Managing Amidst Uncertainty: Learning to Cope with Organizational Change in a Globalized Economy

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Managing Amidst Uncertainty: Learning to Cope with Organizational Change in a Globalized Economy

Being in a constant search for their own identity, today's companies tend to go through restructuring and reengineering processes on a regular basis. The management models and organizational structures that used to be taught in Universities have done their time. In a time of crisis, the first reflex is to challenge one’s structures and to build up new ones. We thus change from centralization to decentralization, from integration to outsourcing, from diversification to concentration… But aren't we just acting like fashion victims?

By Liliane Held-Khawam, author of the book "Management through Professional Coaching: Learning to Cope with Complexity in a Globalized Economy"

It is precisely due to such dynamics that today’s companies tend to restructure and reengineer their organizations. The aim is to effectively put a stress on organizational management tools and on the management of workflows. This is why many of these companies are going through so-called "reengineering processes". But how many of these organizations are actually seeking to simultaneously mobilize their human resources and minimize the gaps between the structures and the human potential that is available to them?

Steering one's projects in an uncertain context

We are all witnessing the deep transformations economic markets are going through in every respect. The management and IT systems we used to employ are showing their limits: they indeed fail to apprehend ongoing phenomena and prove to be somewhat shortsighted. As a consequence, a number of companies are subject to the course of events, without being able to be proactive and anticipate them.

The globalization of the economy, the quasi daily emergence of competitors coming from new geographic zones and often from different cultural background, an ever faster-paced technological change, the volatility of financial markets – and in particular of foreign currencies, demand an ability to deal with ever more complex variables. The impact is particularly significant at technological level, both in terms of the products offered and of the production techniques used for goods and services.

In such an uncertain and changing context, the expectations managers now have to meet have nothing in common with those that were prevalent until recently. Managers are now required to anticipate and cope with change and take risks in an uncertain context. As a consequence, managers should master the interrelations between the four following axes:

  1. Axis of structures and organizational tools
  2. Axis of the human factor (individuals)
  3. Axis of products
  4. Axis of the environment

In this article, we will especially focus on the two first axes (i.e. structures and individuals). However, we would like to outline the essential need of being able to listen to the market and to the actors on this market (whether these are customers, partners, salespeople or suppliers), in order to be able to immediately sense the current trends. Listening to one’s own salespeople and setting up a constructive interaction with R&D and Production teams should lead to an optimization of the company’s potential of innovation. A "just in time" approach, the quality of products and the optimization of customer relationship management through the management of the entirety of the company’s activities will then become something obvious and natural. Management structures and systems play, in this respect, an essential role. They should indeed strengthen rather than hinder this orientation. In this article, we will examine how to successfully integrate structures and individuals in order to optimize the use of the human potential and increase one's influence on the market.

Restructuring the organization to meet market demands

In order to address the dynamics of this change, a number of companies go through restructuring processes. The way in which the change is operated often turns out to be a source of destabilization and stress – and thus, in the end, of inefficiency – for managers and employees alike.

The main characteristic of the diverse models adopted is their flexibility and customer-orientation.

1. Introduction of more flexible structures

In order to address a changing market, companies tend to make their structures more flexible by creating autonomous units, a trend that can lead to the dismembering of the larger units and to a subsidiarization through a reduction of the number of intermediaries between the Board and the employees. The present "fashion" of conducting "business reengineering" processes belongs to this trend.

2. Reengineering and the "workflow-oriented" organization

In this approach, customers (whether internal or external to the company) lie at the core of the company's preoccupations, so that all services are organized around them. This results in a workflow-oriented system that integrates the diverse steps of the production process.

When this type of organization is adopted, the company's hierarchy and separation into different divisions lose on importance. The company’s pyramid gets flatter. The optimization of workflows, from the development of new products to their delivery to customers, becomes essential.

Every person who takes part in such workflows plays a vital role that consists in addressing the needs of her own customers (the persons who come after her in the different workflows she is involved in) in an optimal way. Therefore, every time a change in the needs of the final customer occurs, every time some component is modified and every time an innovation is integrated into the process, it is essential to react in a fast and adequate manner. This consequently requires the employee to be constantly vigilant and react ever more quickly, in order to cope with the pace of the present market. Moreover, employees can count ever less on support from their superiors, as they are themselves engaged on several fronts at the same time. They thus have to make their own decisions, take responsibility for them, and even anticipate the needs.

