Overview of the organization
Hans Demant founded Oticon Holdings in 1904. The motivation behind the formation of his
company came from the fact that his wife had a hearing impairment. After his return from the
United States, he brought his wife one of the very first hearing aids. Shortly after, people
started asking him to get them the same device. He then started importing electronic hearing
aids to his station in Europe and operated as a trading company, Oticon. During the Second
World War, the company was forced to begin manufacturing its own devices. This was
because trade had been affected by the war and there was delay in the delivery of goods. The
company remained family-owned until the year 1956 when a different management took over
and began mass production. The new management saw the company moving up to become
the number one supplier globally by 1970.
When Oticon was first incorporated, it functioned as a financial firm. It was later on
reconstructed in 1990 to become a group management company. The reason behind this was
to capture more business opportunities, including getting acquisitions in industries that were
undergoing consolidation. It could now support the distributors of their main products, that is,
hearing aids in well over a hundred countries. Out of these bunch, Oticon had set aside some
of their companies in thirteen countries whose main function was to manufacture the hearing
aids and to maintain a close relationship with other dealers of professional hearing aids. One
of its subsidiaries, Oticon Export, specifically performed the task of distributing the products
to dealers from the remaining countries.
Market
The main product service of Oticon Holdings was the manufacturing and selling of hearing
aids. The company’s products accounted for about 89.8% of the total hearing aid market back
in 1993. By 1998, the effectiveness of the manufactured products had gained popularity all
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over the world and this figure rose to 90.4%. Aggregate growth projections estimated a 5%
annual growth between 1990 and 1998. Experts in the industry sector predicted that the
structure of the organization would remain stable owing to the rate at which it was producing
and distributing goods. It was also expected that the company would engage in mergers with
other companies so as to increase the line of products and technology.
Assumptions
Characteristics of Oticon Holdings and the Proposed Interventions
Teamwork
Teamwork refers to the combined efforts of a group working together to achieve a common
goal. At Oticon, the employees are organized in different hierarchies in accordance to their
qualifications. The employee base consists of the hearing aid designers, assemblers,
distributors, supervisors, operation managers, trainees in the engineering and mechanics filed,
customer service staff, among others. While the listed occupations may not necessarily be
related in terms of the expertise required, the employees listed have their actions reflected on
the subsequent employees from a different department. For instance, the sole objective of the
designers is to come up with state of the art aids. Previously, people who wore hearing aids
could only access the large ones that were visible to the rest of the public. Some of the
impaired people did not really mind having their hearing aids seen. However, there are a
couple of them who feel conscious about wearing visible hearing aids. Such people became
the reason why hearing aid designers had to up their game and come up with smaller hearing
aids. The new version was just as efficient, if not more, than the first types of hearing aids.
Designers must therefore ensure that the designs they bring in are in accordance to the market
expectations. So, how then, is the role of designers intertwined with other employees in
Oticon? Whatever design they come up with is what the engineers and mechanics department
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will manufacture. The manufacture of undesirable hearing aids would lead to reduced sales
and other competitors may take up the top spot that has been held by Oticon for decades now.
To further enhance the concept of teamwork, I am of the opinion that the Designers team up
with the HR department to gather data from potential customers on the kind of features that
they would like to see on the hearing aids. The rationale behind this reasoning is that the end
product would be one that is satisfactory to both the manufacturer and the customers.
Furthermore, the interaction of employees from different departments would bring about a
sense of freedom in the organization in that anyone is free to consult everyone.
Training opportunities
For Oticon to eliminate competition from other manufacturers, it must train its employees on
how to go about their daily routine while working at the firm. For starters, employees in the
designers department may improve their designing skills by attending seminars that are
relevant to their lie of work. Since seminars usually last a few days to a week, the employees
may take a leave of absence (in turns to ensure that the entire department is not absent during
working hours) and attend these workshops. The Human Resource department may also
increase the geographical area from which they gather customer data to ensure that they
collect as much information as possible. The more information gathered the more changes the
company can make with regard to how it manufactures and distributes its goods. Assemblers
of the goods can also seek training on how to best assemble the goods so as to take up
minimal space for the transportation of the maximum number of devices. The rationale
behind the training of assemblers would be to reduce the damage of products while in transit.
