Case Study
Managing Change in Corus Steel Products

Executive Summary

This paper provides the outlook on how important is change to an organization. How an organization with long history of establishment reacts to complacency and resistance to change from its human capital, the methods and ways to overcome the resistance through continuous support from the management.

This paper also presents the importance of change programme implemented by the Corus Strip Products UK which has delivered accountable and intangible results through their “the Journey” initiative.

The “Journey” starts from the very first step from recognizing the current pattern of work which they considers as ineffective and complacent. These drivers of change, internal or external they maybe, are important for the management to outline a comprehensive plan for change.

The plan would be specific enough for the management to visualize the end result, where they want to be and the end of the journey. Lastly, the most important of all is that the programme should delivers measureable results and should record improvements and deliver them to where they want to be in the initial plan itself.

We then conclude the paper with recommendation for future change management framework and followed by conclusion.

Introduction

Corus was formed in 1999 when the former British Steel plc combined with the Dutch company, Hoogovens. Corus is now part of TATA group of companies. Corus has three operating divisions and have 40,000 human capital globally. Corus aims to be in the pole position in the steel sector by providing better products, superiority customer service and higher value for money than its rivals.

Corus which has been in existence since 1999 has set in complacency and the management has recognize the need for them to initiate a change programme to take them from where they are to where they will be whilst retaining their competitiveness.

In 2005 CSP UK introduced a cultural plan for change called “The Journey”. The company wanted to address a wide range of business challenges, but the common theme was the fundamental way that people at all levels went about their work. The Journey focused on the values and beliefs of its people. Vitally, this was not limited to employees, but it included contractors, suppliers and other partners. This community of people together re-defined eight core values. These provided the guiding principles by which Corus people would work.

The management has achieved measurable results from the implementation of the change program; production capacity has increased by 4.5% to a run rate of 5 million tones; the plant is on track to achieve a 20% reduction in the cost of producing steel; a reduction in absenteeism; measurable improvements in levels of quality and service for customers; tighter targets for Health and Safety – new safety teams contribute towards accident-free production.

 

Corus Steel Products “The Journey” Change Initiative

Type of Change

There are many different types of change and different approaches to managing change. However, it is clear that it is firms that are best at adapting to managing change that eventually live to tell the tale and prosper in the industry that they are in. As Charles Darwin wrote in the 19th century: ‘It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.’

At Corus Steel Products the type of change is considered to be transformational. The change program focuses on the drivers of change on the basis of “as is “. The change is built on where they are now to where they want to be; with the change management is implemented through adaptation and modification of the current work processes and build on the current operational processes they have now.

Transformational change is an evolvement of company values of an organization resulting from a shift in the underlying strategy and processes that the company has used in the past. A transformational change is designed to be company-wide and is enforced over a period of time.

Change management is central to that most leaders and managers need to be proficient in. Managers need to be able to implement and manage change in a way that meets organisational objectives. They need to make certain the dedication of their staff both during and after implementation, often while business continues as usual. (Kotter 1999)

The impact of such failures can be high, including a loss of competitive advantage, market position, stakeholder confidence and resignations of senior managers and key employees, to name a few. In this context, change management has a key role to play in ensuring that organizational change is managed efficiently, minimizing risk while maximizing the organizational benefits of change. (Tichy & Devanna 1986)

The Journey is a change management tool implemented by the Corus management to achieve measureable success and change the current culture to new values. The Journey is based on Performance Management Cycle where the programme implementation is based on these steps; i) plan, ii) act, iii) monitor, and iv) review. (Armstrong & Baron ,2005)

Drivers of Change

At Corus Steel Products the drivers of change come from both internal and external of the organization. Among the internal change drivers are; delay in delivery – costing the company with increased cost, penalty and also loss of customers. Competitiveness – steel produced in the UK could be more expensive than from some other countries. High product defects – products did not met the specification would need to be reworked or scrapped. Employee confidence – employees were committed but were not motivated by the environment in which they were carrying out their jobs.

External drivers for Corus Steel Products were; new competitors – steel producers in Eastern Europe and the Far East produced at lower cost compared to UK which lead to reduced order. Varying customer requirements – Corus needed to develop different products to suit ever changing customer requirement. New technology meant customers expected higher specifications. Perceptions of the steelmaking industry within the community tended to be negative – for example, the industry was seen as having a poor record on environmental issues.

The drivers of change observed by the management do bring about the need for Corus to implement a change program to stay competitive in the industry. The steel industry going through a series of merger and acquisition is producing very large companies, e.g. Arcelor Mittal is gaining a large portion of the market share worldwide. This poses as a threat to the industry as these giant companies are moving towards becoming a monopoly. Therefore Corus would need to reorient themselves so that they remain competitive and cost efficient.