It is up to individuals to find new solutions, and to adapt so that their response may be as good as possible. They thus have to display competency, innovation and, most of all, autonomy, while taking their "suppliers", "customers" and the group they belong to into account. They cannot expect others, the structures, the systems or their superiors to provide them with solutions anymore. The answers they give will have to be based on experience, judgment and personal initiative.

By the way, let us keep in mind that the Chinese proverb saying that the strength of a chain amounts to that of its weakest link holds more than ever.

3. The causes of the difficulties encountered

Employees thus find themselves in quite an uncomfortable position. While in the pyramidal organization, they used to fit into structures and processes that defined their activity and the way in which these had to be realized. Now, in a workflow-oriented structure, both their skills and areas of incompetence will be brought to light. They will be asked to take on additional responsibilities and to display adaptation, anticipation, improvisation and coordination skills, as well as initiative and team spirit. Many things that were not so badly needed in the past.

In this context, it is obvious that everyone’s performance will be determined and assessed in an ever more precise way. Performance indicators will give a much faster feedback than in the case of the pyramidal organization, where it was still possible to hide behind a superior, a structure or an organization.

The impact of this exposure on the involvement of the employees will be made even deeper by the pressure of the management who, being under stress themselves due to the situation of the market, may be tempted to point to mistakes rather than try to help their employees overcome their blocks.

The existence of merit pay systems can further increase the sense of vulnerability of many employees. This will result in a sense of fear - quite contagious in itself and which can lead to a tense and often negative work atmosphere. This fear certainly represents the most important source of blocks: it leads to inertia, to a search for protection and to the minimization of risks rather than to innovation, initiative and enthusiasm. And the more the pressure is mounting, the more this sense of fear will be generalized, thus resulting in a paralysis rather than in the expected mobilization and emergence of talents and ideas.

Other sources of blocks can be identified:

  • The employees' lack of autonomy: although this autonomy is required for an organization in processes, nothing has allowed employees to prepare for it.
  • The lack of individual responsibility: due to a large dilution of responsibilities within the pyramidal organization and in very participative systems.
  • Insufficiently updated skills: because the employees or superiors did not see it as a priority, or because the training that was taught was not concrete enough or rapidly applied to the professional context (We observe, in particular, insufficiently updated technical skills, a frequent lack of polyvalence, limitations in terms of language skills, an insufficient command of IT tools, limited administration and management skills…).
  • A lack of coherence in the way the company is managed: a discrepancy can arise between the organizational model managers advocate (e.g. a "workflow-oriented" organization) and their behavior which often corresponds to a hierarchical model. This is due to an insufficient preparation and training of managers on how to manage the change.
  • An insufficient preparation of the employees to structural change: the change is perceived as a new "fashion", not as an actual need.
  • The form of the new management model does not sufficiently integrate the company's organizational culture.
  • Employees see themselves as the victims of a change imposed by the Board, not as "actors" or "partners" in the change management process.
  • A somewhat mixed acceptance of the consultants mandated to support the implementation of the change management process. The latter can be mistrusted or deemed useless, given that the management are already paid to run the company.

The causes of such blocks are thus deeply linked to the human factor, at both the psychological level and the level of actual competencies. Possible consequences are quite obvious and unpleasant:

  • The relation of trust between employees and their managers is broken: their ability to manage the change is often questioned, as well as their integrity – in particular when dismissals take place;
  • A truely "workflow-oriented" organization never sees the light: the disorganization left after the change is greater than before;
  • People who abruptly become aware of their incompetence are going to lose their motivation and get discouraged (the proportion of employees concerned can be significant): Stress, loss of motivation and fear set in: the damage on the human level can often be considerable;
  • The resistance of the employees can lead to the implementation of workflows that will present a high risk of inflexibility: the rigidity one wanted to bring down simply becomes horizontal instead of vertical;
  • The work and social atmospheres can be significantly impaired;
  • The emotional loads (fears, anger, frustrations, sense of incomprehension, health problems, loss of trust…) employees keep inside increase;
  • Operational performances can deteriorate: delays in the delivery, a lack of quality, errors that must be corrected, a blocked creativity, repetition of the same problems that are not thoroughly dealt with…

This makes it clear that managing the human factor is a primordial, sensitive and difficult issue. Moreover, it is no exact science and demands, and this issue demands to be dealt with in a highly personalized manner, so as to take the company's history, its organizational culture, its products and - of course - its strategic goals, into account.

It is far more interesting to motivate one’s employees for the change rather than impose it upon them and create an opposition.

Structures and individuals

The difficulties encountered by a number of companies prior to or within the context of a restructuring process lead them to try and find a solution by designing a new structure, a new organizational model and new management tools. Some companies even re-change a structure even before it has had a chance of being integrated by the employees; this can turn out to be very destabilizing and, often, inefficient.

