Champion International (CI) is a pulp and paper manufacturing firm with a long pedigree of traditional command and control style of management in American industry. In the mid-1980s, it became a low performer and this resulted in constrained labour relations. However, the situation improved a decade later due to the adoption of socio-technical systems. Among others, such initiatives resulted in a change in management practices. Ten out of the twelve plants could achieve excellence, with four achieving world-class status. CI's de-layering of management from 8 levels to 5, revamping the support functions, divestment of low-performing assets, improvement in information technology, and a strong customer-focused quality improvement programme helped to make them one of the most admired companies in Fortune's list for six successive years.
According to those who were engaged in the process (including one consultant), such change initiatives are more eclectic than theoretical.
Andy Sigler was the CEO when the change process started at CI. His leadership was critical for sparking and sustaining the process of transformation. Sigler's pursuit for transformation was triggered by the 1980 strike at one of CI's mills where management tried to run the plant. His statement of principles called "The Champion Way" focused on quality circles to achieve employee involvement and helped the company to improve the work culture.
In 1985, CI's new pulp mill at Quinnesec (in Michigan) used "The Champion Way" values as the basis for adopting a socio-technical systems approach. The plant's performance system features were self-directed work teams, pay for knowledge, and a flat management structure. The success at Quinnesec compelled CI to move away from a traditional functional structure to a more business unit focus.
Over the years, the change process focused on transformation of the work culture. Self-directed teams were formed, incentive compensation programmes were restructured and introduced for all levels, labour-management partnerships were started, new participative forms of planning were introduced, open-book management was practiced, and generous amounts of training was provided. In addition, CI continued its pursuit to upgrade machinery and equipment and improved its strategic market and product focus, etc. A team of professionals managed this process of transition. CI's change process developed the conceptual model as follows.
W2 = A x C x L
where W2 refers to What Works (WW); A refers to a clear alignment of organizational change effort with business strategy, values and core technology; C means strong capabilities that result from skilled dedicated people working together; and L signifies letting go of traditional forms of direct supervisory control.
CI's change programme initiatives and actions have been aligned with the competitive strategy of the organization, making use of core technology, and addressing the social values. This obviously led to modifications of pay systems, communications, and information technology. In fact, CI's change model leveraged the three Cs of capability, that is, competencies, commitments and cooperation, which reinforced 3 Ss, namely style, structure and systems.
CI continued its change pursuit even beyond and is today adjudged as the best pulp producing unit in the world.
Discussion Question
a) Draw lessons from the change management programmes at CI and compare it with any Malaysian company, to understand the degree of compatibility in their line of action.
b) Discuss why do organizations need to change. Give examples to illustrate your answer.
c) We all know about the failure of the mergers between Daimler-Chrysler due to cultural incongruence. Browse through the available information and analyze the reason for this. What could have been the appropriate approach for a successful organizational change process?