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Nestle’s change management report Report

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Updated: Jul 21st, 2021

Executive summary

Competitive advantage and commercial success are very important aspects of modern day businesses and without this two factors, businesses often fail at some stage. Due to the volatile nature of the commercial environment businesses through their managers are required to be quite radical in the way they operate so that the current change management structures are able to assist the organization effect any strategic changes if necessary.

Nestle is a good example of an organization which put in place a good management structure that made it very possible for the organization to embrace change because the organization identified the exact needs that were to accompany the change and therefore when managers initiated the change the entire organization was able to swiftly adopt to the new strategic changes.

When Nestle finally discovered that change is part and parcel of the organization they put in place change management strategies and also assisted organizational members to accept change more effectively making change management efforts from managers more successful.

Introduction

The current business environment is very volatile and dynamic and what is happening today will most likely change tomorrow, hence every organization needs proper change management. Change is inevitable in an organization and organizational managers are expected to behave like change agents who champion and advocate for change within the organization.

Change must be accompanied by reason since organizations do not just change because other organizations are changing but because they need to change and if they do not change they will most likely not achieve their commercial objectives (Eden 2002, 804).

The nature of changes from organization to organization always varies and therefore every organization is expected to carefully monitor and manage the entire change process in order to ensure corporate, business and functional levels of strategies are not negatively affected (Wheelen & Hunger 2002, 76-78).

The main purpose of change in most instances is to rejuvenate the organization and improve its performance and hence managers are expected to ensure that the entire change process within the organization is quickly accepted within the organization so that both short-term and long-run performance is not affected negatively.

Change strategies therefore provide managers with numerous options which they can use to successfully marshal organizational members to quickly accept and adapt to strategic changes without negatively affecting the performance of the organization (Feldman 2000, 618).

Change management is consequently part of the current business atmosphere that commercial organizations exist in and this require that they dedicate significant resources and therefore it makes more sense if these organizations put up the necessary change management systems so that all organizational members can be in the same page as far as welcoming organizational change is concerned.

The nature and need for change within Nestle

The entire change process of Nestle was only successful because the organization identified the exact needs that initiated the change and also went forward to develop the appropriate change management strategies to usher in change. Emerging business trends and decisions have prompted Nestle to experience changes in its business model.

Due to the fact that the organization is venturing into foreign markets and stepping out of isolation and venturing into new territories, this introduces a lot of complexities and may lead to ambiguity, which may often be fatal if not well managed. The nature of the change within Nestle involves divesture of Strategic Business Units (SBU’S), which are not profitable and serve as a disadvantage to the company.

Divesture normally requires organizations to sell existing business units and invest those funds in other more important business processes such as corporate restructuring or expanding to other business territories. Moreover, Nestle also considers growing its business structure by venturing into the pharmaceutical and cosmetic industry, and these kinds of changes are not easy.

Expanding businesses often require change in management structure and approach and that is why the organization is also dumping the entrepreneurial way of management and adapting a corporate management business format which heavily depends on managers (Wheelen & Hunger 2002, 244).

All these changes have been triggered by the organizations desire to grow in size by going multinational and stepping out of isolation. Moreover, the management desires to step up sales and revenue hence stepping of using sales agents in the global market and entering into agreements with local subsidiaries in foreign markets by acquiring them or entering into contracts.

The C.E.O, Brabeck-Letmathe, believed that change is very appropriate for the company because it will enable the company to realize efficiency and also increase productivity within the organization. Additionally, the entire corporate restructuring which costs almost $300 million annually is a type of change that is initiated by the need attaining a good and effective business structure whereby managers can be incomplete control of the entire businesses of the organization.

The C.E.O believes that the organization’s desire/need to have a competitive advantage, grow, become flexible and highly flexible within the market depends on how well the organization can be able to respond to change.

The nature of change requires the commitment of the entire organization and should therefore have a long-term approach therefore requiring managers to involve all organizational members. Moreover, managers are required to be highly critical of the nature of change and not just rush into changes such as technological change unless they are fully sure that the change is most likely to be for the benefit of the organization.

Challenges

Change in most instances within organizations, Nestle being an example in this case, is not always welcomed for the reason that it definitely demands that human resources and organizational personnel to commence a cultural change which is not easy because it involves removing people comfort zones to new unfamiliar territory and for an organization such as Nestle which has over 220,000 employees the entire change process should be a product of careful planning.

