Organizational Alteration
Organizations are occasionally presented with the option of modifying their structures. This requirement is necessitated by the dynamic nature of the business environment in which the majority of firms operate, as well as the necessity for the business to expand, enhance its performance, and keep its competitive edge within its industry. Organizational change refers to the changes or transformations that an entire organization or firm undergoes, as opposed to those that effect only a small portion of the organization. This implies that the shift affects the methods and procedures that the company regularly utilizes to conduct its operations, as well as the organization's structure and its people (Nadler & Tushman 195) In most instances, the company in issue must make substantial investments to ensure the effectiveness of the targeted change in order to implement such changes. In order to reduce instances of resistance, it is necessary to inform all employees of the organization about the change.
Many employers develop change implementation plans to guide them through the process of implementing organizational change successfully. Once the employer sees the need for change, a thorough analysis is conducted to develop an implementation structure and transition plan that will guide employees through the change phase and avoid problems created by the changes' implementation. Several strategies have been outlined for implementing change in an organization. According to Cummings and Worley (163), a successful structure consists of the following components:
Motivating Change: In this step, the employer prepares the workers for change in order to reduce instances of resistance. The reasons for the change are made plain to the employees, and they are also made aware of the current condition in comparison to what the ideal situation should be at that moment (Cummings and Worley 165)
Vision: The employer articulates a vision for the changes and describes their impact on personnel and the organization as a whole. The vision is founded on the company's intended aims and objectives, as well as its current vision.
Developing Support for the Change entails identifying persons with the most influence on the change process and persuading them to support the changes.
Transition Management: Here, the employer describes the actions that will be carried out, the order in which they will occur, and how the management structure will be affected and handled. At this stage, commitment to the change is crucial and should be communicated to staff. Noting that the majority of change effects are not noticed immediately, the transition period should be managed with great care, as it signifies the company's shift from its current condition to its anticipated future state.
Sustaining the Change's Momentum: The employer provides the resources necessary for the change's success, ensures that everything is proceeding as planned, and implements the plans meant to bring about the change (Cummings and Worley 176) It is essential to highlight that the majority of change effects are not felt immediately.
Ford Motor Corporation
Ford is an international automobile manufacturer headquartered in Dearborn, Michigan. Henry Ford formed and incorporated the corporation in 1903. Lincoln, Mercury, and Ford are the company's primary vehicle brands, but it also holds investments in other vehicle-producing firms, including Volvo, Mazda, and Aston Martin. Currently, it is the fourth largest automobile manufacturing corporation in the world, with a sizable client base and employee workforce in its numerous international subsidiaries. Multiple accolades have been given to the company for the exceptional quality of its brands, which bolsters its continuing growth, performance, and presence in the automotive sector.
Ford has had enormous expansion over the years, but since the onset of the global economic crisis, it has encountered similar difficulties as other automakers. This is a result of the rising cost of gasoline used in the automobile sector, the rising cost of raw materials, and the declining demand for vehicles. Ford and other major industry players, such as General Motors, had focused on producing less fuel-efficient vehicles due to the high profit margins generated by major sales. However, when the energy crisis struck, the demand for these vehicles decreased, putting the companies under pressure because they had few fuel-efficient vehicles to offer customers.
Ford's Way Forward Plan for 2006
Due to these and other financial problems that have plagued the company for the better part of this decade, Ford drew up a business plan and submitted it to Congress. The plan outlined additional measures the company intended to take to combat the problems caused by the 2008 economic crisis and the subsequent credit crunch. In an interview recorded by PBS News Hour's Ray Swarez in early 2006, the company's vice president Mark Fields stated that Ford needed to embrace a new business model because the one they had been using was no longer working (Suarez para. 2).
The plan was intended to go into force immediately and last through 2008 or 2009, but due to the economic difficulties of the past two to three years, it has had to incorporate more strategic activities. It was commonly referred to as the Way Forward Plan and was presented to the company's employees via the FCN broadcast network and Web Cast from the Dearborn Product Development Center in the presence of industry analysts and the media (Bresnihan paragraph 4). The motivation behind the plan was the realization that the company needed to focus on long-term goals such as brand building, customer satisfaction, strong product delivery, innovation, cost cutting, and productivity.