It is a common occurrence for goods to be damaged while being transported. If the
assemblers of Oticon are further trained on how to package the devices, less damage will
occur and the company will save money that would have otherwise been used for purposes of
refunds or the repairing of devices. Operation managers generally oversee the entire process
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starting from the designing of devices up to the moment they are assembled and distributed
worldwide. The training of operations managers is crucial to any organization. Employees
who are aware that their operations mangers are fully equipped with relevant skills tend to
have more confidence in not only their superiors, but also themselves. The rationale behind
this intervention is the fact that confidence in the employees will be reflected through their
work.
Division of labour
Proper division of labour is essential in the workplace if its objectives are to be achieved
efficiently. Division of such labour does not necessarily refer to people in different
departments performing their separate roles. Even those from the same department with
similar qualifications must be arranged accordingly to maximise on the combined efforts.
Various factors will determine how the labour will be divided. These include the type of work
to be done, and the manpower needed to accomplish it. Take the example of the distributors’
department at Oticon. Before distribution takes place, they must take into consideration the
location in which the goods are to be supplied. It would be favourable to distribute the
devices to a subsidiary company that is close to the city or metropolitan area where the
population is high. A large population often means that the demand in that area is high
compared to scarcely populated area. When employees are categorized efficiently more work
will be done. On the other hand, improper division of labour would interfere with the rate at
which roles are performed and the end result is that the products would not be up to standard.
It is only normal for chaos to erupt in the event that a certain task lacks the specified amount
of people needed to complete it.
Handling of performance
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Employees’ performance must be supervised by the immediate senior person in that firm’s
division. Such supervisory roles are important as one is able to keep track of how the
employees are faring and factors that may be inhibiting them from performing tasks at their
best. A common misconception in various organizations is that a worker’s negative
performance can only be caused by personal problems that he may be facing at home.
However, an employee’s performance is largely influenced by the environment in which he
works. Social and mental needs at work must be met if he is expected to produce beneficial
results. Employees who have to report to a supervisor at specified intervals, say, weekly tend
to perform better than those who are not supervised regularly. In the case of Oticon Holdings,
management must come up with ways through which each employee can come into contact
with his supervisor regularly. Considering the size of the company, it may be impossible for
individual employees to set up a meeting with a supervisor. As such, the most reasonable
thing to do would be for the employees to be supervised in groups. If this practice is adopted,
close relationships would be formed between employees and their supervisors. Such would
make the work environment have favorable conditions for workers to produce optimal
results.
Adaptation to change
The business world is unpredictable since people’s needs change according to various factors.
Such factors include the need for a product, location of the individual, ease of use of the
device, among others. Being established in 1904, Oticon Holdings should be aware of the
shift in terms of preference of their clientele. For instance, thanks to the development in
technology, smart hearing aids now exist. The devices are subject to artificial intelligence
whereby they may be connected to other devices via Bluetooth. Some of the benefits of
smart hearing aids include the ability to stream music through the devices. Wearers of these
devices can now enjoy their favorite songs at anytime and anywhere as long as the device is
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in place. The devices have also been improved technologically in that users can monitor their
health through it. It can read the wearer’s body temperature and heart rate, which is especially
crucial for patients with chronic illnesses. If Oticon Holdings manages to keep up with the
latest technological milestones employees would have a sense of pride knowing that they
work for an organization that has updated its products tech-wise. This factor would motivate
them to work more efficiently and design and manufacture high quality goods.
