Online Custom «Managing Organizational Change» Essay Sample
The Abu Dhabi National Oil Company (ADNOC) has been undergoing changes in its management since 2009. The changes were caused by the need to cut the costs of running subsidiaries by about 20 percent to ensure that the company is profitable. Such a step was followed by radical changes in the administration and management of the company, namely the change of the leadership. The human resource department was, therefore, one of the key targets of change. However, it prompted some resistance from the management at the subsidiaries of the company because they were not used due to the budgetary constraints which they faced for the first time. Nevertheless, the change was inevitable as a result of the drop in the oil prices in the world. Thus, there was a higher production and a lower demand for oil. Therefore, to sustain its profit and regain its economic strength, the company had to initiate proper planning, organizing and controlling systems. The report thus traces organizational changes that have been faced by ADNOC in the human resources department and application of organizational change concepts, principles and theories towards change.
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The report seeks to examine compliance of the ADNOC Company in the United Arab Emirates with the change concepts and theories. The company was facing many problems due to the fall in the crude oil prices in the world owing to the 2008 and 2009 recession. The organizational change majorly related to employee recruitment, job descriptions and leadership. However, since the company was much interested in cutting costs, employees’ involvement in the change process was minimal, which made it difficult to even measure the outcomes.
Main Issues for Discussion
The main issues for discussion include changes in the Abu Dhabi National Oil Company, specifically within the human resources department. To begin with, the 2008 and 2009 inflation affected majority of businesses and consumers in the world. Thus, the spending of the majority of people decreased, especially on luxuries (Benn, Dunphy, & Griffiths, 2014). ADNOC was thus greatly affected by the recession because the oil produced and supplied by the company is mostly used by car owners, the majority of whom use the vehicles as a luxury. When the recession began in 2008, the company lost a substantial part of its profits, thus prompting the board of directors and the management to devise the most reliable means of managing these changes (Benn et al., 2014). Eventually, the company decided to embark on the change of the leadership structure of the organization and reduction of the budget. Although these changes affected many departments, the human resources department was the major target.
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Ali Ar-Jar, the then managing director and the current CEO of KPMG UAE, announced that the fall of crude oil prices in the world by about 80 percent greatly affected oil companies. Further, the then chief executive officer Yousef bin Yousef was accused of corruption, which made it impossible for the company to thrive. The fact of corruption was discovered after an audit of the whole company, especially administration of the finances, was conducted at ADNOC. Further, it was unveiled that the majority of the subsidiary companies were operating in great secrecy, which made it difficult for them to seek and share information with each other (Benn et al., 2014). The secrecy thus caused considerable embezzlement of the funds. While confidentiality, especially in the subsidiaries outside the United Arab Emirates, was cherished due to the need to protect the fundamental intellectual property rights, in reality it caused more harm than good to the company.
The above problems and difficulties experienced by the company effected several changes. First, the company adopted a new management strategy to effectively curb the costs by embracing a new cost cutting measure. Second, the company introduced a new culture of openness as a part of the move to realize the unexploited potential. The move also aimed to enhance the culture of nurturing ideas and information sharing.
The human resources department, which was the major target for the change, developed a reward system program to motivate industrious employees. It also aimed to cherish openness and information sharing as well as generation of new ideas for the improvement of the company (Benn et al., 2014). Similar to other departments, a new system of communication was set up in the company to facilitate interaction between subsidiaries as well as between company employees and the management. The human resources department also introduced a system of breaking the barriers between the management of the company and the technical staff by equipping employees with knowledge about creating effective PowerPoint Presentation plans (Benn et al., 2014). Further, the department was much engaged in the preparation of budgets. The entire structure of the company was changed, thus forcing the human resources department to change to meet the needs of the subsidiaries and units. For example, the company sought to increase production through growing the number of oil fields (Benn et al., 2014). The fields required quality and competent manpower to meet the targets of the company. Further, the company sought to inject the culture of openness, transparency, and innovation. As part of the human resources department’s change strategy, a revision of job descriptions of the workers and their qualifications was done. Some of the changes effected at the leadership level involved appointment of Abdulaziz Abdulla Alhajri as the petrochemicals and refining director. Abdullah Salem was nominated as the marketing strategy director. Additionally, many other reshuffles were done in the company.
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Discussion of the Main Issues
It is evident from the problems discussed above that organizational change at the ADNOC Company was inevitable, especially within the human resources department. It should first be noted that change management is a relationship issue. In other words, the manner in which the management interacts with employees, communicates plans, etc. determines whether the implementation of a change plan will be successful or not. The quality of the proposed change plan cannot guarantee the success of the change but rather the manner in which the stakeholders and change agents relate (Cameron & Green, 2015). Further, development of a change structure process does not mean that the structure will automatically guarantee a positive change. This is because the organizational change process is not rational but rather based on understanding and relationships. Effective change is only gained through hope, trust, intuition, emotion and personal faith (Cameron & Green, 2015). Therefore, in effecting a change, two things have to be taken into consideration. First, a company must develop tangible structures to curb the problem. Secondly, intangible strategies such as trust and faith of workers and other stakeholders must be considered. The process involves projection of the company’s goals for the next few years and introduction of changes to attain those goals. For this reason, an organizational change is not a process that can simply be designed and installed (Cameron & Green, 2015). The workers must be informed in advance about the change so that they can take the whole responsibility for the process.
