Organizations that operate in the contemporary business environment cannot escape change following significant advancements made in various fields such as technology. As revealed in this study, such changes have substantially altered the way of conducting business to the extent that institutions that wish to remain competitive in the current market have to borrow from the input of transformational leaders.
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Such people are better positioned not only in executing change but also recognizing the best time and the most applicable strategies to adopt to save an otherwise falling organization. The study also presents the example of General Motors to demonstrate the effectiveness of leadership through transformational change. In the period between 2007 and 2009, when faced with bankruptcy challenges that needed a change after the Great Depression wave, it took the input of transformational stakeholders, including Larry Summers, Rick Wagoner, and the then American President, Barack Obama, to turn the company into a thriving business through their introduction of practical, viable, and well-supported change management strategies.
Operations in the 21st-century business have been marked by rapid changes that are primarily attributable to technological advancements. Such transformations have altered the way of conducting business or even interacting with people. Consequently, the situation has triggered the need for implementing changes not only by altering organizational structures but also by adjusting conventional cultures to be on par with current business requirements.
Bearing in mind the level of resistance to change that many institutions encounter because of the uncertainty that comes with transformation, this paper finds it crucial to critically examine the role of leadership during transformational change. It investigates the extent to which employees and employers need to be prepared for such transformations. Consequently, this discussion may not be exhaustive without examining the concept of change management, especially during transformational change processes. It will also be imperative to include a case study of General Motors to investigate the situation that called for a change in the organization and the place of the company’s boss and other interested parties in spearheading the transformation.
According to Năstase, Giuclea, and Bold (2012), change management is a concept whose key agenda is to facilitate lasting and sustainable organizational operations. Although many authors use the words “change” and “transformation” interchangeably, Năstase, Giuclea, and Bold (2012) clarify that not all changes are transformational. According to them, change is said to be transformational if failure to implement it may render an organization dysfunctional. Implementing change in an organization is a complex process that is characterized by resistance from various parties, especially those who are apprehensive that it may affect them negatively. For instance, a section of the workforce may develop the perception that any organizational alterations will leave them jobless.
Change may also involve relocating administrative centers to new places where employees will be subjected to a strange culture or a new environment away from their families. This situation is arguably the reason behind Laposi, Dan, and Oţel’s (2016) suggestion that managers and organizational heads need to be firm and wise when handling any change implementation process within the workplace. In other words, the concept of leadership during a transformational change comes into play whereby organizational bosses have been tasked with the responsibility of adopting the best approach to implementing strategies. For instance, they should ensure that employees are informed about the inevitability of the proposed change, including the mutual and positive impact that the move will have on the workforce and the organization.
In this case, the article by Schein (1999) introduces Kurt Lewin’s change framework, which has been proven to be successful in helping change leaders in executing transformational plans in their organizations. Figure 1 below shows a detailed sketch of Kurt Lewin’s model.
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Although Schein’s (1999) change model does not focus on the input of other parties to the transformation, Oreg et al. (2018) agree with Kurt Lewin’s elements by introducing the issue of change agents, specifically the role they play in effecting change. Such agents are responsible for the pressure that leads to the unfreezing phase. Here, Kurt Lewin introduces the unfreezing concept whereby leaders need to ensure that any transformation taking place is well known to all stakeholders, including workers.
The goal of this step is to allow interested parties to realize that indeed a transformation is necessary and that failing to implement change will ruin the organization and consequently stakeholders’ welfare. According to Oreg et al. (2018), managing change entails a mention of how productive the transformation is regarding the interest of the organization and workers. Kurt Lewin’s “movement” stage seeks to address this issue whereby employees and other stakeholders are informed about the final constructive contribution of the change.
Here, it becomes straightforward to all parties that the transformation is meant to attain a result that will benefit them in the end, hence eliminating any possible resistance and instead encouraging their input and cooperation during the change execution process. The last step of Kurt Lewin’s change management model, namely, refreezing, paves the way for implementing the change permanently in the organization.
