Managing Change in Cadbury Plc.
Cadbury traces its rich history back to 1824 when a shop was opened in Birmingham, England by John Cadbury. The shop specialized in tea and cocoa and in 1831, John Cadbury started to manufacture drinking chocolate and cocoa, laying the business’ legacy. In 1969, Cadbury merged with Schweppes and Cadbury Schweppes was born.
Cadbury Schweppes is a global company with over around 45,000 employees that manufactures, markets and distributes a variety of confectionary and beverages brands sold in almost every country in the world. In 2007, the Group decided to separate its Americas beverages business from the confectionery business. The separation was completed on May 7, 2008. Now Cadbury plc, will be focusing on its confectionery business.
Background to Change
The change that took place in Cadbury that I want to discuss in this report is the company’s adoption of Strategic Human Resource Management. Cadbury has undergone numerous changes which included organizational restructuring, and downsizing. Cadbury Schweppes (now Cadbury) makes it clear that its main goal is to deliver shareholder performance. However, the company also understands the importance of human resource as a source of competitive advantage and as an instrument to achieving its goal. The industry and the business environment continues to change and the company believes that adapting to these changes is the key to success. Because the business environment is unstable, the management believes that the company must be flexible. The company’s human resources also needs to be flexible and the goals and objectives of the HR department must be aligned to the organization’s. This served as the motivation for the company to embrace Strategic Human Resource Management (SHRM).
Cadbury Schweppes is aware of the benefits of SHRM. According to Gibson, the in every company endeavour, a lot of consideration is given to the human resources. Working at Cadbury Schweppes, according to Gibson is about people adding value at every level of the business. So what are the benefits that a company like Cadbury Schweppes can get from Strategic Human Resources Management (SHRM)?
Successful organizations in the future according to Sims (2002) must closely align their HRM strategies and programs with the external opportunities, competitive strategies, and their unique characteristics and core competence. Equally important to organizational success is ensuring that HRM programs or efforts help implement the organization’s HRM strategy effectively. Effective SHRM planning is expected to generate direct and indirect benefits for an organization.
- Identification of gaps between an organization’s current situation and desired future.
- Explicit communication of organizational goals.
- Encouragement of proactive rather than reactive behaviour.
- Encouragement of line managers’ participation.
- Stimulation of critical thinking and ongoing examination of assumptions on which they make their decisions.
- Creation of common bonds or a sense of shared values and expectations.
- Identification of the potential problems and opportunities with respect to the people expected to implement the business strategy.
Current Business Climate
The confectionery market remains a very attractive market and has grown steadily over the past five years at a rate of 5 percent. Innovation is a major driver of growth in developed markets where premium and ‘better-for-you’ products are prevailing themes. The faster pace of growth in emerging markets can be attributed to higher population growth rates and rising levels of prosperity, which has increased demand for affordable luxuries and treats. Overall, the confectionery market is relatively fragmented.
Because change is constant, organizations must continually renew themselves in order to survive. Rolls (1995) believes that organizations need to adapt, learn and become change-responsive. He also maintains that organizations that excel in the future will be those that understand how to gain the commitment of people at all levels and continually expand their capacity to learn (cited in Gilley and Maycunich 2000, p. 51). Today’s organization must be market-driven. Employees must be flexible, learning and adapting quickly to ever-changing conditions. In today’s organization, employees are more accountable and maintain greater authority (Gilley and Maycunich 2000).
Hierarchy and Bureaucracy
Rigid hierarchies hinder organization change. In order for an organization to successfully facilitate change it must streamline or eliminate rigid hierarchies. The process of eliminating hierarchies can be challenging. In hierarchical organizations, decisions are made at the top and passed down through intermediaries. Many people resist solutions imposed by individuals whom they perceive as lacking familiarity with day-to-day operations. Organizations that aim to change need a certain number of entrepreneurial employees – people who like to try new things and who are comfortable with taking risks. But hierarchical firms have few such entrepreneurial spirits. Hierarchy protects two enemies of change: bureaucracy (the protectors of ‘how we do things around here’) and a sense of entitlement among employees (complacency). Effective change demands collaboration between willing and motivated parties. Unfortunately, hierarchical companies are better telling people what to do than at getting employees to collaborate.