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In some instances workers may resist organizational change. Firstly, if the proposed change does not disclose any vision, it may face opposition from workers. Secondly, if the stakeholders do not see any urgency in its implementation, the workers may resist. Thirdly, the stakeholders may resist the change if they feel that it is not all inclusive. Lastly, the change is likely to cause resistance if it is an individual or departmental affair as opposed to an institutional affair (Cameron & Green, 2015). For organizations to avoid the above situation, the stakeholders must be informed of benefits of the change and any complexities in its implementation. The change should also be compatible with the values of the organization. Finally, the implementation of the change should be a gradual process to give employees ample time to adapt to it without any harm.
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Kart Lewin proposed three phases in his theory of change management. He argued that any valid and effective change in management must pass through three stages (Cameron & Green, 2015). The first one is the thaw stage, which involves stimulation of people to feel the need for a change. The second phase is the change stage, where programs are put in place to assist in producing the desired change (Cameron & Green, 2015). The last phase is the refreeze phase, where reinforcement is done to ensure that the new values, knowledge, skills, and attitudes become a permanent aspect of the organization.
Based on the above concepts of change management and the theory by Kart Lewin, it is evident that the Abu Dhabi National Oil Company needed a change. First, the recession led to hostile working conditions by reducing the company’s profits. In addition, workers feel motivated when they work for something productive. Therefore, overproduction of oil and reduction of profit needed urgent attention. Further, application of the Six Sigma and Lean Manufacturing process to the company reveals that there are many inefficiencies in the company, thus warranting a change (Cameron & Green, 2015). These inefficiencies included corruption, lack of motivational strategies for workers and poor leadership. The change was thus inevitable for the company based on the application of these theories of quality management and the Kurt Lewin theory of change.
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Application of the Kurt Lewin change management theory presents an avenue for the management of the change. First, ADNOC engaged in the employment of qualified and competent staff. Second, there was a total overhaul in the leadership of the organization. Thus, in 2016, all the subsidiaries of the company received new chief executive officers. Additionally, changes were also effected in the managerial positions. Further, due to the loss of money through unnecessary activities, the company embarked on a cost cutting strategy, which resulted in a 20-percent decrease in the costs of the subsidiaries (Benn et al., 2014). The cost cutting was also done by reducing the number of employees and focusing on the multitasking of employees. Besides, the human resources department laid much emphasis on the development of new job descriptions and motivational strategies to take into account the new needs of the company (Benn et al., 2014). To make the change permanent, the company cherished the values of transparency, anti-corruption, openness, creativity and innovation among both leaders and employees of the company.
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To address the issues discussed above and produce an effective and permanent change, ADNOC must take into consideration the following recommendations. First, the company should ensure that the stakeholders are fully involved in the change process. The employees must be capable of understanding the change and internalizing it. Second, before commencement of the change process through creating structures or projects, the company should use quality measurement tools such as the lean manufacturing process and the six- sigma theory of total quality management. Third, the change project should be measurable. Fourth, risk assessment should be done to assess any forms of resistance to the change and analyze ways to deal with them. Lastly, every step of the change process must be measured and achievements must always be celebrated to motivate employees.
Trails of Recommendation and Results
Based on the above discussion and recommendations, there is a need for an orderly implementation of the change process. First, ADNOC must identify the needed change (Benn et al., 2014). Communication should then be done to ensure that all the stakeholders of the company are involved. Further, all the stakeholders and people likely to be affected by the change must be identified. Then, a change team should be constituted to spearhead the process. The change team should determine whether employees need further training to personalize the change (Benn et al., 2014). Lastly, the company should follow the process to ensure successful implementation of the change process.
However, the majority of the stakeholders of ADNOC were not involved in the implementation of the change, and thus it faced considerable resistance, especially from subsidiaries, due to cost cutting. The process was fully dictated by the board of directors and thus failed to take into account the necessary change management steps (Benn et al., 2014). Further, there was insufficient communication with employees, who are the major stakeholders. Thus, the organizational change in the company was never people-driven and, thus there was no willingness from the stakeholders to adapt to it.
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Review and Measurement of the Results
Organizational change management is done at three levels, namely the individual level, the use of performance metrics in measuring change, and tracking the effectiveness of the change management activity. In ADNOC, employees were never involved in the change process (Benn et al., 2014). As a result, a proper feedback on the effectiveness of the change could not be achieved, thus rendering the process unmeasurable. Overall, there was forced compliance with the change, as the employees were not willing to implement it.
Due to the manner in which the change process was initiated, it was also difficult to measure the project performance by any metrics. For example, factors such as compliance with the timelines, realization of the benefits and the speed of execution could not be measured. Lastly, change management activities were ineffective due to poor communication with employees (Benn et al., 2014). Hence, lack of employee training and poor communication rendered the change process futile. Therefore, ADNOC did not fully achieve the aims of the change process.
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Summary and Conclusion
From the above discussion, it is proper to infer that the change management process is a relationship-driven rather than a rational process. ADNOC, for example, sought to effect change through the human resource department to mitigate the negative consequences of 2008 recession. Specifically, the company effected change in leadership, the modes of employee motivation, cost cutting as well as employee recruitment. However, it took the exercise as a rational process by setting up structures without communicating to or involving the major stakeholders. As a result, the change process became immeasurable and did not lead to achievement of the required or projected goal.