Introduction
The report aims to present a case study on organizational behavior. The focus of the case study is on Scania, one of the leading manufacturers of buses and trucks in the world with international operations. Relevant theories and models of organizational behavior will be discussed and applied in the case study. Discussed below is the flow of discussion that the reader can expect from this paper.
The discussion will start with a brief description of the company and its businesses and operations. Then the discussion will turn to the drivers of change or the reasons that compelled the management to introduce change. An assessment of the type of change that took place in the organization will be presented as well as its impact on the company’s business. In every change initiative, it is important to consider the stakeholders and gain their support. Thus, the report will also briefly describe the different stakeholders and the impact of change on each one.
Background of the Company
Scania was founded in 1891 in Sweden. The company is known as one of the leading manufacturers of buses and trucks in the world. In addition to heavy trucks and buses, Scania manufactures industrial and marine engines. The company also markets and sells a broad range of service-related products and financing services. Scania operates in Europe, Latin America, Asia, Africa and Australia. The company’s products and services are:
Buses and Coaches
Scania concentrates on buses and coaches with high passenger capacity for use as tourist coaches and in intercity and urban traffic. Bus and coach operations focus on delivering fully-built vehicles based on Scania components to customers. Scania achieves this through it own bodybuilding operations and through collaboration with selected manufacturers of buys and coach bodies.
- Engines – Industrial and marine engines from Scania Engines are used in electric generator sets, construction and agricultural machinery as well as in ships and pleasure boats.
- Services – Scania’s growing range of service-related products supports transport and logistics companies in their business operations. These service-related products encompass everything from parts, maintenance agreements and round-the-clock workshop services on various continents to driver training and IT support for vehicle performance data and transport planning.
- Financial Services – Financial services are an important part of Scania’s business. Financing is often one element of cost-effective comprehensive solutions for customers, who can choose between loan financing, various forms of leases and insurance solutions.
Reasons for Change
Organizations are operating in both external and internal environments. Thus, external and internal forces influence the organization’s operations, strategies and objectives. In the case of Scania, both external and internal forces influenced the management in its decision to introduce change. From the case study, there are at least 5 factors that compelled the organization to undergo change: These are:
1. The company’s success or failure - whether the organization enjoys spectacular growth and profitability or suffers difficulty or even failure, change will often result. In the case of business success, a company’s leaders may decide to invest profits in new product development or marketing efforts. In the case of business difficulty or failure, leaders may streamline processes or launch other efforts to turn the business around.
2. External environmental factors - macro-environmental factors such as regulatory changes, economic changes and technological changes affect a company’s strategy and force the management to come up with ways to cope up.
3. Business trends - one such trend is globalization 9the spreading of commercial activity internationally. Because of globalization, competition between firms becomes stiffer and companies are forced to change in order to successfully enter new markets.
4. Internal environmental factors – these often include stakeholders. One of important stakeholder group is the employees. Over the years, there have been changes in the demands of the employees. Employees expect that the company can offer them challenging, rewarding work. Consumer demands are also changing, prompting organizations to change their operations, products or services (Harvard Business School 2005, pp. 3-4).
The Change Initiative: Major Changes
Historically, the changes that were initiated in Scania were small and incremental. In the 1990s the company started to introduce major changes in order to cope with the changes in the business environment and in order to cater to a wider market. The change process that took place in the organization can be described as something that follows Lewin’s Change Model. Lewin’s model of change consists of unfreezing, movement, and freezing. Unfreezing refers to conditioning individuals’ readiness for change, and establishing ownership. Momentum build when stakeholders align to introduce change and plan its implementation. Movement also called ‘transformation’ occurs when individuals engage in change initiatives. In the final phase, refreezing, individuals incorporate the change into their daily routine and reestablish equilibrium personally or within the firm. New behaviors solidified and ultimately deemed the norm (Gilley 2005, pp. 34-36).
The management initiated major changes that greatly affected the organization’s businesses, its strategies and objectives, the way people are managed, and it also paved the way for changes in organizational culture. Now let us discus the major changes that took place in Scania.
The Company embraced new Mission
The company, led by the CEO has created a new vision for the company. Previously, the company was product oriented as what can be surmised from its previous business statement “building trucks, building reputations”. The company shifted its business orientation with particular focus on extending its operations worldwide and strengthening its relationships with different stakeholders. The company’s new mission is to “commit to providing optimum solutions to meet customer needs by building profitable partnerships driven by quality in all it does”. This new mission was communicated to all the people in the organization from the top to the bottom. The statement, and the manner in which it has been communicated throughout the network since 1994, have energized many employees and made widely-accepted wisdom concrete.
