QUESTION

Overview of Organizational Change Case: Tata Motors in 2001

Organizational Change is much required in any organization. (Warner, 2002) It is usually seen as a gap between the current and the desired state that the firm wishes to achieve. People say that if there is a requirement then there should be a change that needs to be thought of and implemented. But if there is none then why should firms even think of changing. In this context there are many global companies that have undergone change for their current or future benefit and have reaped excellent profits or have fulfilled their short term or long term objectives. One such case is of Tata Motors which is one of the largest automobile company’s in India, with exceptionally good revenues. The company has a huge base of employees working across all major locations across the globe. TM has been one of those companies that have always laid great emphasis on innovation, building trust, carrying out ethics, change management for benefits of its stakeholders.

Drivers of Innovation and Change: For a change to take place there should be the reasons behind it which leads to change. It can be a small source or it can be as large as recovering billions of losses. The basic drivers of innovation and change are: Globalization and competition, new products, price, and changing customer needs or shift in consumer behavior.

The seven steps to creating organizational change: There are typically seven steps to for creating organizational change in a typical organization (Richard, 2003).

1. Joint identification of business issues and their solutions so that the energy and commitment is mobilized
2. Developing a shared commitment and vision of how to plan, organize, implement, and manage the change and competitiveness
3. Identification of the leaders who can support in the process
4. Laying extreme focus on the results and not majorly on the activities
5. Starting change from the bottom or the periphery with pushing it from the top.
6. Formal policies, structures, and system should be laid down to institutionalize the success
7. Monitoring and adjusting the strategies in accordance with the issues that are arising

Tata Motors is a division of one of the largest corporate houses in India and the world called as Tata Group which was formed in the year 1945(TataMotors, 2012). It is the first company in this vertical to be registered with NYSE. It is the country’s India’s largest automobile company, with revenues of INR 1,23,133 crores (USD 27 billion) achieved in the year 2010-11. Being a leader in commercial vehicles and among the top three players in the passenger vehicles segment, it has also made its mark in the small car segment and utility vehicles arena. The company is the world’s fourth largest manufacturer of trucks, and the world’s third largest manufacturer of buses.

It employs more than 25,000 employees across the globe. Tata Motors is a value driven firm and the five core values that govern the organization are: Integrity, Excellence in whatever they do, Understanding, Unity and Responsibility.

The company expanded internationally via mergers, acquisitions, and join ventures. It operates via associate firms or subsidiaries in countries like UK, South Korea, Thailand and Spain. The two commercial vehicles by Tata Motors namely, Tata Indica and Tata Indigo were a big commercial success and in the span of two years Indica was marked as the largest selling car in India. Though everything was going fine the phase came when there was a downturn in the economy when the commercial vehicles segment dipped down to 40%. This was the period from 1995 to 1998. Tata Motors suffered a loss of 5 billion rupees loss for the year 2001. Tata then realized that it needs a restructuring and there is urgent need for organizational change for it.

The Managing Director of Tata, Ravi Kant led the change in the company who through his plans and the effective implementation saved 8 billion rupees in two years. The recovery strategy which forced organizational change occurred in three phases in 2001.

Phase one was the period marked by cost reduction in all the cases – fixed, variable and the interest costs. They replaced whatever parts they could with an equivalent less costlier part to save the cost. They also implemented and used Seibel to manage their processes and SAP to manage the customer relationships. To cater to this change a remote training network was established for video training so that the costs in training are saved and the change is effectively implemented.

Phase two was to maintain the strong position in the market and the industry by providing quality and competitive products to the consumers. So while they were saving costs yet they were mindful in investing in new products which is required by the market in the near future. Tata Motors tightened their credit policies, formed new sales plans and looked at factors like customer satisfactions, reaching the distribution networks easily, and the dealer and vendor issues.

Phase three purely focused on the inorganic growth and the company’s expansion outside India. (Vivek, 2003) To fulfil this objective the firm identified new strategic business locations to carry out their operations and to expand their footprint to gain new customers. The company also looked at reaching out to new segments. Diversification was their next strategy. Tata Motors identified 12 markets where they sold over 50000 vehicles in comparison to what they sold earlier which ranged from 7000 to 8000 vehicles.

All the phases of implementing new plans and strategies resulted in some form of organizational change in a unit of Tata Motors or sometimes the change affected the entire firm. Where there is change there tends to be resistance as well which needs to be handled with care via various methods. The change should be clearly communicated and the vision and objective should be explained to all. If feasible, change manuals should be distributed or made available to the employees online for better clarity. (Kimberly and Robert, 2001) The change should be enforced from top and the leaders and senior managers should enforce as well as motivate their subordinates to carry the process in the desired changed manner. (Steven, Walter, and Art, 2007) Hence bringing about organizational change in the organization is a collective effort and not a unilateral decision by the CEO alone.

Reference:

Kimberly, B and Robert, H, 2001, Strategic Leadership Research: Moving on, Texas Tech

University Press.

