Organizations undergo various changes over a period that complies with the changing business environment. In order to stay ahead in the competition, organizations have to ensure that they have made the perfect changes within time and within budget. These systematic changes made by the organizations refer to organizational development (OD) (Hornstein, 2015). Over the years, many theories have been developed in order to explain the mechanism of organizational change. The first attempts at developing a theory were made during the 1930s post industrial revolution era. Gradually, four stems of OD were developed that included T-group, action research, survey feedback technology, productivity, and quality of work life (Hoobler, Lemmon & Wayne, 2014). T-group referred to the process where members be trained from their own experiences. Action research involves the diagnosing, taking action and reevaluating the action. Survey feedback technology is the process where organizations collect data by conducting surveys to know the current trend and take action accordingly. Lastly, productivity and quality of work life is achieved through integration of employees’ technical and social requirements within the workplace.
The report aims to provide an analysis of organizational development by taking up the case of a real organization. It will provide an overview of the organization and explain organizational development through various theories. The report will include a SWOT analysis of the organization shedding light on its various strengths and weaknesses. The organization chosen for the study is Woolworth Group.
Organizational development theories
Kurt Lewin provided one of the first theories of OD that had three stages of change. These include unfreezing, changing and refreezing (Sarayreh et al. 2013). The first stage that is unfreezing involves changing the old system or behavior within the organization. In the second stage, the changes will then be evaluated and this will lead to the third stage, which is refreezing. Refreezing refers to the adoption of the change for a longer period (Cummings, Bridgman & Brown, 2016). This three-stage process helps organizations make systematic changes that help generate profit.
Another theory that provides a solid ground for firms to make changes that ensures growth and development is the Ralph Kilmann theory involving five critical tracks.
- The first track is culture track that ensures enhancement of trust, communication and sharing of information.
- The second track, which is management skills track provides noble ways to cope with complex issues.
- The team building track that is the third track involves infusion of new culture and modernized management skills
- Fourth track of strategy structure helps in developing modified strategy plan for the organization
- The fifth and the final track that is the reward system track includes establishment of reward system based on performance
It is important to note that all the five tracks are interlinked and without a change in one track, change in other tracks would not be possible. Members within the company often hide information due to their distrust in managers. In addition, they feel pessimistic about any new changes within the company. The culture track involves five steps that include developing actual rules, communicating what is desired for accomplishment today, creating new norms, recognizing culture-gaps and closing these gaps (Tinoco, 2014). The skills track offers makes sure that after analyzing the changes in the culture track, employees and managers are prepared to be guided on the skills required to make those changes. After analyzing the need to change and acquiring skills through training, companies can proceed to the team track. In this stage, three major objectives are to be achieved that include keeping maladaptive behavior in check, bringing new learning into the daily activities and enabling supportive decisions to happen across work groups. The strategy structure track involves an eight-step process involving formulation of strategic choices, creation of a list including objectives and tasks to be achieved and performed, evaluating object and task relationship, computing inefficiencies, and four others. The final track is the reward system track that is carried out when changes in the first four tracks have been achieved.
Several other theorists have proposed effective models of organizational change that have assisted even the contemporary organizations with effective change.
Overview of the organization
In this section, the company chosen for the study that is Woolworth’s overall view shall be presented. Woolworths is a supermarket chain based in Australia and owned by Woolworth Limited that has a presence in other parts of the world as well. Founded in 1924, Woolworths began operating within Australia with collaboration from Coles and owned almost 80% of the markets in Australia ("About Us - Woolworths Group", 2018). The company specializes in grocery items sale along with magazines, DVDs, household products and health and beauty products. It is Australia’s largest chain of supermarket with stores more than 990 across the country having over 110 thousand members in the team. The success of the organization could be analyzed from its performance in the last financial year. It showed marked improvement in terms of its share price in the market as it earned a profit margin of 13.27%. However, the initial phases of 2018 indicated that the company is in loss with negative 2.20% in share prices although experts are confident of a turnaround ("Share price - Woolworths Group", 2018).
The company boasts of more than 200 thousand employees comprising with over 77 thousand young employees. It also has a good record in having over 950 employees from the Indigenous community and female representation of 54% is another added uniqueness of Woolworths ("2017 at a glance", 2018).
Analyzing internal factors
In order to analyze the internal factors that concern Woolworths, it is essential to understand its strengths, weaknesses, opportunities and threats (SWOT). Conducting a SWOT analysis would bring forth a clear picture of the areas where the company is strong and the areas it needs to improve upon. It would help Woolworths undertake an effective organizational development plan.
Strengths – The major strength of Woolworths is its top position within the Australian market that is still undisputed. Further, the company has a good combination of online and brick and mortar market presence. The corporate social responsibility (CSR) policy is another of its features that makes it a strong brand (Crs.woolworthsgroup.com.au, 2018). Woolworths has a strong commitment towards environment and the community. In terms of products, the company has a varied range of products that makes it the top brand in Australia.
Weaknesses – The organizational structure of Woolworths is one of its biggest weaknesses. The structure is not compatible with anything new as it relies heavily on the present business model. In addition, it lacks good product demand forecasting team thus escalating to missed opportunities and benefits. Further, it had limited success beyond its core business and thus its expansion strategy is limited. This is reflected by its failure to enter the hardware markets in which it failed miserably. Woolworths also has a limitation of being a renowned brand within Australia only. It lacks a strong international presence.