These characteristics of hierarchy hinder change. Meaningful Change cannot happen in a hierarchical organization. Hierarchy suppresses collaborative work – an important ingredient in change.
Bureaucracy is the norm, rules, and procedures that serve as the guiding principles of the organization. Bureaucracy is ideally suited to mass production, mass markets, relatively stable environments, and purely economic goals – in other words, the conditions of industrialization. The design hallmarks of bureaucratic organization are standardization, homogeneity, and hierarchy, all geared to the ends of economic efficiency. Characteristics of a bureaucratic organization include fixed allocation of tasks, hierarchical supervision and a system of rules and regulations and military style discipline (Mcmillan 2004).
Systems for Understanding and Involving Others in the Process of Change
Stakeholders are the people who are affected by or can affect the activities of the firm. There are two types of stakeholders – primary and secondary. Primary stakeholders are those who have formal, official, or contractual relationship with the organization. The secondary stakeholders are other societal groups who are affected by the activities of the firm.
For the organizational change that took place in Cadbury, the main stakeholders are the employees. The change will greatly affect the employees and their jobs and their relationship with other members of the organization. The company’s people (employees) are an important part of the change process. For the change program to be successful, it is essential that the people affected are involved and motivated and that their support is gained.
The company decided to embrace SHRM. This has great effects on the employees and Human Resource objectives, goals, policies, processes and procedures will be altered. In order for the change process to be successful, the company needs to create a willingness to change among the stakeholders, involve people and sustain the momentum (Palmer et al 2006).
1. Creating a willingness to change – many people will resist change because of the fear of the unknown. It is essential that people are made aware of the need for change and also provided with regular feedback on its progress. In order to create a positive attitude to change, organizations should publicize successful change and the benefits this has brought to employee.
2. Involve people – in order for people to support the change process, they must be able to take ownership of the process rather than having it imposed upon them. This can be achieved through effective communication and getting people involved.
3. Sustaining the momentum – it is essential that organizations sustain the momentum of change and this can be helped by ensuring that sufficient resources are available, support is given to the change agents and desired behavior is reinforced through rewards.
It is important to be transparent with the stakeholders in the diagnosis phase of the change initiative and to communicate to them the objectives and goals of the initiative in order to identify the attitudes and possible resistance before the implementation. Transparency will also make it possible to modify the change initiative and motivate important stakeholders in order to ensure success.
Early communication and consultation with the stakeholders while the change implementation is in the diagnosis and planning stage will assist in getting people interested and prepared to participate in the change process. Stakeholders will have different levels of involvement. At various stages of the implementation they can be informed, consulted, collaborated with or can be active participants. Stakeholders should be provided with as much information as possible, including baseline data, the objectives of the change and should be involved in anticipating problems and determining solutions.
Processes to Help Involve Stakeholders
1. Employee Empowerment
In order to deal with resistance organizations according to Randall (2004) need to energize, enable and empower their people. By energizing we mean creating a goal that will prompt or energize everyone in the organization. Also the management must be able to lead from the front by showing integrity and establishing trust. Enabling involves invigorating the top team by strengthening its leadership capability. In addition, in order to enable the people, the organization must build a culture of empowerment by opening the door to ideas. Moreover, the organization must also make sure that the employees understand the change process and reasons behind it. In order to effectively influence people, the organization must create a shared vision and common direction. Empowerment is very important. The organization must make sure that everyone is informed and educated about the change initiative.
There are two approaches to empowerment. These are the relational approach and the motivational approach.
Empowerment as a relational construct addresses the relationships between more powerful or controlling individuals or groups and less powerful or controlling individuals or groups. It is believed that individuals or groups who have power will have a greater degree of success in influencing others and achieving desired outcomes. The relational focus of empowerment is the ability to use power and control to create a desirable work environment. Empowered individuals possess the necessary information and resources to function effectively. Empowerment from a relational focus, then, becomes the process by which power is shared by the more powerful with the less powerful. A variety of management strategies deals with the relational construct of empowerment. Examples of management strategies include participative management, delegation, decentralization, shared governance and quality circles.
