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LESSON # 34
IMPLEMENTATION AND STRATEGIC CHANGE: CONSTRAINING FORCES IN THE
IMPLEMENTATION OF STRATEGIC CHANGE (CASE STUDY OF XYZ COMPANY)
In this lesson we will continue our discussion about the implementation of strategic change. Again at strategic formulation, one can get extraordinary type of vision and mission prototypes but at implementation level the results are often quite otherwise. The recent surveys also exhibit the similar conclusions about the success pattern of strategy formulation-execution mechanism. Therefore this is an attempt for analyzing the situation realistically by dealing various scenarios in generic terms. According to an author, the following variables hamper the execution of strategic change.
Systems
(a) Misdirected reward and evaluation
In organizations, the actions of change in strategies, particularly at operational level, depend on linkage between performance and reward systems. One thing which happened in most cases is that the organizations do not have suitable criteria for performance evaluation. It means the organizations do not have a suitable portfolio of attributes at different hierarchical levels which could measure the performances. In this scenario, organizations may face inequity and injustice which lead them into anarchy and conflict. However we see various efforts that have been made to link reward with performance and to induce managers to make decisions that are in the long-term interest of the enterprise.
At Ford Company, for example, more emphasis is given to stock grants that reward the achievement of 5-year objectives. These criteria include not only return on equity but also measures such as customer satisfaction, involvement of employees, and product quality. Furthermore, performance is compared with that of competitors. For instance, even though quality may have improved at Ford, if more quality improvements have been made by a competitor, this will be held against Ford's managers if their quality improvements have not been sufficient.
(b) Oppressive control systems
Oppressive control system means a system which is tightly managed and where element of exploitation is very high. The control system, in an organization, has several directions. In broad terms we can divide them into two types; tangible control systems and intangible control systems. Most controls are designed for specific things: policies, wages and salaries, employee selection and training, research and development, product quality, costs, pricing, capital expenditures, cash, and other areas where an organization wishes performance to conform to plans. These controls are tangible or visible in nature where traditional approaches are to be applied such as budget summaries and other financial analyses. Many other types of controls are dependent on intra-organizational relationships, leadership styles; organizational learning and culture based established patterns. These are intangibles or invisible in nature and where modern attitudinal and behavioral approaches are to be applied. For instance, decentralization of authority - especially in product or territorial divisions - on the one hand creates semi-independent units but also empowerment and smooth relationships between various levels in an organizational hierarchy. The point here is that control should be on invisibles as equal as with visibles which certainly is an important objective to gauge the success in change implementation. It must do more than say that a management group has followed "generally accepted standards of management control."
The concept of the modern organization as it exists today in the United States originated with Pierre S. Du Pont and Alfred P. Sloan. It was Sloan who structured General Motors with an emphasis on centralized staff and decentralized operation. Policy-making and operations were distinguished. Control
was maintained through a number of control techniques and budgets. This kind of organization workeddocsity.com
remarkably well and is still the predominant way large enterprises are organized today. However, new technology, new demands in the environment and a new work force call for a new kind of organization based on information.
(c) Inflexible budgeting systems
Budgeting is the formulation of plans for a given future period in numerical terms. As such, budgets are statements of anticipated results, either in financial terms - as in revenue and expense and capital budgets or in non-financial terms such as in budgets of direct labor-hours, materials, physical sales volume, or units of production. It has sometimes been said, for example, that financial budgets represent the "dollarizing" of plans.
Perhaps inflexibility is the greatest danger in budgets. Even if budgeting is not used to replace managing, the reduction of plans to numerical terms gives them a kind of misleading definiteness. It is entirely possible that events will prove that a larger amount should be spent for this kind of labor or that kind of material and a smaller amount for another or that sale will exceed or fall below the amount forecast. Such differences may make a budget obsolete almost as soon as it is formulated; if managers must stay within the straitjacket of their budgets in the face of events like these, the usefulness of budgets is reduced or nullified. This is especially true when budgets are made for long periods in advance.
Budgeting is never more perfect than the planning behind it, and plans - especially long-range plans are subject to the imperfections caused by change and uncertainty. Such uncertainty or sometimes change in strategy can be incorporated if budgets are inflexible and easily be reorganized. However, this phenomenon also depends on the degree of centralization.
(d) Arbitrary cost allocation systems
This variable, basically, relates to decision making pattern. The questions here are that whether cost allocation is based on rational basis or emotional or political or either professional basis. So it is a decision making phenomena either participative of limited to few organizational political elites. This definitely leads the strategic change towards failure.
