Leadership And Change Management At General Motors Commerce Essay Example For Students

Leadership And Change Management At General Motors Commerce Essay General Motors ( GM ) , one of the universe s largest car manufacturers, was ab initio founded by William Durant in 1902 and held a singular presence in the car industry for about a century. It is preponderantly engaged in the designing, fabrication and selling of autos, trucks, and other car parts in North America, Europe, Latin America, and Asia Pacific parts. Additionally, GM besides provides vehicle safety, security and information services through GM OnStar. This company sells non merely autos but besides trucks under several trade names such as Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall in 31 different states ( Datamonitor ) . The chief central office is located in Detroit, Michigan where over 200,000 people are presently employed globally. Its largest market is in the U.S, followed by China, Brazil, the UK, Canada, Russia and eventually Germany. Globally, the cars and constituents industry was badly affected by the plan etary economic downswing in 2008. Unfortunately, the recession in the planetary economic system harmed GM s concern by adversely impacting its grosss, consequences of operations, hard currency flows, and fiscal status. Harmonizing to Isidore ( 2009 ) in CNN Money, General Motors filed for bankruptcy on June 1, 2009. . This move was one time viewed as impossible, since it was one of the universe s prima car manufacturers. However, after old ages of losingss and market portion declines topped by a major dip in gross revenues, bankruptcy was inevitable. A new company financed by the US Treasury stepped in and purchased most of GM s assets and hallmarks. By July 10, 2009, the company s name changed from General Motors Corporation to General Motors Company. Consequently, the company experienced major alterations such as monolithic occupation cuts, closing of a twelve installations, outgrowth of new leaders, etc. In order to measure the extremist alteration undergone by General Motors, bo th internal and external factors taking up to the alteration must be identified. Several force per unit areas such as economic conditions, competition, authorities intercession, engineering, resource handiness, and people can do alteration ( Porter, Smith A ; Fagg, 2006 ) . In order to be successful, organisations progressively need to be scanning the environment to expect the appropriate alteration action. More significantly, they need to be proactive in their attitude to alter. In the instance of General Motors, the causes of alteration were economic conditions on a planetary graduated table and inaccessibility of fiscal resources. Even though there was a opposition to alter, GM had to fleetly measure the state of affairs and invent new schemes on how to travel frontward. The success of the passage of an organisational alteration is chiefly dependent upon the leading of senior direction ( Porter, Smith A ; Fagg, 2006 ) . The Chief Executive Officer at GM, Mr. Fritz Henderson, wa s replaced by Mr. Edward Whitacre in 2009. He was the former Chairman and CEO at AT A ; T from 1990-2007. Mr. Whitacre serves on the Board of the Institute for International Economics and the Boards of Burlington Northern Santa Fe, Exxon Mobil and the PGA Tour ( Datamonitor-GM ) . Furthermore, he is besides involved in The Business Council. Even though leaders of General Motors are still seeking to implement stableness, the passage taking up to the extremist alteration could hold been more efficient and effectual. Outline1 LEADERSHIP THEORIES AND APPLICATION TO GM2 1.1 Leadership Theories:3 1.2 Leadership in General Motors4 2.0 EXTERNAL AND INTERNAL FACTORS5 2.1 PESTLE Analysis6 2.2 Porter s Five Forces7 2.3 Internal Analysis8 2.4 SWOT Analysis9 3.0 CHANGE THEORIES AND APPLICATION TO GM10 3.1 Change Theories11 3.2 Changes in General Motors12 3.3 Resistance to Change13 4.0 LINKAGE OF LEADERSHIP AND CHANGE14 5.0 RECOMMENDATIONS / CONCLUSION LEADERSHIP THEORIES AND APPLICATION TO GM 1.1 Leadership Theories: Amongst the many definitions of a leader, Bryman ( 1992, p. 3 ) describes The leader is characterized by a strong thrust for duty and undertaking completion, energy and continuity in the chase of ends, adventurousness and originality in job resolution, thrust to exert enterprise in societal state of affairss, ego assurance and sense of personal individuality, willingness to accept the effects of his or her determinations and actions, preparedness to absorb interpersonal emphasis, willingness to digest defeat and hold, ability to act upon other people s behaviour and the capacity to construction societal interaction systems to the intent at manus . A true leader has the ability to actuate his or her followings. While the early leading theories focused on the leader s single features and behaviour, ulterior theories explored the responsibilities of the followings and the environment lending to the success of a leader. Up to the late 1940 s, it was believed that leading qualities were unconditioned chiefly by work forces or passed along from coevals to coevals. Whether a leader is born or made was the controversial inquiry that arose in the yesteryear. Historical grounds can warrant that many effectual leaders seem to be born with unconditioned aptitudes. This is known as the Traits theory, which has three wide types