Labour and Change: Essays on Globalisation, Technological Change and Labour in India

Kuriakose Mamkoottam Chapter 1

Managing Change: Issues and Concerns

Introduction Change is an all-pervasive and a permanent reality. Change has no boundaries of time and space. Scholars and thinkers throughout history have enquired into the causes and consequences of change, which may be political, social, technological or scientific in nature. However, it may not be an exaggeration to suggest that changes witnessed in recent decades are of such radical nature that they have created a break in the history of modern life. As Tom Peters (2000) said recently, the world is going through more fundamental change than it has in hundreds of years. Peters predicts that 90 percent of white-collar jobs in the U.S. will be either destroyed or altered beyond recognition in the next 10 to 15 years. That's a catastrophic prediction, given that 90 percent of working people are engaged in white-collar work of one sort or another. Even most manufacturing jobs these days are connected to such white-collar services as finance, human resources and engineering. Change is inherent in contemporary organisational experience, and its management is critical to organisational success and survival. It is important that we have an understanding of the principles and nature of change at the individual and group levels to be able to be a part of the change process and to appreciate its implications. Burke et al (1993) examined the awareness of managers and executives about the change management process. Using the Managing Change Questionnaire, (developed by W. Warner Burke Associates, Inc.), they reported a quantitative assessment of the knowledge and understanding of this group of individuals about managing change in organisations. Results from 700 managers and executives across a variety of organisations indicated that these individuals would have received a grade of "C" in the subject of managing change. These results are not very positive considering the fact that these managers would be instrumental in shaping the future of their organisations through effective utilisation and management of the change effort. The authors found that managers had two weak spots in particular: The first was in their knowledge of the individual responses to change efforts, and the second was in those areas relating to the management of the people side of change. In other words, managers had difficulties in interpreting what their people's reactions would be, and subsequently would presumably experience difficulty in guiding their people through the often complex and confusing process of change. The focus of change includes structure, process, behaviour, strategy, environment etc. Organisation structure is perhaps one of the most common targets for change. The concept of organisation structure will encompass the manner in which a business or organisation is held together, the various configurations of people, communication channels, job roles, skills and relationships within an organisation which give it internal shape and coherence. Processes may be seen as sequences of related activities within an organisation, which transform inputs into outputs. Manufacturing process and interaction with customers involve detailed sequencing of activities and events. Other types of process that are the target of change include:

• Communication processes for disseminating information and knowledge around the organisation- formal or informal. • Management processes which govern how decisions get made and the allocation of work and resources.

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• Learning processes which shape how an organisation learns from its past through its customers, competitors and its staff. Recently, concepts like 'knowledge management', 'soft systems dynamics', and 'action learning' have sought to deepen our understanding of (organisational) learning.

Behaviour is another important area of change. Behaviour may be defined in terms of patterns of action and reaction within the organisation, which get influenced by organisational culture. The collective preference or shared mind-set, which determines 'the way things get done' is known as organisation culture. Other targets of change in behaviour include the manner in which employees deal with uncertainty, changing expectations or values of customers, and the wider society. Crucial to any organisation would be its corporate objectives, strategic goals and the basis on which it will compete in a given market. Periodic review of strategic intent is clearly vital for an organisation if it is to stay aligned with market needs and shareholder expectations. Most organisations are actively trying to change something in their environment at all the time. These are largely planned changes with management proactively looking to manage the future of their organisation. All the above-mentioned changes will affect the overall state of the organisation. An organisation's state may be measured in terms of cash flow, annual turnover, share price, return on capital employed, or market share. Kaplan and Norton (1992) suggest that an organisation should attempt to set up a measurement to monitor organisational performance in four key areas, namely:

• Business processes; • Innovation and learning; • Finance; • Customer satisfaction.

Either a drop in performance in any of these areas or increased level of performance by competitors (in any of these areas) may necessitate the need to initiate change. In fact, to succeed in the present competitive environment, it is necessary for organisations to anticipate the future and initiate changes proactively. Change occurs where possible along the lines of least resistance. Amorphous systems with little formal structure or internal framework are susceptible to change in many directions. Change will be most likely to take place along paths where there is little to impede it, subject to an organisation's structure and operational rigidity. Structural boundaries and clear lines of symmetry will define where change is most likely to occur with ease. Closed resistance to change may be visible within organisations where business is self-contained such as family-controlled or public sector organisations. Such organisations are largely inward looking and parochial and are concerned with the purity and sanctity of company procedures and processes than adjusting to the needs of a changing market/ environment. This may partly explain why companies in India, which consist largely of family-owned private enterprises and state-owned public sector enterprises, have been slow to change. However, developments in recent years reinforce Stickland (1998:156), according to whom we are moving from a world in which we determined our destination to a world in which we must learn to navigate a path into the future between myriad possibilities, never setting our strategic sights too far ahead. There are few givens, few absolutes any more, around which we can base our change journey. What is urgently required is a sound understanding of how change works, what drives it and shapes it within our organisations. Fundamentally, change is the engine, which

