Executive Summary

The ambition of most expanding organizations is to take the company to the top of the market as
well as gaining market shares and competitive advantages over their rivals. It is crucial for profit-
making organizations to either improve their process or technology to be in synchronism with the
consumers’ and their demands. The changes within the management levels should be made in
line with the consequences, otherwise, the organization will suffer unfavorable consequences in
its operations. Once applied, these changes will help in making the organization achieving their
goals and targets.

For more than a century, the media and professionals have debated the value of having the right
leadership style and approaches. Nonetheless, until the twenty-first century, leadership was not
viewed as a driving force in a company. Organizational behavior and leadership styles fit for
mega-corporations such as Google, Apple, and Microsoft vary as they grow, responding to the
demands of the market, economy, and the firm itself.

For instance, in 2008, the global financial crisis began which happens to be the worst type of
financial crisis the global market has ever come across since The Great Depression in 1930(s).
This crisis was a major factor in the downfall of vital enterprises such as banks, insurance firms,
real estate loans and construction, and the car industry, among others. Consumer wealth losses
estimated in billions of dollars. Hence many businesses started laying off employees or closed
outright, and commercial lending drastically decreased. In addition, the buying power of
customers decreases as the inflation rate increases which makes the raw materials of automobiles
and the fuel prices to rise. Among the big three US companies in the automobile sector, Ford
went through the crisis without being bankrupt gaining a huge image publicly.
1. Introduction
During the global financial crisis, in 2008, the sector which got highly damaged was the
automobile sector. The rise in prices of fuel as well as the raw materials made the purchasers
to demoralize. By the fall of 2008, the big three US companies of General Motors, Chrysler
and Ford risked probable insolvency, and their futures were in jeopardy unless the
government intervened quickly. The General Motors management informed the Congress
about the company not being able to pay its suppliers, debt commitments as well as covering
the labor insurance’s costs. The company earned $5 billion from the President George W.
Bush’s administration and $17.2 billion from President Barak Obama. Whereas Chrysler
was taken over by the Fiat Automobiles of Italy in June 2009 in addition of receiving $4
billion from the government. That leaves the Ford company who either didn’t go bankrupt
but had to survive the financial crisis until the new organizational changes brought in by
CEO Alan Mulally. In this report, we are going to discuss about the organizational change
Ford Motor Company brought in and what leaderships styles as well as theories did, they
apply to survive through the global financial crisis.

1.1Background of the Company

Ford Motor Co., U.S. automotive corporation. Founded in Detroit, Mich., in 1903 by Henry
Ford and a group of investors, the company introduced the hugely successful Model T in
1908 and by 1923 was producing more than half of all U.S. automotive vehicles. The
company was reincorporated in 1919, with Ford and his family acquiring full ownership. Its
stock was first publicly traded in 1956. Ford acquired the British automaker Jaguar in 1989–
90, bought the rental car company Hertz Corp. in 1994, and purchased the automobile
division of Volvo in 1999. Later acquisitions included Aston Martin and the Land Rover
brand of sport utility vehicles. Ford also owns a significant share of the Mazda Motor Corp.
(The Editors of Encyclopaedia Britannica, 2008)

1.2Organizational Change in Ford

Prior to the global financial crisis CEO of Ford Alan Mulally’s “One Ford” plan reorganized
its entire structure and obtained $36 billion in capital market borrowing. In 2006, Ford’s
CEO offered to mortgage all of the company’s assets to the nation’s largest banks in
 exchange for billions of dollars in order to re-build the firm. Ford sold Volvo, Jaguar as well
as Land Rover to India based Motors company for $2.3 billion. Mr. Mullay believed that
these loans might come in hand if the recession was to occur which turns out to be right
when the recession occurred in the winter of 2008. The big three US companies within the
automobile sectors were General Motors, who was acquired by the bank and Chrysler, also
taken over by the Fiat Automobiles of Italy. Ford’s actions prior to the financial crisis
served as stepping stones to their revival and prosperity. Ford made a net profit of $6.5
million in 2010, while the yearly report for 2017 indicated a net profit of $7.6 trillion.

2. External factors making change necessary

Mullaly's organizational innovations at Ford had a profound effect on how the firm was
formed, how cooperation was promoted, and how innovation flourished under his
leadership. Mullaly’s solutions to the challenges Ford was facing amid the financial crisis
was outlined in his strategy One Ford. Alan Mullay used a simple strategy which was not
easy to implement. Mullay’s main focus was on enhancing quality the quality and
profitability of the company’s primary brand vehicles as well as removing pension and
medical obligations. To improve Ford’s finances, he mortgaged most of Ford’s assets and
was able to raise $23.6 billion. This move of his was considered risky to plenty however
when the global financial crisis hit, he was able to save Ford from having to seek
government assistance.

