Uncertainties faced by Businesses

Businesses in the present day face a lot of unexpected uncertainty. The uncertainty faced can be associated with prevailing internal and external environments that are perceived to create misalignment within the organisation and its functions. As captured by Ludvigson, Ma, and Ng (2015), given this uncertainty, businesses and managers require diagnostic models that can help in facilitating organisational change. The value provided by these models is the allowance for different sources of organisational change to be pursued; the internal and external environment analysed and update sources already in place. Consequently, Waddell et al. (2019) aver that the diagnosis of the need for change is vital in the identification of the problems faced by an organisation. As such, this makes it possible for an organisation to identify the causes of the problems experienced and, in the process, initiate plans that can help provide solutions. An organisational diagnosis, in the view of Đurišić-Bojanović (2016), is thus perceived as a powerful consciousness that raises the activity in its own right while highlighting the primary usefulness within the actions induced by the diagnostic change model. To this extent, this report aims to critically diagnose change at Pemancar, identify possible interventions, and make recommendations for any resistance likely to be experienced. Consequently, the structure used in this report is as follows: a critical analysis of diagnostic models and application to Pemancar; critical discussion of the intervention that would be implemented in the Pemancar case study; critical analysis of any resistances likely to be anticipated and provision for recommendations; conclusions.

2.0 Critical analysis of diagnostic models and application to case study

2.1 Critical analysis of the McKinsey 7S model

The McKinsey 7S framework, as captured by Hanafizadeh and Ravasan (2011) refers to a management model applied in business to analyse the design of an organisation by evaluating its 7 vital internal elements of strategy, structure, systems, shared values, style, staff and skills as shown in figure 1 below. Within this evaluation, Alshaher (2013) contends McKinsey 7S framework seeks to identify if the 7 key internal elements are effectively aligned and able to allow the organisation to realise its objectives.

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According to Hanafizadeh and Ravasan (2011), the seven elements of the McKinsey 7S model are not only interrelated but also are likely to make a significant contribution to the effectiveness of the organisation through the interrelationship. As a result, through the interrelationship of the seven elements, McKinsey 7S framework can focus on the quality of the internal alignment of the internal environment of the organisation by leveraging on the design formed.

Figure 1: McKinsey 7S framework

Source: Ravanfar (2015).

One of the primary merits of the McKinsey 7S framework is its ability to illustrate how change tools can be developed to help determine areas of misalignment that are likely to necessitate further investigation (Singh, 2013). Within the diagnosis of change function, Naipinit et al. (2014) argue that change managers can leverage on McKinsey 7S model to determine the information needed for diagnosis. For instance, they are likely to investigate the current strategy of an organisation. This can encompass the collection of data regarding how an organisation matches its resources to opportunities and, in the process, creates a competitive advantage. Likewise, during the investigation of the organisational structure, change managers are also likely to collect data regarding the formal and informal arrangements of the company and its coordinated activities.

Moreover, Shiri, Anvari, and Soltani (2015) aver that the McKinsey 7S framework is effective in the improvement of organisational performance. By demonstrating an ability to identify the misalignment elements within the McKinsey 7S framework, strategy and decision-makers can influence better alignment and, in the process, improve organisational performance. Consequently, Channon and Caldart (2015) elucidate that the McKinsey 7S framework is useful in the analysis and evaluation of the effects of futuristic changes within the organisation. Within this context, one can argue that better change management awareness within the organisation is not only well planned for, but greater anticipation for these changes is also realised. Therefore, given the above-competing strengths of McKinsey’s 7s framework, one can argue that the standout feature of the model is its ability to diagnose the need for change within an organisation.

However, McKinsey’s 7S framework has experienced some criticism that has limited its influence in the diagnosis of change. One of the standout criticisms advanced by Hanafizadeh and Ravasan (2011) is its one-dimensional focus on the internal environment of the organisation. By focusing on the internal alignment of the organisation, McKinsey’s 7s framework lacks a holistic perspective in the diagnosis of change. Given this limitation, McKinsey 7S framework is likely to be irrelevant in the diagnosis of change due to its inability to capture the influence of external environmental misalignment on the need for change in an organisation. Besides, Alshaher (2013) contends that McKinsey 7s framework focus on the attainment of strategic fit across the entirety of an organisation makes a business predictable and thereby easier for competitors following a more aggressive strategy to anticipate and overcome the business. While consistency in the strategic execution is essential for stability, it is often characterised by a lack of agility, dynamism, and flexibility that is often regarded as an essential trait for businesses to possess. Nonetheless, despite the criticism levelled against McKinsey 7S framework, scholars such as Ravanfar (2015) aver that within the context of the internal alignment elements, McKinsey 7s framework is one of the most effective in diagnosing change as captured from the context of the internal environment.

