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Industrial and Commercial Training
Management of change in a multinational company
Brian J. Hurn
Article information:
To cite this document:
Brian J. Hurn, (2012),”Management of change in a multinational company”, Industrial and Commercial Training, Vol. 44 Iss 1
pp. 41 – 46
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http://dx.doi.org/10.1108/00197851211193417
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Steven H. Appelbaum, Sally Habashy, Jean-Luc Malo, Hisham Shafiq, (2012),”Back to the future: revisiting Kotter’s 1996
change model”,
Journal of Management Development, Vol. 31 Iss 8 pp. 764-782 http://dx.doi.org/10.1108/02621711211253231
Paula Matos Marques Simoes, Mark Esposito, (2014),”Improving change management: how communication nature influences
resistance to
change”, Journal of Management Development, Vol. 33 Iss 4 pp. 324-341 http://dx.doi.org/10.1108/JMD-05-2012-0058
John Edmonds, (2011),”Managing successful change”, Industrial and Commercial Training, Vol. 43 Iss 6 pp. 349-353 http://
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Management of change in a multinational
company
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Brian J. Hurn
Brian J. Hurn is Associate
Lecturer at the London
Academy of Diplomacy,
Universities of East Anglia
(London campus),
Middlesex, UK.
Abstract
Purpose – The paper is based on leading a management of change simulation involving trainee
managers in a global oil company who were tasked with preparing a proposal for senior management
regarding the management of change to face future challenges. The purpose of the paper is to comment
on models of change management, overcoming resistance to change, the necessary skills and
commitment to implement change and stages in the planning. It concludes with the key outcomes of the
simulation exercise.
Design/methodology/approach – The paper is based on a management of change simulation
exercise from which guidelines for good practice are deduced.
Findings – The paper identifies key factors necessary for successful change management, including
anticipation of the need for change, communication at all levels, overcoming resistance, skills required
and the planning stages to implementation.
Practical implications – The learning outcomes of the simulation and the discussions reflect accepted
models of change management.
Originality/value – The paper provides examples of good practice arising from a two-day simulation
exercise.
Keywords Change management, Organizational change, Multinational companies, Simulation,
Resistance to change, Communicating the vision, Implementing change
Paper type Case study
‘‘All is flux, nothing is stationary’’ (Heraclitus, Greek philosopher).
Introduction
We live in a world of change with much uncertainty and a loss of business confidence
caused by the recent collapse of the banking system and the resulting credit crunch. To
continue to operate in this increasingly complex, diverse and global environment,
international business must be prepared to accept the challenge of change. New market
opportunities and technologies will arise and these will involve the need to adapt and adjust
to change in strategic thinking in order to compete and survive.
The author’s interest in the subject developed when he was recently involved with a group of
young male and female management trainees of a large global oil company. The group were
tasked to consider by means of a simulation exercise how their company might have to
change its focus in ten years’ time in order to cope with the commercial challenges of the
increased cost of oil production, diminishing reserves and the strong environmental and
regulatory pressures. The last included the Copenhagen Agreement on the reduction of
carbon emissions, the June 2011 The Energy Forum: Energy for All, and the target to
produce 30 per cent of the world’s energy from renewable energy sources by 2030.
DOI 10.1108/00197851211193417
VOL. 44 NO. 1 2012, pp. 41-46, Q Emerald Group Publishing Limited, ISSN 0019-7858
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INDUSTRIAL AND COMMERCIAL TRAINING
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PAGE 41
The trainees were expected at the end of the simulation to present their proposals for
change. Before they began the simulation exercise they were given a presentation on The
Management of Change, followed by much discussion in groups. The following paragraphs
include the main points arising from these discussions.
Definition
Management of Change can be defined as a planned objective to change a company’s
direction from the current to a desired future position in the business environment in
response to new challenges and opportunities. It involves the projection of a new vision,
together with wide consultation with employees at all levels to overcome resistance and gain
acceptance. It is, furthermore, essential that the requisite leadership skills, commitment at all
levels and both human and financial resources are available to implement the desired
change.
