Managing organizational politics for radical change

By: Susanne Blazewski ,Wolfgang Dorow

Abstraction:

In 1997 Beiersdorf group reacquired its former subsidiary in Poznan which under Polish state after World war 2.

In two year management succeeded in making this state owned and production driven company into highly profitable company.

In this article there is a comprehensive model of organizational transformation that integrates micro level change theory and organizational politics approaches focusing on the interplay of power and interest for radical change in CEE enterprises.

Introduction:

In this article there is a micro level model for radical intra-organizational change that particularly focuses on a systematic analysis of interest and values ,power means important element of organizational transformation.

In this article they have provided a framework for proactive management of intra-organizational change that which power and politics are used to attain a rapid and radical turnaround of the company.

Transformational theory: re-introducing micro level perspectives

Transformation at CEE was particularly seen at macro level economic theory. But the neo-institutional list and researcher point that there is need of micro level to study the radical change.

There are three micro level theories by researchers

1. Newman.

2. Johnson.

3. Antal Mokos.

Theory by Newman:

The dominating agency plays important role in the transformation, institutional upheaval in the organization radical change process.

Too much organizational change inhibits organizational ability to learn.

Theory by Johnson:

How actors within the organization cope with the change in their institutional environment.

In privatization process there are 3 micro-level mechanisms.

1. Involvement of actors.

2. Behaviors by other actors how they adapt behavioral routines.

3. Symbolic representation of change in the radical change process.

Theory by Antal Mokos:

He said that “Organizational Politiking” means that micro political activities of organizational actors involved in transformation process forms one of the key determinants of privatization success and failure.

Extension of theories:

Three theories concentrate on the earlier year transition in CEE.

Micro level should be better understood in political dimension.

Antal Mokos views political behavior in organizational change processes as “Harmful”.

The theories leave aside the possibility of proactive management of transformation processes.

Organization politics model for organization change

Organizational politics approach interprets the change processes as processes of resolving conflicts and colliding interest between internal members of the organizations.

Managing power has several implication:

1. Identify colliding interest of persons holding powers.

2. To which extent these interest vary within the organization.

3. Power against the opponents.

4. Strategies that how these are developed within the organization.

Organizational politics model

Interest of the organization change agent and their opponents

Limited scope of the change agents. Access to institutional and personal power bases Changing the frame and changing cognitions as

power processes.

Conclusion:

Organization politics model allows for a systematic description of all relevant dimension of handling conflicts within change processes.

Radical and revolutionary change at Beiersdorf-Lechia S.A, Poznan:

Beiersdorf group in 1997 acquired majority shares of formely state owned cosmetic company Fabryka kosmetykow Pollena-Lechia S.A.

Beiersdorf-Lechia is one of the Beiersdorf group top ten affiliates worldwide.

There were 3 stages of radical change.

1. Pre-acquisition phase.

2. First post-acquisition phase.

3. Second post-acquisition phase.

TRANSFORMING THE MANAGEMENTS FRAME OF ACTION

•Pollena was a part of a collective combine.

•It has high vertical integration.

•Pollena had a few state owned customers.

In 1995, Pollena became the part of the privatization program.

But the state treasury still own 25% of the shares and employee own 15%.

Heterogeneous ownership was the problem for Pollena.

They also had some limitations.

Transforming The Managements Frame Of Action

Another Insecurity was that they had only 3 main customers.

The competition was growing aggressively. The company was over burdened by the 350

employees.

Transforming The Managements

Frame Of Action

Financial resources were also the main problem for Pollena.

There were also some information deficiencies like: Lack of Customer Research. Lack of valid Sales Data.

Tight embeddedness of the company in the old system and Heterogeneous Ownership of the company results in the failure of the change process.

Transforming The Managements Frame Of Action

Transforming The Managements Scope Of Action

In 1997, Beiersdorf acquired majority stake in Pollena company which was now renamed as Beiersdorf-Lechia S.A.

They replaced all board members with their own executives.

Transforming The Managements Scope Of Action

Acquisition of 100% shares solve the problem of heterogeneous ownership for the company.

Beiersdorf recruited young highly motivated new employees.

They adopted Nivea Brand strategy by increasing their sales force.

Now Beiersdorf was able to attain those results where Pollena had previously failed.

Beiersdorf changes individual’s behavior routine by Providing new frame of action. Supporting cultural value system.

Employee have only one choice to accept the new frame of action or to leave.

Beiersdorf Found Success

Potential resistance to change was proactively prevented through the offering of high monitory equivalents.

Unionization was dropped from 100% to 15%. These minor changes had played an important

role in the success of the company.

Beiersdorf Found Success

Challenging culture and cognitions

• Individual frame of action is achieved.• Changing organizational culture.• Introducing new communication styles

and careful selection of new recruits are two important steps of Biersdrof Liechia.

Challenging culture and cognitions

Individual frame of action is achieved. Changing organizational culture. Introducing new communication styles and

careful selection of new recruits are two important steps of beiersdrof lechia.

Reflecting norms of all employees. Young graduates not feel difficulty in institutional

upheaval as compared to old pollena employees.

Positive attitude of employees towards learning.

Challenging culture and cognitions

Beiersdrof lechia management supported the new corporate culture with four instruments.

1. Provide Orientation.

2. Creating mutual trust.

3. Strengthen local competencies.

4. Cultural dialogue.

Provide Orientation

Development of joint venture vision by series of workshops.

Six expatriate managers which functions as paternalistic role models.

Use standard communication instruments to convey norms and values.

Creating Mutual Trust

Building relationship with employees. Providing information. Giving importance to employees in

decision making. Awareness of new plans. These changing symbol reduce distance.

Strengthen Local Competence

Providing the sense of ownership to the employees.

Provide training of soft management skills like communication, motivation and conflict handling to the in competitive employees.

These skills providing new sense of responsibility.

Increase local competence reduce power distance.

Cultural Dialogue

Some problems between management and employees.

New norms are not taken roots. Need for reducing complexities cross

functional cooperation and overall positive attitude.

Polish mangers not convey their learned norms.

Cultural Dialogue

Management restricted to the espoused value.

Expatriate team recognized the need of mutual cultural dialogue.

Management initiated this process of dialogue by starting project I July 2001.

Conclusion 1:

Pre acquisition phase confuses the organization transformation which is inhibited by the institutional disturbance in company environment.

Conclusion 2:

In post acquisition phase organization change at bieserdorf lechia is characterized by 2 distinct phase

1. Rapid adjustment of employees behavior.

2. Process of cultural transformation.

Conclusion 3:

In 2nd post acquisition phase the management need for cognitive change like communication style and changing symbols.

The management action first to change the frame and 2nd is to reduce the complexity in response to these changes.

Conclusion 4:

Cultural change required the establishment of new valid frame.

The cultural change ensures the effective organizational transformation and the management continue the pace of changing the environment.

Conclusion 5:

There is clear need of taking initiative of cognitive changes at biersdorf lechia to reduce the resistance.