Page 152 - DMGT520_ORGANIZATION_CHANGE_AND_DEVELOPMENT

Unit 10: Structural Intervention

Step 8: Implement the New Process (Manage the Change Process) Notes
This can be done by understanding the people who will be affected by the change. Change
should not and can not be forced on people. Effective communication is a must. People must be
informed in advance. People affected by the change must be involved in the decision making
process. It takes a long time for changes to be accepted. Reengineering should be done before it
is necessary. A culture conducive to generative change is to be created.



Caselet Ford Motor Company

I n the early 1980s, Ford looked at its 500-person accounts payable department closely.

It was soon realized that the majority of each employee's time was spent tracking down
discrepancies between purchase orders, shipping receipts and invoices. Ford decided to
reengineer the entire parts procurement process. Therefore, the steps Ford took were:
An online database was created of purchase orders. Whenever a buyer issued a purchase
order, it was entered into the database. As goods are received at the receiving dock,
someone checks the database. If the shipment matches a purchase order, it is received. If
the shipment does not, it is not accepted.
Therefore, there are no possible discrepancies between what was ordered and what was
physically received. As soon as the shipment is received, the database is updated and a
check is automatically generated and issued to the vendor at the appropriate time.
The results of Ford's reengineering program were: Head count in Ford's purchasing
department fell from 500-people to 125-people at the same time efficiency improved
dramatically.

''The reengineering of procurement at Ford illustrates another characteristic of a true
reengineering effort: Ford's changes would have been impossible without modern
information technology -- which is likewise true for the reengineering effort at IBM
Credit. The new processes at both companies are not just the old programs with new
wrinkles. They are entirely new processes that could not exist without today's information
technology. We say that in reengineering, information technology acts as an essential
enabler. Without information technology, the process cannot be reengineered.''
– Michael Hammer & James Champy
''We learned that you can't plan an entire reengineering project in advance, because what
you discover during the project changes your plan. Every change you design is a living
rough draft, not a perfected process. Reengineering is an iterative process. The problems
you encounter themselves lead to better solutions, which is why it's essential to attack
change in manageable chunks. We also learned that in reengineering you have to
reengineer both human and technical systems, not just one or the other, and it can't all
happen at once.''
-- Pamela Goodwin, senior vice president,
Direct Response Group, Capital Holding Corporation

Contd...

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