Forces of change
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Uncertain economic conditions compounded by the continuation of threats to international
security and social unrest as witnessed in North Africa and the Middle East, as well as the
conflict in Afghanistan, are important ingredients in the analysis of risk in the international
environment. Despite these factors, the process of increased globalisation will continue as a
major force for change as companies and, indeed, governments seek new markets,
encouraged by the reduction of trade barriers and the desire to acquire economies of scale.
Competition and the desire to gain control over scarce resources, together with the
advantages of cheaper labour costs in other countries, are other important driving forces
behind the increase in globalisation. In addition, fierce competition in market share is
increasingly evident as new, aggressive players enter the marketplace, particularly Brazil,
Russia, India and China, the so-called BRICs.
Political interests and government intervention also play their part. The latter is seen in
protectionism in times of recession and government restriction on foreign inward investment.
It is also evident in the search for new oil reserves, for example Russian interest in the Arctic
Ocean, China’s territorial disputes over islands in the South China Sea and the United States’
policy to lessen its strategic dependency on oil, particularly from the Middle East, and its
resulting extensive research into the development of renewable sources of future energy,
e.g. wind, tidal and biomass.
The advent of new technological developments is itself a pressure for change. These can
result in more flexible methods of working or a reduction in the number of employees
involved in the new process. Examples include the introduction of robots on assembly lines
and the widespread use of containerisation and e-commerce. In the automobile industry the
pressure on the ‘‘gas-guzzlers’’ particularly in the USA, has prompted huge research and
development into new forms of energy.
Resistance to change
Resistance should be considered both on an individual and a corporate level. This
resistance is reflected particularly in times of downturn and recession by increased
redundancy when a company is forced to downsize and restructure. It is evident in trade
union hostile reaction and in unpopular government austerity measures as seen in the
Eurozone in 2011.
As individuals most of us are basically creatures of habit, we do not appreciate changes in
our daily routine, in our working practices and working environment and, importantly, in a
change of responsibilities or power within the organisation. (Mullins, 2005). We often tend to
be selective in our perception of what might change and we tend to filter out change
possibilities that we do not like. We are conscious of our own achievements and fear they will
be eclipsed or forgotten in the wake of new ideas or processes. We become unhappy about
any loss of freedom to do certain things, for example smoking restrictions at work, changes
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‘‘ Management of Change can be defined as a planned objective
to change a company’s direction from the current to a desired
future position in the business environment in response to
new challenges and opportunities. ’’
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in shift patterns or hours of work, and changes in our standard of living and buying power.
These have been evident in the recent angry demonstrations in Greece against the Greek
Government’s severe austerity measures and the one-day strike in July 2011 in the UK
against the Government’s plans to extend retirement ages and increase pension
contributions in the public sector.
In addition there is often a sense of security in the past, the way things have always been
done and which appear to have done reasonably well. This in turn produces a fear of the
unknown, an element of uncertainty about future economic risk (Pilbeam and Corbridge,
2006). The stress caused by actual or perceived change is an important issue and its
reduction is a key concern of management. It is essential, therefore, that there is
transparency when explaining the reasons for the desired change. If this is not the case,
much harm can be done by rumour and resulting anxiety about the future. The organisation
should develop a comprehensive communication strategy, which should begin with general
consultation and briefing, followed where appropriate by individual interviews and, in some
cases, counselling.
On the other hand, changes in working practice, such as the introduction of flexi-time and
increased opportunities to work partly from home, have been well received. Another
example is perhaps the eventual acceptance of staff appraisal schemes in a number of
professions. Such acceptance, however, is not universal and is excluded altogether in some
cultures, even when it is intended to be seen as an important element in staff development.