of traits. The first is chiefly based on the physical factors such as visual aspect, build, tallness, etc. Second, the traits reflected on the individual s abilities including intelligence, eloquence of address, and cognition. The 3rd type covers a broad scope of personality features such as conservativism, assurance, laterality, and emotional control ( Bryman, 1992 ) . On the contrary, the Style theory describes that employees will execute better depending on the adoptive manner of their leader ( Porter, Smith A ; Fagg, 2006 ) . In other words, the same group of people will act otherwise harmonizing to the leader s manner. A type of leading that follows the manner theory is transactional leading, based upon eventuality where wages or penalty is given depending on the subsidiary s public presentation. The leader designates a specific undertaking, and the subsidiary is to the full responsible to transport it out despite the fortunes. The accent is based on end elucidation, the scene of undertakings and aims, and organisational wagess and penalties. While this attack still remains popular, certain restrictions exist such as the premise that the subsidiary is purely motivated by money and wages ( Dave Paper ) . On the other manus, transformational leading theory is centralized on the development of committedness and motive among followings. A transfor mational leader creates a vision and finally carry his or her followings to buy in in order to transform the public presentation of the organisation ( Porter, Smith A ; Fagg, 2006 ) . Even though people wo nt readily accept a extremist vision, the transformational leader will make whatever it takes to acquire every individual on board. This construct is based on a relational contract, where subsidiaries volitionally contribute beyond the demands. Both transactional and transformational are every bit of import to assist increase organisational fight in an epoch of planetary competition ( Mohamed A ; Rafiuddin, 2010 ) . Yet, another leading theory is that of Vroom and Yetton s decision-making theoretical account. Harmonizing to Porter, Smith and Fagg ( 2006, p.76 ) , All leaders are considered as decision-makers, and their effectivity can be determined by analyzing the quality of determinations taken over clip . The most appropriate manner of leading is flexible which depends upon the subsidiaries preferable manner, the state of affairs and the undertaking confronting the leader. Vroom and Yetton defined five cardinal types of leading where two are bossy, two are advisory and one is group-based. The manner how the leader obtains information or the manner how the leader makes a determination is different for each type. Situational factors influence which method is considered the most pertinent. While the path-goal theory of leading is similar to the Vroom and Yetton s theoretical account, many differences exist. A feature of the path-goal theory besides involves a participative leading, where the leaders consult with the followings and take their thoughts into history for decision-making. However, the leaders are expected to steer, promote, and back up their subsidiaries in accomplishing the ends. For illustration, they are required to unclutter the way by taking barriers so that the subsidiaries know which manner to travel ( Dave s Paper ) . Furthermore, the leaders are to be supportive by demoing concern for the followings public assistance and making a friendly on the job environment. Another similarity to the Vroom and Yetton s theoretical account is that the path-goal orientated leader will besides change in his or her attack depending on the state of affairs. Finally, a term used to qualify superb signifiers of influence, exceeding, gifted, and even heroic is known as magnetic leading. Harmonizing to Galvin, Balkundi and Walkman ( 2010, p.477 ) , Subordinates who view a leader as magnetic will be given to see the leader and his or her vision as nucleus their ain individuality and will be willing to give so as to profit the collective and accomplish the ends and vision of the leader . Some separating properties possessed by the magnetic leader are assurance, power, success, and influence. A transformational leader can besides be qualified to be magnetic and frailty versa. Since a transformational leader instills the vision onto the subsidiaries, he or she can make so in a magnetic mode. 1.2 Leadership in General Motors Leadership theoretical accounts and theories should be used as models for developing personal manners, and self-reflecting. While assorted theories exist, a successful leader should cognize their industries, have sharp penetrations, and are willing to bring on the alterations necessary to their organisation ( Van Wart, 2010 ) . Furthermore, they are an inspirational figure, where they can act upon their followings in the class of events. In the instance of GM, the former head executive, Mr. Fritz Henderson was asked to step down from the place. Mr. Henderson had worked along the former GM president, Mr. Rick Wagoner, throughout his calling. Harmonizing to Madslien ( 2009 ) , This could present serious jobs for GM, which may now happen it difficult to happen non merely a replacing for the magnetic auto cat . However, concerns such as the fact that Mr. Henderson was cleaving on to power in the name of stableness were expressed. Additionally, he was thirstily seeking to reconstruct th e company