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propels an organisation from the cloying affections of the past, through the challenges of the present and into the future. Talking about the challenges of change and the need for new competencies and mindsets, Gareth Morgan (1989:2-15) a decade ago sketched different scenarios to express the intensity of change that he thought would be in store. He visualised an increasingly turbulent environment. Few organisations can be sure of a secure future, as scientific and technological developments transform the very ground on which they have learned to operate. As he pointed out, more than ever before, the world is in a flux today. Organisations and their managers must recognise the necessity of developing the mindsets, skills and abilities that will allow them to cope with this flux. Morgan suggested that the increasing turbulence and change would require organisations and their managers to adopt a more proactive and entrepreneurial relationship with the environment, to anticipate and manage emergent problems, and to create new initiatives and new directions for development. This proactive philosophy will be essential for empowering and energising organisations to keep abreast of the challenges they face. Change and Human Resource Management Organisational change has to be seen in association with the character and style of management in general and organisational leadership in particular. In recent years, the role of leadership has not only increased in importance at all levels of organisation, but has also undergone change in character from being (highly) formalised or hierarchical to one of being dynamic and people-centred (decentralised). Increasingly, the leadership process is becoming identified with an ability to mobilise the energies and commitments of people through the creation of shared values and mutual understandings. Managers of today have to view leadership as a "framing" and "bridging" process that can energise and focus the efforts of employees in ways that resonate with challenges and demands posed by the wider environment. In the modern age, knowledge, creativity, opportunity seeking, interpersonal skill, and entrepreneurial ability are becoming important. Increasingly, the corporate world is knowledge driven and organisational life is information focused. In a society in which knowledge and information enjoy a premium the management of human resources would be extremely important. Managers have to find ways of developing and mobilising the intelligence, knowledge, and creative potential of human beings at every level of the organisation. The knowledge economy requires organisations and their members to promote creativity, learning, and innovation. They have to unleash individual creativity and learning, and develop organisational processes and structures that promote them. Organisations must develop more open managerial processes that flatten hierarchies and improve lateral interactions. The ability to manage and work within multidisciplinary teams will be essential. The flattening of organisational structures must be synchronised with new approaches to management and control. As the rigidity and hierarchy of the bureaucratic structures would become less relevant, managers will have to co-ordinate through the development of shared values and common understanding and find the right balance between delegation and control. Managers are expected to promote decentralisation and become skilled in designing and managing systems that are self-organising. Management should be more concerned with empowerment than with close supervision and control. The pace of change and the required evolution of skills place a high premium on continuous learning. Information technology in the form of micro-computing, robotics, electronic communication and the Internet have transformed the nature and structure of many organisations and the nature and life cycles of their products and services. Technology is leading us into an age in which completely new styles of organisation and new human resource competencies are emerging. New technology has a capacity to dissolve

