I. Background
The management of FMC Green River, a chemical plant, part of FMC Corporation, needs a plan to implement changes at its facility that will parallel the developments at FMC Aberdeen. The latter plant has developed a unique management model based on employee motivation, encouragement of initiative, empowerment, work groups and teams, and special managerial culture. Kenneth Dailey of FMC Green River will have to decide on a plan to address the need for organizational change at his facility. This type of change is defined as “organization-wide change, as opposed to smaller changes such as adding a new person, modifying a program, etc” (McNamara, 1999). Due to the comprehensive nature of change, he will have to incorporate in the analysis and plan the findings from a variety of other areas such as Job Design and Goal Setting, Performance Appraisal, Pay, Career Development, Management of Ability, Organizational Commitment, Job Satisfaction, Organizational Ethics, Organizational Structure, Organizational Culture, Communication, Leadership, Groups and Teams etc.
To secure effective development of FMC Green River, Kenneth Dailey will also have to address the issue of organizational development (OD). Warren Bennis defines organizational development as “complex strategy intended to change the beliefs, attitudes, values, and structure of organizations so that they can better adapt to new technologies, markets, and challenges” (Wikipedia, 2006). Implementation of changes will therefore allow FMC Green River to make improvements in many areas, allowing it to adapt better to the challenges posed by the external environment.
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Organization development is not just an arbitrary effort to improve something within an organization. According to Richard Beckhard, any meaningful attempt at OD should be “a planned effort” that is “organization-wide” and “managed from the top” (Wikipedia, 2006). Its overall aim is “to increase organization effectiveness and health through planned interventions in the organization’s ‘processes’, using behavioural-science knowledge» (Wikipedia, 2006). Therefore, Kenneth Dailey faces the challenge of designing the interventions that will be applied to as part of the organizational development effort that will fulfil the criteria of being planned and implemented at the organization-wide level, not just in a specific department or unit.
These changes have to be implemented at FMC Green River that is part of FMC Corporation, a Chicago-based company with 1989 sales reaching $3.4 Billion and operations in five different areas: industrial chemicals, performance chemicals, precious metals, defense systems, and machinery and equipment. Green River, the FMC’s subsidiary, is a large underground mine employing 400 people and producing 5 million tons of trona ore annually.
The management FMC Green River is eager to realize changes at its facility that will parallel the management model at FMC Aberdeen, another subsidiary of FMC Corporation specialising in defense. The latter plant has developed a unique management model based on employee motivation, encouragement of initiative, empowerment, work groups and teams, and special managerial culture. At the same time, FMC Green River has a number of differences from the Aberdeen facility: isolated work stations, a variety of customers to cater to as opposed to a single customer at Aberdeen, a unionized workforce, and an inferior computer system.
II. Situation Analysis
The progress at FMC Green River is hampered by its traditional hierarchical organizational structure that suppresses employee initiative. Even though the management style of Kenneth Dailey is rather open and democratic, the plant management has not achieved the degree of worker input and motivation observable at FMC Aberdeen.
At Aberdeen, organizational structure heavily relies on teams that serve the purpose of effort integration and control activities. A more horizontal, flatter organizational structure was introduced by Bob Lancaster, the ex-plant manager at Aberdeen. His emphasis was on “self-directing work teams that would eliminate fear from all employees” (Darden, n.d., p. 5).
The team became the basic unit of organizational structure as “teams ranging in size from 16 to 3 managed virtually every aspect of the plant’s work and reporting” (p.8). The range of their authority encompasses purchasing materials, setting schedules and work hours, performance evaluation, salary issues, and reporting. Every member of the organization is part of a team that provides an environment for his or her development within the organization, sets pay levels, and solves work problems. Teams are not used at Green River, partly because of isolated work stations.
A notable feature of Aberdeen’s structure is its simplicity. The plant manager is assisted by a staff of four executives including “a quality and engineering manager, a purchasing manager, a production manager, and an administration manager” (Darden, n.d., p. 16). This structure ensured easy communication, transparent responsibility, and savings on salaries of administrative staff as administrative functions were performed by managers.
