CHANGE MANAGEMENT

Table of Contents

CHANGE MANAGEMENT.. 1

1.0 CHANGE MANAGEMENT: A CASE STUDY OF MARIUS KLOPPERS. 1

1.1 Organizational change management 2

1.2 Program change management 3

1.3 Project change management 4

1.4 Technological change management 5

2.0 LEADERSHIP IN CHANGE. 6

2.1 Democratic leader. 6

2.2 Pace setting. 7

2.3 Commanding. 9

2.4 Coaching. 10

REFERENCES. 12

CHANGE MANAGEMENT

Change management is the process and structures put in place by an organization to handle the growth and improvement process within the organization (Beerel 2009). For any organization to succeed it must continue to reinvent it, adapting to changes in the industry and also in the environment of business. The process of change management begins by defining and strategizing to adopt change. Structures in the organization should be such that they encourage change rather than determined to maintain traditional production and business strategies. All members of the organization should be prepared for change at all times. Change management is whereby managers and leaders of an organization develop plans and take actions with these plans as a guide to improve or grow the organization. It is the process of corrective action that encourages stakeholders, members of the organization, managers and even employees recognize the need for change, and develop strategies that encourage and abide with the change (Drucker 1995).

1.0 CHANGE MANAGEMENT: A CASE STUDY OF MARIUS KLOPPERS

Change is a constant factor in organizations today. It does not matter the industry type, business environment or nature of business that the organization sis involved in, change is a recurring subject (Bereel 2009).  The philosophies of change management have become enthroned in the business world. Many CEOs and leaders have become the benchmark for adoption of various principles and styles in change management. One of the greatest managers, who has challenges and developed his own complex style of change management, is Marius Kloppers, CEO of BHP Billiton, the largest mining company.

1.1 Organizational change management

This kind of change comes from restructuring of changes directly to the businesses. Mergers, acquisitions and company restructuring are all perfect examples of organizational change. According to Bereel (2009), Managing this change often involves changing people from their traditional sense to new directions, allowing employees to maximize the use if their talents and skills to ensure that they are able to meet the new goals and adapt to the new structures that have been put in place.

Rio Tin was imbedded in the culture of BHP Billiton. For decades the companies had been involved in a never ending business deal.  BHP made annual offers to purchase and merge with the company and each year they were turned down. At the beginning, Marius Kloppers, upheld the tradition. However, with time, he realized that too many resources of the company were directed towards the merger, when such talents could be used elsewhere. He therefore made the choice to stop the negotiations. This direct step put him forwards as one of the best agents in managing change.

With the wave of mergers picking up again, following tough economic times globally, Marius Kloppers, renewed his desire to merge BHP Billiton with several other small companies. He saw that the resources available to these companies, technology sued in these companies and location of these companies would give his company an edge over its competitors. One of the proposed and most spoken about mergers is that with Glencore-Xstrata, a company that has advanced some of the highest technological innovations in the mining industry. Though much smaller, the technology owned by this company would revolutionize the production process, cutting production costs by a majority. The CEO had prepared his entire staff, implementing changes which included hiring new staff so that the amalgamation would not have any main impact on the strategic goals and structure of BHP (Kippenberger 2002p.109).

1.2 Program change management

This form of change management deals with structural and process changes. Each program has desired goals, which in turn are directed towards ensuring that the organization meets its own goals. Program changes are more directive than normal goal changes and sometimes are inbuilt into the culture of the company (Drucker 1995). For example a program change could be directed at reducing costs, this means that all branches of the company individually and by themselves are working to reduce the cost of production. The success of program change management comes with the complete incorporation of the change into the organizational structure.

Marius Kloppers, was a determined CEO, determined to reduce costs and manage employee schedules in such a way that increased the productivity if the company. One of his major changes could be seen and reflected in employee behavior. What had become a Lazy and satisfied culture in BHP was turned around by this CEO. Lazing around stairs, taking too much personal time, extending lunch hours became a thing of the past. According to World News (2004), Although the new regulations were met with severe criticism at the beginning, over time they were extended to become part of the culture. Rewards and performance recognition, served to make the rules more acceptable.

The mining industry as Marius Kloppers, stated severally is on a steep growth curve. Employees, being the most valued assets of an organization are the only ones who can implement and drive program changes that keep the company above par. To do, however, there are chances that management may have to provide and push the employees to implement and sustain the changes.

1.3 Project change management

This is change that is directed towards specific projects within an organization. A business entity is often involved in various different projects that are directed towards making changes, and ensuring   the business entity meets its goals. Kotter (1996) suggested that Challenges and opportunities that come up in the project course necessitate changes that are directly related to the project. Individuals and the company art whole may have to make changes to the project’s goals and plan turn to utilize these new opportunities.