Leadership and Transformational Change
A study by Carter et al. (2013) depicts transformational leadership as a very critical aspect of change execution in organizations. The authors appreciate the role that organizational change plays when it comes to ensuring that a company succeeds in the prevailing competitive business world. The contemporary operational business atmosphere is characterized by constantly changing demands and hence the need for devising continuous strategies that help to retain and/or attract new employees and customers.
In other words, Carter et al. (2013) acknowledge the continuous change that is taking place and the need for transformational leadership tactics that ensure that organizations adopt appropriate change management approaches to remain competitive and hence operational. In my opinion, while some organizations may wish to implement a major change at once, this strategy may not be the best because the chances of skipping some minor adjustments that should have been implemented earlier are high.
Based on the above study highlights, the authors introduce the concept of continuous incremental alterations as an important change management plan that is usually implemented by transformational leaders. According to Carter et al. (2013, p. 942), “Among various leadership perspectives, transformational leadership is often linked with managerial effectiveness during organizational change.” Transformational leaders not only establish a well-calculated vision but also share with employees the planned change and its impact on them and the organization.
According to Wiedner, Barrett, and Oborn (2017), transformational leaders also take a central position in proposing strategic change initiatives such as the need for coping mechanisms and cooperation between workers and them because the overall outcome is usually beneficial to all stakeholders.
From the study by Wiedner, Barrett, and Oborn (2017), one realizes how transformational leaders work closely with all agents during change management processes, as opposed to dictators who only propose issues to workers who then operate on their own to execute the suggested directions. Hence, transformational leadership embraces the notion of teamwork during change implementation processes, a strategy that Carter et al. (2013) present as imperative in enhancing workers’ performance, especially in institutional levels, which are characterized by continuous operations.
Although the article by Carter et al. (2013) briefly mentions the connection between transformational leadership and Organizational Citizenship Behavior (OCB), Biswas and Mazumder (2017) offers a detailed investigation of this link and its bearing on change management in organizations. According to Biswas and Mazumder (2017), transformational leadership is a change-stimulating tool that not only enhances the level of worker-leader interaction but also facilitates employees’ capacity to accept change, embrace it, and cooperate during its implementation. The concept of OCB is presented in this study as an outcome of transformational leadership during change whereby satisfied workers manifest high levels of job commitments, a situation that translates into organizational actualization of the set goals and objectives.
As Biswas and Mazumder (2017, p. 8) assert, “Employees who exhibit OCB are those that take that extra step to contribute to organizational effectiveness and success.” In this case, the distinguishing element possessed by workers who demonstrate OCB may be argued as their unswerving uptake of change and the capacity to cooperate with the lead unit to turn an otherwise falling business into a center of excellence, productivity, and a benchmarking base for other companies.
Although many transformational agendas are expected to succeed to the point of benefiting all stakeholders, Kotter (1995) reveals several reasons that make some of the change efforts fail to attain the desired outcome. In other words, in the course of leading change in organizations, not all efforts were undertaken to enhance a company’s competitiveness in its line of business yield positive results as expected. Some transformational change strategies fail miserably in the process of their execution. According to Kotter (1995), transformational leaders who are well versed in change execution take their time to implement revolutionizing strategies in phases.
This strategy matches the opinion by Carter et al. (2013) concerning the systematic and incremental change implementation tactic. Kotter (1995) reveals that speeding the process of change in organizations results in omitting some minor but essential steps, a situation that never bears the fruits initially projected and hence the failure of the transformation procedure. The lack of aggressiveness and collaboration among all parties plays a key role in the failure of many change execution efforts. This situation is solely the reason why the author emphasizes the need for an innovative and transformational boss who is not only an exemplary leader but also one who can promptly detect the need for a radical change.
In my judgment, Kotter’s (1995) observations concerning why many change efforts backfire may have informed the study by Van der Voet, Kuipers, and Groenveld (2016). The latter group of authors set to introduce a change management theory whose goal was to find out the link between direct managers’ transformational traits and institutional change in addition to how their strategies enhance workers’ affective devotion to any adjustments.