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organisational hierarchies by creating smaller-scale, loosely coupled organisational units co-ordinated electronically, where work units can remain separate yet integrated. Though many managers may want simplicity, in reality they would be expected to deal with increasingly complex situations. The complexity of organisational life is increasing rather than decreasing, as manifested in the conflicting demands posed by multiple stakeholders. Today, the different shareholders - employees, unions, customers, collaborating firms, government agencies, the local community and the general public - engage with each other as active stakeholders in the organisation, each imposing its own demands on management, is the reality today. Managers have to become increasingly skilled in managing transition. They have to recognise flux as the norm and develop mindsets and skills that allow them to cope with the continuous flow of new ideas, products, technologies, skills, information, and the dynamics of interpersonal and inter-organisational relations. Managers at the top/ senior level should find ways of reshaping those trends so that they become more manageable. They would have to accept a much greater sense of social responsibility, not just for lofty moral reasons, but because in a complex, interdependent society, a high degree of responsibility needs to be integrated into the way managers think about their (organisations') relationship with the wider context. Change and Technology Globalisation and the widespread application of microelectronics and now that of the Internet are associated with much radical changes of modern times. The widespread use of information technology (IT) has helped faster generation and transmission of information, making communication ever more efficient than before. It is also argued that the easy availability of information and faster communication have accelerated the process of globalisation as well. IT is revolutionising the way we communicate, work, shop and play. Computers and the Internet are offering the means for a sweeping reorganisation of business from online procurement of inputs to more decentralisation and outsourcing. By increasing access to information, IT helps to make markets work more efficiently. IT is truly global. More and more knowledge can be stored and sent anywhere in the world at negligible cost. Information technology and globalisation are intimately interconnected. By reducing the cost of communications, IT has helped to globalise production and capital markets. In turn, globalisation further accelerates competition and innovation, and speeds up the diffusion of new technology through trade and investment. International competition among nation states and corporate (firms) to dominate the global market and to conquer the newly awakened customer made the most emphatic point that constant innovation and continuous improvement are most important to survive. Environmental forces and technological factors have always forced firms to change. As McLoughlin and Harris (1997) suggest, firms are primarily driven by technological and competitive imperatives to innovate and have little choice in the matter if they wish to survive. In particular it has conditioned the way organisational sociologists and others have sought to understand the impacts or effects of computer-based technological change on variables such as skills, job content, work organisation, employee attitudes and behaviour and organisational structure and design. However, such changes cannot be seen as a unidirectional process. Management and worker attitudes, organisational structures and cultural systems, industrial relations and the wider social and political environment may act as either facilitators or as hindrances to technological change and globalisation. Technology is not value neutral. In this context, McLouglin and Harris (1997) identify several problem areas. First, technological innovations are often seen to arise in a more or less neutral way out of the activities of inventors or professional research and development laboratories.

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However, critics view it differently. They argue that the form and direction of technological innovation should be seen as a product of the direct influence of social and political factors, not least the interests of the state and employers. Second, those who believe in a technological imperative assume that managers play the role of unreflective 'messengers' whose task is to read the technological and commercial signals emanating from the firm's environment and take appropriate action. But, critics argue that managers should be seen as 'creative mediators' whose decisions and choices critically influence the ways in which particular technological and market options are selected for development. Third, it is assumed that technological innovation is inevitably of benefit to all, in the long run. Employers, management, workers and unions are held to have a common interest in ensuring technological progress. However, technological innovation is often an area over which interests diverge. If new technologies are designed and used to serve particular interests, and if organisations are seen, not as arenas of consensus, but rather the locus of conflict, then disagreement over particular technical change may be seen as an inevitable and legitimate feature of organisational life. As we shall discuss in subsequent chapters, technological changes and their implications assume the centre stage of organisational conflict in many Indian organisations. There are broadly two views about the human (individual) ability to influence the magnitude and direction of change within a system. The first view believes that the environment dictates human activities, both in the immediate and long term. Change phenomena in human behaviour are, therefore, viewed as mechanistic and deterministic in nature, caused and shaped by external forces beyond the control of individuals inside the system. According to Stickland (1998) change can take place regardless of our perception of it, and it can go beyond human control or comprehension. This, in other words, means that change is external to human or social choice. In fact, Heraclitus, the philosopher of 500 BC believed in the extreme position that 'you cannot step into the same river twice; for fresh waters are always flowing in upon you'. Such a view not only views change as a constant reality, but also something on which man has no control at all. According to the second view, human systems are largely autonomous possessing free will. Change behaviour is individually created and spontaneous in origin. There is immense potential for wide variety and unpredictability of change. In fact, one may extend this view to suggest that emergent behaviour and change at the level of the whole may possibly affect the external environment over time. The reality, however, may lie somewhere between the two extreme views; some changes may be imposed from outside while others may be initiated from within the organisation. It would be difficult to identify changes, which cannot be associated with some external forces. It is, therefore, widely accepted that the structure and culture of an organisation must respond to the demands of the environment to survive in the long term. Knowledge and change Economies are increasingly based on knowledge. A growing portion of the modern economy is in the form of intangibles, based on the usage of ideas rather than material things. Compared to only one third of American workers employed in the service sector in 1900, more than three-quarters are engaged in the service sector in 2000. Thinking is serious business today. Scholars and practitioners alike acknowledge the importance of understanding the thinking processes within organisations. It is now well recognised that only knowledge and its management will determine success or failure, and therefore, cognition is an important process. There are two approaches to organisational thinking: behavioural and cognitive. According to the behaviourist approach, it is not possible to study and understand the mental status of people but only their behaviour and responses to different stimuli. Change is reactive, a matter of external and environmental influences. The cognitive approach looks at the internal complexity of learners