Richard, L 2003, Managing Change and Transition. Harvard Business Essentials. Boston: Harvard Business School Press

Steven, W Walter, M, and Art K 2007, “A Blueprint for Strategic Leadership”, viewed on 14^th March 2012,  <http://www.strategy-business.com/article/07405?pg=all>

Task

Critically evaluate a number of different diagnoses models and/or strategies to determine which is the most appropriate for diagnosing change within your chosen organisation. Once you have conducted the critical evaluation, use the chosen model/strategy to undertake a diagnosis of the organisation.

SOLUTION

Critical Evaluation of Various Diagnostic Models

It has been perfectly described by authors that organisations are difficult to change just like bad habits (Clegg, Kornberger and Pitsis, 2008).But there are many diagnostic models which are o great solution providers to facilitate change by highlighting the problem areas (Hebert, 2009).A diagnostic Model is a kind of conceptual framework which is helpful in understanding any organisation. But the problem with these diagnostic models is that there are so many of them and no-one is universally acceptable. There have been many models which are shown below in chronological order but we will discuss just few of them:

• Force field Analysis (1951)
• Leavitt’s Model(1965)
• Likert System Analysis(1967)
• Open System’s Theory(1966)
• Weisbord’s Six-box Model (1976)
• Congruence Model of System Analysis( 1977)
• McKinsey 7S Framework (1981-82)
• High-Performance Programming(1984)
• Diagnosing Individual and Group behaviour (1987)
• Burke-mitwin Model of organisational Performance and Change ( 1992)
• Falletta’s Organisational Intelligence Model (2008)

Diagnostic models or strategies of change are helpful in making us understand what needs to change, why do we need change in organisation and how to bring the change. Advantages of using diagnostic tools for change:

• Simplify a complex situation
• Highlighting the structure and strategies of organisation and interconnectivity between them
• Provides a chain of activities to facilitate change in organisation
• Provides a common “ language” to talk about organisational characteristics
• Helps to become more rationale and efficient to relate to change and bring about change in organisation (Chapter 5: Diagnosis for Change, n.d.).

Weisbord’s Six –Box Model

This model depicts organisations as open systems and supports that six features related to the organisations should be studied:

• Structure
• Rewards
• The Purpose of change
• Relationships
• Helpful mechanisms
• Leadership (Burke, 1994)

ENVIRONMENT

Figure 1: Weisbord’s Six-box Model (Weisbord, 1976)

There are two premises which are not to be seen in Weisbord’s model the first one is formal versus informal systems and the bigger the gap between them, the less effective the organisation becomes. The second issue is eth discrepancy between eth functioning of organisation currently and the ways it will adjust to external environment in future.

Organisation Level Diagnostic Model

It has three major components:

• INPUTS (Cummings and Worley, 2009)

-General environment: External forces which affect the organisational objectives directly or indirectly like social, economic, technological, political and ecological factors.

-Industry Structure: External forces which directly influence objectives of organisation like suppliers, new entrants, customers, rivalry between competitors and substitute products.

• ORGANISATION DESIGN COMPONENETS (Cummings and Worley, 2009)

-Strategy: The method used by organisation to utilise its resources like human, technical or economical in order to attain and sustain competitive advantage.

-Structure: The way in which resources and attention is being focussed on achieving task accomplishment.

-Technology: method used by organisation to convert inputs into services and products

-Human Resource System: Mechanism used for selecting, hiring. Appraising and rewarding the organisational members

-Measurement Systems: methods used for accumulating, assessing and spreading information reading the activities of individuals and groups in an organisation.

– Organisation Culture: basic values, norms and assumptions shared between the members of organisation

• OUTPUTS (Cummings and Worley, 2009)

-Organisation Effectiveness: It includes organisational performance, stakeholder satisfaction and productivity.

Inputs                                      Design Components                                           Outputs

Figure 2: Organisation Level Diagnostic Model

But both these open systems theories portray organisations being made-up of sub-systems which can be in the form of just individuals or departments. These sub-systems have to work in harmony with each other to achieve various goals or objectives and any conflict between these subsystems will lead to abnormality or dysfunctionality in organisation which it will have to eliminate as soon as possible.

That is why systems approaches were developed which are useful and powerful but some change management theorists argue that organisations are political showground’s wherein the departments and various individuals compete for scarce resources of the company. Thus according to them harmony does not dominate the organisations rather the coalitions within organisations with contradictory goals work in the organisation which have  norms like conflicts, political mechanisations, and use of power . The key-Power relationship is depicted below for the organisation:

Higher Authority                                                                                                                                (5)

(4)                               Top-decision-Making Group

(2)                               (3)

Consultant           (1)              Sponsor

(6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               Organisation Departments                                                                                                                                                                                                                                                                 (7)

Figure 3: Key Power Relationships (Griener and Schein, 1989)

Organisational intelligence Model

The latest diagnostic model which can be helpful is the Organisational Intelligence Model which was created by Falletta in 2004 but later refined and republished in 2008 and it serves a great framework for diagnostic of organisational development.  It is quite similar to BL model there are 11 factors and variables present in this model which are shown below:

ORGANISATIONAL INTELLIGENCE MODEL

Environmental inputs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

ORGANISATIONAL CAPABILITY &EXECUTION: KEY INDICES

PERFORMANCE OUTPUTS

But it is difficult to generalise this model too and that is why this model also calls for validation with the help of empirical investigation (Falleta, 2008).