based on the traditional theoretical account that GM used prior the crisis. Based on this analysis, it shows that the former CEO was non disposed for changeableness. He can be categorized as being a transactional leader, where a clear construction must be set in topographic point and subsidiaries are required to merely follow. Fritz Henderson could besides hold been path-goal oriented, where he would direct the subsidiaries, state them what to make, and supply appropriate guidelines. The new CEO stated, Mr. Henderson had done a singular occupation in taking the company through an unprecedented period of challenge and alteration ( General Motors BBC article, 2009 ) . Mozart Essay SummaryHowever, while the Kotter s 8 stairss outline the direction of an organisational alteration, the Bridges Transition Model suggests that alteration will non be successful if passage does nt happen. In this instance, passage is defined as the stoping of something, which is the first stage. The 2nd stage is the impersonal zone, which is a confounding province between the old world and the new. During this stage, people are non ready or comfy to welcome the new beginnings. Much importance must be given during this phase, because the alteration might be jeopardized if the organisation decides to prematurely get away. However, if the impersonal zone is completed successfully, many chances for originative transmutation can be presented. The concluding stage is credence of the new beginnings and designation with the new state of affairs ( Bridges, 1995 ) . Similarly, another theoretical account of alteration that was developed in the earlier yearss is that of Lewin s. His theoretical account besides consisted of three stages like Bridge s Transition Model. The first stage is identified as unfreezing, where it involved leveling the bing mentality of the people. For illustration, a alteration in the organisational civilization would take topographic point in this phase. Harmonizing to Brown ( 1998, p.6 ) , Organizational civilization refers to norms, attitudes, values, and beliefs that conduct the behaviour of members of an organisation with each other and with external stakeholders . Changing is the 2nd stage of Lewin s theoretical account where existent alterations are implemented so the organisation progresses to the new place. Just like Bridge s, this stage is besides accounted as the hardest to get the better of. In the last stage besides known as refreezing, the alterations are stabilized. They have been accepted and go the new n orm. At this point, the demand for enrolling new staff untainted by old wonts might be suiting for the organisation ( Senior and Fleming, 2006 ) . 3.2 Changes in General Motors In 2007, General Motors declared record gross revenues of more than nine million vehicles for the 3rd back-to-back twelvemonth. Despite that this company had such an accomplishment, environmental turbulencies such as the planetary recession in 2009 forced GM to declare bankruptcy. This was considered as the biggest failure of an industrial company in US history ( BBC website- GM ready to register ) . Harmonizing to the intelligence article GM ready to register for bankruptcy, GM, one time the largest company in the universe, has been losing market portion since the early 1980s ( 2009 ) . Some causes taking up to this black event are high production costs and prostration in recognition markets and consumer disbursement. Furthermore, the car manufacturer was slow in traveling off from the production of gas-guzzling SUVs when consumers were looking for more fuel-efficient vehicles ( BBC-Website, 2009 ) . Even though restructuring of the company was necessary, the passage and oppositio n to alter were posed challenging. Using Bridge s Transition Model, the extremist alteration that occurred in General Motors can be evaluated. In the first stage, the organisation realized there were major disagreements between its ends and the current system of operation. Consequently, General Motors accepted the fact that it was the terminal of their glorious epoch and placed its destiny in the custodies of the US authorities. The new GM left the authorities keeping 60 % of the company s equity ( Clark, 2009 ) . Since this car manufacturer was an iconic symbol of the American car industry, it was necessary to continue it. General Motors so entered the 2nd stage, the impersonal zone, of the Bridge s Transition Model. Herein, the company faced many barriers and opposition to the alterations that were taking topographic point. Harmonizing to Bridges, direction and employees would experience dying, disoriented, resentful, and self-protective ( Bridges, 1995 ) . At this phase, it is natural for people to experience baffl ed between hotfooting frontward and traveling back to the old ways. The GM functionary web site provinces that the company has a new planetary operating construction, a leaner and more streamlined leading squad, and a restructured Board of Directors ( GM Website ) . The designated leaders take a important function in the impersonal zone. The newly-appointed CEO Ed Whitacre exercised his authorization by pulling up a new direction design to better answerability and duty for cardinal market public presentation within General Motors ( Luft, 2009 ) . Inevitably, during the restructuring and reorganizing, employers were fearful for their occupations. Bridges ( 1995, p.41 ) advises, Communications