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11May

Corus Steel Organizational Change Management

INTRODUCTION

Steel industry is one of the rapidly growing industries in the world today. The Organizational Change Management assignment is about Corus which is one of the emerging industries for steel manufacturing. Corus, which is now a subsidiary of Tata Steel, is Europe’s second largest steel producing company with annual revenues of around £12 billion and is headquartered in London, United Kingdom (Tata Steel – Company profile, 2010). Corus Group was originally formed with the merger of K. Hoogovens with British Steel Plc, on October 1999. The vision of Corus is “To be the world steel industry benchmark for value creation and corporate citizenship.” (Corus Group – Company profile, 2010).

ORGANIZATIONAL CHANGE MANAGEMENT

There is a proverb given by Greek philosopher – Heraclitus which states “Change is the only constant.” Change management can be considered as a structured approach to deal with the change. It mainly involves shifting or transitioning individuals, teams, and organizations from a current state to a desired future state (John Filicetti, 2007). Organizational change management (OCM) is a framework for managing the cultural changes as well as organizations structural change within an enterprise. Thus change is inevitable in any organization. This case study focuses on how Corus Strip Products UK has overcome barriers to change in order to secure a more prosperous future for the business.

DRIVERS FOR CHANGE

Terry Paulson (1995) quoted: “It’s easiest to ride a horse in the direction it is going.” In other words, don’t struggle against change; learn to use it to your advantage. Every organization needs to follow the changing trends of the industry and the changing demand consumption of their customer segment. Similarly for Corus, there were forces outside and within the organization that comprises of the Internal and External drivers of change.

Various Internal drivers for change were:

  • Disappointing business performance (Poor delivery & wastage). With the increase of business for Corus, there were operational issues arising in the company. The rate of delays in the delivery started increasing and there were unhappy customers that led to loss of business for the company.
  • Increase in size of the organisation through acquisition or inflated sales. The last decade had seen a lot of acquisitions being made by Corus and recently, Corus itself was acquired by Indian company, Tata Steel. As the infusion of new companies into the group takes place, a different set of employees come with their different set of cultures of the previous company. A lot of cultural integration has to be done at the group level.
  • Investment in technology. With the coming of age, technological innovations in the steel industry have led to operational efficiencies for the steel manufacturers. Also, the rise of alternatives to steel like carbon fibre and aluminium has forced the steel manufacturers to streamline their process and to deliver efficiently.
  • New Owners. As the company has been acquired by the Indian company, Tata Steel, the existing company Corus have to go through a orientation process wherein they understand the philosophy of the acquiring company and this will facilitate the process of cultural integration. This is necessary requirement for a successful changeover of management and control.
  • De-motivated workforce. The employees of Corus were committed to their work but they were unhappy about the type of work environment at the organisation level. This created a sense of dissatisfaction and the employees were de-motivated due to this.

Various External drivers for change were:

  • Legal and political changes, e.g. the introduction of the Equality Act. The steel industry is both a capital intensive and a labour intensive industry. Therefore, it is guided by a lot of Government rules and regulations which the company needs to comply with. Any changes in the political or legal structure of the country command a change at the organisation level. A new act of the government “Equality Act” asks for a fair policy of the company towards its employees and devoid any discrimination among the employees.
  • Changes in the economy and industry trends. It is seen that the changing requirements of industry has been the basic reason behind a company opting for a change. As always, the reason behind the change of culture by Corus was to meet the industry standards of greater operational efficiency.
  • Changing customer requirements. With the increase in the usage of alternatives of steel, the steel industry had to look for new and different set of customers for their products.
  • Technological change, e.g. growth of the internet. The biggest barrier to any change in technology implemented at an organisation has been the mindset of the employees. Corus foresighted this and tried to go in for a cultural change across the organisation.

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BARRIERS TO CHANGE

Implementing any change in an organization is a complicated task. It is extremely important for organizations to set a goal or a vision and move on to achieve it. For this, they may have to adapt to different situations that may come in the way. But whenever the changes are being planned, there are always resistance and barriers which come on the way. The main reason for these barriers is the inconvenience caused to the employees as it may challenge peoples’ abilities, experience, customs and practice. Taking an example from the case itself that manager & employees may feel as if they are losing their power or status if job roles are changed. Similarly, employees may feel insecure for job cuts.

Few major barriers which came on the way of Corus while implementing these changes are as follows:

  • Tolerance to Change: Corus has been established company from more than 10 years. It has got set values and patterns for the activities in various areas of its business. Thus they have an attitude of – ‘This is the way we do things around here’. This was the main reason which made the implementation of change a difficult task. Thus, the employees considered these initiatives by Corus as a threat to their positions (Stephen Rampur, 2010).
  • Structural inertia: The overall structure of the organization was suffering from the ageing workforce. Although there was a high degree of expertise and technical skills, but these skills were not easily transferable. Reason being unattractive and reduced job opportunities for the industry. This also led as a barrier to change in the employees.
  • Reward Scheme: In the organization, there was a rewarding process of appreciating “long service’ rather than ‘distinguished service’. Thus, even if the newer employees were more productive in their work, all those employees who had been associated with company for a long in spite of having lower productivity were gaining greater rewards. This can cause low morale and lead to poor productivity. This was another reason for resisting the change.