Empowerment from a motivational focus refers to the power or control individuals or groups have in influencing their world. The ability to cope with events, situations, and people increases an individual’s sense of power. An inability to cope with the physical and emotional demands of the environment results in feelings of frustration and powerlessness. From a motivational focus, empowerment is related to the individual’s need for self-determination and self-efficacy. Self-efficacy becomes a major motivational factor related to the individual’s perception of self-as-cause. Efficacy expectations are associated with the belief that one can successfully perform the behavior required to produce an expected outcome. The development of competencies and personal effectiveness expectations leads to increased feelings of self-efficacy.
2. Restructuring Human Resource Management
Because of the company’s growth and acquisitions, the company needs to adapt a new business strategy that will fit the worldwide competitive situation it finds itself in. The company, as stated earlier, is now focused on delivering superior shareholder performance. This new focus was communicated all throughout the organization. Every one in the organization understands this business move. Human resources play an important role in achieving this goal. The HR department needed also to create new policies, practices, programs and strategies that will support the organizational goal. The different HR programs and policies that are in effect in Cadbury Schweppes are geared toward achieving the organizational objectives. First, the program called “Managing for Value” is aimed at the enhancement of employee knowledge of how the company could be more profitable. This program is coupled with the “Three A’s” policy (Accountable, Adaptable, and Aggressive). We can say that the HR department is able to deliver people strategy by helping the employees adapt to the new organizational culture. The HR department helps the employees to become results-focused, be commercially focused on growth and be aggressive. In order to ensure that the employee’s individual goals are linked to the organizational goals, the employees went on a five-day programme. In addition, to make employees feel a sense of ownership, the company has introduced two share schemes. The HR is able to deliver people strategy by motivating employees through the company’s share schemes. The company also strives to create an environment where every employee can build relationships with co-workers. This is evident in the result of the company’s first global climate survey. Over 90% of the employees felt they are part of a team. In addition, the global climate survey also revealed that the employees understood the business’s purpose and values and its local priorities, they also added that they felt proud to work for Cadbury Schweppes. Collaboration has become important since the acquisitions of different companies. “Working Together” provided more than 50 online tools for people to undertake in order to work more collaboratively than they were used to. In order to deliver people strategy, the HR department focused on motivating and coaching employees to unlock their full potential. With this thinking, the company introduced “Growing our People”, a program focusing on behaviors and unlocking the potential of people at different levels of the business.
Models for Change
Kotter’s Eight-Stage Process of Change
1. Establish a sense of urgency; examine market/competitive realities, discuss potential crises or major opportunities, make change planed and intentional.
2. Create a guiding team; the guiding team is a powerful group that works together as a tem; select the change leaders based upon their capabilities.
3. Develop the vision and strategy to direct the change effort and individual strategies to accomplish the vision.
4. Communicate the change vision by using every communication tool available and become the role model for implementation.
5. Empower broad-base actions, get rid of obstacles, change structures and systems, encourage risks, and deliberate training.
6. Generate short-term wins by planning visible improvement; recognize the people who cause the wins.
7. Consolidate gains and produce more change by openly advocating the necessity to change systems and structures. Develop people who can lead the change, and reinvigorate and encourage the change philosophy.
8. Anchor new approaches in the culture by focusing on customer service, better leadership and succession planning.
Lewin’s Three-Phase Model of Organization Change
Lewin’s model of change consists of unfreezing, movement, and freezing. Unfreezing refers to conditioning individuals’ readiness for change, and establishing ownership. Momentum is built when stakeholders align to introduce change and plan its implementation. Movement also called ‘transformation’ occurs when individuals engage in change initiatives. In the final phase, refreezing, individuals incorporate the change into their daily routine and reestablish equilibrium personally or within the firm. New behaviors solidified and ultimately deemed the norm (Gilley 2005, pp. 34-36). Lewin’s model describes the ‘common-sense’ way in which many managers plan both strategic and operational change.
1. Unfreezing – means destabilizing the present balance of forces that give the organization or business its stability. Lewin argued that this destabilizing process helps to overcome resistance to change.
2. Change – involves moving the unbalanced system in the desired direction. Change or movement continues until a new balance is established between the forces driving and restraining change.
3. Refreezing – aims to establish the balance at a higher level of performance, in such a way that those involved do not slip back into old ways. This is done by supporting mechanisms which positively reinforce the new ways of working (Sinclair-Hunt and Simms 2005).
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