In the beginning of 2006, aluminum mining and technology was seen as the greatest and the biggest opportunity for mining companies. Marius Kloppers began a project aimed at ensuring that BHP would enjoy the benefits of aluminum mining (World News 2004). Employees were hired, proposals were considered and the project took off, with a budget of three billion. At first selling the proposal to stakeholders and shareholders was an uphill task, but as more and more attention was given to aluminum mining by experts, the company began investing more and more into the project.

However, a few years into the project, analysis showed that the generation was much lower than had been expected. Expecting the losses to increase, Marius Kloppers made the decision to stop the project, completely. BHP was the first company to stop investing in the future of aluminum mining. The project was disposed off at a loss, selling at a total of $2 billion dollars (Kotter 1996p.224).  The decision to let go of the project, was made together with management of the project on realization that future prospects in the business were low.

Several projects which BHP has been involved in have been changed or undergone some form of change in order to maintain competitiveness. The result is that a large percentage of the projects undertaken by the large mining company under the management and leadership of Marius Kloppers, have become outstanding successes. The company has a strong project change management structure that has allowed projects to grow and deal with the challenges of the project faster. Drucker (1995) indicated that Each of the projects has been directed towards reducing costs, increasing productivity and meeting customer demands faster and much more easily. As long as products meet the clientele demands, and are delivered within the time specified, project changes are considered a success.

1.4 Technological change management

This is change that comes with the advancement of technology. Technology in various forms has caused changes in the business environment. For example, online and internet technology has expanded the market for products and the ability of companies to communicate with their clients. Technological change management deals with predicting future advancements n the industry and taking advantage of the same before other competitors do. It also includes development of structures that will support the change in technology before time (BHP Billiton 2005).

One of the best examples involves the entry of aluminum mining technology, of which BHP was among the first companies to unveil. Although the technology was found to be costly, BHP showed the importance of aluminum as a product, and as the foundation for success in future mining companies.

2.0 LEADERSHIP IN CHANGE

There are several leadership styles adopted by people of various character and natural ability. The leadership style in management of an organization reflects more on the needs of the organization rather than the needs of the leader himself. Kotter (1996) stated that the history of an organization, it backbone and culture determine the nature of the leader and the leadership style that the leader will elect to go by. The demand s facing an organization call upon different leadership styles which when adopted bring to fruition the pursuit f organization goals faster and more effectively.

Marius Klopper has for a while now been described as the most complex, leader in this era. As a CEO he has shown so many facets in his leadership style and described himself as a combination of leaders. He has become the embodiment of the statement that leadership styles adapt to the needs of the organization rather than the organization adopting to the leadership style. As BHP underwent various changes, he adopted various leadership styles for each season and depicted various personalities and chacteristics that went with these leadership styles (BHP Billiton 2005p.27).

2.1 Democratic leader

This is a leadership style that is founded on the assumption that everybody in the company has something to contribute, and each and every contribution should be given a platform to succeed. This leadership style is characterized by voting, meetings and an endless supply of new ideas. The leader leaves the decision making to his team, believing in their capabilities and abilities to make the best decision for the company. The company moves as a collective unit taking each step together. This leadership styles is considered to be ideal, especially where the goals of the organizational and activities are not very clear. However, the democratic style can be cramped by endless meeting and long decision making processes which in turn stall many of the progressive projects.

Under the influence of his mentor, Marius Klopper, was a democratic leader. Decisions on projects and products were made as a team rather than on his own. He likened himself to a coach in a cricket team where the team plays were made together. rather than sit back and yell out what he thought was best, he engaged  the team in decision making, voting was carried out and the best decision put to table, his managers, felt that this democratic style of leadership worked best in some areas, such as in the process change decisions.

However, even with this style, Marius Klopper, realized the importance of a focused leader. Without some sensible direction, democratic leadership can become the most unproductive and time wasting type of leadership. People can spend so much time arguing and building cases for their own ideas, and very little time pursuing the business growth (Newsmakers 2001). Furthermore, individuals and especially mangers can begin conflicting on various ideas, causing a rift in the employees and the organization as a whole. To avoid this, managers under the direction of Klopper were made accountable for their own ideas, responsible for the performance of their departments and were rewarded not just for innovative ideas but also for a cohesive workforce.

2.2 Pace setting

This is a kind of leadership popular in a competitive industry. Under this leadership, the leader demands that all people find ways o do things better and at a lower cost. The legacy of this leader often includes extreme cost cutting measures, lower productive costs and high quality goods and services. A pace steer is a leader who is hard to replace and where demands not just the best but everything from his workforce. Failure is not an option, and the performance of his employees his rated highly.

According to Newsmakers (2001p.73), this style of leadership was evident when Marius Klopper, decided to transform BHP into a benchmark company in the industry. Cost cutting measures were extreme, for example in the Pert office where employees were required to take less than an hour eating lunch in order to reduce overtime costs. The overtime was to be accounted for and approved by the main office. At first this measures were resisted to just by the workforce but also by the managers, but over time the importance of cost cutting measures became evident and part of BHP culture.