At rational and sometimes professional level we have cost valuation technique for efficient cost allocation which is called cost-benefit analysis. It seeks the best ratio of benefits and costs; this means, for example, finding the least costly way of reaching an objective or getting the greatest value for given expenditures. The major features of cost effectiveness analysis are that it focuses on the results of a program, helps weigh the potential benefits of each alternative against its potential cost, and involves a comparison of the alternatives in terms of the overall advantages.
(e) Overly Rigid, formal planning system
Planning involves selecting missions and objectives and the actions to achieve them; it requires decision making that is choosing from among alternative future courses of action. Plans thus provide a rational approach to achieving pre-selected objectives. Planning also strongly implies managerial innovation rather than rigidity and bases our decisions on purpose, knowledge, and considered estimates.
Planning bridges the gap from where we are to where we want to go. Without plans, the organizations are at high risk or chance. But without flexible planning system, an organization, if not in slump, is at stagnation. The second thing is that planning and controlling are inseparable or plans thus furnish the standards of control. So, efficient control system depends on flexible planning and decentralized structure.
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spans below the top executive are much narrower. According to a study of more than 100 companies of all sizes revealed a much narrower span in the middle levels of management than at the top.
While, in broader term we can divide the management span into two types: one is wide and the other is narrow. A wide span of management is associated with few organizational levels; a narrow span, with many levels. The advantages and disadvantage of the both categories are given in the following table:
ORGANIZATION WITH NARROW SPAN
ADVANTAGES DISADVANTAGES
- Close supervision
- Close control
- Many levels of management
- High costs due to many levels
- Fast communication between subordinates and superiors - Superiors tend to get too involved in subordinates work - Excessive distance between lowest level and top level
ORGANIZATION WITH WIDE SPAN
ADVANTAGES DISADVANTAGES
- Superiors are forced to delegate • Danger of superior's loss of control
- Clear policies must be made • Requires exceptional quality of managers
- Subordinates must be carefully selected • become decision bottlenecks^ Tendency^ of^ overloaded^ superiors^ to
(c) Responsibility without authority
Although research still does not address all key the key managerial activities such as structuring the organization or clarifying of authority-responsibility relationships because of person-to-person variability and that require a comprehensive look at what successful and effective managers really do. But in general, the authority responsibility mismatch has considered one of biggest hindrance in managerial success. It has normally considered more as structural phenomena rather than individualistic. For instance, in most of the cases managers are assumed to be responsible instead of appropriately authoritative. One reason for that is the geographical dispersion between authority structure and responsibility structure. So, the point is that there must be equilibrium between manager’s functional authority and perceived responsibility. Some recent research studies have focused this phenomenon under the domain of total managerial job.
(d) Top down management system
It is the most traditional and oldest style of management where management flows from people at higher levels to those at lower levels in organizational hierarchy. This kind of management exists especially in organizations with an authoritarian atmosphere. Therefore in today’s context, it has been much disliked form of organizational structure. Most of the time, the strategy, goals, and objectives
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manipulation is retained at the higher level of organization. Even middle level managers are working as operators. In fact, it is commonly argued that effective management has to start with subordinate otherwise problem will develop.
In top down communication, information is often lost or distorted as it came down the chain of command. Top management issuance of policies and procedures does not ensure prompt communication. Consequently, an effective feedback system is required for finding out whether information was perceived as intended by the top management. The possible consequences are:
- Least motivated and least involved employees
- Mechanistic organizational environment
- Stagnant efficiency
- Poor coordination between operation of functional level and higher level etc.
(e) Restricted communication channels
It is generally considered in traditional communication structures that top management is the most informed segment in an organization. Is this assumption, particularly in modern context, is a myth or reality? Modern research now argued that middle level and operational level managers are the more informed people in an organization. Because they are getting information simultaneously from multiple channels such as backward channels, forward channels, and also through organizational hierarchical channels. Therefore, the point here is that, an open ended organization is more intelligent and interactive with the environment.
(f) Lack of accountability
Although employees are empowered to make decisions they believe will benefit the organization, they must also be held accountable and responsible for results. Accountability phenomena works at two levels: at extraneous level and at internal level.
At extraneous level, the organization held accountable to individual, to a group or groups of people, to government, and ultimately to society. This is reactionary and legal way of accountability. At intra- organizational level, there must be some restraints or checks that can held accountable to individual level and department’s level, at business level and at corporate level. The objective here is that, morality should be generated form within the organization.
