Case Study: Stanley Australia Essay Example

and their respective effectiveness in Stanley's case. The analysis begins with a diagnosis at the organization level and proceeds to the implementation of restructuring at the group level in various aspects such as people, corporate culture, process, and structure, with the added complexity of a merger. The change process undertaken at Stanley has proven successful. The parent company of Stanley in the United States underwent three crucial steps in organizational change: diagnosis and information gathering, intervention design, and intervention evaluation. The management team at Stanley Australia was primarily responsible for implementing the change. Upon realizing that Stanley's products were losing market share, the parent company initiated an analysis of external competition and collected internal feedback.

Some cost inputs for Stanley Australia were sourced from the management on the ground. The US parent company mainly adopted an E change management style due to their focus on value maximization. Conclusions were made to improve profitability and market share by moving Stanley Australia to a more desirable state. The organizational interventions included cutting uncompetitive manufacturing plants, upgrading the marketing force, and synchronizing Stanley Australia's presence into one structure. The effectiveness of the change implementation was evaluated from a profitability and revenue standpoint. Industrial interruptions and unfair dismissal claims were also taken into account.

The structure transformation was expected to produce quick financial gains from cost efficiency and establish a culture focused on achievements over time. Because Stanley's urgent reaction required strong leadership from the top, this approach had its own advantages. However, although there were signs of success in the transition, the results were not fully satisfactory. The analysis below reveals that undesirable costs were incurred during the implementation process

using a hard approach, such as unscheduled downsizing in Stanley Australia due to increased profitability pressure and cultural dissonance caused by top-down merger instructions. Once the U.S. parent company set the vision for the new Stanley Australia, it was communicated to Australian management, who were then given a tight timeline to implement the changes.

The discussion below primarily focuses on the aspects involved in implementing change.

People – Manufacturing plant downsizing

In any organizational change, individuals are always a key consideration. Stanley Australia's reform is primarily driven by economic reasons, as there is a pressing need from their US headquarter to increase profitability and market share. As a result, Stanley Australia has employed theory E change strategies in their transition, which involves significant layoffs, downsizing, and restructuring. After evaluating the external competitive environment, Stanley Australia has identified two main strategies to improve cost efficiency and regain market share. These strategies include closing uncompetitive manufacturing operations and merging two subsidiaries in Australia (the merger will be discussed separately). By implementing a well-designed system of rewards and incentives, the top-down approach has proven to be effective in the downsizing of employees.

Stanley Australia underwent a strategic shift away from manufacturing to focus on competitive logistics and marketing, resulting in the closure of a manufacturing plant and the loss of around 300 jobs. The tight time constraints imposed by the company's parent company in the United States necessitated primarily E style change management. During this process, Stanley implemented various common strategies in human process intervention, such as setting goals, employing management by objectives, establishing reward systems, and more. Decisions were made without employee participation or involvement within strict deadlines. The

success of the restructuring exercise was measured through clear economic goals, including minimizing industrial disruptions, avoiding unfair dismissal cases, and reducing absenteeism. Additionally, pre-approved budgets were established for each step in the process.

The aim of achieving a smooth downsizing and transition, while also considering potential morale and resistance issues, was considered reasonable. Stanley ensured that the goals were aligned by implementing a reward system that discouraged employees from taking sick leave for financial gain and maintained their morale and loyalty. The absenteeism rate was a reasonable 3%, indicating the success of the incentive reward program. In addition to the top-down approach of restructuring, Stanley also implemented an O style management to facilitate the changes and minimize disruptions. Efforts were made to ensure that employees understood the changes and why they were necessary, and the option for redundancy was extended to all employees, not just those directly affected, in order to encourage efficient movement of people.

During the interim, there were negotiations between management and employees regarding incentives for maintaining production schedules. Alongside this, employee representatives met biweekly. There was also the introduction of a consultation scheme, which involved outplacement facilitators gathering feedback on ongoing programs. Due to time constraints, Stanley implemented the people change in an E style, which led to some unscheduled downsizing. This downsizing was prompted by additional pressure from the US to meet profitability targets. However, the company did incorporate some O style soft approaches in processes, such as a reward system and consultation, in order to minimize resistance.

The general response from individuals affected by the Australian plants was fairly positive.

Culture change - Transitioning focus from manufacturing to marketing

The Stanley Australia encountered a

significant challenge during its organizational restructure - The new company's strategic decision to lessen the emphasis on manufacturing skills and instead prioritize marketing forces and capabilities. Culture plays a role in determining whether the organization can successfully execute new business strategies and operate at a high level of excellence. It is evident that Stanley Australia recognized the significance of cultural transition.

