Shell Change Management Case Study: Introduction
This assignment is a case study on organizational change and change management. The case study is based on a Canadian based organization known as Shell Canada. This organization is one of the many organizations which have undergone through major changes in the recent past. The change which has taken place in this organization is in the form of restructuring. This discussion starts with a brief overview of an organization and the theoretical perspectives to organizational change.
The discussion thenoes on to highlight the changes in the organization in terms of internal and external pressures of the changes, various types of change, the management’s role in the change process, resistance to the change process, the consequences of the change process and flow chart for the change process.
Shell Change Management Case Study: Discussion
Definition of an Organization
An organization is a group of people who work together with coordinated efforts to achieve certain objectives or goals. Organizational goals and objectives are of various categories and it is this variation of goals and objectives which classify organizations into three main categories namely profit-making, service-based and social responsibility based organizations (Murray, Poole, & Jones, 2006. pp.45-69). The study of organizations is made possible by the use of organizational theoretical models or approaches.
These theoretical models are mainly used to explain organizations in terms of structure and culture. Organizational culture refers to shared beliefs, values, norms and practices which characterize an organization. Organizational structure refers to how the organization is structured, how power and authority to make decisions are distributed along the structure of the organization and who takes what directives or instructions from whom and when (Robbins, 1996).
Theoretical Perspectives to Organizational Change
There are various perspectives of looking at organizational change in terms of how it occurs, why it occurs and how to address the issues of resistance to change in organizations. The perspectives take the form of theories or models. These two terms (theories and models) are used interchangeably although they do not mean the same. While theory is used to imply abstract insights to a subject, models are used to connote a particular set of procedures, methods or plans which may be used to undertake a particular action (Kezar, 2001).
In organizational context, many scholars use the term models instead of theories. Even when the term theory is used, it is used as model to lead organizations in their actions (Kezar, 2001). There are two main theoretical models of explaining and conceptualizing organizational change namely the Evolutionary and the Teleological models. The major distinction between the two is the manner in which they address the issue of determinism in the change process.
The Evolutionary model seems to embrace the idea of determinism in explaining organizational change while the Teleological perspective tends to de-emphasize it. However, both models tend to conceptualize organizational change as a liner and rational process which occur due to forces internal and external to organizations. Each of the models has got several other approaches of explaining and conceptualizing organizational change (Kezar, 2001).
Evolutionary model of organizational change
The major assumption in this model is that change in organizations depends on the situations and environments in which organizations operate. This model has its origin from the natural selection theory which was adopted in organizational change with the philosophy that change is always happening naturally and no force can effectively prevent it from happening (Towers, 2008).
Later on, there emerged the Resource Dependence approach which purports that organizations can never be self-sustaining but they rely on external environment and resources, and therefore managers in organizations have to come up with adaptive systems to enable them to cope and survive in the ever-changing internal and external organizational environments (Towers, 2008).
The Evolutionary model, in general, tends to emphasize on determinism, that is, organizations operate in an unpredictable socio-cultural, economic and political environments which automatically dictate how they should operate.
According to the model, change occurs in a liner manner but may also occur spontaneously as the environment may dictate and therefore managers cannot anticipate it. Managers should, therefore, embrace change, either from internal or external forces and develop adaptive mechanisms. Employees are supposed to automatically understand and embrace organizational change without questioning (Towers, 2008).
Teleological model
This model is also known as scientific management or planned change. The major assumption of this model is that change in organizations occurs as a result of concerted efforts by organizational leaders who see the necessity of change, plan and execute it for the benefit of organizations. This model is perhaps the most common in the literature of organizational change (Keys & Fulmer, 1998).
Approaches which lie under this category include Organizational Development, Strategic Planning and Organizational Learning. The Organizational Development approach is very popular in this category and it involves managers doing an analysis of their organizations to know the problems they are facing and then coming up with solutions to these problems as well as strategies of how to improve organizational productivity using minimum resources (Keys & Fulmer, 1998).
The change process and management
The change process can be contextualized using Kurt Lewin’s approach to change management which falls under the category of the teleological model of change. Lewin came up with what he called three-stage theory which involves three stages or steps namely unfreezing, changing and freezing (Cummings & Worley, 2008). In the first step (unfreezing), the organization is supposed to be motivated and prepared for the change.
The management must engage the employees and create a state of discontentment with the prevailing conditions in the organization. While doing this, the management should also ensure that they set out deadlines for themselves to come up with a new dispensation of doing things (Cummings & Worley, 2008). This stage is about doing a cost-benefit analysis about the proposed change and weighing whether the pros of the change outweigh the cons, then creating the necessary motivation for the change.
This stage is, therefore, the preparatory stage and is very crucial because it determines the success of the change if effected. When employees are highly motivated to change, the resistance to change is minimized and vice versa (Cummings & Worley, 2008). The next stage is the change stage which is also known as the transition stage and involves implementing the change. This is the hardest stage in change implementation because employees are always reluctant to move out of their comfort zones despite any motivation.
During this stage, therefore, employees need to be guided and encouraged to undertake the change. To realize a smooth sailing through this stage, employees need to be given the necessary training for them to acquire the knowledge and skills for navigating successfully through the transition stage (Cummings & Worley, 2008). The final stage is the freezing stage, which is also known as a refreezing stage. During this stage, the organization has successfully sailed through the change process and is now leaving in a new dispensation.
There is, therefore, the need of creating a new culture in the organization which is in line with the new organizational dispensation (Cummings & Worley, 2008). This approach has however been criticized for being very simplistic especially in the way it assumes that people can be taken through these stages without difficulties. Its critics argue that the approach is a bit mechanical and unrealistic.