Acknowledgement of risks
Risk is an integral part of any risk. It is safe to say that all business are subject to risk as long
as they are in operation. As such, proper measure on how to handle potential risk must be put
in place. The most common risk management feature is the training of employees so that they
may be able to identify instances in which potential risk could harm the business. When
related to the company in question, Oticon Holdings should acknowledge the fact that it is
subject to risk that may be either self-inflicted or caused by other elements. If the company’s
administration sets out principles of risk management, the organization is less likely to suffer
risks such as fraud. Studies show that fraud is the most common risk faced by financial
industries. This is fuelled by the nature of the funds liquidity in the organization.
Assessment
Assessment refers to the act of determining or gauging a phenomenon. An Assessment tool
is the approved deposition needed to gauge the competency of a unit. This section of the
essay seeks to use a tool of assessment to assess Oticon Holdings as it moves through the
phase of resistance to transition.
Background to the Resistance
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When Oticon first started manufacturing the hearings aids, it was not aware that the devices
would change in shape. The aids went from being two centimeters behind the ear, to being
worn right inside the ear. This introduction of modified products saw Oticon suffer a great
financial loss since they had already produced their initial products in bulk. Between 1979
and the company had lost a significant portion of its competitive power. It fell to the third
position from the first position with its sales going down by 7%. The company saw it fit to
hire a new CEO, Lars Kolind. This was an unexpected choice considering the fact that he did
not have any experience in the relevant industry. However, his previous employment was
from a company that manufactured scientific device and it was for this reason that he landed
a job at Oticon. However, the fact that a new CEO had been appointed did not stop the
previous management team from being involved in the operations at Oticon. They simply
switched roles in that the sales director became the general manager whereas the technical
director became the manufacturing operator.
Kolind introduced new measures in a bid to save the company from making constant loss. He
began by cutting down costs by getting rid of some product lines. This caused about 15% of
the employees to become jobless. On the bright side, the company managed to restore
profitability in just six months. This propelled Kolind to further change the clientele focus. It
was now clear that the market was attracted to the quality of hearing aids that a company
produced, and Oticon’s competitors were producing the desired quality. Oticon could no
longer hold the top spot for hearing aids considering that a competitor was the one who had
come up with the new innovation in hearing aids. Kolind then formulated a plan to make
Oticon a partner of a majority of hearing clinics. That way, the company could have a more
direct access to patients with hearing needs as opposed to advertising to the general public.
He also promoted junior managers who assumed the role of making relevant changes in the
organization of the company. However, the employees at the company felt like nothing had
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really changed despite the financial turnaround witnessed under the leadership of Kolind. The
CEO stated that cutting costs had been the secret to reviving the company. However, this
could not be treated as a long-term solution to the problem in question.
The Resistance
On 1 st January 1990, Kolind wrote a memo to his employees in which he described the type
of organization that could ensure the company gains back its competitive advantage over
other manufacturers. He challenged his employees to think out of the box and not allow their
thoughts to be limited by any factors. All walls and irrelevant paperwork were to be done
away with and the new foundation of the company would lie on two things: action and
dialogue. The entire company was to be redesigned in support of these two elements. Kolind
also set out another objective that he hoped would be achieved with the next financial year.
This objective was known as Project 330 whereby employees were expected to increase their
productivity by at least 30%. What Kolind envisioned was a company completely different
from the current company that he was running. According to his vision, the new company
would have only one team (this is contrary to the characteristics of an organization in which
the entire team is divided into hierarchies depending on people’s roles). The rationale for this
is that having a good product in the market is not enough. Instead, the manufacturer of that
product must be organized in such a way that all departments (starting from administration, to
production to sales) work as a unified team. He claimed that the cost of running the business
was high therefore the only way such expenses could be prevented was if the entire employee
base was treated as one large department. It is from this concept that Project 330 was born.
