Managing a Change Process in the Ford Motor Company

Introduction

The objective of this assignment is to describe the process of managing changes in the Ford Motor Company. Nowadays, this company has become a global automobile industry leader. The company’s head-office is based in Dearborn, Michigan. It has 62 plants worldwide and distributes automobiles almost in every country all over the world (Ford Motor Company 2015b). In order to support such production scale, the company has 187 thousand employees (Ford Motor Company 2015a).

This company has a long history of success. Nevertheless, in order to keep the leading status in the market, it should provide some organization changes. Nauheimer (2007) defines change management as a system of tools and techniques that help people to manage changes in organization with an aim of achieving the required outcomes defined by the organizational strategy. Further, according to Nauheimer (2007) the result of managing changes in organization should bring the effectiveness among individuals, within teams and wider systems in general. Burke (2014) agrees that in order to successfully achieve the expected results, every organization should create project teams with managers who have appropriate skills to drive and navigate change.

Potential Change

The potential change for the Ford Motor Company was described in the One Ford plan adopted in 2007 (Henry 2015). In 2015, the company has started the second generation of this plan in order to ensure sustainable development of the company’s global operations. The second variant of the One Ford plan is based on the findings learned from the first One Ford plan. According to the Ford Company's business strategy (2015), the One Ford plan focuses on three strategic priorities. First of all, the Ford Motor Company is planning to accelerate the pace of progress in its business. Secondly, it is going to continue delivering excellent products. Thirdly, it will try to involve innovation in every part of it business (Ford Motor Company 2015a).

These strategic priorities should be implemented on the base of four main points. The first point is leveraging the unique automotive knowledge and assets of the Ford Company. The second point is making one global team from all the Ford employees. The next point is focusing on building cars valued by consumers. The last point of the plan is arranging significant financing if necessary (Henry 2015). Thereby, the employees were defined as one of the major success elements (Ford Motor Company 2014). Thus, in order to support the plan, a set of behaviors expected from all employees were defined. These goals and expectations are consistent for all employees regardless of their location – the US, China, or any other country (Ford Motor Company 2014). The basic changes that were planned for implementation were focusing on a few goals. Among the key goals, the following ones should be mentioned: aligning the Ford Company's organizational structure with its global business footprint; providing the “people-related” processes to support the employees; creating great work places; and developing capable and effective work force (Ford Motor Company 2014).

Drivers and Resistors

Drivers for Change

Lunenburg (2010) defines external and internal drivers for organizational changes. He mentions the marketplace, government laws and regulations, technologies, labour markets, and economic changes among the external drivers (Lunenburg 2010). Furthermore, Lunenburg allocates administrative processes and problems related to the staff among the internal forces (2010).

External drivers. In recent years, the marketplace has affected Ford Motor Company by introducing competition from other automobile brands. Thereby, in 2006, the company was in tough shape because it had lost 25% of its market share since 1990 (Caldicott 2014). Despite of the huge brand portfolio containing such famous brands as Aston Martin, Land Rover, Jaguar, and Volvo, the company has low sales. Moreover, fluctuations of labor markets have raised labor costs up to $76/hour (Caldicott 2014). As a result, the company’s operating margins have become uncompetitive both at home and overseas.

Internal drivers. Some administrative processes should be mentioned among the internal change drivers. For example, Cameron and Green (2015) found that it is necessary to change the motivational strategies, communication processes, and leadership style within the company. The detailed analysis of the internal drivers proves that a staff motivation was nonexistent, communications between the company’s departments were inadequate, and the leadership style was not appropriate for the current situation (Caldicott 2014).  While speaking about the problems related to staff, it is necessary to mention poor performance levels of workers and their high turnover (Ford Company 2014). Thereby, these factors provided a signal to company’s top managers that change is necessary. In addition, internal drivers for change have occured as s response to organizational changes designed to deal with the external drivers (Lunenburg 2010).