Employees who introduced new and innovative ways to reduce the cost f production, and such ways were successful became examples by which others were forced to live by. Under his leadership, managers who showed maximum cost cutting measures were not only recognized but were awarded.  Managers, who were unwilling to take up cost cutting on the other hand, were replaced (Newsmakers 2001). This style of leadership is fast paced and requires people to be open minded about the changes in the organization.

However, this style has some major weaknesses in that it is prone to massive turn over. Employees who experience too much change and who feel the demands placed on them are too many are more likely to leave the organization for others with fewer demands. Furthermore, managers under this style of leadership face the possibility of complete burn out and high levels of anxiety. These factors likely to cause increased health problems and low productivity.

Pace setting is a style that takes advantage and makes full use of employee talents and skills bring maximum profit to the organization (Kippenberger 2002). When Marius Klopper, joined BHP, he felt that much f the talent in the company and the skills acquired by employees were going to waste yet they could be used generate income for the company. As such he made the rules tighter, regulating everything including the coffee in the cafeterias as a method of employee’s motivation to be productive. This style worked for the short term, with BHP moving up fast and increasing its productivity greatly. However, in the long term it was not sustainable.

2.3 Commanding

In this style of leadership, the leader makes all the decisions. An employee is not expected to generate any ideas, and in fact speaking up is often frowned upon. Only decisions that have been approved by the leader are put to use. Although employees may perform exceptionally, they are not rewarded or given the recognition. It is assumed that employees would always perform exceptionally otherwise they are replaced. On the other hand, failure and under performance is met with severe criticism from the leader. There are no opportunities to fail, and people are not given second chances. In this style of leadership employees either perform or they are gone. Replacements, firing and transfers are a daily component of this leadership style.

Many critics, business writers and analysts have felt that Marius Klopper, is a commanding officer. Articles have been written quoting and showing examples of his military style of leadership. In the Perth office for example, employees were not allowed to stand in stairs, talk to each their idly or loiter around the company offices.  Such rules seemed extreme, and punishments were severe with cases of reprimand from Klopper being cited (Leading Developments 2005). Employees lived in a continuous state of fear, and although the office was the most productive within a few years it was also the least motivated office. Over time, managers had to persuade Klopper to move from this controlling type of leadership.

Commanding leaders often have t control everything, even the smallest aspects of the organization. This can be seen, in examples of Marius Klopper.  In 2008, Klopper made the decision to remove spicy soup from the cafeteria menu citing that employees spent too much time drinking the soup, time which could have been spent on production. Furthermore, he required that employees report to their supervisors every hour that they were outside the office. These demands seemed extreme and at times annoying, but his style of leadership proved effective when the company needed a complete turn round.

2.4 Coaching

This style of leadership focuses on mentoring managers and employees, showing them how they can improve themselves and guide them at the same time through the improvement process. Coach leaders, do not necessarily level the employees and managers to make their own mistakes, but rather attempt to show them the error of their ways before they begin.

Marius Klopper, and his renowned analogy of the cricket team is a good example. His managers have often stated that they are the team and he the couch. He calls the shots, makes the directives and ensures that the team is headed towards one goal. Mistakes can be tolerated, but not for long. learning is an expectation of this leader.

In 2005, when he separated the regional offices allowing them autonomy, Marius Klopper adopted this style of leadership (Leading Developments 2005). He took the time to train and build his managers, giving them the skills they required. He helped them make decisions and resolved challenges for them, as part of ensuring their growth.

As organizations grow , develop and are influenced by external factors, change management becomes necessary. Change management allows the organization to adapt to various changing elements in the business environment. When an organization is changing, management and leadership must adopt t the changes. The goals, strategies and plans of the organization cannot remain the same, adoption is a must to ensure exemplary growth. When management and leadership remains the same, competitors are likely to take advantage and push out the organization from the industry.

REFERENCES

Beerel, A. C. (2009). Leadership And Change Management. Los Angeles, Sage.

Drucker, P. F. (1995). Managing In A Time Of Great Change. New York, Truman Talley Books/Dutton.

Kippenberger, T. (2002). Leadership Styles. Oxford, U.K., Capstone Pub. Http://Site.Ebrary.Com/Id/10441449.

Kotter, J. P. (1996). Leading Change. Boston, Mass, Harvard Business School Press.

(2005). Leading Developments – BHP Billiton To Market One steel’s Project Magnet Iron Production. Engineering And Mining Journal. 206, 5.

(2001). Newsmakers – BHP Billiton. Engineering And Mining Journal. 202, 16dd.

(2004). World News – Australia’s BHP Billiton Bumps Production. Coal. 109, 7.

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