The second and perhaps more potent resistance to change is at organisational level
affecting the very corporate culture of an institution. Corporate culture, often described as
‘‘the way we do things around here’’, is strongly resistant to change. A multinational
corporate culture consists of many elements, including the vision of the company, its
objectives, management style, ethical standards and the national characteristics of its
international managers. A change such as a merger or acquisition can have a significant
effect on corporate culture as has been seen in the case of the takeover of Cadburys by Kraft
in 2011. This resulted in a great deal of restructuring with a requirement for many managers
to move from London to Zurich and others to leave the company altogether, the exodus
being blamed on a culture clash between the two companies. A good example of a
successful major change in a company is IBM, which celebrated its centenary this year.
Intense competition forced it to change from concentrating on the making of mainframe
computers to emphasising the production of systems, software and the provision of
consultancy. As a result it has successfully repositioned itself in the market.
The desire to maintain stability, the status quo, in a company is a strong form of
organisational resistance to change. This is seen in proposed changes to the structure of a
company, the number of its employees and their job descriptions. Change will often entail
increases in costs and expenditure on resources including new skills and retraining as well
as research and development and increased foreign direct investment. Such outlay has to
be weighed against possible future advantages to the company which may be perceived as
relatively uncertain, at least in the short term, and therefore carry a strong element of risk.
Existing strategic plans may have to be altered and this may cause possible lack of
confidence in investors, in consumers and in the share price. Past contracts and
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agreements may be difficult and expensive to change and relationships with foreign
governments and suppliers and distributors may cause lasting damage if these are broken.
Lewin (1951) developed an interesting three-stage model of the behaviour modification in
overcoming resistance to change:
1. Unfreezing – communicating the need for change and the resulting advantages.
2. Movement towards the desired goal – nurturing the desired change of attitude through
consultation with the support of key change agents.
3. Refreezing – reinforcing and sustaining the new change through supporting procedures
and policies.
It should be emphasised that these are not discrete changes but may overlap each other.
Skills required to implement change
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A major requirement in change management is to anticipate the need for change and not be
merely reactive. Change management requires considerable discussion of the proposed
changes with the key stakeholders – employees, customers and suppliers, trade unions and
financial backers – in advance. The key to successful management of change depends
largely upon the encouragement of participation at all levels in the organisation. People are
the key factor in the process. This can be seen in the Japanese-inspired total quality
management (TQM), in which the whole organisation is committed to customer satisfaction
by means of a continuous process of improvement in all areas.
Management must be seen to listen to objections and to discuss these openly. At the same
time managers must be seen as the champions of innovation and creativity, encouraging a
clear-shared vision for the future.
Change invariably means the development of projects to implement new ideas and these
are likely to require specialist project managers who may have to be recruited internationally.
Demonstrating commitment to change
It is essential for management to drive through the agreed changes once there is general
agreement and support within the company. To achieve this, an effective management team
must be built and sustained, consisting of managers from all key functions in the
organisation. Change managers must maximise the problem-solving skills of those from
different disciplines. They should be good negotiators, flexible, with a long-term
perspective, which does not see a degree of compromise as failure. The vision and the
strategy to achieve change should continue to be communicated to all concerned,
especially in recruitment, training and professional development, as well as those providing
financial support. It is essential that change managers themselves fully demonstrate their
own commitment and serve as a role model in motivating the rest of their team. They need to
show they have the courage to make decisions in a climate of uncertainty.
Those concerned directly with implementing change must be appropriately empowered.
This means a continued commitment and unwavering support from top management and
the provision of the required resources. In order to motivate fully all concerned, the
organisation should strive to demonstrate successful progress during the period of transition
by publicising the completion of each stage. Residual resistance to change is also likely to
be lower if each step in the change process is not too large.
Planning change
A useful practical guide to planning the management of change is the model produced by
Kotter (1995) which builds on Lewin’s three-step model. Kotter’s model consists of eight
sequential stages but may include some overlap. The stages are listed below and the author
has amplified a description of the aim of each stage:
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B
Creating a sense of urgency. It is essential to promote strong motivation for change,
having first identified the need and what could happen in the future if the changes are not
implemented. In addition the reasons for change should be clearly identified – economic,
technical, political, financial – if the organisation is to survive and compete
B
Form a strong team to lead the change. This requires convincing staff at all levels of
the necessity for change and providing strong leadership backed by positive support
from top management. It includes the identification of key change agents and opinion
leaders.
