The nature and needs of the organization changed dramatically,especially in today’s environment. OrganizationDevelopment (OD) is an effort planned within the organization, and managed andexecute by the top to bottom, to increase organization effectiveness and healththrough planned interventions in the organization’s processes. (Source: managementhelp.org) OD must have the full involvementand ownership of all stakeholders, not only the employees or members in theorganization in order to be successful during the process.
OD is usually facilitatingin the change process. These change agents may require both employees of theorganization as internal consultants or people from outside the organization asexternal consultants. Effective changerequires leadership with knowledge, and experience in change management and tofollow and sustain in the rapid changes an organization need to change byfreezing and unfreezing. (Source:mindtools.com) There are many organizationsfailed and unable to cope with the rapid changes environment such as NOKIA. The primary reason of why NOKIA failure is disinterestand the disengagement between the stakeholders duringtheir transformation. During such critical situation, the change managementteam and leaders, the employees, the consultants or the industry experts whoare supporting the process of change management, either external and internalstakeholders of the organization should be sharing a common vision in terms ofthe objective for change management. (Source:atozgossips.
com) The family-owned business is differentfrom any other organizations in some way. It is mainly complex way aboutmanaging an organization especially a family and shareholders. This includedthree different system which is family, company and shareholder (Source:sedlak-partner.com). In summary, the organizationaldevelopment and change (ODC) has expanded widely to focus on aligningorganizations with their rapidly changing and complex environments throughknowledge management, organization learning and transformation oforganizational norms and values (Source: Bacal,2007).
Every organization has gone through a process of change in order to achieve more effectiveness and company’s optimism goal. As usual, a normal organization will go through two different types of incremental and revolutionary change; growth and change. This change will execute and monitor by the change management team by applying a learning curve and changes process according to the situation. Especially to Family Business both of the changes required different approach. As organizational development is thought to be a process of integration of culture and family goals, the family business may not follow the actual process as what an actual business organization does and always leads to improved strategic implementation which families speaking the same language (Source: Bacal, 2007). It was pointed out that tackle problems during the growth of family business with a great opportunity to cultivate long-term family ownership.
Although it has been showed the family business need to use behavioral science approach as a key for organizational development to establish a high-level leader, most of the time their behavioral traits in the family and ensuring that their family needs emerge instead of focusing on employees demand. As such, there are some of the modifications that can be identified like the system of the family business, complexity and satisfaction and etc. Every family business has a set of three different systems; the family system, the ownership and the management system. The owner will always behave as the shareholders and there are purely owned by their own family or trustworthy person as friends, which both of their goals will be the same to achieve higher profit in the business and securing a long term position and family well-being. As a family business created the change, usually not difficult as the top management team are from the same family as their thoughts is similar as compared to others organization.
The managers from normal organization could be from the outside which more well-versed with the norm of business. The main development issue in this area is that they even hired some people from outside the organization; the final decision makers are still family. A family business and the family leaders that recognize and manage these three systems are more effective at keeping sustain a success which is not applicable in normal organization; only two different group managers and shareholders work to make the business successful. Therefore, the modifications that need to be made are to consider the process as a consolidation of two elements and to include more non-family members in the system to enhance the process. In family-owned businesses, satisfaction may become more complicated as family ownership is required to adapt to new financial requirements or to meet unacceptable external quality of measurement, as family businesses seldom accept changes and always change because of insecurity which they do not trust others into business.
Families are now often compromised so that businesses can continue to be at a tolerable level of anxiety that a normal organization always wants to meet shareholder needs and achieve business goals. Unless they know the difference between a family and a business, the change may not be easy to adapt to a family business. (Source: Gary, 2005) Innormal organization, the CEO or managers will play and work according to theirtask and responsibility however this is not much applicable into the familybusiness as they are bound by the complex structure and misunderstand. It has acomplex structure and most of the time will lead to any misunderstand andeveryone wants to keep each other feeling taken into care.
In this context theymay very reluctant to do any continuous improvement as they feel it may bereflecting the weakness of their own family members and they have the habit tofind a scapegoat to be victimized and this not been likely by the employees.This also difficult process as they required take care additionally a familyand shareholder which in certain need to be confronted with situations thatcannot be solved without anyone feel offended or insulted. This issuefrequently evolves in the family-owned company and they may not able to settleit in smooth and employees may not able to interfere. OD may not adopt in herebecause this process is difficult to be change unless the system changes toaccept other in the board of directors or shareholder like PARKSON – under LionGroup. One of the successful family business that growing and anticipate changes and using revolutionary changes like PARKSON. Even though they are family business but the ideas and concept are very much relevant to the concept of open management in normal organization; the modification they have done is the change the entire system works in the organization by implementing a board of director which consists of outsider.