3. The Model of Change

The change model can assist in identifying possible sources of resistance and implementing
tactics to decrease or remove resistance. It also aids in the development of a successful
communication strategy which is a huge advantage.
Allan Mulally, CEO of Ford, discovered a work environment that permitted poor conduct as
long as technical abilities were good. In addition to that, he had to face major challenges to
break the Ford’s silo mentality, which is an attitude that reduces company’s efficiency and
contributing to a shattered corporate culture.
Allan Mulally used the Lewin 3-step model, that provides guidance to execute changes and
cope with workers that are resistant to change.
3.1 Stage 1: Unfreeze
The unfreezing process is to convince an organization to get rid of their previous ideas
and structures. In order to do that the best way is to explain the employees for the need
of change and how the results from doing this change might make higher profits. Once
employees understand the reason the change is needed, they will be more motivated to
accept the change. (Stone, 2021)
Before Allan Mulally was recruited, Ford was already making a net of $12.6 billion and
its share price was at $8.39. Within the Ford organizations, the top executives were
competitive with each other that they forgot to save the Ford as a whole. Once Allan
Mulally was recruited in 2006, he discovered this poor work environment and he took an
unexpected step by creating the One Ford plan. This broke the silo mentality within
executives at top and made them into one learning and performing unit. Each employee
was given a wallet-size card that had details of the business plan on one side and the
culture and expected behaviors on the other.
3.2Stage 2: Move
After the unfrozen process, this is the stage to start implementing the change.
Organizational change is a complex process therefore there is no guarantee of
predictable results. For successful and long-term effectiveness after implementing the
change the flow of information within the organization is important and a great
leadership. It is also important for the company to communicate sound and clear whether
it is about the implementation or the benefits or misunderstandings and encouraging
employees to get involved as much as possible.
Allan Mullaly scheduled weekly meetings where the top executives of Ford from all
over the world had to attend by conference call or in person. The attendees were made to
give presentations without any sort of assistance which forced them to acknowledge the
issues within Ford. To showcase the seriousness of the problems Mulally used bar charts
with different colors indications which was going well or not.
For employees, Mulally made sure that all employees understand the vision of the
company and make them feel supported. He made them feel that everyone is part of the
team and every input of theirs is valued making them take part.
 3.3Stage 3: Refreeze
This step is intended to maintain the change implemented. If necessary, actions are not
taken to sustain and reinforce the change the previously dominant behavior tends to
reestablish itself. To freeze these new modifications, the organization needs to consider
both official and informal processes. Moreover, it is also crucial to celebrate the success
which will make the employees feel valued and gives them more motivation.
Employees are routinely trained at the Ford company to ensure that they have the
appropriate abilities. Allan Mullaly made sure that every employee’s contribution was
valued and made them feel part of the team. He implemented a twice-yearly
performance review that assessed both technical ability and teamwork abilities.
Managers always made sure that there was communication and information flow with
employees.

Mulally saw drastic improvements within the organization. He even mentioned if a unit
stopped then the previous managers would have asked what was the cause of stoppage but
that has changed where now executives ask “What we can do to help you?”. That method
has shown to be more productive and successful in problem solving. Employee buy-in is
taken so seriously at Ford that some employees carry a card that details the business plan on
one side, and the culture and expected behaviors on the other. (Miller, 2013). We will be
discussing more about the leadership’s styles Allan Mulally applied on this change process.

4. Leadership Style
Leadership is the capacity to motivate and lead others in order to achieve a common
objective. It can also refer to an organization's senior management hierarchy. To be a good
leader, one must be able to convey the goal in a way that motivates others to strive toward it.
Below are some types of leaderships used commonly among organization.
4.1 Lassiez-Faire Leadership

Leaders following this leadership style have a trusting and reliant attitude toward their
personnel. They do not micromanage or become overly engaged, and they do not
 provide excessive instruction or direction. If the organization is staffed by talented,
skilled and experienced employees then this style would work, as this style is quite
popular among professional and creative industries. Its biggest flaw is that it is largely
dependent on the ability and temperament of your staff.