The management of FMC Aberdeen also ensured proper work motivation through implementation of innovative systems of Job Design and Goal Setting, Performance Appraisal, Pay, and Career Development. Due to the loose guidelines in job design, “there were no job definitions in the plant, and everyone was responsible for making top-quality canisters profitably” (“FMC Aberdeen”, p.7). Flexible job design permitted rotation of tasks within a team and thus made teams effective. The same collective attitude was reflected in goal setting that often embraced collective goals related to teamwork rather than individual goals focused on a separate employee’s work.
Teams’ importance was underscored in their role in determining pay through performance appraisal. The “continuous peer-review process” provided a way to each team member to give timely feedback to other team members on an ongoing basis concerning their performance. This evaluation was then linked to pay, also influenced by the equal basic pay for all technicians and consideration of skill level possessed by an employee. Skills were classified according to the “qualification standards” divided into five levels, each of which required appropriate certification” (“FMC Aberdeen”, p.12). Growth from one level to another offered a way for career development. In contrast, Green River used the usual model of moving up the ranks as skills increase.
Although the potential to grow in one’s rank was limited at Aberdeen, the plant had an effective system of managing employees’ ability. Shifting employees between various functions inside the same team, the organization allowed each member to apply one’s skills to various tasks, bringing out hidden talents. At FMC Green River, on the contrary, relatively stable functions prevented employees from demonstrating whatever undiscovered potential they could have.
FMC Aberdeen had a unique culture that effectively contributed to organizational development. Team structure, the management’s emphasis on fear elimination, encouragement of initiative – all this created an atmosphere that made team structure effective and at the same time boosted organizational commitment and job satisfaction.
Job satisfaction at Aberdeen was derived from the sense of achievement that, in turn, stems from responsibility for one’s own actions. Culture built on trust and cooperation also contributes to satisfaction. Job satisfaction, in turn, is one of the leading factors driving organizational commitment, evidenced by low turnover rates.
Wide-scale organizational change implemented by Bob Lancaster at Aberdeen when he created the specific management model and culture was only possible because of his unique leadership style. Lancaster introduced a delegative style where “the leader allows the employees to make the decision” (Clark, 2005). Such leadership allowed for greater independence in employees and proved hard to replicate by subsequent leaders. Although Green River’s Kenneth Dailey also credited himself to have a style that was “interactive, with high level of trust for the people”, it was still a far cry from Lancaster’s empowering leadership (Darden, p.24).
The communication process at Aberdeen had a number of assets such as a simple and cost-effective system, integration of information within this system, and transparency of information. Although outsiders were at first surprised by the amount of time spent in discussions, it helped to talk over important issues. At Green River, sharing of information was impeded by an ineffective computer system that would pose difficulties in the attempt to integrate the approaches used at Aberdeen.
At Aberdeen, a comprehensive organizational change was accomplished a long time ago by Bob Lancaster who succeeded in realizing his vision for an empowering and fearless environment. First finding employees reluctant to follow his ideas, he later managed to convince them that from now on they could assume more responsibility and expect no punishment for their mistakes. The change affected all areas of the organization, leading to a complete overhaul of both structure and culture. Green River is only on the threshold of large-scale changes that will penetrate into every corner of the organization. Therefore, the employees should prepare for serious shifts in the organisation that will affect their well-being and prove definitive to their future with FMC Green River.
In implementing organizational change, FMC Green River has excellent possibility for organizational development. In developing the plant facility, it has better improvement prospects than Aberdeen that has already established a mature management culture and is likely to remain stable over the years to come. In contrast, the Green River plant can develop the organization by adopting the best elements of Aberdeen’s management model and putting it to use to advance its performance.