B
Creation of a vision and strategy for change. This requires sharing the vision with all levels
of staff by discussion and identifying the advantages.
B
Communicate the vision and the strategy to achieve the desired goal. This involves
addressing all concerns openly and honestly.
B
Overcoming resistance to change. Identifying the barriers to change and developing a
communication strategy to overcome resistance with the help of the already identified
change agents.
B
Emphasise short-term attainable goals. These should be clearly visible as incremental
stages on the path to the long-term aim.
B
Reinforcing the vision. This requires building on the changes achieved so far and
publicising successes.
B
Develop a corporate culture. This should reflect the desired change right across the
organisation and maintain the momentum to work towards the final objective.
The above model is a useful practical guide, which can be applied to most management of
change situations.
The case study – summary of key learning points
The trainee managers had been allocated the roles of senior managers, e.g. production,
marketing, sales, research, finance, etc to consider how the future changes could be
managed and implemented. During the simulation meetings they considered the
development of the various types of renewable energy. After their discussions within their
groups, the trainees presented their proposals.
In summary, this simulation exercise emphasised the following key points, which arose from
the management of change in a major multinational:
B
The need to anticipate change rather than being merely reactive to a changing situation.
B
The effect of the extent of change on the corporate culture of the company.
B
The resistance to change that would be met from both management and the workforce.
B
The extent of the economic, regulatory and environmental pressures to change.
B
The need to develop a communication strategy to overcome resistance through wide
consultation at all levels.
B
The considerable research and development resources required in addition to the human
and financial resources.
B
The effect of change on the workforce, including the need for retraining, bringing in
additional expertise and the overall duty of care the company had towards all its
‘‘ Change managers must maximise the problem-solving skills
of those from different disciplines. ’’
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VOL. 44 NO. 1 2012 INDUSTRIAL AND COMMERCIAL TRAINING PAGE 45
personnel during the transition. This reinforced the fact that managing change is a vital
part of HRM.
B
Managing change with a multinational workforce required particular cross-cultural skills.
B
The requirement for top management to support the vision for the future and to keep all
informed of the stages in the move to the future positioning of the company.
This exercise proved to be a very challenging task for the trainees as it required the
consideration of managing a fundamental change in strategic thinking. In the future it was
felt the emphasis would be on striking a delicate balance between the urgency to meet
energy demands, the potential environmental effects of climate change which necessitated
the development of alternative sources of energy, and the need for energy security. All this
proved that a major change is a very complex process, which takes considerable time to
implement and requires careful and detailed planning
References
Kotter, J. (1995), ‘‘Leading change: why transformation efforts fail’’, Harvard Business Review, Vol. 79
No. 11, pp. 85-96.
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Lewin, K. (1951), Field Theory in Social Science, Harper & Row, New York, NY.
Mullins, L.T. (2005), Management and Organisational Behaviour, Pearson Education, Harlow.
Pilbeam, S. and Corbridge, M. (2006), People Resourcing: Contemporary HRM in Practice, 3rd ed.,
Pearson Education, Harlow.
Further reading
McKenna, E. and Beech, N. (2008), Human Resource Management: A Concise Analysis, 2nd ed.,
Pearson Education, Harlow.
Whitley, R. (2000), Divergent Capitalism: The Social Structuring and Change of Business Systems,
Oxford University Press, New York, NY.
About the author
Brian J. Hurn is Associate Lecturer at the Universities of Surrey and East Anglia (London
Campus) and Associate Professor at Schiller International University, London. He teaches
Intercultural Communication, Negotiating Skills, Business Ethics and International HRM at
postgraduate level. He publishes widely on cross-cultural issues and is a former Director of
Programmes at the Centre for International Briefing, Farnham, UK. Brian J. Hurn can be
contacted at: brian.hurn@btinternet.com
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