Change is not easy and simple and employees may often refuse or rebel against regimes that champion for change and this usually affects the performance of the organization. Additionally, change may end up being expensive and exhausting to organizations therefore affecting performance of the organization negatively (Eden 2002, 803).

Organizations and managers are faced with a lot of challenges especially during the change phase in organization especially due to the fact that employees often do resist then it automatically becomes hard to maintain the vigor and passion of employees all the way through the change process and this results to negative consequences within the organization.

Additionally, if all organizational members are not on the same page this may sabotage the entire change process because the organization may most likely backslide into old ways of operation (Hughes 2007, 41-43). Hence, change management is a must if an organization is to survive and ensure its objectives are met without compromising the stakeholders involved in the organization.

It is not easy managing cultural shifts within organizations and managers are required to come up with the most appropriate culture changing initiatives for organizational members to accept change.

Change is not only complex but also costly for organization restructuring and most of the time it becomes hard for managers to prioritize the numerous organizational projects and resources, and this is one of the reasons why the C.E.O Brabeck-Latmathe insisted that it is sometimes better to adopt a slow and steady approach when it comes to issues of expansion and divesture because nestle spent well over $300 million annually in restructuring costs (Steiner 1997, 128).

Prior to implementing change initiatives within organizations, it is vital that managers who are change champions/agents for the companies to understand the resulting effects and consequences of the changes process on the workers (Eden 2002, 805).

By doing so, the managers will appropriately prepare for any challenges and this will see the organization formulate better change policies and strategies in order to avoid many of the potential pitfalls that may arise as a result of the challenges which accompany the entire organizational change process. When managers get to comprehend the cognitive change process then they are likely to managing the entire process more effectively and marshal the corporation of other organizational members

Change Management

Change is always received with hostility because it is accompanied by uncertainty and people usually fear uncertainty and the entire change process was not smooth and easy for an organization such as Nestle.

Therefore, this is the reason why managers such as the C.E.O Brabeck-Letmathe of Nestle become champions of change within the organization and hence come up with the more appropriate strategies that will make it possible for a smooth transition to take place to allowing organizational members gradually and successfully accept organizational changes and therefore welcome in the new era that will assist the organization become better in terms of performance.

Contemporary Management theories hold on to the belief that organizational change must take place whenever organization themselves in complex / ambiguous situations that necessitate the organization to move from ordinary ways of doing business to a much more radical business model in order to improve the performance of the organization (Wheelen & Hunger 2002, 78).

This fact was reflected in Nestle when the company decided to shift its focus from the local Swiss market to other parts of the world such as North America. The main endeavor during the organizational change phase is for the organizational change managers to maintain some balance and tranquility by working together with other organizational members so that the organization can ultimately progress (Steiner 1997, 203-204).

Current operations should be carried out in such a way that the organization will respond in the most effective way to unpredictable commercial and non commercial events when they occur according to the organization adaptation theory.

The organizational adaptation theory insists that organizations are more likely to become more successful only if the organizations gives up rigid business structures and decide to put in place the necessary framework to usher in change more effectively making them flexible. Managers often use numerous strategies to enable their organizations accept change within their organizations.

Change Management Model.

Figure 1. A pictorial diagram indicating what organizational change normally involves

Change Management Strategies

Whatever change management strategy is pursued by managers it is necessary that the organization dedicates the required resources that are required to implement the changes.

Implementing change is not simple for an organization such as Nestle as it expands and divest and therefore the organization should most of all make sure that it develops clear goals and communication systems and also go ahead to offer rewards and incentives in order to encourage organizational members to accept the change without altering their motivation (Tovstiga 2010, 49-54).

Despite stand of organizational members as the organization moves into North America and other non-related business industries a non biased support system should be formed, so that organizational members can get the necessary help as far as the change process is concerned.

Facilitation

Organizational change is not simple and managers are required to be change agents and also use other organizational members to bring about change. Often one of the best approaches that managers can use is to work hand in hand with other organizational members in the process of creating the change.

