Managing organizational politics

for radical change

By: Susanne Blazewski ,

Wolfgang Dorow
Abstraction:

 In 1997 Beiersdorf group reacquired its former

subsidiary in Poznan which under Polish state after
World war 2.
 In two year management succeeded in making this
state owned and production driven company into
highly profitable company.
 In this article there is a comprehensive model of
organizational transformation that integrates micro
level change theory and organizational politics
approaches focusing on the interplay of power and
interest for radical change in CEE enterprises.
Introduction:

 In this article there is a micro level model for

radical intra-organizational change that
particularly focuses on a systematic analysis
of interest and values ,power means important
element of organizational transformation.
 In this article they have provided a framework
for proactive management of intra-
organizational change that which power and
politics are used to attain a rapid and radical
turnaround of the company.
Transformational theory: re-introducing micro
level perspectives
 Transformation at CEE was particularly seen at
macro level economic theory. But the neo-
institutional list and researcher point that there
is need of micro level to study the radical
change.
 There are three micro level theories by
researchers
1. Newman.
2. Johnson.
3. Antal Mokos.
Theory by Newman:

 The dominating agency plays important

role in the transformation, institutional
upheaval in the organization radical
change process.
 Too much organizational change inhibits
organizational ability to learn.
Theory by Johnson:

 How actors within the organization cope with

the change in their institutional environment.
 In privatization process there are 3 micro-level
mechanisms.
1. Involvement of actors.
2. Behaviors by other actors how they adapt
behavioral routines.
3. Symbolic representation of change in the
radical change process.
Theory by Antal Mokos:

 He said that “Organizational Politiking”

means that micro political activities of
organizational actors involved in
transformation process forms one of the key
determinants of privatization success and
failure.
Extension of theories:

 Three theories concentrate on the earlier year

transition in CEE.
 Micro level should be better understood in
political dimension.
 Antal Mokos views political behavior in
organizational change processes as
“Harmful”.
 The theories leave aside the possibility of
proactive management of transformation
processes.
Organization politics model for organization
change
 Organizational politics approach interprets the
change processes as processes of resolving
conflicts and colliding interest between internal
members of the organizations.
 Managing power has several implication:
1. Identify colliding interest of persons holding powers.
2. To which extent these interest vary within the
organization.
3. Power against the opponents.
4. Strategies that how these are developed within the
organization.
Organizational politics model

 Interest of the organization change agent and

their opponents
 Limited scope of the change agents.
 Access to institutional and personal power bases
 Changing the frame and changing cognitions as
power processes.
Conclusion:
Organization politics model allows for a
systematic description of all relevant dimension
of handling conflicts within change processes.
Radical and revolutionary change at
Beiersdorf-Lechia S.A, Poznan:
 Beiersdorf group in 1997 acquired majority shares of
formely state owned cosmetic company Fabryka
kosmetykow Pollena-Lechia S.A.
 Beiersdorf-Lechia is one of the Beiersdorf group top
ten affiliates worldwide.
 There were 3 stages of radical change.
1. Pre-acquisition phase.
2. First post-acquisition phase.
3. Second post-acquisition phase.
TRANSFORMING THE
MANAGEMENTS FRAME OF ACTION

Pollena was a part of a collective combine.

It has high vertical integration.

Pollena had a few state owned customers.

 Transforming The Managements
Frame Of Action

 In 1995, Pollena became the part of the

privatization program.
 But the state treasury still own 25% of the
shares and employee own 15%.
 Heterogeneous ownership was the problem for
Pollena.
 They also had some limitations.
 Transforming The Managements
Frame Of Action
 Another Insecurity was that they had only 3
main customers.
 The competition was growing aggressively.
 The company was over burdened by the 350
employees.
 Transforming The Managements
Frame Of Action
 Financial resources were also the main problem
for Pollena.
 There were also some information deficiencies
like:
 Lack of Customer Research.
 Lack of valid Sales Data.
 Tight embeddedness of the company in the old
system and Heterogeneous Ownership of the
company results in the failure of the change
process.
Transforming The Managements
Scope Of Action

 In 1997, Beiersdorf acquired majority stake in

Pollena company which was now renamed as
Beiersdorf-Lechia S.A.
 They replaced all board members with their own
executives.
 Transforming The Managements
Scope Of Action

 Acquisition of 100% shares solve the problem of

heterogeneous ownership for the company.
 Beiersdorf recruited young highly motivated new
employees.
 They adopted Nivea Brand strategy by increasing
their sales force.
 Beiersdorf Found Success
 Now Beiersdorf was able to attain those results
where Pollena had previously failed.
 Beiersdorf changes individual’s behavior routine
by
 Providing new frame of action.
 Supporting cultural value system.
 Employee have only one choice to accept the new
frame of action or to leave.
 Beiersdorf Found Success
 Potential resistance to change was proactively
prevented through the offering of high monitory
equivalents.
 Unionization was dropped from 100% to 15%.
 These minor changes had played an important
role in the success of the company.
Challenging culture and cognitions

• Individual frame of action is achieved.

• Changing organizational culture.
• Introducing new communication styles
and careful selection of new recruits are
two important steps of Biersdrof
Liechia.
Challenging culture and cognitions

 Individual frame of action is achieved.

 Changing organizational culture.
 Introducing new communication styles and
careful selection of new recruits are two important
steps of beiersdrof lechia.
 Reflecting norms of all employees.
 Young graduates not feel difficulty in institutional
upheaval as compared to old pollena employees.
 Positive attitude of employees towards learning.
Challenging culture and cognitions

 Beiersdrof lechia management supported

the new corporate culture with four
instruments.
1. Provide Orientation.
2. Creating mutual trust.
3. Strengthen local competencies.
4. Cultural dialogue.
Provide Orientation

 Development of joint venture vision by

series of workshops.
 Six expatriate managers which functions
as paternalistic role models.
 Use standard communication instruments
to convey norms and values.
Creating Mutual Trust

 Building relationship with employees.

 Providing information.
 Giving importance to employees in
decision making.
 Awareness of new plans.
 These changing symbol reduce distance.
Strengthen Local Competence

 Providing the sense of ownership to the

employees.
 Provide training of soft management skills
like communication, motivation and conflict
handling to the in competitive employees.
 These skills providing new sense of
responsibility.
 Increase local competence reduce power
distance.
Cultural Dialogue

 Some problems between management

and employees.
 New norms are not taken roots.
 Need for reducing complexities cross
functional cooperation and overall positive
attitude.
 Polish mangers not convey their learned
norms.
Cultural Dialogue

 Management restricted to the espoused

value.
 Expatriate team recognized the need of
mutual cultural dialogue.
 Management initiated this process of
dialogue by starting project I July 2001.
Conclusion 1:

 Pre acquisition phase confuses the

organization transformation which is
inhibited by the institutional disturbance in
company environment.
Conclusion 2:

 In post acquisition phase organization

change at bieserdorf lechia is
characterized by 2 distinct phase
1. Rapid adjustment of employees behavior.
2. Process of cultural transformation.
Conclusion 3:

 In 2nd post acquisition phase the

management need for cognitive change
like communication style and changing
symbols.
 The management action first to change
the frame and 2nd is to reduce the
complexity in response to these changes.
Conclusion 4:

 Cultural change required the

establishment of new valid frame.
 The cultural change ensures the effective
organizational transformation and the
management continue the pace of
changing the environment.
Conclusion 5:

 There is clear need of taking initiative of

cognitive changes at biersdorf lechia to
reduce the resistance.