Abstract
The secret of change is to focus all of your energy, not on fighting the old, but on building the new.
—Socrates
Case Analysis
STPL is facing a dichotomous situation, as its management wishes to modernize the organization, while retaining its traditional ethos. This is a typical case featuring challenges of managing change and emergent conflicts. STPL is a family business, owned and managed by three brothers, the eldest of whom is highly religious and yet has a modern outlook with a vision to grow globally. The organizational culture is centred on the beliefs of the religious sect that the family belongs to. All employees of the organization either explicitly or implicitly belong to the same religious sect and/or community. Moreover, the organizational processes, functions, practices, and decision-making are guided, governed, and controlled by the same religio-social ethos.
STPL has garnered recognition for the quality and reliability of its products in the industry and has obtained necessary certifications and approvals; furthermore, the company has sufficient funds for growth. It also has the advantage of location, which is a quintessential success factor in a competitive world. Against this backdrop, STPL had rightly embarked upon an expansion plan which envisaged exports to some 16 countries. Efforts of expansion in India had given desirable outcomes to the company. So it fostered an ambition to grow in the international market. The growth plan began well due to sufficient availability of funds (especially cash reserves), skills, wide product range, and possibilities of capacity enhancement. However, its first tryst with international markets came with many provisos.
ENIGMAS OF EXPANSION
The strategy of STPL to enter into international markets entailed modernization and professionalization of all its major functions, practices, and processes. International expansion also called for complete overhaul of the firm, starting from recruiting new professionally qualified people to training its existing employees in modern skills and work methods. In short, a new human resource management (HRM) strategy was identified as a prerequisite. On the face of which, STPL did everything that was desirable in such circumstances. It hence recruited a vice president of HR (VP-HR) from the open market, who had experience of working with a family-owned pharmaceutical manufacturing business that had undergone similar transformation. The new VP had to modernize the organization while retaining the elements of faith. He brought system in the HR function, by creating formal hiring plans through open recruitment, with an aim to hire good talent. The new workforce included senior persons for managerial positions, who were being offered compensation above market rates, qualified accountants, and Graduate Engineer Trainees (GETs).
While recruitment was easy, integration gave trouble. New employees, particularly GETs, wanted logical answers for every ritual, practice, and belief. Quite obviously for existing employees, it was a matter of faith and loyalty. This is where conflict emerged. GETs were technically qualified but needed training and support, whereas existing employees who had grown within the system declined any voluntary support. Clash of two distinct cultures was evident. The new VP-HR did try to resolve it, but in a way which can best be characterized as piecemeal.
RESOLUTION OF CONFLICTS
The VP-HR believed that the root cause of this conflict was sense of insecurity among existing employees, and therefore planned to build confidence in them. In response, an education programme was rolled out. Under this plan, all the existing employees were given an opportunity to enhance their educational qualifications and attain the next higher level of capabilities. But to the utter dismay of management, only a few employees took advantage of it. In the meantime, GETs continued to resist the rituals related to the sect that were almost mandatory in the firm, as they saw no connection between professional requirements and religious beliefs. Some even left the organization.
As a second measure, continuous mentoring at various levels was introduced. Along with periodic monitoring of mentoring, rewards, incentives, and even promotions were linked to the appraisal of mentoring. However, such a policy of monitoring reflects nothing but lack of trust of the senior management on employees and its intentions, which seems odd in an organization which believes in the philosophy of organization as equivalent to family. Formal and informal interaction opportunities were also created and sporadic results were seen. Subsequently, to enhance the change process, values and beliefs of religion were given new and modern definitions with the expectation that this would transform religion into spirituality and improve chances of acceptance and adherence.
The firm was facing a transition phase, where it was being seen as a potential employer by outsiders, yet there were latent signs of ideological conflicts among employees. In spite of all changes initiated and implemented, the reality remained that international clients and employees were uncomfortable due to cultural myopia of the owners. While overt efforts were being made to give a secular colour to the organization, the undertone was to maintain the original culture.
MANAGEMENT OF CHANGE
A deeper insight into the state of STPL would make it clear that this is a case of change management and not that of conflict management, as assumed by the VP-HR or by the owners. Change can be gradual or radical. Gradual change is easy to manage, while radical change is complex and multifaceted. Whenever a firm attempts to grow inorganically, it needs radical change in various aspects of its business, as has happened with STPL. Any effort to reduce or avoid or suppress resistance normally results in conflicts. Often management of the organization undergoing any change process, comp-rising the change implementers themselves, gets stuck in dealing with conflicts than managing change. And this is analogous to treating the symptom and not the disease. In reality a change of this magnitude should have been planned by STPL in a holistic manner, instead of in a fire-fighting mode.