Overall, Stanley Australia has performed well and achieved a clear strategic vision for improving its logistics, sales, and marketing skills and resources. The decision to import instead of manufacture has resulted in increased profit margins, allowing the top management to allocate more resources towards enhancing marketing capability. The change in culture was exemplified at the highest level with the appointment of Mark Parow, a former senior sales executive from Dulux, as the new CEO of Stanley Australia, indicating a strong focus on sales and marketing at the management level.

To strengthen this, adjustments were made to the organization structures to expand the sales and marketing department. Individuals were chosen or let go based on their suitability for the new culture, and the alteration in company demographics supported the adoption of new values and behaviors. Additionally, employees were granted greater involvement in decision-making, and a communication and participation process was established to encourage their integration with the goal of maximizing company value. There were indeed positive measures taken to enhance employee contentment. By engaging a younger and more talented workforce, it became easier to facilitate a shift into this fiercely competitive marketing culture.

As demonstrated by the outcomes, Stanley Australia achieved satisfactory levels of profitability and sales after undergoing restructuring. One crucial element of the organizational process changes

was the closure of manufacturing operations. This change aligned with the shift in business strategy from manufacturing to a strong logistics, sales, and marketing operation. These changes had substantial effects on both individual and organizational procedures and the performance appraisal system. The organization's focus shifted to overseas purchasing instead of manufacturing, leading to the elimination of uncompetitive manufacturing operations and an increased emphasis on effective responsiveness in marketing through computer systems.

The company's performance appraisal system would undergo changes to align with the new goal of marketing, making the organization more responsive. The emphasis on the IT system would be increased, replacing non-adaptive procedures. Individually, this change opened up new career opportunities in sales, logistics, and marketing through the introduction of new workplace technology. Although job losses occurred in other areas, there was no resistance as people recognized the necessity of this requirement in meeting the company's new goals.

The result showed that there was a strong alignment between individuals and the organization in achieving a common goal. In the new workplace, workers needed to have more skills, and the management team had to rely on their professional self-management ability. These areas need further improvement and alignment within the Stanley organization. At the organizational level, changes in some upstream processes increased pressure on the new areas of the occupational health and safety system. The focus on logistics tasks led to increased stock levels with longer lead times, resulting in the first incident in many years.

The text highlights the need to modify the organization structures at all levels in order to enhance worker skills and autonomy. Additionally, the incident rate is mentioned as a crucial indicator of the

outcome of process change. In general, Stanley's organizational processes primarily aim to facilitate structure change, technological advancement, and human resource system change to boost productivity in Stanley Australia.

Structure Change – Closure of manufacturing plants and strengthen marketing force

Stanley Australia's organizational structure changes were evident in the divestment of manufacturing plants and emphasis on purchasing, forecasting, and planning functions. The closure of uncompetitive manufacturing plants allowed Stanley Australia to secure cheaper suppliers and increase profit margins. This enabled investment in activities related to logistics, sales, and marketing. Additionally, Stanley assigned different managers to oversee specific products, with varying levels of responsibility, decision-making authority, communication, and relationships.

In the meantime, the sales and marketing departments received a significant increase in prestige and remuneration as part of the designed intervention from corporate strategy. This, along with the aforementioned structural changes, enabled an effective implementation of Stanley's mission and strategy. The structure change process implemented by Stanley included shifting work units from a manufacturing focus to intensive sales and marketing skills and workforce, changing job scopes to include multiple dimensional responsibilities such as purchasing, forecasting, and planning, changing people's roles from controlled to empowered, and shifting the focus of performance measurement and compensation from activity centric to profitability and productivity results. With these changes, Stanley Australia established a supportive structure that helped sustain the long-term competitiveness of the amalgamated company's new strategy.

The need for the merger between Stanley Bostitch and Stanley Australia arose from internal company dynamics, aiming to align the organization's presence in Australia with the external competitive environment. Transformational change often occurs in response to or in anticipation of major changes in the organization's environment.

For Stanley, the merger

meant they had to revise their business strategy significantly. This was because their existing customer base and operational efficiency were not meeting the profitability and market share goals set by their US parent company. Stanley used a traditional organizational development process to implement the transition of people, culture, and structure, but it had both successful and unsuccessful outcomes. They also experimented with an integrated strategic change approach for process transformation. In terms of people and culture transition, they merged two separate groups of workforce into one with the aim of creating an achievement-oriented culture. Stanley's management recognized the importance of treating both groups equally at the individual level to avoid a perception of takeover, but this strategy was only partially successful. It is clear that people and culture were interconnected issues during this transition.

