally, the paper has also explored the three frontline experiences as a result of three major changes in big organizations like Nestle.
List of References
Cascio, W. 2002. Strategies for responsible restructuring. Academy of Management Executive .16(3): pp. 80–91.
Feldman, M. 2000. Organizational routines as a source of continuous change. Organization Science. 11(6): pp. 611–29.
Hughes, M. (2007). The tools and techniques of change management. Journal of Change Management, 7(1): 37-49.
Maiese, M. (2003). The need for dialogue. Retrieved from https://www.beyondintractability.org/essay/dialogue/
Taylor, F. (1911). The principles of scientific management. New York, NY: Harper.
Wetlaufer, S. 2001. The business case against revolution. Harvard Business Review, 79(2): pp.113–119.