4.1Authoritarian Leadership
This leadership style is known to be the complete opposite of the Lassiez Faire
Leadership style. The authoritarian leader makes all choices and sets all goals for
himself. Everyone understands their position and their duties, and the leader rapidly
establishes the goals and plan. Employees frequently detest commanding managers,
which may lead to constrained innovation, disobedience, and even significant staff
turnover. Some employees may feel undervalued, which can impair motivation. It is
critical to recognize when this style of leadership is required and to put it to good use for
a limited period. The major disadvantage is that employees in the team might feel like
they are not able to contribute their ideas which also results in lacking creative solutions
to issues.
4.2Participative Leadership
Participative leadership is a style of leadership in which all members of the organization
work together to make decisions. This leadership is also known as democratic
leadership. The leader always discusses the issue with the team before making a
decision. Sharing information and ideas with the team to solve issues. The participative
leadership decision-making process can take many forms, but the key element is
collective input from all members of the organization. Participative leadership is most
successful in organizations or companies that have defined roles requiring little
management or oversight, like universities, technology companies or construction firms.

There are other leadership styles such as transactional leadership, transformational leadership
and many more however, these three are the most commonly used in corporate. The leadership
style Allan Mulally applied at Ford was the Participative leadership also known as the
Democratic leadership. He addressed the decisions he was about to make with his team, engaged
in corporate sales and other events, contacted consumers during sales, and urged the executive
team to collaborate on the brand and image.
He also mentioned that changing the attitude of the top executives is solely not enough for
desirable enhancements. It is also necessary for all the employees at all levels to understand the
mission and vision of the company and feel dedicated to it. It was important for him to show the
employees that they were also part of Ford transition from bankruptcy to success. Mulally
wanted the managers to ask how to help the employees rather than dismissing them for their
mistakes or slow work performance. The participative method has been used over five decades
by other organizations but Mulally added different ideas, motivated teamwork, participating in
company events as well as taking ideas from employee and contributed his own answers. He saw
this chance to serve and discover solutions to major challenges, rather than a source of control
over individuals and firms.

5. Overcoming the resistance of change

One of the most baffling and recalcitrant of the problems which business executives face is
employee resistance to change. Such resistance may take a number of forms—persistent
reduction in output, increase in the number of “quits” and requests for transfer, chronic
quarrels, sullen hostility, wildcat or slowdown strikes, and, of course, the expression of a lot
of pseudological reasons why the change will not work. Even the pettier forms of this
resistance can be troublesome. (Lawrence, 2022)There are six primary areas in which
companies must work when it comes to tactics and approaches for lowering resistance to
change:

 Structure the team to maximize its potential

 Set challenging, achievable and engaging targets
 Resolve conflicts quickly and effectively
 Show passion
 Be persuasive
 Empower innovation and creativity
 Remain positive and supportive

All employees working under corporate expect leaders to manage the change they
implemented. However, inspiring leaders foster a culture in which change is seen as
everyone’s responsibility. This is what Alan Mulally did where some employees
 working under Ford has a card where on one side the One Ford plan is written and on
the other the culture and expected behavior is written. This helps them keep their mind
in one unit that is to treat the Ford Motor Company as whole.

6. Creating the culture for change

In 2006, William Ford Jr. made up his mind of recruiting someone from the outside in order
to retrieve the company. Allan Mulally, the new CEO of Ford Motor Company, reorganized
the working structure and developed plenty new polices aiming to create a new vision and
cultural change. These changes helped the company survive through the global financial
crisis during 2008. However, there were some parts of the company which still needed
developments.
6.1Deteriorated culture
The company mainly focused making profits fast instead of making profits in the long
term. They started acquiring several brands and expanded into financing sector. A
massive bureaucracy developed among the organization where top executives were
locking horns with each other to prove themselves. This created in lack of innovation
and developing creative ideas for solving issues within the company. As I have
mentioned before, they ignored to treat Ford as a whole. Due to this type of deteriorated
culture, the company starts to affect financially.
6.2 The “One Ford” strategy
The first step Mulally did was to make all the top executives to attend weekly meetings.
They are expected to give presentations on how well the project is going without any
assistance. He also sold the four other companies acquired by Ford family to shift the
main only on the Ford Motor Company. He also offered early retirement packages and
buyouts for the hourly working employees. This One Ford strategy was a plan for
sustainability.
6.3 Financial impact on employees
Ford’s employees earn salaries accordingly to their effort. The compensation committee
takes into account of the performance before giving them a raise. The company make
sure that they are not underpaying their employees by looking over the tasks they were
assigned with and the achievements they made. Ford has prioritized delivering a
 competitive wage package in order to retain and inspire its employees. This entails
paying salaries that are comparable to or higher than those paid by the main automobile
manufactures in the United States.
Furthermore, the Ford compensation system encourages fairness and economic stability,
which reduces employee unhappiness. As a result, the organization can retain its
valuable staffs.