When managers decide to work hand in hand then the possibility of the change being successful goes up. Facilitation often involves educating employees and creating the best communication systems that encourage the flow of information and feedback loops (Wheelen & Hunger 2002, 38-44).

When managers decide to work together with other organizational members by communicating their intentions and vision and giving clear reasons why change is inevitable within the organization and the intentions of the change then organizational members will likely be more receptive to work with the manager.

Facilitation offers a good way under which when organizational members are willing to welcome change and desire collaborate but they lack the capacity to effectively blend in into the new change regime (Hughes 2007, 42).

Education

Often employees refuse change because of information asymmetry and it hence becomes necessary for management to educate them on the main reason why change is important. Education enables organizational members understand the reasons of the change, the benefits, and all variables of the entire change process.

As a result of proper education systems organizational members are able to rationalize change and what is expected for them (Eden 2002, 802). Because sometimes the resistance to organizational change is triggered by perceptual issues, the education programs can make employees less rigid especially if they understand that change can be rewarding.

Education offers an avenue under which employees can be empowered to understand what the entire change process entails and how it can be easy for both them and the organization (Cascio 2002, 84)

Involvement

Sometimes the change process within the organization does not only emanate from the higher levels of the organizational hierarchy. When organizational members are not involved physically or intellectually, or emotionally then they may feel as if their opinions are not respected and therefore this could ultimately affects their motivation and this may sabotage the entire change process.

Allowing organizational members offer their suggestions and become involved in the process of change offers an avenue under which all organizational members become change agents and own the change process (Wheelen & Hunger 2002, 243). When the change is a brainchild of the organizational members then there is no way that the employees themselves can sabotage the change process.

Negotiation

When management and the organizational change agents discover that the other party the other cannot easily be persuaded, it therefore becomes necessary to reach a consensus through negotiation. Organizational managers will hence be required to enter into conference/board rooms and ask them to discuss with each other in order to ensure that the change process is accepted (Eden 2002, 804).

Especially when change involves mergers and acquisitions in unrelated industries which are common for Nestle resistance to change is most likely to be very high and negotiation may often be the best way for change to be accepted. Negotiations are a way under which mutually agreeable solution that works for both the organization and organizational members can be arrived at (Wetlaufer 2001, 115).

Manipulation

Manipulation is an art used by managers and involves controlling a person’s environment so that a suitable outcome can be arrived at. Despite the fact that manipulation is considered as morally questionable, organizational managers are forced to use it especially when the stakes are high and change is required to take place quickly. Some ways of manipulating employees may involve using psychological and monetary awards to force them accept change regimes faster (Watson 2006, 72)

Coercion

Change management strategies fail managers are often forced to take extreme measures and often coercion is the only option. If manipulation fails those managers might decide to use threats and force to enable organizational members change. Some of the threats may involve threatening employees will lose their jobs, allowances and job related benefits (Wetlaufer 2001, 114).

Unorthodox managers may often go as far as humiliating and threatening employees or even public sacking in order to create fear and make examples out of organizational members who have not yet adopted change. This should only be used as a change management strategy of last resort especially when change is to be implemented in a hurry.

Conclusion

The role of change management in commercial organizations is directly related to the success of the organization. Managers are required to justify the need of the change, the nature of changes, the challenges that will accompany the change and pick the most appropriate strategy to implement change and make it acceptable among organizational members.

Managers should not ignore the important role that change management plays and therefore should dedicate the necessary resources and support to organizational managers in order for organizational members to accept change in the most appropriate timeframe.

References

Cascio, W., 2002. “Strategies for responsible restructuring.” Academy of Management Executive 16(3): pp. 80–91.

Eden, C., 2002. “Strategy development as a social process.” Journal of Management Studies, vol.29: pp.799–812.

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.

Steiner, G., 1997. Strategic planning: what every manager must know. New York: Simon and Schuster.

Tovstiga, G., 2010. Strategy in Practice: A Practitioner’s Guide to Strategic Thinking. New Jersey: John Wiley & Sons.

Watson, T., 2006. Organizing and managing work, 2nd edn. London: Penguin.

Wetlaufer, S., 2001. “The business case against revolution.” Harvard Business Review, 79(2): pp.113–119.

Wheelen, T. L. & Hunger J. D., 2002. Strategic Management and Business Policy. New Jersey: Prentice Hall.

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