In other words, direct managers play a key role in facilitating change execution and workers’ dedication to it. Their close transformational input seals all gaps that can lead to failures pointed out by Kotter (1995). Specifically, according to Van der Voet, Kuipers, and Groenveld (2016, p. 842), “transformational leadership behavior of direct supervisors is an important contribution to the successful implementation of change.” Hence, it suffices to conclude that the kind of leadership that a company adopts during transformational change matters significantly because it determines whether the required adjustments will be effective or not.
The Case of General Motors
The global financial disaster of 2007 and 2008 interrupted the operations of many businesses around the globe. General Motors (GM) is among the companies that were hit hard by the Great Depression. The study by Goolsbee and Krueger (2015) paints a clear picture of the degree of the predicament that the company experienced during this time. As the authors reveal, “General Motors alone lost almost $40 billion in 2007 and another $31 billion in 2008” (Goolsbee & Krueger 2015, p. 4).
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This state of affairs indicates the extent to which the company needed to implement change strategies, for instance, establishing cost-cutting mechanisms, restructuring, or seeking the intervention of the American government, to cope with the situation or else risk losing business until an unknown time. Also, the company’s sales had gone down tremendously following the presence of other competing brands such as Toyota. Hence, the company had no alternative other than adopting change, as opposed to facing the consequences of losing its employees, customers, and its already recognized global image.
Through its transformational CEO, Rick Wagoner, the company had to alter its counterproductive structure that entailed a top-down cultural approach, which disregarded workers’ input and instead introduced the down-top plan. This new cultural model improved employees’ contentment and consequently altered their turnover plans, despite the tough times the business was facing. Also, it was to change its number of global employees by more than 50,000 before 2012 (Goolsbee & Krueger 2015).
The CEO vowed to support the organization’s workers in coping with the crisis and the new change. Moreover, through the facilitation of the company’s boss, other transformational stakeholders such as the Obama Administration was put on board to rescue the business from falling. According to Goolsbee and Krueger (2015), one of the changes suggested, thanks to President Obama’s involvement, which later proved effective in reviving the organization, entailed reducing its debt by more than 30 billion American dollars.
It achieved this goal by translating its liabilities into equity. In full collaboration with its then transformational president, Barack Obama, the American government invested huge financial resources in the company in the tune of over 51 billion U.S. dollars, a step that marked its turning point up to date when it is enjoying substantial returns and a well recognized and popular global brand (Krueger 2015). In other words, GM’s current standing is purely attributable to the role of leadership during a transformational change process.
Based on the expositions raised in the paper, it is apparent that businesses need to establish feasible change management strategies to remain operational in the rapidly transforming market. However, the study reveals that not all changes can result in successful transformation, especially if parties steering them (changes) do not possess the required traits. Consequently, the paper recognizes the role that transformational leaders play in spearheading a company during change implementation processes.
Such leaders not only advise on the appropriate time to execute change but also specify the most appropriate transformational plan to embrace. In addition to supporting all employees in coping with the change process, they consider workers’ opinions concerning the transformation. The case study of General Motors substantiates the essence of leadership during a transformational change.
Biswas, N & Mazumder, Z 2017, ‘Exploring organizational citizenship behavior as an outcome of job satisfaction: a critical review’, IUP Organizational Behavior, vol. 16, no. 2, pp. 7-16.
Carter, M, Armenakis, A, Feild, H & Mossholder, K 2013, ‘Transformational leadership, relationship quality, and employee performance during continuous incremental organizational change’, Journal of Organizational Behavior, vol. 34, no. 7, pp. 942-958.
Goolsbee, A & Krueger, A 2015, ‘A retrospective look at rescuing and restructuring General Motors and Chrysler’, Journal of Economic Perspectives, vol. 29, no. 2, pp. 3-24.
Kotter, J 1995, ‘Leading change: why transformation efforts fail’, Harvard Business Review, vol. 73, no. 2, pp. 59-67.
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Wiedner, R, Barrett, M & Oborn, E 2017, ‘The emergence of change in unexpected places: resourcing across organizational practices in strategic change’, Academy of Management Journal, vol. 60, no. 3, pp. 823-854.