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and analyses their behaviour in the context of their mental states. Learning is a proactive process of acting and gradually building on one's environment. It precedes change. Every learning event inevitably has a framework. The organisation designs the events to suit its corporate goals and strategies while individual participants have their own subjective goals and strategies to achieve them. Successful change management may be seen to have two strong elements in common. One, they all have a strong change agent or change manager to initiate the process of change. Two, change within the organisation is executed within four key levers - culture, operations, structure and strategy, including the strategy for managing human resources. Organisations need to change internally to cope with today's changing environment. However, the biggest factor to managing change is managing the people involved in the process. One factor largely missing in today's global organisation is trust. Trust in change is based on two things: predictability and capability. In several organisations, it has been observed that most employees want to know what is going to happen next. Very often in the middle of the change process, employees suddenly stop trusting the organisation as one by one the ground rules begin to change. As we shall see in later chapters, employees do not trust the intentions of the management. Often suspicion and lack of trust develop into inter-departmental and inter-functional conflict as well. The impact of change must be communicated to the employees as the organisation seeks to move towards new organisational goals. Organisations that carry out strategic, organisational and other changes often tie in their programmes to the core competencies of their personnel. Managers must define their capabilities in the same manner, as an organisation needs to define its core competence. A definition of their required capabilities will help to negotiate the responsibilities of those involved in the process of change. Very often a diverse array of skills is required for an organisation to make the transition, and no one employee possesses all these skills simultaneously. What is required is to develop interdependency. Modern organisations built on the model of Weberian bureaucracy are accustomed to place trust and dependability on the system rather than on the people in them. In fact, people are expected to fit into the system to assure success. But as time passed events overtook most of the existing organisations and their systems were overwhelmed to cope with the changing realities. Gradually organisations realised the need to rely more and more on their people to make decisions on matters for which a systematic (routine) response may not be sufficient. As Kanter (1983) says, after years of telling corporate citizens to “trust the system”, many companies must learn instead to trust their people and encourage their people to use the neglected creative capacities in order to tap the most potent economic stimulus of all: idea power. Because individuals can help organisations stay ahead of a changing environment by moving their organisations beyond what they already know, into the more uncertain realm of innovation. Organisational environments can stimulate people to act and give them the power to do so. Organisations can systematically encourage innovation by the design of their systems and the treatment of their people. The degree to which the opportunity to use power effectively is granted to or withheld from individuals is one operative difference between those companies, which innovate and those, which stagnate. The term innovation is not confined to (new) technology, (new) products or (new) methods of making them. Innovation is the process of bringing any new problem solving idea into use. Ideas for re-oraganising, cutting costs, improving communication, or building effective teams are innovations. Innovation is the generation, acceptance, and implementation of new ideas, processes, products or services. The changing world requires as much social and organisational innovations as technical innovation. In fact, if technical innovation runs far ahead of

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complementary social and organisational innovations, its use in practice can either be dysfunctional or negligible. We shall see in a later chapter that technical change introduced without congruent changes in organisational structure and human competencies and attitudes do not give the desired results. Stickland (1998) identifies three fundamental sources \ categories of change: information, action and process. Access to and availability of information can be a cause of change. Rapid information transmission and communication can cause cascading change within large composite systems. Action represents a specific act attributable to a particular part of the organisation and locatable at a given fixed moment in time. The ensuing change caused could affect the organisation in which the action originated, or another external to it. Decision-making falls under this category, as it can be seen as both a cognitive act in and of itself, as well as resulting in specific behavioural actions. Process can be defined as a connected series of actions attributable to one or more parts of an organisational system, or the whole, occurring over time. Over time there may be a causal link from information to action and on to process. Nonetheless, each category can also represent a specific, individual source of change. Together, they are proposed as a simple analytical base from which to describe both internal and external change sources within organisation. Approaches to change The most important aspect of managing change is the choice of appropriate strategy and its implementation. The strategic process is more likely to succeed if the stakeholders involved in the change process have been clearly identified and if the impact of change on the stakeholders have been adequately assessed. Carnall (1995) suggests that strategic changes need to ensure that stakeholders are aware of the change, they are capable of coping with it and they accept the implications of change. It is important to ensure that the stakeholders understand and believe in the vision, strategy and the implementation plan of the change. The stakeholders involved should believe that they are capable of developing the necessary skills to cope with the change and take full advantage of it. Moreover, it is necessary that the stakeholders value the new jobs and opportunities and they develop new attitudes, skills and new ways of working. Beer & Nohria (2000) note that ever since the Industrial Revolution have the stakes of dealing with change been so high. Most traditional organisations have accepted, in theory at least, that they must either change or die. Change remains one of the most difficult things to accomplish; few organisations manage the process of change as well as they would like. Most initiatives in introducing new technology, restructuring, downsizing or trying to change corporate culture have had poor success rate. Many change initiatives meet with fatal failures. Based on very different and often unconscious assumptions about why and how changes should be made, Beer and Nohria propose two archetypes of change, namely, theory E and theory O. Theory E is change based on economic value while theory O is change based on organisational capability. Theory E is the hard approach. It is more commonly adopted and is intended to enhance the shareholder value. It is a top down approach. Leaders who subscribe to theory E manage change in the old-fashioned way: from the top down. They see goals with little involvement from their management teams and certainly without input from lower levels or unions. By contrast participation is the hallmark of theory O. It is known as the soft approach. Theory O's initial focus is on building up the "software" of an organisation - the culture, behaviour, and attitudes of the employees. It attempts to develop corporate culture and human capability through individual and organisational learning. Theory O attempts to achieve a cultural transformation. The process of change takes place by obtaining feedback, reflecting and making further changes.