For starters, Kolind advised all employees take up several roles in the firm regardless of their
qualifications. This way, when the tasks in a particular need an extra hand anyone would be
free to fill in and propel the country to greater heights. He also advocated for the avoidance of
paperwork. According to Kolind, paperwork affected an employee’s efficiency as it consists
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of certain protocol which must be observed including the stamping of signatures on a
document. Lack of paperwork would mean that employees directly work with their
colleagues for utmost feedback. Lastly, it was Kolind’s idea to get rid of the walls at the
workplace. He wanted the workspace to be one large hall where all employees could have
one-on-one interactions with each other. Walls were a barrier to communication and therefore
inconvenient. Furthermore, the lack of walls would give all employees a sense of equality as
opposed to other organizations whereby the senior most members have private offices while
the rest of the people have to share cubicles in relatively small halls.
The first batch of people to resist these changes was the managers. It should be noted that the
managers were of the older generation and so they were used to things being done the
traditional way. This means that bosses had to have their private offices, and so on and so
forth depending on the hierarchy at work. However, the younger employees were in full
support of these changes. From the foregoing, we see how it is difficult for people who grew
in the traditional set up of an organization to accept changes that are contrary to it. As for the
rest of the people who did not resist the changes, the challenge that arose from them is that
they did not have much confidence in the project. They were of the opinion that it would not
materialize and that even if it did, it would only be matter of months before the company fell
to its knees due to the changes made. The saving grace for the company was when the board,
inclusive of Kolind, began talks on relocating the company’s headquarters. It therefore
became easier for employees to integrate in the new building which already one of the
features specified in Kolind’s memo, that is, no walls.
Assessment via Observation
For the assessment, I will look into how the employees resisted the change to transition at
Oticon Holdings. First and foremost, the company had faced financial difficulties when a
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technological change in the hearing aids cane about. Oticon was a large scale manufacturer of
hearing aids. It would manufacture the devices in bulk before distributing them all over the
globe. This means that by the time the technological innovation in hearing aids came about,
Oticon still had lots of unsold devices in its storage warehouses. Whether or not these devices
had been pre-ordered was irrelevant since they were now deemed useless, at least for a
majority of the population. The hearing aids manufactured by Oticon were 2 centimeters
behind the ears while the new generation of hearing aids could fit perfectly in the wearer’s
ear. It was only obvious that a better part of the population would go for the almost invisible
hearing aid. It was at this point that Oticon Holdings started making losses.
It should be noted that since that the company was among the pioneer manufacturers of
hearing aids, it had acquired plenty of revenue in profits. This was the reason why it did not
go into bankrupt immediately. The new CEO formulated new policies that saw the company
retain its lost glory in a matter of months. Supposing the employees had readily agreed to the
policies, this period would have been shorter.
Evaluation
This essay looked into the resistance of the employees of Oticon Holdings and from the facts
gathered, it is evident that the resistance was fuelled by various elements.
The major challenge that arose with regard to resistance in transition was that people who had
already become dependent on a certain organizational structure were not willing to try out
something new. In the case of Oticon Holdings, the managers, who were older than the rest of
the employee base were the first to resist transition. They believed that by virtue of them
being older, they had all the experience needed to decide whether or not a structure could be
changed or stay as it was. Another factor that could have led to the resistance was that all
other competitors of Oticon Holdings were following the traditional structure of
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organizations. It is only obvious then that as the pioneers of the company they did not want
their batch to be the first to try out a new concept which they were not sure how it would turn
out.
From the foregoing, the issue of resistance could have been better dealt with if only the CEO
had consulted other member of the organization before coming up with a memo that was
known to him only. This brings us to another cause of resistance, that is, people in an
organizational structure are likely to resist changes of they were not consulted during the
formation of the recommendations.
Strategies for Curbing Resistance
Training of employees
According to the CEO of Oticon, all employees have to be familiar with more than just one
area of expertise. One need not be excellent in that particular field; as long as he has some
knowledge is enough. If the employees were to be trained on how to be familiar with skills
other than what they studied for, it would be easier to overcome the resistance phase.
