Analyze Effective Communication and Change through a Corporate Case Study
OLB 7006, Assignment 4
DuBose, Justin Z.
Dr. Marie Bakari
7 October 2018
Research has proven true the old adage that change for organizations is inevitable (Saruhan, 2014). While there are many factors which contribute to this constant need to change and adapt, prevalent factors include a shrinking global economy, increased competition and technological advancements (Saruhan, 2014). Consequently, it is necessary that organizations change and change positively. Organizational change initiatives are both challenging and complex, and the future of organizations depends, in large part, on successful change initiatives. This paper will examine a recent failed change initiative by General Electric and examines what steps could have been taken to result in successful change.
Adam Lashinsky of Fortune Magazine recently detailed the decline of General Electric following their failed organizational change initiative with implementing new technology (Lashinsky, 2018). Former CEO, Jeffrey Immelt, began addressing sweeping changes to General Electric and their utilization and implementation of new technology (Lashinsky, 2018). Lashinsky (2018) noted that the change effort was a massive failure as a result of three exceptionally poor decisions: poor investments in new technology, poor allocation of capital, and, as a result, a sharp decline in organizational culture. Ultimately, for Immelt, the failed organizational change initiative resulted in his abrupt resignation from his role as CEO of General Electric. What steps could have been taken by the organizational leadership of General Electric to better communicate with their stakeholders regarding these changes? What lessons can we learn from this failure?
Vamsi Chimitiganti, writing for ITProPortal, a technology commentary and analysis organization, noted that the primary failure of General Electric was not related to technology, but to organizational communication (Chemitiganti, 2018). Chimitiganti (2018) noted that General Electric communication to stakeholders was poor every step of the way: poor communication of the rollout plan, poor communication to technology developers, and poor communication to employees impacted by the new technology. While the technological advancements leaders were seeking to initiate failed, the true failure on the part of those leaders was communication with stakeholders.
Chimitiganti (2018) noted that General Electric’s communication of their rollout plan failed to communicate in quantifiable terms what the company was seeking to accomplish and how. Their communication during this phase failed to address how the new technology would reduce costs and generate revenue as well as failing to address how this would affect their existing business model and structure (Chimitiganti, 2018). Their communication with technology developers was equally ineffective. Chimitiganti (2018) noted that General Electric’s communication with developers failed to include listening to or soliciting their input regarding the technology they were developing. Organizational leaders of General Electric imposed unnecessarily long, cumbersome organizational processes for procuring resources and solving technology-related problems in the development phase (Chimitiganti, 2018). Furthermore, the developers were dictated to what technology they were developing and what the timeline for development was rather than being consulted with regarding such decisions (Chimitiganti, 2018). Similarly, Chimitiganti (2018) noted that poor communication to employees impacted by the new technology included no invitation to employees to experiment with the new technology and provide feedback regarding their experience. As with their relationship with developers, communication from organizational leaders of General Electric to their employees was given in the form of directives which increased resistance and decreased the likelihood of successful change.
Strategies for Improved Communication
What can we learn from the failures of General Electric’s leadership in this change initiative? What strategies can other organizations adopt which would increase their likelihood of changing successfully? Firstly, organizational leaders must acknowledge the importance of careful and thoughtful communication to all stakeholders within the organization. Saruhan (2014) developed a list of vital organizational change factors. The researcher noted that communication and perception of organizational justice are both vital factors, and that good communication positively impacts employees’ perception of organizational justice. The research of Raina (2010) also concluded that communication is the most vital factor and predictor of organizational change success or failure. Additionally, Amis (2013) discovered that communication is also the primary instrument used effectively by organizational leaders to prepare employees for change. The research of McClellan (2014) agrees with this conclusion. The researcher noted that communicating and announcing change should be seen as opportunities for open dialogue with shareholders to invite them to serve as active change participants.
Communication is arguably the most important factor for organizational leaders in considering and implementing organizational change of any type. This is true not only in the technical sense of utilizing appropriate communication tools, but more importantly in what it communicates to stakeholders about the values of the organization. Research has demonstrated the importance of trust between organizational leaders and stakeholders, but it has also highlighted the importance of a sense and perception of proper organizational justice by leaders implementing change (Huevel et al., 2013). This sense of justice deals with the treatment of employees throughout the process of change (Saruhan, 2014). In addressing this issue, Saruhan (2014) noted that while there are many reasons organizational change initiatives fail, human related issues are the primary reason. Many of these human-related issues surface in the form of resistance to change which may be alleviated with purposeful and intentional communication from organizational leaders (Huevel et al., 2013). Oreg (2003) constructed a “resistance-to-change scale” comprised of four factors: routine seeking, emotional reaction to imposed change, short-term focus, and cognitive rigidity. The researcher concluded that the greater the dependence of individuals on these factors, the greater will be their resistance to change. Inversely, it can be concluded that the greater and more personal the communication by organizational leaders to address these issues during change processes, the greater the likelihood of changing successfully.
