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Managing

Organisational Change

A Case Study on Toyota Australia

16768417 Email: 16768417@uws.edu.au

Daniel Barreto

Management of Change

Change management is not a singular concept; rather, it entails a diverse range of best practices and experiences (Mishra, B. 2007) that are adapted both internally and externally to changes in the environment. The dynamics and influence of external and internal environments have evolved rapidly with the way assumptions are made about the business and the assumptions implied about governing the business (Parikh, I. 2007). In most recent times Toyota has been a stand out example of dramatic change in relation to its most recent move to cull 350 workers from its workforce in light of financial uncertainty (Toyota Australia responds to current operating conditions 2012), despite taking out top spot in sales for 2011 (Toyota leads sales for ninth consecutive year 2012). In discussing the change management concepts adopted and displayed by Toyota this essay will endeavour to also evaluate the possible issues and dilemmas surrounding the strategies of change in Toyotas organisational structure. Firsty we will discuss the theoretical frameworks of change and which is better suited to an organisation, thirdly we will discuss the theoretical tools employed for change and the different stages involved in the change process as well as the possibility of a resistance to change and finally the issue of leadership and their role in the process of change with an emphasis on the theoretical perspectives surrounding this. The crises following the global financial downturn of 2007 provided a

burning platform for Toyota to rethink its production capacity and the resources necessary to maintain its current and expected levels of production. Graetz et al. (2011) describes various complexities of change in an environment;

Management of Change

but what stands out within the context of Toyotas situation is the time of unprecedented change where the challenges in maintaining its output of volume are hindered by the high Australian dollar (Toyota Australia responds to current operating conditions 2012). The cue for change here is quiet evident and Graetz et al (2012) describes the goal of change as a way to strengthen productivity well within its capabilities despite the probable implications of measuring such a proactive action to ensure the future success of Toyota in maintaining the lead role in manufacturing vehicles both locally and internationally (Toyota Australia responds to current operating conditions 2012). This form of organisational change is evidence of an organisations will to adapt to the environment (Barr et al. 1992) as well as the aim to improve overall performance (Boeker, 1997). The issues involved in the change of an organisation falls back on the major framework built on contingency theory (Donaldson 2006); it is a reflection of the characteristics in an environment and an organisation (Graetz et al. 2011) with an emphasis on organisational structural design that has an almost perfect fit in the contingencies of the organisation (Donaldson 2006). However, there are dilemmas involved when attempting to fit this framework into the internal and external environment; this consists of employing an adaptive or rational strategy, a cultural or structural change, continuous improvement or transformation, empowerment or command and the economic or social goals. However, such an implementation of contingency theory is its ability to affect and deal with the status quo of organisational change and adaptation (Galunic and Eisenhardt, 1994 cited in Donaldson 2006), in other words, its failure of complete integration. In the case for Toyota, they display a rational strategy with reaction to changes in the external environment high Australian dollar with

Management of Change

respect to poor export volumes and sales in hopes of achieving economic and social goals through command of its workforce and the overall production facilities operating locally and internationally. However, this vision of achieving such a feet is hindered due to the lack of holistic integration. Although contingency theory is often considered as an equilibrium theory (Donaldson 2006) is it a realistic one? Donaldson (2006) identified a flipside to this phenomena which is a more realistic theoretical model of Structural Adaptation to Regain Fit (SARFIT); in short, it is a theory where an organisations fit remains temporarily in equilibrium until the dependant variables affect the equilibrium because the environment is always changing and never in permanent equilibrium. When applying this theory to an organisations point of view, it is clear to see why such a theory be can apply in the real world; in the case for Toyota where volumes are down, this first thought out temporary situation has turned in to a undeviating one which reflects the unpredictable variables of changes in the organisations environment. The processes and strategy of change must be well thought out with caution to the tools employed in the change process due to the imposed uncertainties in and organisations macro environment (Graetz et al. 2011). The tools for change can come in different forms, whether it is used in promoting change through communications or the tools needed to drive change (Wallace 2007). Graetz et al (2011) describes scenario planning as an important aspect to the role of change in the organisational structure and to the key stakeholders involved. Customer value propositions are at the core of the business strategy and promotes the identification of ways to stand out from their competitors and

Management of Change

to hence therefore strengthen their customer relationships which Toyota is in dire need of (Hammerton 2011). Following this point, it is important to outline the change agents in the overall process of change; in each of the stages of change, a change agent must have specific activities that enable the change (Krishnan 2007). Various researched (Graetz et al. 2011; Gravenhorst 2003; Krishnan 2007) has identified three stages in change; the unfreezing, moving and the refreezing stage. In the unfreezing stage the action is to develop the need for change and point out the reasons why things should change from the way things used to be done (Graetz et al. 2011; Gravenhorst 2003; Krishnan 2007) In the case for Toyota, it is displayed quite clearly why the need for change is necessary; The high Australian dollar has led to decreases in competitiveness of local manufacturing facilities and the overall decline in production volumes estimated to be around 36% (Toyota Australia responds to current operating conditions 2012). The moving stage introduces the new behaviour requirements as a result of the change and the re-freezing stage introduces the new values and rules to enforce the new behaviour to establish a new state of organisational equilibrium (Graetz et al. 2011; Gravenhorst 2003; Krishnan 2007). It sounds all to good and simple to be true doesnt it? But the matter of the fact, it isnt at all. There are much larger dynamics and in helping discuss this matter we must delve into an analysis of the first and second order changes. The first order changes are minor with respect to looking for improvements on a present situation (Goldstien 1988). However in Toyotas situation this is best reflected in the second order of changes; this form of change is strategic, transformational and revolutionary (Goldstien 1988); which is backed by their aim to become more cost effective Toyota (Australia responds to current operating conditions