2.2 Critical analysis of Weisbord’s Six Box Model

Weisbord’s Six Box Model, as informed by Kontić (2012), is a generic framework used to assess the functioning of organisations. Owing to its generic nature, the model is widely applied across organisations for organisational development. One of the hallmarks of the model, as informed by Saleem and Ghani (2013), is its ability to view organisational structures and designs in a particular way. This is because it gives credence to the aspects of planning, incentivisation, and reward system provided by an organisation. Likewise, it also assesses the role of support functions that encompass personnel, internal competition, and organisational units. The six boxes encompassed within the model include purposes, structure, relationships, rewards, leadership, and helpful mechanisms. Figure 2 below shows the illustration of Weisbord’s Six Box Model.

Figure 2: Weisbord’s Six Box Model

Source: Zhang, Schmidt, and Li (2016).

As shown, the components of the six-box model imply the following: purpose focuses on what business people are in, structure focuses on how work is divided, relationship focuses on how conflict between people and people with technology is managed, rewards focus on the incentive for doing all that needs to be done, leadership focuses on determining if someone is keeping the boxes in balance and helpful mechanisms focus on the adequacy of coordinating technologies.

One of the advantages of using Weisbord’s six boxes model for diagnosing change, as captured by Zaffa, Naeem, and Jamal (2018), is its ability to foster consistency in change diagnosis. The model emphasises the importance of the same people being involved in the identification and solving of problems in a systematic manner. As such, in so doing, not only is consistency in change diagnosis achieved, but also the same people are likely to learn from their own situations and in the process seek to make improvements towards change diagnosis. Through the capture of the history of change diagnosis within an organisation, it is both easy and essential to make useful inferences with regards to expanded approaches to change management. Moreover, Zaboli et al. (2013) argue that Weisbord’s Six Box model is holistic in the diagnosis of change within an organisation. This is the case because the model not only focuses on the informal aspects of the organisation but also on the formal elements that define the organisational functioning of the organisation. This is particularly useful in the diagnosis of change in an organisation because of change factors in an organisational context can be informed by both formal and informal elements. Therefore, in this context, Weisbord’s six boxes model is an appropriate model in the diagnosis of change within the organisation.

Yet, as captured by Karimian et al. (2015), Weisbord’s Six Box Model faces the disadvantage that the constituent elements of the model lack interconnectedness amongst the elements. Instead, as averred by Kontić (2012), the Weisbord’s Six Box model is categorised into three parts of inputs, transformation, and outputs. While the input-output model used has an advantage of minimising gaps between inputs and outputs during the interaction of various components, this approach also poses certain disadvantages such that of time and money consuming nature that often results in a cumbersome model. Consequently, given the lack of interconnectedness, it lacks the similar design alignment of the McKinsey 7S framework that makes it an effective model for the diagnosis for change. It is on this basis that the Weisbord’s Six Box Model is viewed as inappropriate in the diagnosis of change at Pemancar. Another rationale for its inappropriateness includes its dual and holistic approach to the internal and external alignment analysis (Saleem and Ghani, 2013). Whilst this is effective in providing an effective overview of the holistic diagnosis for change, it is not only limited in terms of the depth of coverage but also ineffective in primarily focusing on the case study by Abdullah and Siti-Nabiha (2012) that primarily focuses on the internal alignment perspectives.

2.3 Application of McKinsey 7S framework to Pemancar

Of the two critically analysed models, the McKinsey 7S framework is chosen for its appropriateness in undertaking an in-depth analysis of the internal alignment of an organisation. This provided it with an advantage over Weisbord’s Six Box Model that failed to provide an in-depth analysis of the internal alignment of the organisation. In this vein, table 1 below summarises the alignment of the 7S framework as encapsulated in the case Pemancar case study of Abdullah and Siti-Nabiha (2012).