While the objectives of the organizational leadership of General Electric may have been in the best interest of the company, the communication during this season of change was so poor that this message was never received by shareholders. Consequently, the change initiatives proved disastrous. Company revenue provides the most glaring example of this disaster and its consequences. Alwyn Scott, writing for Reuters, noted that General Electric’s revenue for 2017 equaled $124 billion. Current projections for the year 2020 expect General Electric’s revenue to equal just $12 billion (Scott, 2017). This indicates that this failed change initiative cost General Electric more than ninety percent of their annual revenue. What practical steps need to be taken going forward?
Organizational leaders of General Electric must re-evaluate the importance they place on communication. Trust and a proper sense of organizational justice must be re-established throughout all levels of the organization prior to any new change initiatives. Therefore, a listening phase is recommended to encourage participation and engagements at different organizational levels. Initially, a forum should be initiated by organizational leaders to include as much of the company as possible. This would address all employees and other members of the organization and encourage their feedback and input on the proposed changes. Secondly, a subsequent listening phase should be held with each department. Departments should have their own forum, as this will allow organizational leaders to learn and absorb how proposed changes will impact departments differently and how resistant various groups are to organizational change. Furthermore, specific attention should be given during this listening phase to the “resistance-to-change scale” constructed by Oreg (2003). This scale is comprised of four factors: routine seeking, emotional reaction to imposed change, short-term focus, and cognitive rigidity. Each of these factors should be at the core of communication efforts to employees to minimize employee resistance to change initiatives.
Secondly, experimentation should be encouraged once change initiatives are launched. This further encourages employees and shareholders to interact with the new changes with the understanding that their interaction and feedback are valued more than the technical usage of the technology. This further communicates to those impacted by the changes that their contribution to the organization, and their role within the organization, are more important than the technology they utilize. Throughout each of these phases, it should be communicated how this new technology will improve the life of the shareholder as well as the organization. This provides a purpose for the changes that will help shareholders grasp how these changes are beneficial. These recommendations help build a framework for the employees in which they are valued, encouraged, and empowered and the organization continues to be effective and prosper as well.
Amis, J.M., & Aissaouri, R. (2013). Readiness for change: An institutional perspective. Journal of Change Management, 13, 69-95. doi: 10.1080/14697017.2013.768435
Chimitiganti, V. (2018, October 3). What we can learn from GE and why digital transformations fail. ITProPortal. Retrieved from https://www.itproportal.com/features/what-we-can-learn-from-ge-and-why-digital-transformations-fail/
Heuvel, M. V., Demerouti, E., Bakker, A. B., & Schaufeli, W. B. (2013). Adapting to change: The value of change information and meaning-making. Journal of Vocational Behavior, 83(1), 11-21. doi:10.1016/j.jvb.2013.02.004
Lashinsky, A. (2018, May 24). The failure of GE’s digital transformation. Fortune. Retrieved from http://fortune.com/2018/05/24/ge-failure-immelt/
McClellan, John G. (2014). Announcing change: Discourse, Uncertainty, and organizational control. Journal of Change Management, 14(2), 192-209. doi:10.1080/14697017.2013.844195
Oreg, S. (2003). Resistance to change: Developing an individual difference measure. Journal of Applied Psychology, 88(4), 680-693. doi:10.1037/0021-9010.88.4.680
Raina, R. (2010). Timely, Continuous & Credible Communication & Perceived Organizational Effectiveness. Indian Journal Of Industrial Relations: Economics & Social Dev., 46(2), 345-359. Retrieved from http://www.i-scholar.in/index.php/ijir/article/view/41270
Saruhan, Nese. (2014). The role of corporate communication and perception of justice during organizational change process. Business and Economics Research Journal, 5(4), 143-166. doi:10.1108/13563280510596943
Scott, A. (2017, August 28). GE shifts strategy, financial targets for digital business after missteps. Reuters. Retrieved from https://www.reuters.com/article/us-ge-digital-outlook-insight-idUSKCN1B80CB
NG, LR, & NCU
My collection of personal papers written over the years