Management of Change

2012) and competitive overall. There are structural dilemmas to be addressed here, which are best highlighted by Bolman and Deal (2003). The six dilemmas are as follows: differentiation verses integration; the dilemma between allocation and coordination, gap versus overlap; where tasks arent assigned with clarity, overuse verses overload; too little work leading to a state of un- equilibrium, clarity verses creativity; sense of misdirection, autonomy versus interdependence; sense of isolation due to excessive autonomy, and finally loosely coupled verses tightly coupled; building an organisation without holding it back. The structural dilemmas described prior, places an important emphasis to the configuration in the structural mechanisms to respond to recurrent management challenges. In the case for Toyota, Yasudas actions to tackle the overuse of employees in the production process and to improve the direction of the manufacturing process without hindering its traditional values is a clear indication of the dilemmas facing Toyota Australia today. On the other hand, such a change can cause resistance in any conduct taken to affect the status quo as the persistence to avoid change increases (Maurer, 1996). In a study it was identified by Maurer (1996) that three of the five fundamental sources of resistance were identified that resonates with Toyota: the first being the direct costs of change, the second which closely identifies with Toyota cannibalization costs, in other words, it is a change which brings accomplishment to the product but has an affect of bringing great forfeitures to the stakeholders involved (Maurer 1996) in this case, the Toyota employees and finally, the failures to identify with the vision of key stakeholders which can leave a cynical image for future changes; not only domestically but also on an international scale.

Management of Change


Following the previous topic, leadership has a central role in the direction of

change in organisational management (Graetz et al. 2011). The informational power that is brought forward by the leader becomes necessary if the ramifications of change have important practical implications. This is because informational power has a flow- on affect on the organisations target beliefs, attitudes and culture (Gravenhorst 2003). Bass (1995) identified two basic leadership styles branded transactional and transformational leadership. First is first, transactional leadership has an impact on stakeholders values and ambition levels. This is where employees would appreciate changes and options they would not have appreciated on their own. Then there is the role of the leader to bring about the transformational change agent, this occurs where the leader attempts to pass on the acceptance of change to the stakeholders by referencing positive feelings of the change and a re-evaluation on their perspectives of this change. In utilizing these change agents the overall purpose is to serve their (the leader) self-interest (Emans 1997 cited in Gravenhorst 2003). However, it is quite difficult to postulate one method of change to a population that is resistant to change (Krishnan 2007). Dr. John Kotter (Kotter 1996) devised an 8-step Change model to implement change effectively within an organisation. The Steps involve the following: 1. Create Urgency, 2. Form a powerful coalition, 3. Create a vision for change, 4. Communicate the vision, 5. Remove obstacles, 6 Create short-term wins, 7. Build on the change and 8. Anchor the Changes in Corporate culture. The steps devised are quite simple, however rigorous effort is need to imply and change the organisation successfully. When translating this to the situation Toyota Australia is facing it is quite evident that they have a lot of work to do in order to manage the overall functionality and operation in the manufacturing aspect of the company. In conclusion, it is quite palpable to see why there are difficulties to change. Even though it may seem like a one-dimensioned concept, there is always two-sides to

Management of Change

the coin. The change must result from a need for the change and why it is necessary, but also taking being prepared to face the issues and dilemmas that result as a consequence. In following that point, it takes the attributes of a leader to employ a tool for change and using it to the best of his/her will in managing and consistently maintaining the change. In the case for Toyota, it is clear that they do have a lot to work on and consider given the current economic climate.

Management of Change

References
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Management of Change

Kotter, J 1996, Leading Change, Harvard Business School Press, Harvard. Krishnan, S 2007, Defining Change Agents, Organisational Change, vol. 1, pp.43-47. Maurer, R. (1996) Using resistance to build support for change, The Journal for Quality and Participation, 19 (3), pp. 56-66. Mishra, B 2007, Change Management: Some Practical Considerations, Organisational Change, vol 1, pp.24-27 Parikh, I 2007, Organisational Change, Organisational Change, vol. 1, No.1 pp.5-9. Raymond Caldwell, Models of change agency: a fourfold classification, British Journal of Management, 14 (2003) Wallace, S 2007, Organisational Change Management: Why, What, How? Organisational Change, vol. 1 pp.10-17.

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