Table 1: Application of McKinsey 7S framework to Pemancar

Element

Case study description

Alignment

Strategy

Market performance

Structure

Bureaucratic structure

Systems

Availability of formal systems

Yes

Skills

Adequate specialised skills from the employees involved

Yes

Staff

Few employees are needed for the organisation to achieve efficiency

Style

Autocratic leadership style

Shared values

Adventurous staff, value teamwork and trust each other

Yes

Source: Summarised by this report

Upon acquisition by NOVA, the Pemancar market performance is not to the expected level (Abdullah and Sit-Nahiha, 2012). The poor performance is indicative of a strategy that is not working. Likewise, Pemancar, though a subsidiary of NOVA, is characterised as having a bureaucratic structure encompassing over 100 mid-level managers, 130 supervisory staff, 100 administrative staff, and 1370 staff at the operative level. This creates a potential problem for a small organisation that has to experience delayed decision-making process as the flow of information along the tall organisational structure remains low. As showcased in the Pemancar case, the number of employees in the company is large and creates significant inefficiencies (Abdullah and Sit-Nahiha, 2012). Given this challenge, there is misalignment towards the achievement of efficiency in the organisation.

Additionally, the Pemancar case also demonstrates that the democratic approach to leadership in the company has created bottlenecks of delayed decision making (Abdullah and Sit-Nahiha, 2012). This creates a misalignment to the strategy development in terms of the style element adopted. Contrastingly, as captured by Abdullah and Sit-Nahiha (2012), Pemancar has formal systems that have resulted in the attainment of recognition based on various quality and management rewards. In this connection, the availability of these systems has enabled Pemancar to provide clear structures for customer support, strategic planning, and personnel management that are integral to the success of the company. Moreover, in the context of skills development, the case study suggests that Pemancar has a large number of employees that possess various advanced and specialised skills to make the company a top automobile parts manufacturer (Abdullah and Sit-Nahiha, 2012). This makes the Pemancar skills element well aligned. Finally, the shared value system of the Pemancar employees is showcased as adventurous staff, teamwork-oriented, and great trust upon each other. This demonstrates a strong alignment with the value system of the NOVA company.

Given the above diagnosis of change at Pemancar, this report concludes that change is necessary at Pemancar if efficiency and greater alignment of the strategic development are to be realised.

3.0 Critical discussion of the interventions that would be implemented in the Pemancar case study

With change perceived to disrupt work practices considered normal, Cates et al. (2017) aver interventionist methods are important change agents because they break the cycle of consistency for more flexible and dynamic approaches. As informed by Hayes (2018), intervention methods can be categorised into prescriptive or collaborative styles. While prescriptive styles focus on advising, collaborative efforts focus on supporting, theorising, challenging, and information gathering styles. Because of these competing perspectives, the interventionist methods discussed in this case are advising, supporting, and challenging. The choice of these interventionist methods is informed by their appropriateness to the Pemancar case focus.

3.1 Advising styles

As informed by Kuipers et al. (2014), several change managers intervene through the giving of advice or informing others what they should do. The reason for this interventionist policy is that the change managers, owing to the nature of their experience, are more likely to see solutions as opposed to their less experienced clients. In the context of the Pemancar case study, the advising intervention style is likely to be useful in the introduction of policies such as the voluntary separation scheme that is likely to stimulate voluntary retirement of some employees as the first step towards downsizing within the company (Abdullah and Siti-Nabiha, 2012). While the owners could agree that cutting down the size of the workforce is one way of achieving efficiency, there could be a lack of ideas on how to go about this. Consequently, through the advising style, this potential solution could be suggested. Yet, Worley and Mohrman (2014) counterargue by pointing out that the advising intervention style may not always be the best approach to providing assistance. Several reasons are highlighted to this effect. Firstly, there is a possibility that clients are likely to become too dependent on the change agent. Secondly, the change agents are likely to neglect the point of view of the client with regards to their own problem. Thirdly, the client may reject any advice given altogether.

3.2 Supporting styles

Supporting is another intervention style that can be applied by the change agents at Pemancar. As elucidated by Hornstein (2015), the supporting style encompasses the empathetic listening, withholding of judgment, and facilitating clients to express their feelings and emotions that are perceived to hinder clear and objective thinking towards an issue. Given this, one can argue that the value of the supporting style lies in enabling the client’s development a more objective of the problem in their own capacity. For instance, in the context of the Pemancar case, the supporting style can be useful in enabling NOVA to consider more objective views such as selling the Pemancar subsidiary if at all it is making losses or not contributing to the overall corporate objectives of the firm (Abdullah and Siti-Nabiha, 2012). Consequently, the supportive style can facilitate NOVA establishing that the culture of Pemancar should be different and in line with its market of operation to achieve the performance expected of it. Nonetheless, while the supportive style of intervening is considered effective in influencing change in the client, Alvesson and Sveningsson (2015) aver that there are situations when it is insufficient in producing change. For instance, if the supportive style only yields the consideration that a new management team is required at Pemancar, this approach might not be effective in producing change because Pemancar has already undergone two management overhauls, and limited change has been experienced.