Indeed, the company's structure and its management tools only represent one of the aspects of the management of a company, as presented in the illustration above. It can be tempting to modify organizational structures: the change is easy explain and describe, it is understandable - we could even say comforting. However, the impact on the environment, the products and the human factor are clearly more difficult to assess beforehand. This is why we often tend to neglect these aspects of the problem.

However, achieving a successful change requires one to act on the four dimensions and, in any case, to integrate structures and individuals in a coherent and progressive way.

There are numerous cases in which a perfect structure (or at least so in theory) is not accepted by employees and yields poor results, while standard structures accepted by all and managed in an optimal way, yield excellent results.

Thus, the core issue is rather to harmonize structures in relation to the market, the organizational environment and the human potential, than to respect some theoretical reference models. Structures are but a tool that should allow the company to achieve good economic performance - and certainly not an end in itself. Therefore, it has to be adapted to the realities of each company's corporate life.

A company that is organized along workflows is offered many interesting opportunities, as this structure allows overcoming certain malfunctions that can arise when the company is split into different business units. But the central issue is the suppression of these malfunctions, as well as the constant improvement of the services that are provided to customers, both in terms of quality and efficiency.

The important is thus to develop the structures and management tools that allow valorizing the human potential in an optimal way, so as to put it into action, stimulate its creativity, valorize the satisfaction of customers and the efforts made by employees. There must be a permanent interaction between individuals and structures, not a domination of the one over the other.

Any significant gap between individuals and structures will result in stress, malfunctions, disturbances, fears and, finally, a poor performance.

Example of organizational malfunction: the human factor is not oriented towards the company's strategic goals

When the human factor's competencies, motivations, values or culture do not match the organization's strategic goals, this translates into tensions and a level of stress that are proportionalo to the size of these gaps.

Preparing for change

Change thus consists in a process that must be prepared and steered all along. Ideally, change is a continuous and "endogenous" process - i.e. it should be driven by employees, not imposed upon them. Indeed, it is employees themselves who best perceive the problems they are facing. They can therefore play an important role in making the change happen. Restructuring processes may take place in a harmonious way if:

  • a vision and a clear strategic orientation (markets, products, localization…) are set;
  • an audit of the present situation is carried out, which means:
    • identifying one’s own strengths and core competencies.
    • identifying one’s weaknesses
    • detecting possible hindrances, malfunctions.
    • listing up the problems. Defining the priorities (avoiding working on too many issues at a time).
  • appropriate steps are defined;
  • an analysis of the ability of employees to integrate these steps is carried out, in order to ensure that the social atmosphere improves rather than deteriorates, that they behave as "actors" rather than "victims" (active listening proves to be an excellent tool in this respect);
  • the steps to be taken are communicated in the most transparent possible way. The restructuring process may not turn out to be the appropriate solution. It may be necessary to change some managers, to delocalize some activities, to modify some management systems, to develop some competencies and to energize creativity on the basis of a clear and shared vision.
  • employees are given the means they need in order to perform the change (management tools, clear goals, training, communication workshops, …); if one starts to listen to one’s organization.
  • the communication is transparent and words and actions are coherent, so as to restore the credibility of the management.
  • one gives to oneself and others the time needed to complete the change.

Conclusion

The challenge of today’s companies is to survive and even develop while evolving in a complex and pitiless global market. Change has to be permanent, just as the acquisition of new competencies. Fast reactions should however not equal simple reactivity, with an absence of vision and strategy. In the contrary, it is in such times that strategic axes should be defined and implemented, and that employees should be asked to commit their energy, competencies, enthusiasm and creativity. This is how human energies should be mobilized within the organization.

Companies often invest much in their organizational tools, as well as in training programs; however, only a few of them really invest into the mobilization of their human capital. The "hyperactivity" of some top managers thus often stands in sharp contrast with the inertia displayed by their employees. This inertia is accompanied by fears, stress and sources of block and non-development of the competencies.

The challenge for managers consists in initiating the change at the heart of the company, so as to mobilize the human energy toward construction and action, in order to harmonize the structures with the available human potential.

Change will thus be lived in a natural way. Indeed, a little bit of "psychology" is enough in order to energize structures and avoid blocks. Employees will thus be given a sense of being the actors of an evolutive process rather than the victims of a revolution.

Change can thus only be regarded as the fundamental attitude of an organization. It should occur as a natural and progressive behavior that is implemented by employees themselves.

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