Encouraging teamwork
Teamwork would ensure that if another department was slowing down on it performance, an
employee from a different department would fill the gap and the objectives of the company
would be achieved.
Distribution of labour
As much as all employees should have general skills from other departments in the
organization, they must properly divide the work among themselves. This would avoid the
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issue of one department being fast in performing its tasks while another department can
barely keep up.
Handling performance
Performance handling means that the CEO keeps close tabs on individual employees and not
just departments. This would pave the way for promotions and illuminate employees who
need to be let go.
Acknowledgement of risk
Employees at Oticon must acknowledge that they are at risk of closing business if they do not
come up an organizational structure that is different from their competitors. It is for this
reason that they should be willing to implement the policies suggested by the CEO.
Future Trends
Future trends in organizational structure see the leader of the organization consulting other
members of his team before the formulation of new policies. It is also likely that
organizations will start to arrange their structure in accordance with the nature of the business
conducted. For instance, it would be favorable for service and manufacturing industries to
adopt the open policy by Lars Kolind. On the other hand, it would be recommended for
processing industries to stick to the traditional organizational structure as processing plants
are delicate in nature and the combination of employees from different departments may pose
a danger to the business.
Workers would also adapt to the fact that the structure at their workplace may change at any
time. Just because a certain trend was being used from the onset of the business does not
mean that it is not subject to change. Once the change takes place, how soon the results are
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seen will be dependent on the enthusiasm of the employees. Workers who are quick to adjust
to structural changes are most likely to get positive results first.
Summary and Conclusion
Change in any organization should be a gradual process. It would take months before results
are seen under the implemented changes. The person who decided to bring about the change
in organization must also be willing to consider the needs of his employees. The latter should
therefore be consulted before making any major changes. Failure to that would lead to
resistance, which would further lead to a drop in sales.
Drop in sales would return the company to the initial position that forced it to seek structural
change in the first place. If the company was still new in the market with average revenue, it
would most likely fall into bankruptcy. It is for this reason the CEOs and managers must take
their time when trying to bring about major changes at the work environment. In some
instances, the resistance is usually dealt with by firing the employees who refuse to comply.
This would have detrimental effects on not just the fired employee but the employer as well.
The employee would have lost his source of livelihood while the employer would have to go
through the trouble of finding suitable candidates as replacement. Such scenarios are
especially hectic if the company had already financially invested in the fired employee
through training and seminars. It would therefore be favourable for both parties to come to an
agreement as to how to adapt to changes.
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References
Macrì, D., Tagliaventi, M. and Bertolotti, F. (2002), "A grounded theory for resistance to
change in a small organization", Journal of Organizational Change Management, Vol. 15 No.
3, pp. 292-310. This book looked into the reasons why people would resist change even
though their employer saw it was for the good of the company. Popular reasons included peer
pressure, economic factors, and threat to the comfort of the employee.
Buchanan David , Huczynski Andrzej: Organizational Behaviour – An Introductory Text,
Third Edition. Prentice Hall, 1997. This book focused on the fact that employees were most
likely to accept organizational change if they were consulted on the changes to be made in the
first place.
Connor Patrick E., Lake Linda K. & Stackman Richard: Managing Organizational Change,
3rd Edition, Praeger Publishers, Westport, 2003.This text emphasised on the factors that
would force an organization to change its structure. The top reason was the reduction in
revenue of the business.
Robbins P. Stephen: Organizational Behaviour- E – Business, Night Edition. Prentice Hall,
Upper saddle River. New Jersey, 2001.This text looked into the relationship between
employers and employees and how this relationship would influence the decision of the
employer to change the organizational structure.
Senior Barbara & Jocelyne Fleming: Organizational Change, 3rd Edition, Pearson Education
Limited, Edinburgh Gate, Harlow, England, 2006. This book pointed out how organizational
change could lead to the downfall of a business if the employees did not quickly adapt to the
new measures set up.