Although change is inevitable to any organization, it is necessary to undertake it so that a company can gain a market share for its product and continue to maximize on its productivity. Sergio Marchionne was instrumental in revamping an Italian automaker Fiat from the verge of bankruptcy to become one of the world renowned car manufacturing firms in the globe.
- Sergio Marchionne developed some strategies to facilitate the turnaround at Fiat. He therefore adopted and formulated some to enable him facilitate change at Fiat.
- Among the concepts and tools to help in organizational change are;
Concepts Organizational change strategy
Responsibility and decisions. Initially at Fiat, senior executives were unused to taking responsibilities and decisions. They basically depended upon the CEO to do all the decision matters as they play deputizing role.
Communication Between senior executives, communication was characterized to be via their secretaries as they did not involve themselves in direct or face to face communication. This created gaps between them as they spent the remaining time avoiding problems instead of formulating strategies on how to tackle the problem.
Management positions Traditionally in Fiat, career progression to senior management levels was dominated by engineers in the firm who were the majority of the workforce at Fiat. Possession of engineering skills guaranteed an employee a rather direct ticket in terms of promotion without considering other factors such as skills, training and experience which are key elements of human resource management in recruitment and selection of employees. Other departments such as Human Resource was not given due consideration as a result.
Concept or tool Organizational change in Fiat and Chrysler
Work force trimming More than 200 managers and staff were sent home through early retrenchment and early retirement. This was because of closure of some unproductive plants thus the additional labor proved unnecessary. This was also a measure of cost cutting strategy after the closure of unproductive and inefficient manufacturing plants of Fiat and Chrysler in 2009.
Upward decision making Since decisions were mainly made by the executives, Sergio implemented the policy of involving all people in decision making from the lowest level of management, workers to the highest cadre of management, which is the CEO. In this same strategy, Sergio required leaders in every aspect in Fiat and Chrysler to take responsibility and be more accountable for the tasks assigned to them. Failure should not be thus negative but motivator for better performance in the subsequent tasks.
Talent spotting Sergio identified young-talented managers and to help him in management. He prioritized and regarded them because his personal engagement with them was more valuable than formal assessment. This created a strong bond to facilitate the smooth management of the company.
Profit target In his first stint as the CEO of Fiat and Chrysler, he was rather considered over ambitious when he set a profit target of 2 billion Euros in 2007 at a time when the company was on the brink of bankruptcy and low sales volume for Fiat products. Although it was considered unrealistic, the idea forced managers to think differently and challenge the old ways of doing things.
Years later, for instance in 2011, the firm was able to offset the government debt with ease as profitability also increased.
Group Executive Council Sergio Marchionne stipulated the replacement of management layers and elimination of proliferation of committees with Group Executive Council that brought together disparate operations of the company.
Information sharing Sergio established a 24-person team to facilitate and enhance getting all parts of the company to talk to one another. This strategy was ideally vital in promoting information sharing among employees and managers in the company.
Also, to encourage information sharing, he also began to move executives from one part of the business to another and required top cadre managers to take multiple responsibilities for different parts of the company. This vertical and horizontal management layout encouraged sharing of information between the organizational units in the company.
Workforce level parity At the workforce level, most of the manufacturing units that Sergio seen and considered inefficient and unproductive was shut down. In particular, they were two plants. This caused disgruntling among the workforce members. As an alternative motivation, grocery stores and kindergartens were brought close to the workers to enable them create a balance between their work at the firms and their related domestic chores.
Analysis of change
Process development. Sergio identified processes that could be eliminated so as to enhance faster product launch. These challenging processes were also aided by outsourcing managers from outside the company and also benchmarking with other successful firms like Apple Incorporated. (Rothaermel et al,. 2015)
Customers perception about the company products. At Chrysler, management was highly hierarchical just as Fiat with decisions only taken at the chairmans office, commonly referred to as the Tower. This created a negative perception among the customers as the auto-firm was considered as failing and usually produced low-quality cars characterized by endless bureaucracies in its management structure. (Johnson et al, 2014)
Management problem. To counter this problem, he identified and appointed 26 young leaders from three or two below top management who had been hindered by the unnecessary hierarchy to help in flattening out the organization and these managers were responsible to report directly to him. (Johnson et al, 2014 pg. 497)
Cost control. Savings meant increased profitability to the firm. In turn, through Sergio, the company was able to gain some savings (2.9 billion Euros in 2009) by sharing parts and engines with Fiat. Part of the savings was used to settle debts to suppliers and the government loans. (Johnson et al, 2014 pg. 498)
Product development. Emphasis was put on it so as address the issue of product quality predicament. The single brand quality departments were combined so as to enhance quality improvement through upgrading and plant modernization. (Johnson et al, 2014)
Harrison, J. S., & St. John, C. H., 2010, Foundations in strategic management. Mason, Ohio, South-Western Cengage Learning
Hill, C. W. L., & Jones, G. R., 2012, Strategic Management. Cengage Learning
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E., 2009, Strategic management: competitiveness and globalization: concepts & cases. Mason, OH, South-Western
Rothaermel, F. T., 2015, Strategic management
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