J. O. McKinsey came to the conclusion that a business enterprise should periodically make a "management audit," an appraisal of the enterprise in all its aspects in the light of its present and probable future environment. Although McKinsey called this appraisal a management audit, it is actually an audit of the entire enterprise.
(g) Bloated (over-fed) staff functions
In management literature, still there are number of obstacles which require some deep extrication like the problem of semantics. The terms such as "organization," "line and staff," "authority," "responsibility," and "policies," are exemplified by variety of meanings. And much confusion also has among managers as to what these terms are. So, what the roles of line and staff are? This is one of several areas of management that causes more difficulties, more friction, and more loss of time and effectiveness. 1One widely held view of line and staff is that line functions are those that have direct impact on the accomplishment of the objectives of the enterprise. On the other hand, staff functions are those that help the line persons work most effectively in accomplishing the objectives. The people who hold to this view almost invariably classify production and sales (and sometimes finance) as line functions and purchasing, accounting, personnel, plant maintenance, and quality control as staff functions. According to an another classification, purchase, production, sales departments are under line authority domain
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Organizations that have entrepreneurial like orgonomics or attributes – develop ability to see an opportunity, willingness to take risk and commitment to systematic innovation are progressive, dynamic and long lasting structures. For instance, When Steve Wozniak could not get his dream of building a small computer fulfilled at Hewlett-Packard, he left that prestigious firm to form - together with another entrepreneur, Steve Jobs - Apple Computer.
Entrepreneurship, in general, is thought to apply to managing small businesses, but some authors expand the concept so that it applies also to large organizations and to managers carrying out entrepreneurial roles through which they initiate changes to take advantage of opportunities. For instance, Progressive companies, such as IBM or 3M, consciously try to develop an organizational environment that promotes entrepreneurship within the company.
(c) No vision from the top
If the top executive of an organization is visionless or retained them on existing level of achievements then organization suffers immobility, and lacks strategic direction for long term survival as a very famous English quotation delegate that ‘fish stings from the head’. An ideal organization’s leaders or top management has known about how to form a plan that constitutes a standard and ordinate it to vision of the organization. He also has the ability to compare it with the present structure and execute changes should be made when possible.
(d) Lack of commitment from senior executives
Similarly, senior executives must be committed, meaningful and incorporate with the objectives, mission, and purpose of the organization. They must also have clear understanding about their area or intentional structure of roles for better serving in today’s highly infiltrated environment. But we have seen different scenarios in organizations. For instance, one survey of CEOs in Fortune 500 enterprises indicated that executives spend little time with lower-level employees. Professor Henry Mintzberg, who previously studied the activities of executives, interpreted the findings as showing that "management by walking around" is not very prevalent in these large companies. Managers spend a lot of time with those who are at similar organizational levels. Yet by wandering around, managers could obtain a great deal of information not available through formal communication channels.
(e) No entrepreneurial role-model at the top
In a learning environment, employees at the lower level learn from the middle level and from the top level management. If there are no such role models in an organization then it suffers asymmetry, communication gaps, and perhaps leadership vacuum.
Policies and Procedures
(a) Long complex approval cycles
It is a typical area of Office Management Study or OM study in which we analyze day-to-day procedures and conventions in office environment. For instance, in public sector organizations we have seen that the approval of a document require dozens of signature and other complexities. So if an organization has this kind of old and classical system that creates problem of efficiency, effectiveness and disorder in organizational outcomes.
(b) Extension documentation requirements (even problem with iso-9000)
Over-documentation is other hindering phenomena that affect the efficiency and effectiveness in an organization. This is even not a local phenomenon in developing countries’ business and organizational
environments but at international level too. For instance, ISO certifications require documentation overdocsity.com
documentation that creates an abnormality in organizations. This is because we are overly relaying on visibles rather than on invisibles that led an organization to mechanistic and spiritless structure. The point here is that every organization should determine its own formality and informality levels according to their operational size and industry norms.
(c) Over-reliance on established rules of thumb
It means the over-reliance on past patterns experiences, norms, and conventions. This approach creates hindrance to value-addition and creativity and makes an organization a stagnant body.
(d) Un-realistic performance criteria
The unachievable or unrealistic performance criteria also create constraint during implementation of strategic change. This thing creates de-motivation in organizations.
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