The Company created a new a new Vision
From the new mission, the company created a new vision which was driven by the dynamic environment and existing and developing company values and beliefs. The vision guided the management on the changes that will be introduced. Generally, the changes were categorized into hard change and soft change. Hard change included the development of a new direct value-added services while soft change included the development of a seamless value system, cultural re-orientation and other success-enabling mechanisms.
Communication plays an important role in the success of the change initiative. In the case of Scania, changes started in the company’s visions and mission. In order to gain the stakeholders’ trust and support, the management needs to communicate the reasons behind the change and the part that each one will play in the change process. Early communication and consultation with the stakeholders while the change implementation is in the diagnosis and planning stage will assist in getting people interested and prepared to participate in the change process. Stakeholders will have different levels of involvement. At various stages of the implementation they can be informed, consulted, collaborated with or can be active participants. Stakeholders should be provided with as much information as possible, including baseline data, the objectives of the change and should be involved in anticipating problems and determining solutions (Palmer et al 2006, p. 147). Effective communication is important in managing change. Effective communication is a key tool for managers seeking to drive successful change. Organizations that can communicate effectively about change increase the odds that changes they undertake will be successful, and that the environmental changes they encounter will be understood. Organizations that mismanage communication about change or simply ignore the need for it when change is necessary, help guarantee their own struggles and failure to change (Axley 1996, p. 194; Kotter 1995, p. 46).
Scania Angers (SAN)
Angers was a plant owned by Scania. Trucks for the French, Italian, and Iberian markets are assembled in Angers. Since it opened in 1992, output increased significantly and production plans suggested that a continued increase is possible for some time to come. In 2004, the plant was able to produce 7 trucks per day which increased to 30 trucks per day in 1995. In 1998, the plant was able to produce 40 trucks a day, while it was able to produce 50 trucks per day in 2005.
Management Philosophy
The plant is made up of teams that are responsible for different elements in the production and manufacture of trucks. The plant operates in teams and teamwork is greatly valued. In order to ensure that operation is stable and improvements in team performance are achieved, the management facilitates socialization and provides training opportunities for the employees. Being able to work in teams is one of the primary skills that are required from the employees. Teamwork is central to the management philosophy of the plant. Team work and employee involvement in pant-wide work processes and in the broader aspects of company activity are regarded by management as a vital motivational tool.
Organizational Culture
Organizational culture includes the values, norms, rites, rituals, ceremonies, heroes, and scoundrels in the history of the organization. The organization defines what a new employee needs to learn to be accepted as a member of the organization (Sims 2002, p. 302).
The changes in the vision and mission of the company paved the way for changes in the production plant in Angers, France. The plant started to adapt cluster teams as the primary element in the organizational culture. Cluster teams are teams which are responsible for a discrete element of production. The focus in the plant is cluster working. All managers are clear in their determination to insist that all activities have to be justified in terms of their value added to the cluster operation. From this, we can assume that the plant’s organizational culture is one that can be described as “Cluster Culture”. In the cluster culture, the individual is the central point. The structure serves only to assist the individuals within it. The structure is as minimal as possible and that a cluster may be the best description, or perhaps a galaxy of individual stars. Control is minimal or nonexistent, except by mutual consent. Individuals have a great deal of autonomy, either because of their expertise and the demand for their services elsewhere, or because that are tenured in their positions (Handy 1993).
While we can observe that the organizational culture at SAN is leaning towards cluster culture, we can also observe that there are some elements of work that characterize a “Task Culture”.
The task culture provides team members with a substantial amount of control over their work, and employees also enjoy mutual respects within the group, based upon capability rather than age or rank. This culture harnesses the unity of the work team, with its goal of completing a particular project, in order to improve efficiency, and to identify the individual with the objectives of the organization as a whole. Managers have the power to allocate projects, people and resources, and so they maintain control in the task culture. However, this is not control on a day-to-day basis, team members retain substantial control over their work and any attempt by senior managers to exercise closer everyday control would not be acceptable in this type of culture (Dixon 2003, p. 231).
This particular culture serves to support the new mission and vision of Scania as it is flexible. The task culture is very adaptable and is appropriate where flexibility and sensitivity of the market or to the external environment are important. The task culture will allow SAN to adapt its operations and strategies with the strategies and operations of the headquarters. It will also allow SAN to adapt easily to the changes in customer demands and will enable the plant to keep up with its competitors.