But despite the criticism, the approach remains common in the world of organizational change even today, especially in the preparation of employees for change mainly through doing appraisals and evaluation of organizational activities and their effectiveness (Cummings & Worley, 2008).
These practices of appraising and evaluating organizational activities and programs can be explained as a contemporary Lewis’ approach to organizational change, which may be described by many as a participatory approach to organizational change (Cummings & Worley, 2008).
Shell Canada
The organization of my choice is Shell Canada. This is a branch of the Shell group of companies which are spread all over the world with a history of over 93 years in business and with its headquarters in London. The organization underwent some major organizational changes at the wake of the millennium, that is, in 2000 (Grant, 2002).
The changes witnessed in the organization
The changes basically entailed major restructuring of the organization to make it more productive, especially due to increasing competition from other oil and gas producing companies like B P. The restructuring saw some 1000 positions scrapped as well as the redesigning of the coordination and organizational control systems to make them more sensitive to, and respond adequately to competition.
The elimination of the 1000 corporate positions in the organization led to the decentralization of power to make decisions to divisions (shell Canada included). This also made the top leadership of the Canada division make decisions with ease and in a timely and efficient manner (Grant, 2002).
Internal and external pressures of the change
Organizational change may emanate either from internal or external environment of an organization. Internal environment constitutes things like profit maximization, expansion, bankruptcy, change of objectives, adoption of new technology as well as mergers and acquisitions. External environment constitutes the things which are beyond the control of the organization and may include things like competition, increased cost of production, political and social risks as well as rates of inflation.
One of the internal factors which necessitated the restructuring of Shell is the desire to maximize profits. This was to be achieved mainly through the elimination of 1000 corporate positions and the decentralization of power to make organizational decisions to divisional leaders and managers, with a view of doing away with the bureaucratic red tape which hindered organizational efficiency and effectiveness as well as the maximization of profits by the organization (Grant, 2002).
One external pressure which precipitated a change in Shell Company was competition from other oil and gas producing companies like BP, which were entering the market with a storm and promising customers more customer friendly goods and services at very friendly prices.
This made the organization see the need of restructuring to streamline its systems to allow for proper competition with its peers. The increase in the number of oil and gas producing companies also broke the monotony of Shell in the field of oil and gas, thus prompting the organizational changes (Grant, 2002).
Various Types of Change
According to the national academy for academic leadership, first-order change is a change which is reversible. This type of change entails doing more or less the same things which an organization has been doing with little variations (National academy for academic leadership, 2011). This type of change is usually not transformational and aims at restoring equilibrium in the systems of an organization or retaining the status quo.
First order changes, therefore, happen within the existing organizational structure and does not entail any new form of learning (National academy for academic leadership, 2011). Second order change is a change which is irreversible.
This type of change involves doing fundamentally new things within an organization; either as a result of internal or external pressure. This type of change is usually transformational and thus entails the learning of new concepts as well as the adoption of new approaches to organizational functions, processes, and procedures (National academy for academic leadership, 2011).
Management’s Role in the Change Process
Management is about planning, coordinating and controlling organizational resources so as to facilitate the achievement of organizational goals and objectives in an efficient and effective manner. The nature of management therefore only allows for the top leadership of an organization to act as the drivers of the organization in a way which facilitates the organization to achieve its goals and objectives, including the management of organizational change.
The role of the management of Shell Company in the change process was basically to plan and execute the change in a manner which was efficient and cost-effective so as to minimize resistance while maximizing the success of the change. The Shell management was actively involved in brainstorming and evaluation of the organizational functions and processes as well as doing an environmental scan to understand the market trends so as to inform the change process (Grant, 2002).
The management was able to analyze the market and thus saw the need for the radical departure from bureaucratic red tape and create a more lean organization, which was highly decentralized so as to maximize on organizational efficiency and effectiveness (Grant, 2002).
Resistance to the Change Process
Due to the proper calculations and planning of the change process by the management, there was no resistance to the change. This was basically because the restructuring did not require the consultation of the corporate level employees who were affected by the change. The reason why the management did not seek the views of the targeted employees in the restructuring was that it was obvious that they would resist.
The Consequences of the Change Process
One consequence of the changes in Shell was the remarkable reduction of head office costs following the elimination of the 1000 corporate-level jobs, most of whom had offices in London. Following the changes also were increased organizational efficiency as well as an increase in the number of returns due to the huge savings on management and running costs.
The employees’ remuneration was also increased marginally thus leading to low turnover rates in the organization. The organization also increased its competitive advantage at the global market of oil and gas products (Grant, 2002).
References
Cummings, T. G. & Worley, C. G. (2008). Organization development & change. Farmington, MI: Cengage Learning. Print.
Grant, R. M. (2002). ‘Organizational Restructuring within the Royal Dutch/Shell Group’. Web.
Keys, B., & Fulmer, R.M. (1998). Executive development and organizational learning for global business. New York, NY: Routledge. Print.
Kezar, A. J. (2001). Understanding and facilitating organizational change in the 21st century: recent research and conceptualizations, Volume 28, Issue 4. New York, NY: Jossey-Bass. Print.
Murray, P., Poole, D and Jones, G. (2006).Contemporary issues in Management and Organizational Behavior. Farmington Hills, MI: Cengage Learning. pp.45-69.
National academy for academic leadership. (2011). ‘Leadership & Institutional Change’. Web.
Robbins, S. P. (1996). Organizational behavior: concepts, controversies, applications, (7th Ed.). Englewood Cliffs, NJ: Prentice-Hall.
Towers, I. (2008). Organizational change: processes, contexts and perspectives. Ottawa, ON K1A 0N4: Library and Archives Canada. Print.