III. Alternatives and Recommendations
Realization of the organizational change will require of the management of FMC Green River the implementation of a series of measures. These measures have to be far-reaching and decisive, affecting the organization in many important ways. In addition, they have to represent a coherent complex of initiatives that will result in a coherent and well-coordinated effort. The change will parallel many developments and models already in place at FMC Aberdeen and at the same time have to be adapted to the conditions of the Wyoming facility to ensure their effectiveness.
The implementation of organizational change should start with changes in structure that will introduce team approach at Green River. By introducing teams, the organization can mobilize collective effort, empower employees, and relieve managers of some of their oversight functions by transferring responsibilities to teams. This change would undoubtedly unfold innovative potential of Green River’s employees, particularly if emphasis is placed on innovation as in the Aberdeen facility. However, in the implementation process the managers have to keep in mind the differences between the two facilities, namely Green River’s “isolated work stations with little opportunity for groups of people to interact” and the opinion of the union to be considered (Darden, p.23). Goal-setting also has to be adjusted to the needs of teams, including procedures for setting collective goals and ensuring their achievement.
Changes in the structure can also include the simplification of managerial functions since part of the authority has been relegated to the teams. This shift can reduce the overall workload of managers and free time for other activities. This will enable the organization, similar to Aberdeen, to realize savings by eliminating administrative positions. To avoid the pain of lay-offs, the organization can simply transfer administrative employees to other functions where they will be able to increase their skills and competence.
FMC Green River can consider making the structure flatter by removing middle-level managerial positions. These employees can join teams, making an important contribution to the managing process with their past expertise.
The degree to which teams will take over assignments formerly performed by managers has to be decided by the management of the Green River plant, preferably with employees’ input. In any case, it is desirable that performance appraisal be transferred to teams. This would lead to more balanced appraisal that would not be influenced by the perceptions of individual managers.
The company can also consider a shift toward more flexible pay levels. However, complete adaptation of the level pay structure of Aberdeen would certainly mean a drop in some employees’ income which would de-motivate them. Therefore, it is preferable to introduce a bonus system to complement existing pay levels that would be put in dependence on the results of peer evaluation.
Career development policies will depend on the extent to Green River is willing to change to flatter structures. Since an adequately flat structure seems impossible due to the significantly larger workforce size than at Aberdeen and isolation of work stations, it seems feasible to leave the old promotions and positions in the hierarchy in place. This would promote career development while simultaneously making employee functions more flexible.
Introduction of flexible job descriptions accompanied by rotation of functions would be an instrumental tool in unfolding employees’ potential. What differentiates Green River from Aberdeen is the need to consult the opinion of the union in changing job descriptions. However, the management is said to expect the cooperation of the union on this matter. In this way, Green River will be able to utilize the potential of its employees to a greater extent and manage their ability more effectively.
Green River’s leadership has to consider strategies to increase organizational commitment. The key here will be the empowerment of employees and corresponding changes in their attitude that will make them assume a greater degree of responsibility for the organization’s work. Green River can think of meaningful ways to help its employees connect to the organization, such as informal events, parties etc. On the other hand, the management has to underscore the importance of input from an individual employee.
Appreciation of personal input, on the one hand, and the opportunity for personal growth, on the other, will provide a background for raising the level of job satisfaction. Employees at the Aberdeen plant enthusiastically report how they enjoy being trusted by management. Green River can also draw on trust as a powerful tool to boost commitment to the organization and job satisfaction. For instance, it can reduce or totally eliminate penalties for mistakes that resulted in consequence of displaying initiative. At the same time, Green River’s management should keep in mind that it needs to put greater effort into changes since its facility is a much larger operation than Aberdeen (100 employees versus 1,150) (Darden, p.2).
Since leadership is a combination of inborn abilities and acquired skills, Kenneth Dailey cannot fully replicate Bob Lancaster’s leadership style, but he can learn some of its elements. It is advisable that he spend some time going into details of how things are done at Aberdeen so that he could fully grasp the management culture and the way managerial decisions are made. The same is advisable to other managers. Harnessing hitherto unknown employee skills through management of ability will allow the plant to add “fresh blood”, creating a new generation of leaders.
