Organisational Culture and Leadership
Resistance to Change
People don't resist change. They resist being changed!
Organisations are part of a constantly changing, continuous progressing complex business world. According to Nikolenko and Kleiner (1996), they are also subject to internal and external influences, e.g. global trends, strategy, environmental conditions, organisational culture and leadership etc. The most important of them are the development of the global market, increasing competition, ever faster changing economic and technological development and a diverse workforce.
In order to be able to compete, to advance and become successful in the global marketplace, organisations should respond to change in the face of environmental pressure (Lakomski, 2001). However, it is not enough to recognize the need for change but more important is to implement change successfully.
Nikolenko and Kleiner in their Global trends in organizational design (1996) state that in response to these factors, three new forms of organisation structure have emerged, which are expected to adequately meet the constant change of the world.
Some organisations have created a network, whose core has been formed by mergers, alliances and acquisitions of large firms’ groups (Castells, 2000 cited in Lemoine & Dagneas 2003). Lemoine and Dagneas (2003) write in their research that the net is still in a constant development. Many individual smaller firms or groups of firms join or leave the net; the legal arrangements develop interminable, and changes in the net are the normal occurrence, rather than the exception. Early 2000s, the head of the network of transport and logistics services providers was the corporation E.ON, which initiated its activities by the merger of two large corporations: Veba AG and Viag; the aim was to create a company that will stand a chance for development in the global marketplace.
This management report will identify a structure of a company, describe its culture and culture of the country, where the company is situated, show the nature of changes that took place at E.ON, name reasons for possible resistance for those particular changes.
According to its official Internet page (2008), E.ON AG, Düsseldorf, is the E.ON Group’s Corporate Centre (see Figure 1). E.ON operates along the entire value chain in power and gas. These operations are organised geographically or functionally in market units (MU) in line with the structure of its respective target markets. The main company of each MU takes responsibility for implementing and coordinating processes across its target market. All business units manage day-to-day operations. In addition to E.ON’s activities in Europe and recently in Russia, the company operates an electric and gas utility business and renewable-source generating assets in North America. E.ON pursues strategy of a development-oriented management to enhance chances for its competitiveness and advance profitable growth.
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Figure 1 Group Structure. Source: http://www.eon.com/en/unternehmen/2097.jsp
Nikolenko and Kleiner (1996) point out, that there is a linkage between organisational structure and strategy, whereby both elements are linked to the external environment. Strategy can be considered as a direct function of the environment; organisational structure is in contrast a function of strategy, so there is indirect connection between structure and environment. If the environment is stable, e.g. the amount of changes is relatively low, organisations are subject to bureaucracy and a strict hierarchy. In dynamic environment, companies are characterised by openness, responsiveness and lack of hierarchy.
Globalisation and changes in technology has made the external environment more complex and less predictable (Nikolenko and Kleiner, 1996). Many multinational companies started to modify their structures to respond those changes and in order to meet the demands of the markets they operate in. E.ON developed Market Units (Figure 1), which are so-called “global headquarters” per subsidiaryin different countries. Its cross-functional teams (horizontal differentiation) depend not on strong managerial control from the Corporate Centre but on customers’ demands and the final result within a MU.