This openness approach encouraged and creates better growth in terms of innovation and the succession planning may not work for them and they may find it as threatening. This may be cause problematic if anyone in the family faces serious illness or worst, and the continuation of the original plan may not be feasible because they do not inherit the legacy. In addition, they are reluctant to the change due to the insecure feeling and do not trust any others in their business except their own family. (Source: Gary, 2005)The concept of organizational development and change seems to be not easy to execute in family business because the complexity between the family management and professional management as the problem as usually the person who hold high position like CEO or Managing Director may not able to be the right candidate with the relevant qualification especially in specific management skills, beside this it is sometimes it is difficult when someone unable to behave professionally. The most impossible elements of the successful family business plan are the strategic planning between the family and business where owner and managers can produce mutual commitment and alignment towards company’s goal (Source: thefbcg.com).
Figure 1 – Parallel PlanningProcess (Source: thefbcg.com) Based on the Figure 1, the parallelplanning process split to four principal which is the family must first clarifythe shared beliefs amongst, experience and legacies that unite them in their ownershipof the family enterprise however this can be easily identified as a criticalissues in a family business because not all the employees will be able toaccept the shared beliefs. This issue also needs to be encounter by the ODCpractitioner since most of the families’ leaders are more interested to solvethe misunderstanding rather than create a strong values and business policy forstrategic planning. The most of the family businesses are not much keen in astrategic planning. Secondly is the strategic thinking principal applied toboth business and family; will ensure a communication flow in between sincethere must be a set of alignment in between family’s expectation and businesswhere business must proactively plan for growth, however this could lead to becritical factors as when conflict or misunderstanding occurs in the businessthe communication flow stop and end. Therefore, the strategic planning may notable to be applied.
(Source: thefbcg.com) Next, the third principal is sharedfuture vision that leads both the family and the business. This familyexpectations will be balanced against business needs in setting the vision forfuture but the critical factor will be how this future vision can be continuedif there is any illness or death in the family business where the leader whocreates the vision is no longer therein some circumstances. Thus, lack ofmanagerial skills among the management staff especially the one related to thefamily may not have the specific skills in management to develop a vision andshared within employees.
Lastly, the continuous formulating long term plans,where the parallel planning process requires a commitment to have ongoingconversations and improvement. However, the metrics may look difficult to bebuilds no expertise and somehow employees may need to confront the managerialperson. (Source: thefbcg.com) Other than the findings or factorsthrough Parallel Planning process, the ultimate difficult that may face by theOD practitioners is the resistance to change from the family business as thefamily members always want to remain the old history and legacy and difficultfor them to move from their own comfort zone and accept the changes because thefeeling of insecure that others may will take the business from them and theywant to secure the business for their next generation. The OD practitioner is a neutralparty who has to stabilize the emotional forces within the family and bring theexpertise of working with numerous families and company’s employees. It is notonly developing a family continuity plan that is simultaneously focused oncritical factors of success for both family and the business requires more thana simple assessment of SWOT however the problem arise as a critical factor iswhy should the family do all this analysis and they tend to be reluctant asthey themselves are not much keen on a continuity. (Source: inc.
com) Besides that, the difficult factorsto choose in a family business is “business first” and family first” becomesirrelevant with the process of assuming the success of the business nowsupports the continuity and well-being of the family next generation which forthem always “family first”. OD practitioner may find it difficult to formulatea strategy that supports the current and future welfare of the family assuresmanagement and shareholder. In a family business with a poor transitions andlack of succession planning could lead to a failure. A strong and effectiveboard by OD practitioner need to be establish since a strong candidate areneeded to create a continuity and aligned the mission and vision. Theorganizational development interventions are learning process on the actionstage of organizational development which has a structured activities used byan individual or agent to improve their social task performance. It has alsonoted that influences in organization’s improvement program in a change agentwhereas client system relationship which also is an intervention (Source:Bacal, 2007). There are six assumptions in how OD couldintervene into an organization according Beckhard system. The assumptions are:a.
The basic building blocks of an organizationare team/ group.b. An analysis relevant change goal is thereduction of inappropriate competition in between the organizationaldevelopment.c. Decision making in a healthy organization islocated where the information sources.d.
Organization, subunit and individualcontinuously manage their affairs against goals.e. One goal of a healthy organization is todevelop generally open communication, mutual trust and confidence between anacross level.f. People support what they help create.
OD interventions are designed to improve the effectiveness of the key tasks especially to face the change agents. We understand the change in any organization is hard to achieve if there are barriers that are institutional or structural then it becomes harder to drive through the change. PARKSON is also a family-centric company with a unique structure that contrasts sharply with the rest of the family-owned business, where they have charismatic and visionary leaders who can guide and enhance the organization at the change is very important. This reflects that OD’s intervention needs to bring about a change agent who can create goals that are relevant to organizational change. In addition, change institutionalized change management programs must be visionary and subject to shareholder review. The ultimate difficulty for family businesses is that the management structure often shares the inheritance rights with parents and children, siblings, or both family members and non-family members and may complicate the remuneration and reward system.