The improvement of the communication process is the key to success at Green River. The effort at upgrading the computer system is long overdue. In addition, the company should come up with effective ways to display information on progress in various units and teams in an understandable manner. Perhaps, the facility is in need of a greater number of business meetings. The greatest challenge for Green River will be the improvement in communication between the isolated parts of the plant. Another crucial issue is the improvement of the communication process inside teams. This has to be accompanied by a shift toward participative management that both facilitates and is a consequence of advancement in communication (‘Participative Management’, n.d., p.4).
All structural changes have to be accompanied by a change in culture that will ensure the success of the organizational change and development. Thus, management has to change culture by inspiring workers to make more independent decisions. The main issue is to achieve a comparable level of ‘fearlessness’ to assume responsibility. The management has to ‘live’ the culture, demonstrating to the employees that they are serious about the change.
FMC Green River needs to tie all these measures together and implement them within broader context of organizational development. The organisation can benefit from a wide variety of time-tested OD tools, such as usage of flip charts in meetings, problem-solving meetings, and organization surveys (Worley 2002, p. 1). For example, problem-solving meetings can be organized within teams, teaching members of the same team to effectively work together for the solution of common problems. Organization surveys can help Green River to keep track of employee satisfaction and commitment. The organisation’s leadership has to bear in mind that not all measures can be accepted by employees with enthusiasm, and the link between innovations and satisfaction is by no means straightforward.
Engaged in organizational development, the managers at Green River should keep in mind that their ultimate goal is “to increase organization effectiveness and health” (Wikipedia, 2006). Therefore, all effects have to be evaluated from the viewpoint of increasing the overall effectiveness of the whole organization. It makes sense to develop the framework against which the success of the innovations will be assessed, be it financial indicators or motivation of the staff. The management also has to remember that although it is a “planned effort managed from the top”, it has to enjoy the support of the wide circles within the organization. Therefore, feedback evaluation through surveys can help to keep track of employee opinion.
IV. Implementation
To translate alternatives and recommendations into reality, FMC Green River has to realize the following plan:
Organize a training session for leaders, exposing them to the foundations of the Aberdeen model and its advantages. Ideally, such training should also be organized for all employees, acquainting them with the new aspects of plant functioning and predating the change implementation. Input from employees concerning the framing of the organisational change should be encouraged. The management should solicit proposals for desired team structures, roles of team members, leadership patterns, pay schemes and sharing of functions. These matters have to be decided by people competent in a particular area to avoid confusion.
Introduce teams, replacing the old model of interactions in separate workstations. The company also needs to devise a way to ensure a gradual shift in authority from managers to employees providing for their input to increase in small steps that would accustom them to the notion of rising authority. Besides, introduction of teams has to take place after team design has been approved specifying who is included in the team, their scope of authority, and procedures for controlling team performance. In the initial stages, managers have to be ready to step in if correction is needed.
Change job descriptions to allow more flexibility and shifts in performed functions. Changes in job descriptions need to be implemented with the input of the union since it will ensure greater support of the people.
Modify the goal-setting process, adjusting it to the needs of teams. Invent new procedures for goal setting that will ensure the emergence of collective instead of individual goals.
Develop new assignments for employees that will promote independent decision-making and increase their skills. Encourage individual actions and reduce fear through emphasizing initiative.
Change the pay structure. This can involve the introduction of a flexible bonus system in which the amount of the bonus will be set in correspondence to the results of peer evaluation. Deciding on the proportion of bonus and basic pay has to be decided by managers in conjunction with employees.
Develop surveys for peer evaluation with possibility to link the results to pay levels. The experience of Aberdeen has to be consulted, but the actual scheme has to be adapted to local conditions.
Reformat the communication process, allowing greater transparency and ease of information flow. Increase the number of meetings; organise problem-solving meetings to ensure team collaboration.