Stakeholders
Organizations must recognize the rights of interests of various stakeholders – not only stockholders and employees but also outsiders affected by the company’s actions. External stakeholders include customers, suppliers, governments, unions, competitors, local communities, and the public. The stakeholders that were greatly affected by the changes in Scania are the employees and managers. The case states that most of the managers and employees working at the Angers, France plant are Swedish working as expatriates in France. Being transferred to a production plant in another country can greatly affect the employees. For one, there will be a difference between the cultures of the expatriates and the Host-country employees.
In order to assess the impact of differences between cultures on employees let us use Hofstede’s Cultural Dimensions. Hofstede identifies five cultural dimensions. These are power distance, uncertainty avoidance, individualism-collectivism, masculinity-femininity, and short term-long term orientation. The dimension of power distance is about the extent to which power structures are hierarchical and reflect significant inequalities in power. Uncertainty avoidance measures the lack of tolerance for uncertainty and ambiguity. This manifests itself in high levels of anxiety and emotion. This in turn translates into a preference for highly structured formal rules and limited tolerance for groups and individuals demonstrating deviant ideas or behaviors. The individualist-collectivist dimension measures the degree to which the interests of individuals or of the group take priority. Societies that place a high premium on assertiveness, achievement and the acquisition of material possessions are exhibiting aggressive or masculine goal behavior. Cultures that place a high value on social relationships, quality of life and sensitivity demonstrate passive or feminine goal behavior. In countries with a short-term orientation, the emphasis is on the immediate gratification of needs, a focus on the present and the attainment of short-term goals. In cultures with a more long-term orientation, the satisfaction of needs is deferred for the sake of long-term benefits and growth.
From the case study, it was revealed that there is a significant difference in score and ranking between French and Swedish culture. The two most significant differences between countries are on power distance and uncertainty avoidance. French culture supports the maintenance of large power distances between different groups while Swedish culture seeks to minimize such differences and embraces a strong commitment to egalitarianism.
Because of the difference in culture, several challenges and problems surfaced. One problem is the opposition of some cluster managers to a reduction in their territory as new clusters are added. Another problem is the reduction of socialization training because of the company’s rapid expansion. There are also difference when it comes to management as French managers seem to put extra effort on paper works which are viewed to be of little importance while Swedish managers seem to focus on operations or “practical things”. These problems are believed to have cultural elements to them. In order to effectively deal with these problems the managers need to become more aware of the difference in culture. The managers need to be the first to embrace biculturalism (or multiculturalism). Before managers are transferred to the Angers plant, they must be properly trained and educated about the French culture. Managers must undergo culture-specific training.
Motivation and Teamwork
Despite of the highly individualistic organizational culture, it is said that teamwork also flourishes in SAN. Because of the mixture of Cluster Culture and the Task Culture, the employees are empowered and they influence their work and at the same time their efforts and performance are directed towards the goals and objectives of the team. Every employee at SAN can work individually and in teams. Perhaps this is because of the way the teams are build and managed at the plant. Sims (2002, pp. 185-187) provided some of the strategies in increasing the effectiveness of a team. These are:
1. Diversify Team Membership – effective teams are composed of a diversity of individuals with varying skills and experiences. Having a diverse membership can be an effective strategy.
2. Keep the Team Small – in order to be effective, teams must be kept small. Small numbers of people are easier to manage and coordinate.
3. Select the Right Team Members – it is important to understand that people have different personalities. Some people take pleasure in working in teams, other on the other hand prefer to work individually. It is also important that team members are selected based on their skills. The skills of the members must be complementary.
4. Train Members – effective teams have members that possess the necessary skills needed for them to perform their tasks.
5. Clarify Goals – a well-defined mission and goal is a prerequisite for a team to function effectively. Team goals must be articulated clearly.
6. Use Appropriate Performance Measures – in order to function effectively, teams must develop their own success metrics. These measures must be process-based.
7. Encourage Participation –the more team members participate in the decision-making process, the more likely they are to feel committed to those decisions. Every team member must be involved in order for them to feel committed.
8. Foster Communication and Cooperation – team members must communicate and cooperate with each other so they can coordinate their efforts toward the common goal (Sims 2002).
From the case study, we can assume that these strategies are being employed at SAN. Members are diverse and each one has different tasks and contributions. Training is also an important strategy in the development of employees and teams at SAN. The goals and objectives are also communicated clearly to the employees. Lastly, employees are empowered and they participate in the decision-making process.
Recommendations
From the case study, it is evident that the operation at SAN is successful and that the plant is able to align its performance to the visions and missions of Scania. The plant is able to contribute to the success of Scania. Based on the case study, there are no present plans for major changes for SAN. Should the need to introduce major changes arise, the company can take the following strategies in order to make the change process more successful.