3.3 Challenging styles

Challenging intervention style, as captured by Cummings, Bridgman, and Brown (2016), involve the confrontation of the foundations of the client’s thinking to identify beliefs and value systems likely to be distorting their view of the situation. The practice of the challenging style of intervention is aimed at drawing attention towards contradictions experienced in action and attitude or challenging precedents and practices that are perceived as inappropriate. For instance, within the Pemancar case, the change manager could use the challenging intervention style to challenge the thinking of NOVA with regards to the strategic value of Pemancar. Under the strategic alliance, NOVA expected to gain access to Pemancar’s extensive product dealer network in Malaysia, while Pemancar would benefit from NOVA’s product technology (Abdullah and Siti-Nabiha, 2012). Owing to this arrangement, one could argue that NOVA unfairly expects more performance from Pemancar while the real strategic value of access to an extensive product dealer network has already been achieved. Yet, as informed by Pugh (2016), change managers should exercise caution when challenging because challenges perceived to be effective are those received by clients as helpful invitations for exploration of aspects of a problem by leveraging on new perspectives to a problem. As demonstrated, communicating to NOVA that they unfair expect more performance from Pemancar is likely to be considered as an unhelpful invitation if the critique has not been invited in the first place.

4.0 Critical analysis of any resistances likely to be anticipated and provision and recommendations

In influencing and diagnosing change at Pemancar, there is some resistance likely to be faced. One of the primary resistances likely to be faced is that of employee resistance towards change. Several reasons can be used to explain why employee resistance is likely to be experienced. Firstly, one of the change propositions from the diagnosis is the need to downsize to attain efficiency. In its execution, there is an implication that a large proportion of employees are likely to lose their jobs. Given this development, there is a likelihood for employee resistance to be experienced in strong opposition to downsizing. Secondly, employees are naturally resistant to change because it upsets the natural order of things they are used to. As such, in the introduction of radical changes to the organisation, there is a likelihood of employee resistance as they develop some sort of inertia to the proposed changes. This is likely to create potential delays in implementing the change or completely derail the change process. With the occurrence of these resistances, there is a potential for the diagnosis of the change process to remain incomplete and therefore fail to address the issues identified in the Pemancar case study.

Therefore, in providing a remedy for the resistance likely to be experienced, the change managers at Pemancar have two primary options they could pursue. Firstly, as informed by Thomas, Sargent, and Hardy (2011), one of the effective ways in handling employee resistance during organisational change is to seek employee redeployment to other areas considered under-staffed or where they are likely to be a strategic benefit to the organisation. This move is perceived as important in providing opportunities for employees previously perceived to be in excess or those that have contributed to the idle capacity of labour in the previous times. Secondly, Dawson and Andriopoulos (2014) aver that another alternative for handling employee resistance likely to be experienced at Pemancar is to either seek to explain to employees that are eventually laid off why it had to happen and, in the process, adequately compensate them for services rendered. This approach is perceived as effective in communicating to employees that while the Pemancar organisation values them, for corporate and strategic reasons, it is essential to downsize them for the ultimate survival of the organisation. Consequently, and in line with best practice, the employees should be compensated for services rendered over the years through generous compensation packages.

5.0 Conclusion

This report aims to diagnose change in the Pemancar case study. As such, in the first segment, this report critically analysed the diagnostic models of McKinsey 7s model and Weisbord’s six box model and, in the process, established the merits and demerits of the use of either model for diagnosing change. Of these, the report opted for the McKinsey 7S model to diagnose change at Pemancar. In the second section of this report, the critical discussion of the interventions that would be implemented in the Pemancar case included the advising, supporting, and challenging styles. The findings of the analysis revealed that the change manager could apply either of these interventionist methods to influence change diagnosis in an organisation. All the analysed and discussed interventionist styles posed particular merits and demerits to the Pemancar and its diagnosis of change. Finally, the critical analysis of any resistance likely to be anticipated indicated that employee resistance towards change was likely to be experienced. This is because the recommendations for change were downsizing to attain efficiency in the Pemancar organisation. Given these resistances, this report recommended that Pemancar should first seek to redeploy employees to other areas they are likely to have a strategic benefit to the organisation. This can help absorb employees considered to be in excess and likely to contribute to the idle capacity of labour. Accordingly, for employees that are unable to be absorbed into other sectors or redeployed, adequate compensation for their services should be realised.

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