Resistors for Change

Scientists define such resistors for the organizational changes as uncertainty, group resistance, staff awareness of weaknesses in the proposed changes, and dependence (Lunenburg 2010). Uncertainty can occur due to the fact that employees may resist change because of their worries about the effect of the proposed alterations on their work and lives (Lunenburg 2010). Further, group resistance may appear if initiated changes will be viewed by the employees as the ones threatening their norms (Lunenburg 2010). Next, according to Cameron and Green (2015), the employee may be aware of weaknesses and potential problems within the proposed changes. Consequently, the company’s leaders should put forth efforts to make the description of the change benefits more convincing. The dependency on some things can also lead to change resistance. For example, Hayes (2014) argues that if the employees, who are highly dependent on feedbacks on their performance from their leaders, will not get the personal endorse from their leaders in terms of their behavior, they probably will not adopt any new strategies.

Indeed, there are several reasons for the failure of change process.  Harmon (2014) emphasised that the key reason is the fact that the organization was not prepared for those changes, and the internal culture rejected the change. Furthermore, other scientists like Becker et al. (2003) have argued that if the leaders, who have set strategic direction for the change, leave actual change to other less motivated people, the change process can possibly stop or bring worse results than expected. Moreover, it is necessary to choose an approach for the change management that suits the business. Otherwise, according to Burke (2014), the change process will be ineffectual.

Contrasting Approaches to Change Management

As it was mentioned before, the correct selection of the approach to change management is the key factor of the change plan successful implementation. The detailed analysis of the existent schools of thoughts and tools related to the change management allows distinguishing several most popular approaches to change. There are Lewin's 3-stage model, Kotter’s 8-stage model, and combined model that represents change as system models.

Lewin's 3-Stage Model

The first proposed to the Ford Motor Company approach is the Lewin’s 3-stage model. Nowadays, it is known as Unfreeze-Change-Refreeze model. According to this model, the change process should start with creating the motivation to change – so-called "unfreeze" (Hornstein 2015). Afterwards, during the change process, leaders should promote effective communication and empower employees to embrace new ways of working. This is the phase of moving. The end of process – so-called "refreezing" phase – is when the organization comes to sense of stability (Hornstein 2015).

The unfreezing stage. The first stage of the Lewin’s model is called the unfreezing phase. It means that the Ford leaders should reduce the forces that keep the company in its current condition; for example, old strategic vision and ineffective staff policy. In the case of the Ford Motor Company, the unfreezing phase was stimulated by significant losses which the company has got during previous years (Henry 2015). At the time of this phase, the Ford leaders need to prepare the company to accept that proposed changes are necessary. Further, Becker et al. (2003) have found that the change leaders also need to develop a new way of operating by breaking down the existing status quo of the organizational culture. Then, they need to create messages to the rest of staff where they will explain their reasons for change.

The moving stage. The second stage is the moving phase. It is possible to implement this phase only after the first phase is completed. According to Lewis, this phase is actually a changing step. In the case of the Ford Company, it contains the development of new attitudes, behaviors, and values through implementing the changes in the organizational structure (Lunenburg 2010). At this stage, company’s employees need to start resolving their uncertainty and look for new ways of working. Cameron and Green (2015) argue that it is necessary to ensure that they really believe in new direction and act in a way that supports the company’s strategy.  

The refreezing stage. The final stage is the refreezing phase. At this stage, all changes should be stabilized at a new quasi-stationary equilibrium (Lunenburg 2010). For example, company’s leaders need to ensure that changes in organization policy, staff norms, and in organizational culture will not be destroyed after certain period of time. During this phase, employees assay new ways of working. Finally, all changes are institutionalized into everyday business of the Ford Company.