There are three players in any change process: change agent, change implementer, and change target. Normally top management is the change agent, although in this case, it is the international clients, or let us say, prospective clients who are the change agents. The owners of STPL envisage an ambitious plan to grow global with a target to export almost 50 per cent of output in 16 countries. When encountered with the urgency of change to meet the requirements of international clients, the owners chose to change the processes, methods, and people. What they failed to realize was that the most difficult aspect to change is mindset and consequently behaviour. The major source of resistance in the case of STPL is internal, and is nothing but a rigid culture. The problem is resistance of the owners to any change in the cultural–religious ethos of the firm, and consequently the problem is extended in the form of resistance on the part of employees, new as well as existing. The change implementer is the VP-HR, and change target is the organization itself, all the employees and even the owners. Since the change implementer is himself hired from external sources, hence it is possible for him to take strong decisions and actions. However, he is bound by the owners’ belief that their religious faith is inseparable from their business. In such a situation, a three-pronged strategy has to be adopted to ensure effective change (refer to Figure 1).
How to change mindset? Any process of changing mindset involves breaking the conventional approach and generating an image of future. This is what is needed in the case of STPL. There are two extreme opposites: the existing culture driven by the religious sect established by the spiritual guru whom the owners and existing employees follow, and the modern outlook being brought in by the new entrants. It is established that the new arena in which STPL has treaded does not support the old ways of religious management of business. Hence, an open system of continuous feedback and learning has to be evolved to ensure transparency and involvement. There also is a need to create a shared vision of the future, and at the same time, help employees understand both the big picture and its minute details.
The second pertinent question is how to channelize motivation? One effective solution is to increase confidence among the recipients that change is achievable. However, it is imperative to work out the costs and benefits of change in this context, as costs here are emotional, while the benefits are material. Whether to retain its old ideology or to give it up for new modern ways is an emotional issue for STPL, and therefore what is necessary is emotional treatment. Hence, the change implementer (VP-HR) has to work on the emotional resistance of the leaders first. It is the management that has to pass through the stress of letting go old ways for the sake of future and also convince old employees of the compulsion of embracing the new ways. In the new system, employees must be free to follow the in-house rituals, and attending such rituals should no longer be hailed as a symbol of loyalty. In such emotional digression, there should be a process to support each other in managing change and the resultant stress, if any. Participative management should be the key to ensure effectiveness in this context.
Next, how to shape behaviour? The first step should be to train new incumbents in the new behaviours within the organization. There could be a week-long immersion programme for new recruits, especially the younger generation. Such programmes usually reduce the occurrence and impact of cultural shock. The culture to which new employees of STPL were introduced in due course of time could be introduced in a more formal and organized manner. The process of immersion of new employees could include identification of specific behaviours to change, tutoring, feedback, and finally reinforcement of new behaviour. At the same time, there should be a programme for existing employees to get introduced to the new workforce, emphasizing on adoption and amalgamation of old employees with the new ones by reiterating the family culture of STPL, where understanding of mutual needs is important. The management could also introduce a specific programme to deal with employees who cannot change. This could be done by creating a sense of urgency and a guiding coalition to mobilize commitment.
Three-pronged Strategy for Effective Change
CONCLUDING REMARKS
It can be said that the present efforts made by STPL towards reducing conflicts between its new and old employees is like trying to mix oil with water; needless to say, the two can never mix. This is because conflicts within the company are of ideologies, environment, and personalities. Any effort to merge one into the other necessarily assumes that the one which is merging has to lose its own identity. Moreover, such changes do not occur soon; they take at least one generation. Instead of further piecemeal efforts to reduce internal conflicts, STPL management must strive to create an open work environment with the continuous capacity to adapt and change. Working in an open environment allows employees to constructively express their anxieties and anger and also helps reduce passive-aggressive inertia and sabotage. Usage of double-loop learning, whereby errors are corrected by modifying existing organizational objectives, policies, and standard routines and not merely on basis of past practices, with open communication and superiority of organizational interest can help STPL overcome its existing internal conflicts.
ACKNOWLEDGEMENT
The author acknowledges the guidance by Professor Geetika Goel, Professor and Former Dean (Academic), Motilal Nehru National Institute of Technology Allahabad in analysing this case.