Upgrade the computer system: allocate a large part of their capital expenditure for the next year to the improvement of the computer system. They can consider ordering the system with the same developer who designed the software for Aberdeen, paying attention to significant differences between the two plants. Connecting isolated workstations may prove a greater challenge, requiring more complex solutions.
Once the teams become effective decision-makers, prepare for the elimination of middle management positions. The timing of the process will depend on the degree of team members’ proficiency in attaining competence in group decision-making.
Implement a shift from administrative toward more professional positions for employees formerly employed in support functions. This may require the introduction of ‘mentor’ positions to coach new employees to work on the shop floor. If any employees prove unwilling to relocate from offices to the plant, the plant can consider lay-offs.
Encourage managers to release authority to teams. Psychologically, this may be the most difficult part of the change, both for managers who relinquish power and employees who may feel left without guidance. Therefore, Kenneth Dailey, the plant manager, should lead through personal example. Since “the culture of an organization operates at both a conscious and unconscious level”, Green River management needs to communicate a change in culture through both levels (Hagberg Consulting Group, 2006). First, they need to act consciously, explaining to employees that they can now act more freely in their decision-making, assuming more authority for various processes as part of their team. In addition, they also need to heed that their involuntary, subconscious actions also communicate to employees that they are serious about their words. If a manager feels the urge to curb employee independence because he/she knows better what to do, it makes sense to suppress this desire and leave employees make decisions on their own in many cases so that they begin to realize that they now have more responsibility.
Organize on-site training for managers in the Aberdeen plant. Through previous negotiations establish time, dates and allocate budget to this event. In case this proves either too expensive or fails for other reasons, invite employees of Aberdeen to deliver presentations at Green River.
Green River needs to keep track of employee satisfaction and attitude toward the proposed change and its implementation throughout the process. The management needs to keep in mind that shifting responsibility to employees may cause serious stress in the initial stages as employees are not accustomed to the variety of functions and thus decrease satisfaction instead of increasing it. Therefore, it needs to develop an organisational survey that will be on a weekly basis distributed throughout the organisation. The questions will include attitude toward innovations that have already been realizes, as well as the future ones. The results have to be summarised for separate departments and for the entire organisation. If the evaluation demonstrates that employees are unhappy about some changes, but enthusiastic about others, the management can make changes to the initial plan.
The management also needs to develop a model for assessing the results from the point of view of organizational effectiveness. Starting from financial indicators, for instance, it needs to regularly juxtapose the performance before and after the implementation of change. However, the management also needs to remember to check the effect allowing some time to elapse after an innovation was made.
References
Bolton, L. Organisational Culture. Retrieved April 20, 2006, from Swinburne University of Technology website at: http://opax.swin.edu.au/~388226/howto/it2/o_cultre.htm
Clark, D. (2005, September 28). Leadership Styles. Retrieved on April 19, 2006, from http://www.nwlink.com/~donclark/leader/leadstl.html
Darden Graduate School of Business Administration, University of Virginia. FMC Aberdeen. UVA-0B-0385.
Hagberg Consulting Group. (2006). Do You Really Know Your Organization’s Culture? Retrieved April 13, 2006, from http://www.hcgnet.com/research.asp?id=6
McNamara, C. (1999). Basic Context for Organizational Change. Retrieved April 20, 2006, from http://www.managementhelp.org/mgmnt/orgchnge.htm
‘Participative Management’. (n.d.). Retrieved on April 6, 2006, from http://www.spendloveresearch.org/files/participativem.pdf
Wikipedia. (2006, April 19). Organization development. Retrieved April 20, 2006, from http://en.wikipedia.org/wiki/Organizational_development
Worley, C.G. (2002). Is OD Still Relevant? Retrieved April 20, 2006, from http://www.consultingtoday.com/downloads/Consulting%20Todayarticle%20-Is%20OD%20Still%20Relevant.pdf
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