Program: MBA- Master in Business Administration

Group case analysis

Creating and Managing Organizational Change

Pierre Frankel in Moscow-Unfreezing change

Students: Daniela Zdravkovska, Mladenka Vuckova, Slobodanka Miovska, Elena Ristovska,

Mislav Miljetic

Lecturer: Zaklina Gestakovska

April, 2020

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 1- Case summary

The case follows the story of Pierre Frankel, a devoted employee of H-IT, worldwide
provider of technologies and services with a global reputation. After completing studies in
finance at a well-known European university, he starts working in this Swiss company in the
finance sector and then gets transferred in the IT with the company promising him high-
growth position. He is sent from Switzerland to Moscow in the Russian subsidiary which,
besides the vast potential and technology talent, was failing to meet revenue and profitability
objectives. Once there, besides the freezing Moscow winter, he encounters a hostile
environment with Segei Lebedev- Managing Director of Russia- who considers him a threat
as are subsidiary’s other 450 employees. Pierre Frankel needs to find a way to deal with this
change in unfavorable environment.

2- The Russian business environment

First of all, Pierre arrives in a hostile environment having Sergei Lebedev as his
opponent who was difficult to be replaced although the subsidiary was underperforming
under his management because of the skills he has acquired by working there which made
him an experienced leader in the industry with a good network connections with top Russian
managers and officials. On the other side, there was also Nadia Abramova, the head of HR
who was rumored to have close relationship with Lebedev. The human management part was
already a challenge for Pierre, so was the Russian business environment as a result of the
Soviet culture where most of the people had a technical background, but still was lacking
managerial skills. The fact that the Soviet system had a deep legacy on the organizations was
making the things difficult for foreign companies to operate in efficient manner because most
of the managers were employed through existing relationships. The Russian business
environment was reflecting the cultural leadership myth of having a strong leader who was
keeping the relations with the employees distance while the decisions were communicated
top-down. The national identity of the Russians alongside with a strong mistrust of outsiders
represented one more problem that Pierre needed to deal with.

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 3- Getting through – the plan & change elements

As we learned from Kotter (2006), the change is a process, not an event, and Pierre had a
long one to go through. He was aware of the hostile business environment he needed to face;
he had the desire to lead the subsidiary turnaround, he had the knowledge in the industry,
while his ability to break the hostile and outdated Russian business environment was put on
test. So what did Pierre do?

- The cultural aspect of the change is important. Here this factor is dual: on one side we
have a totally different culture as the one he remembered reading about in the books;
on the other side we have the corporate culture used to see outsiders as kind of
enemies while the micromanagement was keen on discouraging teamwork and
expression of new ideas. What Pierre tried to do was to take a native Russian speaker
who would have helped him to establish close business contacts from the Russian
environment and to understand them better;

- Direct contact & Communication: Pierre has arranged meetings with all leaders in the
organization in order to learn more about the subsidiary’s organization, its structure
and operations so he can have an idea on the resources he is dealing with and allocate
them accordingly and align his expectations with the ones of the employees. One of
the attempts to do this was inviting a more open-minded employee for a dinner to hear
his perspectives. A very important part of the getting acquainted mission was to get
Nadia Abramova on his side and to get closer to the more open-minded employees in
order to facilitate the breaking through.

- Resistance: resistance to change is bigger problem than the change itself. Pierre faced
both of them: an active one from Lebedev who was threatened by Frankel’s presence
and was trying to sabotage him; a passive one, from the employees’ side who were
not helping the initiative to move forward.

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 4- Effective change management

In the above case, two types of changes are inevitable that need to be worked on in parallel:

 Process change
 Cultural change

We suggest effective change management using the ADKAR model.

Awareness

The first step is to build awareness of change. Given that this is a company that is managed
authoritatively, Frankel will have to build a relationship with Lebedev. If he gains his
inclination, using his power, he will quickly develop a sense of change.

Desire

By communicating clearly and transparently to employees about the benefits of change that
would make their job easier, increase efficiency, and sell results (by changing the incentive
model) we will eliminate the fear as a contributing factor to resistance to change.
On the other hand, through the insect model, each of the employees will be additionally
motivated to give their contribution in order to earn more. In that way he will be able to win a
part of the team that will support his plan for change.

Of course, if sales results increase, Lebedev will have the motivation to support the change
because he will be stimulated with an additional bonus by HI-T, which like any corporation is
ready to motivate people if the results go up. His relations with the Russian government can
contribute to communication in the PR department and improve the company's image in the
Russian business community.

Knowledge

Given the fact that this is a company that has operated in specific business environment and
in the Soviet system, the knowledge and skills of employees are an important factor in the
transformation process. For that purpose, trainings, team buildings and re-skilling are crucial
in order to acquire the necessary skills. Here we propose to consider the possibility of
outsourcing effective training as well as knowledge sharing with colleagues from Zurich.

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Employee investment, the availability of management, trainings and team buildings have a
significant impact in the process of cultural change. All of the above activities affect the
raising of the motivation (non-financial motivators), change of the corporate culture as well
as the need of the individuals to feel engaged and give greater contribution.

Ability

Ability is closely related to knowledge. At this stage it is important to deploy the right people
in the right place according to the skills they have. Managing people behavior, through
coaching session and mentoring is important but monitoring their work and giving
constructive feedback make the implementation more successful. For Frankel in this phase
middle management team plays significant role.

Reinforcement

This is the final phase. Monitor the change goes together with sustaining the change.
Encourage the employees to take care and maintain the change. It’s time for recognition and
learning for mistakes.
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Change occurs on two dimensions: the organization (preparing, designing, implementing and
sustaining) and the employees. They are going together in order to have successful change.