Blog 1: Organizational change – General Motors (GM)
In today’s competitive industry, companies should be willing and able to change their practice model as quickly as the situation changes if they are to remain competitive. Without the ability to transform in today’s industry a company would be failed in their lack of knowledge and adaptability. However, organizational change, to some extent, has also impacts on a number of aspects of the organization such as reputation or credibility. General Motors (GM) is an example. GM is a corporation that has transformed its organizational model from a traditional model because they have learned that in order to survive in the current turbulent business environment, they have to change.
Traditional organization models consist of a hierarchical structure with a president or executive at the top, vice presidents or senior managers, then lower management below, and the majority of the employees on the bottom. In traditional organizational models, jobs are grouped by function into departments; this was the case at GM. GM was divided into different independent automakers: Buick, Cadillac, Oldsmobile, Chevrolet, and Pontiac. Each independent automaker was operated differently and competing with each other.
The transformed organizational model is centralized and unified; a team versus several individuals working towards common goals. A transformed organizational model does not have several departments, all performing different tasks and with different needs.
It took several years for GM to transform into a more centralized organization using the transformed organizational model. This transformation significantly changed the diverse workforce at GM. The staff, including management, at GM had to learn a central set of skills. GM engineers also had to centralize and learn each other’s methods of design and engineering. Staff needed to learn to communicate and work as a team not as individuals.
Importantly, because GM is a large corporation therefore when this transition took place several groups of people were affected. Two of the external stakeholders that were affected were customers and local communities where GM’s factories were built. Some of GM’s vehicle brands were discontinued making upgrading or servicing particular vehicle models for customers. Customers are traditional loyal to particular brands so when those brands are no longer available they look for something new. As a result, this not only caused GM losing some of their customer base but also affected GM’s reputation.
Yet, during the transition some of GM’s factories were closed in order to streamline production. When large corporations in towns close their factories, entities such as, restaurants, gas stations, the real-estate market, and grocery stores suffer financially. Therefore, this causes a downturn in the community’s financial well-belling. This type of financial suffering causes a chain reaction in the community; less money coming into the community causes unemployment, large budgets cuts, and police and fire departments are downsized. When this type of downsizing occurs, people tend to move out of the town causing the cycle to start over.
Therefore, it can be said that, to some extent, GM were not be able to avoid damage to their reputation. This is because as GM implemented changes, some of their customer base has been lost as well as the local communities were considerably affected.
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