Ford planned to close facilities in Kansas, Norfolk, Chicago, Minneapolis, Ontario, and Dearborn, Michigan, for a total of sixteen by 2008, as well as lay off a portion of its employees in stages from 2006 to 2008. This was to be done in accordance with a buyout plan in which the company's employees would voluntarily select a more financially attractive choice. Following negotiations with the UAW (United Auto Workers) union for workers in the automotive industry, the business agreed to the idea. This idea was prompted by a decline in sales of the business's non-fuel-efficient trucks and sporty vehicles, as consumers opted for fuel-efficient vehicles that the corporation had overlooked in favor of high-profit, high-fuel-consumption vehicles.
Another of the company's plans involved reducing the production of some of its vehicle brands, such as the fuel-guzzling F-series trucks and SUVs, in an effort to reduce production costs, though it was noted that this move would not yield significant results in the short term because workers affected by the move would still need to be compensated (Isidore para 1-2) In order to save its reputation, the business intended to introduce newer, more fuel-efficient models, such as high-hybrid automobiles, and embrace modern technology to conserve gasoline. Competition from General Motors and Toyota, who introduced new vehicle brands to the market, did not work well for Ford, as their brands were fuel efficient, and at a time when gasoline and other fuel prices were high, it was only logical for consumers to choose these new models over those introduced by Ford.
Ford Motor Company has implemented some of the aforementioned modification procedures, while others are ongoing. For instance, the company's CEO at the time, Bill Ford, communicated the intended changes to the employee, informed them of the company's current position in terms of profitability and where the company hoped to be after the implementation of the said changes, how they would be affected, and provided them with a timetable for the completion of the intended changes, which was between 2006 and 2008. He also explained that although the employees would lose their jobs and other benefits, the implementation of the changes would achieve the company's long-term goals and improve the future relationship between the company and its employees in terms of sustainability, as the company would be able to better serve its employees by returning to profitability.
Ford's Achievements Since Implementing the 2006 Way Forward Plan
The company's performance improved as a result of the gradual adoption of the Way Forward adjustments in 2006, as indicated by the company's 2007 annual report published in 2008, which described its progress and priorities. According to the business's CEO, the company had demonstrated financial improvement by incurring a loss of only $2.7 billion as opposed to the close to ten thousand billion dollars that it had incurred the previous year (Ford Motor Company). 5) The corporation had made a number of workforce cutbacks in North America by offering early retirement and separation packages, and it still aimed to make additional reductions in order to reduce its operational expenses (Ford motor Company). 12) The deal between UAW and Ford has made this feasible. Some of the closing plants, including Norfolk, St. Louis, Windsor, Wixom, Atlanta, Essex, and Maumee, were already closed. Additionally, the corporation was able to rearrange and reduce its manufacturing and assembly capacity to accommodate clients' shifting tastes (Ford Motor company). 13) This improvement continued and the company even reported profitability in the first quarter of 2008, but the success was cut short by the 2008 credit crunch and economic crisis. As a result, the company developed a new business plan as a continuation of the previous one and presented it to the Senate Banking Committee, requesting temporary loans to be used if necessary as they continued with their restructuring (Ford Motor Company Business Plan 2)
The 2008 Business Plan for Ford Motor Company as submitted to the Senate Banking Committee
In this plan, the firm outlined its plans for the North American market, which included its reorganization plan, which would allow it to run successfully in accordance with the current market demand, and its suggested product mix for its various car brand models. According to the company's legislative filing, the new product mix would be 40% trucks, vans, and SUVs and 60% cars and crossovers, with 18% of the company's investment going to trucks, vans, and SUVs and 82% to cars and crossovers (Congressional Submission app. 3)u.
In addition, the corporation offered an expedited schedule for the creation of new items designed with the needs of its clients in mind and within their price range. This would imply that they would develop smaller, more fuel-efficient vehicles, but they would not abandon other models like SUVs, trucks, and vans entirely (Ford Motor Company Business Plan 12-13) The company's sustainability and electrification plan, along with its inventive product approach, would allow it to develop new hybrid and all-electric vehicles that would help customers save money on fuel. The 2008 strategy would also allow them to enhance their balance sheet and, consequently, the financial stability of the organization (Ford Motor Company Business Plan 28)
Result of Ford's business strategies (Way Forward 2006 and the Congressional Plan 2008)
These initiatives would affect many firm departments as well as the company's personnel. Based on the given variables, the impact would be as follows from the perspective of the employees:
Employee Absenteeism
As they fight to protect their jobs, employee absenteeism would decrease significantly. This could be due to apprehension that a high rate of absence would be regarded as a lack of dedication to the company's operations, resulting in their termination.