Motivation
Abraham Maslow’s hierarchy of needs theory proposes that people have needs that must be satisfied. According to Maslow (1954) people want to satisfy five basic kinds of needs and self-actualization needs. It is through the satisfaction of these needs that a person becomes motivated and productive. Maslow suggested that these needs constitute a hierarchy of needs, with the most basic or compelling—physiological and safety needs—at the bottom. Maslow argued that these lowest-level needs must be met before a person will strive to satisfy needs higher up in the hierarchy, such as self-esteem needs. Once a need is satisfied, he proposed, it ceases to operate as a source of motivation. The lowest level of unmet needs in the hierarchy is the prime motivator of behavior; if and when this level is satisfied, needs at the next highest level in the hierarchy motivate behavior (Sims 2002). Below are some of the strategies that Scania can employ to motivate employees:
1. Awards and Recognitions
A spot award is given to an employee who rendered a commendable performance. Spot awards are good motivators. When the rewards are dependent on excellent performance and are given immediately, they are consistent with the expectancy approach and provide the recognition that humans want to achieve (Sims 2002). Feeling appreciated is what most people like. Being recognized for a job well done, financially or otherwise is a source of employee motivation. Immediate recognition strengthens motivation and can provide some immediate outcomes to counterbalance the employees’ inputs and efforts. Recognition also underscores the performance-reward-expectancy link, and it helps appeal to and satisfy the need people have to achieve and be recognized for their achievement.
2. Job Redesign
Managers have long been concerned about the monotonous and boring qualities of highly specialized, short-cycle, assembly-line jobs. In an effort to respond to these concerns, many employers set up programs aimed at redesigning their workers’ job. Job design refers to the number and nature of activities in a job; the basic issue in job design is whether jobs should be more specialized or, at the other extreme, more “enriched” and no routine. Job enrichment means building motivators like opportunities for achievement into the job by making it more interesting and challenging. This is often accomplished by giving employees more autonomy and allowing them to do much of the planning and inspection normally done by their managers (Sims 2002).
Leadership
The success of an organizational change rests in the hands of the change leader. People in the organization looks up at the change leader and expects him to plan, to communicate, to implement and to guide in order for the change initiative to be successful. There are different roles and responsibilities that the leader must take (Gilley 2005, p. 42).
Visionary
Leaders create and share visions. They make their visions the visions of the people that they lead. One responsibility of a leader is the challenge the status quo. Leaders look of opportunities and for challenges. They actively search for ways to change. The status quo represents complacency, mediocrity, and eventual decline – conditions that are unacceptable to most leaders. Leaders as visionaries imagine the future (Gilley 2005, p. 43).
Inspirer
One of the most commonly cited traits of leaders is their ability to inspire others. Change leaders motivate and energize their constituents by meeting their needs – making the change personally beneficial in some meaningful way. Leaders sell change. Actively selling change involves identifying specific benefits valuable to each employee while concurrently minimizing potential losses or risks (Gilley 2005, p. 43).
Supporter
Enabling change involves communicating often, providing adequate resources and training, anticipating a learning curve, allowing for mistakes, rewarding individual and group change efforts, continually monitoring the process and its progress, making adjustments to the change effort as necessary, and celebrating milestones. Change leaders create a culture of change (Williams 2005, p. 44).
Problem Solver
Effective change leaders analyze the situation and identify the problems. They also create creative solutions for those problems. Change leaders rely on their own investigation as well as their network of connected organizational members for data, insights, and feedback regarding the state of the environment surrounding the change (Williams 2005).
Change Manager
Change management, by virtue of its complex nature, must be carefully monitored, lest the initiative get out of control. The traditional definition of management is planning, directing, organizing and controlling (Gilley 2005, p. 67).
References
Axley, SR 1996, Communication at work: management and the communication-intensive organization, Quorum Books, Westport CT.
Dixon, R 2003, The management task, Butterworth-Heinemann, Oxford.
Gilley, A 2005, The manager as change leader, Praeger, Westport CT.
Handy, C 1993, Understanding organizations, Penguin Business, Harmondsworth.
Harvard Business School 2005, The essentials of managing change and transition, Harvard Business School Press, Boston.
Kotter, JP 1995, Leading change: why transformation efforts fail. In Harvard Business Review on Change, Harvard Business School Press, Boston.
Palmer, R, Meek, H, and Parkinson, L 2006, Managing marketing performance, Butterwoth-Heinemann.
Sims, RR 2002, Managing organizational behavior, Quorum Books, Westport, CT.
Wiliams, MR 2005, Leadership for leaders, Thorogood, London.
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