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Companies that adopt O strategies, such as Hewlett-Packard did when its performance flagged in the 1980s typically have strong, long-held, commitment based on psychological contracts with their employees. Managers at these companies are likely to see the risks in breaking those contracts. Because they place high value on employee commitment, Asian and European businesses are also more likely to adopt an O strategy to change. However, according to (Beer & Nohria (2000) most companies use a mix of the two theories. Companies that effectively combine hard and soft approaches to change can reap big payoffs in profitability and productivity. These companies are likely to achieve a sustainable competitive advantage. The new wave of change had swept the developed economies and many of the newly developing/ developed economies including China and South East Asian countries in the late 1970s and early 1980s. However, the Indian economy and the corporate sector in India began to realise the impact of the new wave and the urgency to change only by the late 1980s and the early 1990s. By now the gap between the developed world and India in terms of technology, productivity, income levels, availability of new products and services and their quality had widened. A myriad of factors may have contributed to the ever-growing gap between India and the developed world. However, the following chapters seek to explain that industrial relations and the management of people may be among the most crucial issues, which can facilitate or inhibit organisations to successfully cope with the challenges of change. Although each of the following chapters deals with different issues relating to change such as globalisation, re-structuring, organisation culture, productivity improvement, and employee involvement, a major concern of the manuscript is to understand the nature of the symbiotic relationship that exists between human resources/ labour and change. As Carnall (1995:74) says, "To achieve change we must first recognise that change is desirable and feasible. We must get people to recognise that changes are needed". The following chapters of the book have resulted from an attempt to appreciate how the various dimensions of change, particularly technological change, are intimately interlinked with labour and human resource management in organisations. As Sumantra Ghoshal et al. observe in their recent book, "after almost a decade since India took the first tentative steps to economic liberalisation in 1991, most Indian managers who have survived the traumas of industry overcapacity and restructuring, the onslaught of foreign competition, and the growing sophistication of customers and technologies, will quickly agree that companies all over the country, in all kinds of businesses, are in the midst of radical change" (2000:308). However, an equally important observation would be that not many have succeeded in their endeavour to change over. The following essays included in this volume examine how human resources management policies and practices in general, and labour and trade unions in particular, affect the nature, direction and speed of change in the Indian corporate context. Reference: 1. Beer, M. & Nohria, N. (2000) "Cracking the Code of Change", Harvard Business

Review, May-June 2000:133-141 2. Burke, W. W., Church, A.H. and Waclawski, J. (1993)

"What Do OD Practitioners Know About Managing Change?" Leadership & Organisation Development Journal, Vol. 14 No. 6:3-11

3. Carnall, C. 1995. Managing Change in Organisations (2nd edn.), London:

Prentice Hall

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4. Ghoshal, S., Piramal G. &

Bartlett, A. 2000 Managing Radical Chabge, New Delhi: Viking 5. Kaplan, R.S. and Norton, D.P. (1992). The Balanced Scorecard, Cambridge, MA: Harvard

Business School Press. 6. Kanter, R.M. (1983). The Change Masters, London: George Allen & Unwin. 7. McLoughlin I. & M. Harris, 1997. Innovation, Organisational Change and Technology,

London: International Thomson Business Press.

8. Morgan, G. 1989. Riding the Waves of Change, San Francisco: Jossey-Bass Publishers

9. Peters, T. 2000. "What will we do for work?" Time, vol.155, no.20, pp. 38-40.

10. Stickland, F. 1998. The Dynamics of Change, London: Routledge.