Productivity
As a means of demonstrating their dedication to the firm and its operations, employees would increase their output, irrespective of the area in which the company operates. This would result in increased production for the organization.
Occupational Satisfaction
Job satisfaction refers to employees' contentment with their occupations and the general work environment. If they are content with the working conditions, this would translate to job satisfaction. This type of satisfaction stems not only from monetary benefits accrued by the employees, but also from non-monetary gains, such as how they are treated by the management, the organization's culture and how it favors them, their level of participation in the company's decision-making process, and the level of empowerment they receive at work. Given the ongoing layoffs at Ford and the loss of benefits such as health coverage, it is reasonable to assume that the majority of employees are dissatisfied with their positions.
Employee Turnover
This refers to the rate at which employers gain or lose employees due to employees changing jobs. It can be high or low based on the length of time between an employee's joining and leaving the organization. This rate is often calculated using aggregate data. As a result of Ford's continuous restructuring plan, I believe that the staff turnover rate is considerable, as people seek more stable jobs elsewhere in quest of job security.
Employee Engagement
When employees are positively motivated, they work more and generate better outcomes, which positively impacts the company's overall performance. Managers and employers in general must ensure that their employees are motivated at all times. This can be accomplished by recognizing them when they do a good job, offering them rewards such as bonuses, and providing them with job security, as this will ensure that all of their attention is focused on performing the job. It is difficult to maintain high levels of employee enthusiasm at Ford, as job security is no longer assured until the company undergoes significant change, which will not occur overnight.
Conclusion
Ford Motor Company has had its share of difficulties in the past decade, beginning with their financial challenges in 2006 and continuing through the energy crisis, credit crunch, and global financial crisis in 2008. This has prompted the company to implement a number of restructuring and recovery strategies in an effort to change the company's direction so that it can return to profitability as it was before the troubles began. These strategies appear to be working, as the company reported profits for the 2009 fiscal year and predicted the trend would continue in 2010. (Collins, Heck & Dickenson 1)
This demonstrates that organizational reforms have been successful for a corporation, despite the fact that the company had to lay off a big number of employees and close several plants in an effort to reduce expenses. In addition to bringing the firm to profitability, the restructuring plan has resulted in Ford becoming more customer-centric by offering them with more fuel-efficient car brands, allowing them to save money on gasoline expenditures, with plans to further develop these brands in the coming years. Ford will serve as an example for other companies in the automotive industry facing similar problems, demonstrating that it is sometimes necessary to devise viable strategies and make difficult decisions, such as changing a company's business model, in order to save the company and the industry as a whole.
Sources Cited
Ford FCN. 2006. Web. Bresnihan, Terry. "Ford Business Plan Vows to Return to Profitability."
Bill Collins, Larry Heck, and David Dickenson. "Ford Reports Profit for the 2009 Full Year; Fourth Quarter Profit of $868 Million; Plans to be Profitable in 2010+." 2009 Ford Motor Company website.
Thomas Cummings, along with Christopher Worley. Organizational Change and Development. 2008 printing by South Western Cengage in Ohio.
Progress and Priorities, Ford Motor Company, 2007 Annual Report, Annual Report. 2008 Ford Motor Company website.
Business Plan for Ford Motor Company. "Ford Motor Company Business Plan as Submitted to the Senate Banking Committee." 2008 Ford Motor Company website.
Ford Motor Company.
Chris Isidore, "Ford Slashes Production," August 2006 CNNMoney.com. Web.
The names David Nadler and Michael Tushman are cited. Organisational Frame Bending: Reorientation Management Principles. Academy of Management Executive, England, 1989.
"Ford Cuts 1,000 Workers, Closes Two Factories," by Ray Suarez. PBS NEWSHOUR. 2006. Web.
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