aid to maintain people experiencing included in and connected to the organisation . On March 31, 2010 Whitacre decided to direct out a companywide electronic mail to ease the anxiousness and expectancy that had been developing during the alteration. In his electronic mail, he wrote, A smart c ompany alterations and adapts to the demands of the concern. So, while there will ever be single moves within GM, I want to reassure you that the major leading alterations are behind us ( Welch, 2010 ) . Once General Motors was out of the impersonal zone, the company was able to indulge in the new beginnings that have been much anticipated for. Even though the new GM decided to acquire rid of Hummer, Saturn, Pontiac, and Saab, it still held on to the most profitable trade names such as Chevrolet, Cadillac, Buick, and GMC. Additionally, it will go on to press on for structural cost decrease and a healthier balance sheet with a important lower debt. Most significantly, the car manufacturer will purely concentrate on puting in advanced merchandises and new engineering. 3.3 Resistance to Change While the new GM managed to go forth the impersonal zone of the alteration procedure, it was prolonged because of the opposition to alter. Some grounds why persons resist alteration are everyday, security, economic factors, fright of the unknown and selective information processing ( Porter, Smith and Fagg, 2006 ) . In the instance of General Motors, direction and employees were confined to the traditional manner of the company s operations. Even more so, they knew that restructuring and layoffs were traveling to take topographic point ; hence, they lost their sense of security and allowed anxiousness to take over. 4.0 LINKAGE OF LEADERSHIP AND CHANGE Harmonizing to Porter, Smith and Fagg ( 2006, p.301 ) , The alteration agent should be at the centre of any alteration procedure, and one of the most of import occupations for him or her to make is to develop a good relationship between all the parties involved in the alteration procedure. This is critical to guarantee that committedness, trust and common regard develop . The alteration agent is besides known as the leader of the organisation. During the passage of the old GM to the new GM, Mr. Ed Whitacre was designated as the CEO. He instantly recognized the importance of organisational development by altering its construction and the people within it. A successful alteration is accompanied by the redistribution of power within the company so that the decision-making is moved towards shared power ( Porter, Smith and Fagg, 2006 ) . CEO Whitacre alongside other managers and directors had to work together as a squad in order to transport out the alterations successfully. They may ev en hold had to happen themselves following the function as a transformational leader. As leaders, they are responsible in holding a clear sense of way in order to maintain the organisation traveling on path towards the agreed aims and ends. However, leaders can non carry through a successful alteration on their ain. They need to besides depend on the subsidiaries, which can be achieved by promoting teamwork, authorization, and credence of certain failures ( Porter, Smith and Fagg, 2006 ) . 5.0 RECOMMENDATIONS / CONCLUSION While General Motors was able to fast-track the alteration procedure with the right leading in topographic point, certain actions could hold been done otherwise to maximise efficiency and minimise opposition. Palmer suggests that opposition to alter can be managed by communicating to the followings, engagement from everyone involved, dialogue between the leaders and the subsidiaries, and explicit or inexplicit coercion ( Palmer, 2006 ) . Although Mr. Whitacre automatically sent out a companywide electronic mail when the company was in convulsion, it was non needfully effectual. Alternatively, he could hold done a picture conferencing with all the employees worldwide. In this mode, non merely would his organic structure linguistic communication be viewed, but besides would he be able to expose emotions. Harmonizing to Bridges ( 1995, p.41 ) , Communications aid to maintain people experiencing included in and connected to the organisation . Without communications in topographic point , incorrect information can be multiplied and people develop apathy. Furthermore, since the new General Motors wanted to resuscitate its innovativeness, it is recommended for the company to expose people to new facets of their undertakings and chances for coaction ( Vermeulen, Puranam and Gulati, 2010 ) . Besides, while an organisation is in impersonal zone, creativeness should be encouraged. This can be fostered by supplying preparation in the techniques of find and invention, promoting experiment, encompassing losingss or reverses, and looking for chances to brainstorm new replies to old jobs ( Bridges, 1995 ) . All these must be carried out by the altering agents or the leaders. In decision, General Motors was able to place their disparities and steadfastly decided to alter the organisation in order to carry through its ends and aims. More significantly, it acted rapidly and and realized that current leading endowment did non hold the capablenesss to cover with the extremist alteration. As a consequence, General Motors was assigned a magnetic, transformational leader to steer it through alteration, work out complex jobs, and construct for the hereafter.