Opportunities – Supermarkets have a strong presence around the globe and huge scope of profit. To Woolworths, it is a great opportunity to expand its business. One of the company’s weaknesses is its weak international presence. However, it has made moves to enter the international market through its Tmall Global collaboration. Woolworths launched its first online retail store in China through Tmall Global, which is Alibaba Group’s B2C company (Abc.net.au, 2018). Further, it Woolworths is committed towards making Australia healthy and green and this provides a great opportunity for it to have government support.
Threats – The entrance of new players in the market has presented the company with graving threats. Big names like Coles and Aldi are giving a stiff competition to the company with both making huge profits in the last few years. Prior to 2017, Woolworths was on a losing streak for straight seven and half years in the same-store sales (Smh.com.au, 2018). Apart from competition, it also has the threat of losing consumers to online platforms as its online presence is also challenged. The continuous fluctuations in the market in terms of policies and regulations might force the company to indulge in lawsuits. In addition, it might also face threats from the increasing strengths of the local distributors in certain segments of its market with the rise in competition.
Applying theories of change
Theories help organizations to undertake a planned change so that it enhances organizational performance. After analyzing Woolworths’ weaknesses and threats, it is clear that the organization would need a systematic and planned change. In order to retain its dominant position, Woolworths needs to analyze its online presence. One of the biggest strengths for firms in the contemporary business settings is strong online presence. With the emergence of smart phones, consumers now have the ease to browse through brands and find the most suitable one for them. Experts believe that the dip in its share prices might also cause Woolworths to change its organizational planning. Its decision to launch an online store for its consumers in China through Tmall Global was a good strategic move that might bring good profits to the company. International recognition and expansion is one of the important things the company has to focus upon and for that, a planed transformation within its structure is needed.
Lewin’s change model could also be applied to Woolworths that could help the company shed its apparent weaknesses and reduce the threats. The first stage of the model is unfreezing that is breaking the old system of management. In case of Woolworths, the management has to make sure that its working style reflects the demands of the contemporary business. Unfreezing is done on a psychological level as well when employees within the firm feel dissatisfied and frustrated (Suter et al. 2013). At Woolworths, employees often feel frustrated with the long hours of work and management’s negligence in certain important issues. Apart from that, they also develop a sense of survival anxiety, which means they are under constant pressure of working harder. Unfreezing thus, starts with making employees feel psychologically safe while working in the company. The next stage is change. After the unfreezing is done, organizations than move on to the process of change that includes responding to new ideas and information. The management redefines the concepts of working and the standards as well (Van den Heuvel et al., 2013). Changing the structure of the management can be a part of the second stage. Further, managers need to identify a role model that they could follow in order to bring about the change. After that, they could scan the business environment and apply new ideas that comply with the changing environment. The last stage is the refreezing change, which means that after unfreezing the old structure and making relevant changes, the organization must ensure to keep these changes. Managers must feel that the changes made fit to the responses and feedbacks of the employees. Woolworths has faced several problems in the recent past owing to its inability to manage change successfully (News.com.au, 2018). However, with the appointment of Claire Peters as the new Managing Director, the company is hopeful to expect boost in business (Woolworthsgroup.com.au, 2018).
In order to provide feasible recommendations, it is important to understand first the company’s strategies and objectives. One of the foremost priorities of the company is to build a team focused on customer and store-led culture ("Strategy and objectives - Woolworths Group", 2018). The next important priority is to evolve its drinks business to give added convenience and value to the customer. However, in recent years the company has failed to deliver its said objectives owing to a number of factors. The following recommendations could be suggested for Woolworths to follow:
- The company should restructure its strategies and objectives. It should focus first on employee satisfaction and then pay attention to customer satisfaction. Employees are an asset to any company and their satisfaction is crucial towards providing good customers service.
- Woolworths should develop a strong demand forecasting team that manages to grab any new opportunity the market provides. The company’s failure in the hardware market justifies this need.
- It is also recommended that the company should focus on its core business to strengthen it further and then try out new areas. It has a dominant presence in the grocery market and once it maintains its position, the company could look beyond it.
- Further, it is recommended that it work on its international expansion strategy in a clearer way by involving ground level employees in the decision-making process. This would ensure employee satisfaction as well as development of innovative ideas.
Organizational development allows companies to manage successful change through systematic and planned management. It enables companies to make systematic changes to the attitudes, values and beliefs of the employees by creating long-term training programs. In conclusion thus, it can be stated that organizational development or change help companies survive in the ever growing and competitive market. Various theories of OD proposed by numerous scholars have helped companies plan change according to their needs and demands of the market. The report provided a deep analysis of organizational development by evaluating the working of a real world company Woolworths. The report first provided a thorough explanation of organizational development and the various theories related to it. The theory that was primarily focused was Kurt Lewin’s change model. Lewin’s model has three stages of change that includes unfreezing-change-freezing. This theory was focused because it has more relevance to the working of organizations even in the present world. In addition, Ralph Kilmann’s five critical tracks model was also explained. This model too has relevance to the modern world organizational development. Further, the report presented an overview of the chosen company that was Woolworths Limited, based in Australia. A SWOT analysis of the company was conducted in order to track the areas that need change. Thereafter, recommendations were also provided based on the weaknesses and threats that faced the company.
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