Identifying and Overcoming Barriers to Change

Overcoming barriers to change is the upmost important issue that the management needs to tackle. Given that most employees would see that change is a threat to their existence in the company, they are sure to resist any threat affecting their self interest. Managing change would need managers to articulate and disseminate the importance of the change processes; creating a friendly, supportive and conducive environment for employees to understand and accept change. (Kotter 1995)

At Corus Steel Products, among the barriers to change identified were; employee perception of change is meant to reduce workforce. The steel industry requires its employees to have to a certain degree of expertise and its ageing workforce meant that the skills need to be transferable to new employees; however the industry is not getting the younger workers as it is viewed as less attractive. Corus Steel rewards its employees based on loyalty instead of productiveness, giving the impression of longer is better instead of higher efficiency and higher productivity.

With the barriers identified, Corus Steel, through its managing director adopted change program called “The Journey”. Quoting Corus Steel Managing Director ‘We cannot solve our problems by spending; we cannot solve our problems by cutting back. The only way to meet our challenges is to change how we go about things…’

Through the change programme, Corus have introduces a series of workshop, seminars and weekly newsletter as a means to communicate with its employees; to disseminate the importance of taking up responsibilities and ownership of their work. A new culture and wanted behavior from its employees were distributed to all and new values were expected from its staff.

The method adopted by the Corus management is referred to as the transformational change where the change is brought in as fast as possible to create somewhat a shock therapy. The reason is; Corus needs to bring in new values fast to replace the existing culture. They have implemented change to not only within their organization but also did newspaper advertising and newsletter to change the perception of the community of the new values.

Managing and Leading Change Process

Corus Steel Products started the transformational change programme “The Journey” by targeting the senior level managers to convince them. The management knows that the people that can spread the change faster would be first to empower the managers. The managers could then continue to disseminate the information on the needs of change.

The reason top management and senior managers were recruited first in the change management, is that they are the key to motivate and inspire their workforce. They are able to support, recognize and reward the people. They are able to clearly help disseminate the change through leadership by example.

Not only through its leaders in the company, all media was utilized to disseminate the message through, internet, billboards and videos and personal conversation were done to instill the new values and employees are taking ownership and responsibility for the change.

Before the change initiatives, any employee misconduct were dealt with disciplinary actions; but through the change initiatives, employees were given counseling and support to fit back into the work environment. Successful cases would then be the company’s tone in propagating their change idea.

Recommendations

Corus Steel Products have managed the change programme, “The Journey” well to be considered it as a success. However, the management should be aware and not just to sit on its laurels and lead the death spiral.

From the success of “The Journey” which is regarded as a transformational change management, the company should now focus on bringing the change to a slower pace, through incremental change policy. Therefore the change process would continue and innovation to the workplace environment would not cease.

Gradual change will require a different framework and it is suggested to follow the Double Loop Learning Process. This double loop process would allow the workforce and management to questions if the operating norms are appropriate after doing necessary environmental scanning.

The Double Loop Learning Process framework also allows for management to challenge assumptions, beliefs, norms, routines and decisions. Having the opportunity to ask is it the right thing to achieve, gives the management a sense of responsibilities and direction, instead of following the normal framework plan, act, monitor and review. (Buchanan and Huczynski 2004)

The management should continue to be proactive and constantly re-tuning the workforce so that they are aligned to the values and behaviour sought by the company. TQM which was launched earlier focuses on reducing errors and ensure specifications are met.

Corus Steel Products being in a very competitive industry would require the management to monitor the business environment and be a leader in change.

Conclusions

Change management in the end of the journey requires the result to be measurable. However change management has always focused on managing people behaviour and creating and maintaining a supportive environment where productivity can be increased. Most of the time results are intangible and the achievement as in increased productivity are the end product of the change in company values and culture.

After achieving desired result, management should constantly monitor the business environment and employees commitment to the company. Being proactive and implementing gradual transactional changes to keep up with the changes.

References

Argyris, C. & Schon, D. A. (1996) Organizational Learning II (Reading, MA: Addison-Wesley).

Burnes, B. (2009) Managing Change. 7th Edn. Harlow. Pearson Education.

Kotter, J. P. (2008). COMBATING COMPLACENCY. Business Week, September 15, 54-55.

Dervitsiotis, K. N. (2007). On Becoming Adaptive: The New Imperative for Survival and Success in the 21st Century. Total Quality Management & Business Excellence 18, no. 1/2, (January 1).

Latta, G. (2009). A Process Model of Organizational Change in Cultural Context (OC3 Model): The Impact of Organizational Culture on Leading Change. Journal of Leadership & Organizational Studies 16, no. 1, (August 1): 19.

Tatli, A., and M. Özbilgin. (2009). Understanding Diversity Managers’ Role in Organizational Change: Towards a Conceptual Framework. Canadian Journal of Administrative Sciences 26, no. 3, (September 1): 244-258.

 

 

 

 

 

 

 

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