7. Change Strategies applied in Ford company in the face of

financial crisis
The improvements made by Mulally’s at Ford had a far-reaching influence on how the firm
was formed, how cooperation was promoted and how innovation flourished under his
leadership. The One Ford plan already has the solutions to the issues Ford was facing during
the global financial crisis. This One Ford strategy is a combination of standard Change
Management and Change Leadership techniques, as well as components of Organizational
Development and maybe even the Socia-Economic Approach.
The positive traits these change strategies bring into the organization is that it makes the
entire company to respond positively to the crisis situation. These are the 4 aspects of
organizational change model:
 Bringing together all the Ford employees as a global team
 Making the most of Ford’s unique automotive knowledge and assets
 Building up automobile designs accordingly to the customers’ preferences
 Arrange the substantial funding required to pay for it all.

Mulally’s approach to Change Management at Ford was essentially organic. Change

management differs from Change Leadership in that Change Leadership is more
dynamic. Mulally was more engaged with the Change Leadership strategy at Ford.
Organizations that try to find new opportunities and take necessary actions to achieve
will survive in the market. It is important for companies and individual to learn to
change and approach Change Leadership as a mission-critical discipline. Mulally carries
the traits required for this leadership style. There are six characteristics of Change
Leadership:
7.1 Low level of anxiety
Anxiety has a huge impact on a person behavior. People need a sense of security and to
be free of concerns in order to function at their best and promote innovation and
progress. It is a good idea to hire people with low anxiety levels which will create a
workplace where people feel safe rather than threatened.

7.2 Emotional Stability

People should be in a good mood in order to learn well and perform at a high level.
Once the employee’s attitude and belief of succeeding in the business is broken, they go
straight into depression which affects their performance in their job thus losing the
employee. It is crucial to hire individuals that are emotionally wired to be happy all the
time and take daily steps to keep their team’s enthusiasm strong.

7.3 Action Orientation

Other than learning it is important to adapt and lead the change that requires actions.
Effective leaders are more likely to take the initiative and become involved in the
activity. Hire individuals that are high in energy and organize events and activities that
encourage movement and energy.
7.4 Confidence
Exploration is also required for the change. It is normal to feel anxious about stepping
into unknown territory however, new opportunities come only after going into these
unknown territories. Leaders should be positively confident that even though they are
unknown of the outcomes. Hire people who aren’t afraid to take risks and had a taste of
success in the past. Consider assessing and honoring the discovery process itself.
Maintaining an appropriate perspective is required.
7.5 Openness
To learn about new ideas and how to put them into practice, one must be open to them.
Hire people with a wide range of experiences and abilities. Allow works between their
regular responsibilities and encourage them to gather new experiences and viewpoints.
7.6 Risk Tolerance
 Rather than punishing employees for failing, encourage them to take chances. In
addition, rather of monitoring results, be a value-added supervisor by assessing and
teaching your employees on their risk management skills.

These six characteristics should be used when an organization is planning to find a leader. These
characteristics will build the work culture where employees will be able to work on new ideas
and explore new opportunities. Alan Mulally main focus was on the people of the company.

Recommendations & Conclusions

Along with the changing population the world is also changing, customer preferences are
change, the technology is changing and finally the economy. Businesses failing to bring change
into their organization are more likely to lose their competitive edge and fail to meet their
demands and needs of customers. In this report, we have discussed the organizational changes
implemented at the Ford Motors company by Allan Mulally during the global financial crisis.
The company was able to go from a multibillion-dollar loss to five straight years of yearly
profitability. The change management strategies and the leaderships styles of Mulally improved
the corporate culture and working system at Ford to bring success within the organization.

In today corporate culture, it is crucial for organizations to bring change in organizations,

develop new ideas and implement them. The ability to respond quickly to change is a defining
characteristic of successful companies. Competitors may adapt to change more rapidly than an
organization, resulting in the loss or elimination of goods and even employment. Organizations
that see new possibilities and take action to capitalize on them, on the other hand, will thrive.
Because organizations must respond to change, Change Leadership must be treated as a critical
management discipline. Mullaly participative leadership style resulted in the success of saving
Ford from the crisis. The One Ford plan is the best strategy Mulally implemented. The culture
began to transform and he established a safe work environment in which his team could work
and develop as the cornerstone of this cultural revolution. Data was undoubtedly one of the most
significant tools he used to manage his teams, and he made certain that everyone was aware of
the company's goal, progress, and areas that need special attention. (Somol, 2016)
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