Kotter’s 8 Stage Model

Regarding the Ford Motor Company, eight critical steps defined by Kotter may be considered in the case of transforming the organization. In his book “Leading Change”, Kotter lists common errors of change leaders (Harmon 2014).  The key errors are inability to create a sense of urgency about the need for change and the absence of vision for change. Moreover, according to Kotter (2007), change leaders may fail during the process of creating the coalition for managing the change process within the organization or developing the effectively communication with other employees about their vision of change. The next error is the leaders’ inability to remove obstacles that could prevent the achievement of the change strategy goals. Furthermore, the change leaders may declare positive results too soon even without retesting them. Thereby, in case of a failure, they may lose the employees' trust. In order to help managers to avoid these errors, Kotter proposes an eight-step process for managing change (2007).

According to the Kotter’s model, the Ford change managers should establish a sense of urgency first of all. In order to do this, they should formulate the insurmountable reason for the importance of change for the organization (Lunenburg 2010). At the second stage, they should develop the guiding coalition (Kotter 2007). This coalition must be cross-functional and cross-level. Moreover, its members must have enough power to lead the change process within the whole organization. At the third stage, these change managers should get the vision of change properly. Thus, during this phase, they should develop the vision and strategy, which will help to guide the change process (Lunenburg 2010). At the fourth stage, the Ford change managers should develop the communication process in order to define the vision of change. This can be done through creating and implementing the communication strategy and providing the developed strategic plan to the staff members (Kotter 2007). The fifth step is called “the empowering broad-based action” (Lunenburg 2010). During this stage, change managers should use the target elements of change process and eliminate barriers to change. Moreover, it is necessary to encourage creative thinking in the process of problem solving and risk taking (Kotter 2007). The organization transformation should begin as a result of these actions. At the sixth stage, the Ford change team should generate short-term wins. Further, they need to recognize and reward all persons who have contributed to these wins (Kotter 2007). The seventh step is also important, since the change team should consolidate gains and use the reasonableness of the short-term wins to produce more change during it. The last step is making the changes stick and anchor achievements in the organizational culture (Kotter 2007). 

Changes as System Models

Unlike the previous models focused on change as a process, the next type of managing the change process refers to those who are focusing on changes as system models. In 1974, Watzlawick, Weakland, and Fisch have summarized the existing change theories and found that these theories explain the so-called "first-order" and "second-order" changes (Project management institute 2007). First-order changes are the changes that cause no substantial change to the company, and relate to the existing system as an adjustment. They usually take short time for implementing and can be easily reversed. For example, new type of report provided by the PR manager is a first-order change. The second-order changes are irreversible and transformational in their nature. Thus, in case of their implementation, it is usually very hard to revert back to previous way of working (Project management institute 2007).  Such types of changes usually occur in the case of providing new policies or processes within the company. Compared with the first-order changes, they require more time for implementing. The third-order type of changes was theorized by Casey in 2000 (Project management institute 2007). According to his findings, such type of changes requires a change in values. For example, the decision of the Ford Motor Company's leaders to change the philosophy and transform its internal culture is the third-order type of change. The third type of change is the most difficult type because it requires from the company’s leaders to understand the thoughts, behaviors, and feelings of their employees (Project management institute 2007).  Like the second-order changes, the third-order ones are irreversible, but they require even more time than the second-order changes for implementing.

Conclusion

The Ford Motor Company has had heavy financial losses several years ago. In response to this problem, the company’s leaders have developed the One Ford plan. The automobile market overflow, a loss of the 25% of the market share, and outdated leading strategy have served as the key drivers for the potential organization changes. There were also resistors to change, being related to the employees' uncertainty about the potential changes and their awareness of weaknesses in the proposed changes. It is obvious that to successfully implement the required changes, company’s leaders should choose the right approach to managing these changes. In this document, three approaches were analyzed: the Lewin’s 3-stage model, the Kotter’s 8-stage model, and the combined model that represents changes as system models. On the base of the provided analysis, the Kotter’s 8-stage model seems to be the most appropriate in the Ford case. The reason for it is that this model provides clear steps which can give guidance for the process of implementing the changes within the organization. This model fits well into the Ford’s internal culture, which has classical hierarchy. Moreover, it is easy to understand, and it will guarantee success in implementing changes if all stages are done correctly.