 Diagnostic Model Applicable to TATA Motors

After the critical review of some of the diagnostic models the organisational intelligence model fits well to diagnose the problem underlying to find the organisational change at TATA Motors.

Environmental inputs

All the environmental factors both external as well internal factors were considered for the change which will affect the organisational change in the .Since it is very important to remember that the outside conditions effect the company the most  so it is very much important that we find the environmental inputs affecting the company:

• Technological changes in the car engine to increase efficiency
• Production line improvement
• Testing and quality assurance needed to be improved

Strategy

The company needed to formulate the strategy to active all the mission and goals set along with creating value for stakeholders. Thus it developed a clear vision regarding the new strategy of the firm to bring about the cultural change in the organisation along with behaviour and shared values.

Leadership

The topmost layer of management need to participate in the cultural change by displaying their commitment level; because any cultural change needs to be managed form the top-most or senior level of management. The top management should support and favour the change in the organisation, so that the change can be implemented all across the organisation.

Culture

The underlying values, myths, norms, traditions, and beliefs which guide the team as well as the organisational behaviour need to be studied well. The culture of the company should depict change at the very first level that is the top management (Sowmya Rao and Prasad, 2012).

Structure & Adaptability

The roles and responsibilities are clearly assigned to everyone in the organisation in order to implement the strategy and the extent to which the organisation is ready to accept the change is the adaptability of TATA Motors.

Information & Technology

The practices, business systems and technologies which the TATA Motors is planning to use to reinforce the people’s work like the training online video module was developed to reduce the training cost which could be accessed by the employees all across the organisation.

Direct Manager

The relative quality and effectiveness of the immediate boss or the supervisor has been enhanced in the organisation to successfully implement the change. The manager depicts trust and integrity.

Measures & Rewards

There are various methods for measuring the team performance and eth employees are given monetary as well as non-monetary benefits in order to acknowledge their efforts.

Growth & Development

There are several resources, opportunities and practices which are put in place by the company to develop and enhance the skills of their employees which covers various aspects like training, planning and learning. To acknowledge the efforts of employees’ children merit awards are given in sports, academics and the TATA Cultural Group promotes art and talent in their employees.

Employee Engagement

The employees show emotional, behavioural and cognitive relationship with the company as well as with their job too. Employee engagement is promoted through TATAT Club and Community Development Centres created by organisation for their employees. When the employees come on board, form the very first they are brought under employee engagement at TATA MOTORS. During induction also there is mentor appointed to guide the new employee. AT personal level all the festivals are celebrated on-site eth factory to involve all the employees (Gourav, 2007).

Performance Outputs

These are the indicators which depict the organisational achievement along with individual performance in the form of results. TATA MOTORS practices Job enrichment in order to motivate its workers by providing the opportunities s to the employees through their job to achieve, advance grow and recognise and be responsible towards their organisation. Thus the main element of job enrichment is to put back the factors which enrich the job with elements of interest.

Bibliography

Burke, W.W. (1994) Organization development: A Process of changing and learning, 2^nd edition, California: Addison-Wesley.

Chapter 5: Diagnosis for Change, [Online], Available: gsme.sharif.edu/~change/Week003.ppt [20 April 2012].

Clegg, S., Kornberger, M. and Pitsis, T. (2008) Managing and organizations: An introduction to theory and practice, 2^nd edition, London: SAGE.

Cummings, T.G. and Worley, C.G. (2009) Organisation Development and Change, 9^th edition, Mason, OH: South-Western/Cengage Learning.

Falleta, S.V. (2008) ‘Organisational Intelligence Survey’, Training& Development, June, pp. 52-58.

Gourav, K. (2007) ‘Change Management: Survival of the fittest’, HRM Review, June, pp. 61-66.

Griener, L.E. and Schein, V.E. (1989) Powet and Organisation Development, Reasding, Massachussets: Addison-Wesley.

Hebert, S. (2009) Three Diagnostic Models, 25 May, [Online], Available: http://www.heberts.net/three-diagnostic-models/ [20 April 2012].

Sowmya Rao, J. and Prasad, G.V. (2012) ‘THE DRIVERS OF CHANGE: A SAMPLE STUDY ON TATA MOTORS’, INTERNATIONAL JOURNAL OF SOCIAL SCIENCES & INTERDISCIPLINARY RESEARCH, vol. 1, no. 1, January.

Weisbord, M.R. (1976) ‘Organistional Diagnosis: Six Places to look for trouble with or without theory’, Group and Organisational Studies, vol. 1, pp. 430-47.

JG25

But you can order it from our service and receive complete high-quality custom paper.  Our service offers “Organization Behavior”  essay sample that was written by professional writer. If you like one, you have an opportunity to buy a similar paper. Any of the academic papers will be written from scratch, according to all customers’ specifications, expectations and highest standards.”