NATURE OF CHANGE

The Change is been categorized into various ways by many writers. But different types of changes requires different business strategy and plan of action so as to gain the employees confidence for successful organization wide implementation. Two major types of changes that occur in an organization include – Incremental & Transformational changes (Kotter 1999). Incremental change is process of making modification/adaptations in steps by building upon the existing process whereas Traditional change is about bring some radical changes in underlying strategy which can be breakthrough from the past (Carter McNamara, 2005).

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According to the model given by Nadler & Walton in Hayes (2007), regarding the classification of change (shown below), the type of change in Corus can be classified as Incremental and Proactive. Thus, it was a kind of ‘Tuning’ strategy for the organization.

nature of organizational change

Reactive changes are those which an organization makes after some threats or opportunities has already occurred whereas Proactive changes are those which are made in order to avoid potential future threat or to capitalize on a potential future opportunity. The ‘Tuning’ strategy adapted by Corus included the changes in the step wise manner, and was named as “The Journey”.

This all started with defining the eight core values, which provided the guiding principles by which Corus people would work. A booklet was given to each employee and they were encouraged to be accountable for their actions. Corus put emphasis on getting everyone to take ownership of the new values by physically signing up to the program. Also there were regular direct and indirect communications through weekly newsletters and workshops to ensure that all employees understand what behavior is expected of them.

FRAMEWORK FOR CHANGE

As per the model given in the book by Bernard Burnes (2009), a framework for change has to be implemented for a successful change in the organization. It segregates the companies based on two broad parameters: the extent of the transformation at the organization and the nature of change. The framework says that a company can be in any of the 4 quadrants as shown in the diagram below.

An analysis of the change management employed at Corus implies that the company employed a strategy as stated in the First Quadrant, Q1. Corus went in for a large scale transformation wherein it intended at changing the behavioral and attitudinal aspects of all employees across the organization and also the external partners of the organization. The main focus of the change at Corus was to bring about a change in the culture of the entire organization. Corus was looking for a change in the fundamental way in which people looked at their jobs and to bring about a desirable change in the mindset of the employees.

framework for corus steel organizational change management assignment

This model says that a company that falls into the first quadrant takes an approach of Emergent Change. This implies that the company integrates new changes into the system and looks for better ways to fulfill its mission and vision. As far as Corus is concerned, they employed a definitive strategy where they aimed for a complete transformation of the organization culture.

METHODS TO OVERCOME BARRIERS TO CHANGE

Although the real change is implemented by the managers and employees but the top leaders articulate the vision and plan the process in an organization. Corus had used the following strategic techniques to overcome barriers to change:

  • Created a vision and strategy for change. The basic criterion for any change is to have a articulate vision and strategy. This by itself creates a likeable or favorable attitude in the employees and they start accepting the change. Corus achieved its goal of change by successfully formulating a vision.
  • Establish a coalition to guide the change. The change managers should develop a coalition of people throughout the organization who have enough power and influence to steer the change process. Corus did the same thing by putting emphasis on getting everyone to take ownership of the new values.
  • Establish a sense of urgency for change. Organizations tell the employees about the repercussions the organization might face if it does not go for a change. Corus rightly involved its employees by highlighting the performance of the company both in operational and financial aspects and asked its employees to cooperate the change.

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CONCLUSION

Organizations face a dilemma. Mangers prefer to conduct mundane activities in a fixed routine manner. But, change is the natural requirement in today’s global business environment. Therefore, organizations need to foster in change as well as stability to be able to survive in this dynamic business environment.

Corus was able to do it. They top management at Corus realized the importance of change at that moment of time and went on to successfully implement change management at the organization. The need for a change was felt due to various internal and external factors; de-motivated employees, operational efficiency and change of controlling management being the most prominent ones. Like always, they also faced various hiccups during the course of the process of change, but they had successfully overcome them. The Corus team involved the employees and successfully conquered the barriers to change in the organization. All this was possible due to the strategic vision and commitment of the top management towards the organization. The company collaborated with the managers and employees who were the actual drivers / initiators of change for a successful implementation of change in the organization.

Corus is reaping the benefits of the change brought about in the company. The organization has been able to move around the situation and today the company is earning sustainable profits for all its stakeholders.

RECOMMENDATION

Corus went in for a change in the organization at an appropriate time when the company along with the steel industry was under pressure. Also, the company was taken over by a foreign company. These made it the ripe condition for the company to initiate a cultural change and a cultural integration across all the group companies. This particular change management initiative by Corus gives a great insight into when, how and why change process has to be initiated.

REFERENCES

  1. Watkins, Jane Magruder and Mohr, Bernard J. (2001), “Appreciative Inquiry: Change at the Speed of Imagination”. San Francisco: Jossey-Bass.
  2. Pennington, G. (2003), “Guidelines for promoting and facilitating change”. York: LTSN Generic Centre.
  3. McNamara, Carter (March 2005), “Field Guide to Consulting and Organizational Development”. Authenticity Consulting
  4. Rampur, Stephen (February 2010), Article – Barriers to Change. [online]. Availabe at http://www.buzzle.com/articles/barriers-to-change.html. Retrieved on Dec 2010.
  5. Burnes, Bernard. 2009. Managing Change. Pg 140. Pearson Education, Limited, 2009.
  6. Tata Steel in Europe“. Tata Steel Europe. [online] Available at http://www.tatasteeleurope.com/en/. Retrieved on December 2010.
  7. Mysteel Weekly, Issue 186 by “Mysteel Research Institute”. [online] Available at http://www.mysteelweekly.com/about.shtml. Retrieved on Dec 2010