Interpersonal issues are often multidimensional, in which case external intervention may guide the correct organizational structure to distinguish between family affairs and business management. This can be seen in the Chiang’s family how they operate the BONIA Group, to create an independent management structure and independent leader is the chief executive officer of most employees; the staff treated averagely. Recently, the Top management decided to downside by closing down those non-profit subsidiaries and necessary cut-loss on certain department. Few directors and HOD from different department which also the family members have requested early retirement when the change process. This may makes lots of uncertainty and fear between the employees and affected the certain daily company’s process like procurement and etc.
Organizational Development (OD) includes actions that apply behavioral science research to organizational change. It covers a wide range of processes and activities, all of which aim to improve individual organizations. However, in general, OD differs from traditional organizational change technologies in that it usually involves a more comprehensive approach that alters the thinking and behavior of the entire organization.
(Source: linkedin.com)(i) Eliminating Hierarchical Decision-MakingTo create developmental change inan organization, the responsibilities of decision-making should swap from beinga task designated to managers to one that all the employees share. Weunderstand that decision-making should occur where the sources of informationare instead from top of the chain of command. However,this intervention is always not difficult in a family business because themanager is the top member in the family and he/ she able to make hierarchicaldecision making. For example in BONIA Corporation, all the final’s decisionwill be decide by the Chiang’s family who is appointed as Executive Director cum Brand CEO and he control and theultimate power to decide for all. Other than this, the family members usuallyare in the important role in each department like Head of Department and Managers.
Therefore, the OD practices maybe a bit difficult on this as they may notaccept the change in term of decision by eliminating the power. (Source:linkedin.com) (ii) Focusing on Groups & Building TrustIn order to promote change andopen communication, an organization must have a culture of mutual trust. The managerscannot expect employees to trust them automatically. Thus, in order to breedtrust, managers must first show employees that they are trusted. Anorganization is not just individuals whereas by a team of members fromdifferent culture. Groups within an organization must have a clearunderstanding about its purpose, mission and goals, as well as the purpose andorganization of the company’s structure. For an effective change, employees andtheir respective departments should have a good understanding regarding thevarious departments within an organization and their relationships.
Leadershipin a company must have a balance and provide support to employees. (Source:linkedin.com)With rapid globalization expansion, BONIA management was held their first training in Indonesia with objective to strengthen the brand’s future growth.
The employee who have participated not only the local team also included representatives from Malaysia, Singapore and Vietnam. The cultural exchange and interactive activities created lots of new ideas and gaining better trust between employees. In addition, this is also one of the human resource practices to retain employees or expatriate who is assign in overseas country. Apart from that, the employee involvement on decision making of company’s future goal will increase the sense of belonging within the team and indirectly motivate them be a part of the company.
Like an example, the BONIA brand boot camp to review and develop strategies and action in order constantly adapt and manage changes in competitive market. Board of Directors, Country head and all the key management teams from all subsidiaries are involved in this event.(Source from Bonia Annual book 2015) (i) Reducing Unnecessary Competition and investingemployeesCollaborative conditions can help improve teamwork and communication and help employees feel that their contributions are important. Instead of creating a culture-focused environment to motivate employees, companies should focus on creating a culture focused on collaboration within employees. Aside from that, when a company invests in its staff, the staff will invests time and energy into the company. In addition to monitoring goals, providing feedback, and reinforcing positive employee activity, organizations should also strive to develop the skills of employees and enhance their sense of well-being.
Such investments can include educational opportunities, employee benefits and provide the support and tools needed to get the job done effectively.(ii) Active Employee Participation and StrategicInterventionsEmployees will support what they help build. In order to create change, all employees should have the opportunity to actively participate in the employer’s decisions and achievements. This will helps to create employee ownership and loyalty and help them embrace change agents. Strategic intervention is sometimes necessary for within company change and its relationship with the external environment.
Such interventions may include mergers or acquisitions, rapid market expansion, new or increased competition from another company, or re-establishment of stakeholder relationships. (Source: linkedin.com) OD is needed in strategic invention and help to enhance the succession planningthis is because even though BONIA is a family owned business but there reallypays attention on their development of strategic intervention. OD act as anagent to develop and create changes.
When organization workingtoward a goal,it is important to understand the responsibility which involved all levels of organization, not only managerial strategies. Therefore, the organization asa whole, individual departments and employees must evaluate their activitiesagainst set goals