IKS International Ltd
IKS Intl. Ltd employs 1000 staff and is part of an African-based multinational enterprise. Its main business is the provision of specialist services to major construction projects like construction of Hotels in the Indian Ocean. As is typical for the construction industry the Company operates in a highly competitive and at times aggressive and hostile environment. Disputes between clients, contractors and subcontractors can become bitter and frequently end in litigation.
Up to 2004, IKS had been run by an autocratic Managing Director who was feared by his colleagues and who treated the company as his own personal business. His style of management was not liked and many felt that it was counterproductive.
When he retired, the parent company took the view that IKS was underperforming and that much of this was due to poor management and a lack of cooperation in the company. His replacement, a new Managing Director, was appointed in January 2005, with the remit to enhance the performance of the company and develop its managerial competency. This he did to great effect. Over a 4-year period, he transformed the operation, culture and structure of organisation.
The Managing Director recognised that the industry was attempting to change, and conflict was being replaced by ‘partnership’ initiatives–contractors and subcontractors working in more cooperative and team-based manner. In turn this would need a new style of participative management in the Company. Thus, the Managing Director set out not just to upgrade IKS’s management but undertook a root and branch overhaul of the company’s operations and culture.
His strategy for transforming the company rested on carrying out two crucial activities in parallel: to introduce new practices and techniques in the company in order to provide a better service to customers (and thus improve the company’s entire performance), and to change attitudes and behaviours within the company, especially those of managers.
New practices, such as customer care and customer partnering, were not mere technical exercises. They required behavioural alters and new managerial skills. Thus, the Managing Director wanted to create a change programme whereby any change designed to enhance the organisation’s performance, whether it be new skills, new techniques or whatever, also had to encourage and reinforce behavioural and culture change.
The Managing Director’s first initiative was to introduce a small-scale Kaizen programme, (a Japanese technique for achieving small-scale enhancements by the teamwork).
The next initiative, in October 2009, was a customer care programme. This was designed to engender a positive view of customers by promoting joint team working. Other initiatives were introduced over the next few years, comprising investing in people, and a redesigning of Construction Supervisors’ role to ensure that the post-holders possessed the skills, competencies and behaviours essential to work closely with customers and staff under the new regime. Once again this was designed to achieve a combination of aims, including changes to working practices, the upgrading of managerial competency on the construction sites, and promotion and development of a more team-based culture in the organisation.
At the end of year 2009, the Board of Directors decided that it was time to redefine its culture and change its structure.
This then led into a process of reviewing each manager’s leadership abilities and behaviours. With these activities underway, the scene was set for redrawing the company’s structure in order to promote and reflect its new ways of working and its developing culture.
The Managing Director and his Deputy began to have discussions in the company over restructuring. Their basic aim was to remove functional barriers and create a more teamwork based, procedure-focused organisation. But, they didn’t underestimate how difficult this would be. It would need a complete reorganisation in and between the offices. It would reduce the power of the regional managers and amalgamate the Head Office empires of some directors. The Managing Director recognised that such changes could and probably would create friction and resistance. He as well recognised that the organization lacked the skills to plan and implement such a change.
Impact of Change
Though the development and implementation of a new structure at IKS was not without its difficulties, it was achieved remarkably quickly and with relatively little disruption. There was significant potential for those who might lose out from the changes to try to prevent, or at least slow down, their implementation. All the regional managers and a number of the directors saw their areas of responsibility, and thus power, reduced. Many of functional specialists found themselves operating in multi-function teams where their promotion prospects depended less on their technical abilities and more on their ability to work and manage as a team player. There was also the fact that people who did not like each other suddenly found that they were working side by side.
(a) Critically examine IKS’s strategies for change taking into consideration the environment in which it operates and the constraints it has been facing during the years.
(b) What are the change approaches that have been adopted by the company? Provide justifications for your answer as well as its relevance to the set-up of IKS Intl. Ltd.
(c) What measures would you recommend to the Managing Director to improve acceptance of change in this particular organization?