Before the culture layer problem arose, individuals in the impacted group typically felt apprehensive about being overwhelmed, resulting in resistance in practical settings. Regrettably, Stanley Australia's management implemented the shift away from the conventional top-down approach. They prioritized promptly streamlining the hardware, causing former Bostitch employees to be compelled to transition to Stanley Australia's system and structure (which was seen as more advanced and effective by others, but not by the Bostitch employees). Additionally, Bostitch employees were directed to rapidly expand their customer base from contractors and builders to unfamiliar retailers.

The various instructions given to form a coalition created a growing sense that Stanley management had failed to address the cultural issues. It was determined that Bostitch used to operate in a laissez faire manner, while Stanley Australia promoted a culture characterized by strength, direction, control, and loyalty prior to the

merger. These two cultures had conflicting values and assumptions. Additionally, the culture at Stanley Australia was changing due to the improvement of the sales and marketing team. This was not an easy task, and Stanley's management needed to create a clear strategic vision for the new organization's culture in order to reduce uncertainty and foster positive morale among employees from both Bostitch and Stanley Australia.

Instead of acknowledging the increasing cultural integration of Bostitch employees, Stanley management failed to do so and hoped for a gradual adjustment over time. A potential solution for Stanley could be to focus on employee engagement by implementing a reward system that aligns with Stanley's values and culture. By setting clear objectives and providing incentives, employees can be involved in the development of their own norms and contribute to the evolution of the corporate culture. The process change implemented by the merged company took a comprehensive strategic approach. Although the initial decision was to use Stanley Australia's processes in areas where there was duplication, these decisions were not always the most efficient practices in reality.

After encountering practical issues, Stanley made modifications to its approach. The company realized that achieving a different skill mix was crucial for strategic process change orientation. At the group level, the objective was to bring the two groups closer together by having sales staff share their problems. Following this strategic guideline, an operating principle was developed to allow the use of the most appropriate processes in consolidated operations. This gave individuals and groups within the organization more autonomy and integrated them into the analysis, planning, and implementation process. The full impact of these changes was yet to

be seen, but there were already signs of increased efficiency from altered processes, such as a renewed focus on specialization for a group of Bostitch products. Additionally, a significant aspect of the merger between Stanley Australia and Stanley Bostitch was the organizational structure change.

Stanley made changes to its structure in three main areas: 1) Bringing together the sales, marketing, finance, and logistics departments under a central base, 2) Transitioning the former CEO of Stanley Bostitch to the role of managing director of Stanley Australia, and 3) Outsourcing human resource management operations. These changes were implemented as effective management practices to align with the mission and strategy of the newly combined Stanley company, which focuses on marketing. According to a model of organizational performance and change by Litwin & Stranger (1968) and Tagiuri & Litwin (1968), these structural changes impact leadership, work unit climate, and task and individual performance. The position held by the Bostitch leadership became redundant in the new entity and was downsized and absorbed by the managing director of Stanley.

The human resources work unit was outsourced to professional practitioners, and the sales and marketing force was strengthened. These changes effectively supported the processes of structural change, despite the departure of around 300 employees during this period. The effects of the structural changes were felt at both individual and group levels, with new group tasks and individual skills being defined. The added career opportunities formed new chains within the structure, leading to another round of management changes to meet these new expectations. At the individual level, there was a concern about losing the identity among Stanley Bostitch employees.

The organization needs to design the task

identity and task significance instead of the original organization identity. This was also reflected at the group level. Despite efforts to provide equality in the organization for Stanley Bostitch employees, it was difficult to reconcile HR policies from Stanley Australia and Stanley Bostitch. The new structure accomplished the design of group composition, group norms, and group functioning and performance norms, clarifying goals and tasks. This would lead to the expected output of group performance. The effects of the merger structure were a successful transition from manufacturing to sales and marketing orientation within the Stanley amalgamated company. The new organization demonstrated satisfactory profitability and successfully handled regulation compliance and productivity review.

The strategic transformation in Stanley Australia serves as a real-life example of how a large organization responds to industry changes. The combination of E and O style change management facilitated the successful downsizing of manufacturing plants, people, and cultural and structural transition to achieve strategic marketing orientation. However, the integration process did not effectively consider cultural differences and failed to encourage bottom-up participation, resulting in ongoing challenges for Stanley's amalgamated operation.