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Key Variables to Design a Large-Scale Organizational Transformation
Designing large-scale organizational transformation involves many different elements. For the purposes of this exercise, and through the consultant’s lens, four areas related to this organizational transformation need to be explored. These areas are human resources, organizational structure, leadership and trust, and performance measurement. How these variables are implemented into the change process can prove successful for the organization and contribute to the overall structural development of the organization. Also, a lack of attention to detail can prove to be a mistake and cause the change process to fail.
In my opinion, HR is the glue that holds organizations together. Human resources help implement and formulate policy. Also, they act as the front line when any issues arise or new benefits are introduced or the industry changes. Next, they assist as change agents when organizational transformation occurs. Braun (2013) describes HR as more like a strategic partner than the traditional paper pusher paradigm. Also, HR takes on a higher mission, it assists in all organizational functions, assists in developing strategies, setting long-term goals and developing plans to help gain a competitive advantage in the market place. As a consultant and working with HR, the goal is to understand change. According to Appelbaum, Berke, Taylor, and Vazquez (2008), change is viewed as a dynamic process that can be assessed in terms of the scale of the change and the methods that will be involved. HR and organizational leaders must consider how this massive transformation will affect existing policies. For example, will the reward system change from a standard appraisal system to a more complex performance management system?
The organizations his authors refer to are currently undergoing massive transformation. The incentive system and compensation scheme are heavily leveraged and any salary increases have been stopped for the past three financial years. Additionally, many programs and benefits were cut to reduce costs for the organization. These policy changes are the evil necessary to help organizations recover their structures. This change in organizational policy did cause a lot of employee commitment issues and made it difficult to retain top talent, but for now the storm has passed and organizational policies and benefits are returning to normal with the new initiatives in place.
Understanding the structure of an organization is a key goal of consulting to assist in organizational transformation. Consultants need to understand whether the organization is transformational, top-down, transactional, growing, maturing, global or local, etc. Appelbaum et al. (2008) describe transformational change as a form of corporate change, which can be described as a developmental process, and as a form of revolutionary change, which can be described as a complete redesign of the corporate structure. As a consultant, it is important to understand the goals of the organization, but also provide solutions, and as change occurs, so does the need for transformational leadership. Transformational leadership helps improve the status quo and organizational performance by empowering employees to do more and leading by example. Wischnevsky and Damanpour (2006) explored organizational transformation and stated that organizational transformation is a transition between organizational states characterized by structure and strategy. To assist in the redesign of the organizational structure, leadership will be encouraged to redefine strategy, redefine the mission statement and potentially rebrand with a new logo that differentiates the organization from the old and opens the door to a new era of growth and possibility sex.
Within the organizations referenced in this exercise; transformational leadership is one of their top goals and the culture they are trying to build. Unfortunately, they lack follow-up and organizational learning to continue the internal culture change process. Due to the high turnover of leadership positions, developing a culture that is rooted in organizational memory is difficult.
Organizational transformation cannot begin unless all required stakeholders are engaged and understand the new mission. Without proper and continuous communication between leaders/managers and their direct reports, organizations will experience resistance to change. The purpose of leadership communication is to bring stakeholders closer to the organization and give them a sense of belonging and mission. Brauns (2013) exemplifies how an organizational transformation from performance management to rewards should keep employees interested and keep employees engaged during change should be the goal. For example, the existing reward system needs to express the values of the organization and should send the right message from the organization’s point of view. Resistance to change occurs when employees do not understand the value of rewards or benefits. Also, performance management needs to be addressed, and according to Brauns (2013), performance management includes the three C’s, namely consistency, coordination and control. If leadership can communicate and gain the trust of the organization and followers, it will make large-scale transformation easier to achieve. Without trust, employee resistance can hinder the effectiveness of any change.
Organizations used as practice references do not do well in this area of change. Little care seemed to be given to job descriptions or rewards during the rebuilding process. Despite different attempts to effect change and provide glimpses of transformational leadership, they simply have no follow-through to continue and make the changes needed. Many times, leadership communication is muddled and/or ambiguous, which can be frustrating for employees. Consistent and frequent communication about the progress of the change process is recommended. With the addition of several key leaders over the past six months, internal stability is expected in the near future.
Performance measurement is needed to ensure that organizations are achieving their goals to a large extent, while also ensuring that their employees are achieving internal goals. Chen, Yang, and Jiun (2006) studied a performance management system called the Balanced Scorecard or BSC. The BSC enables businesses to transform their overall strategy and provide effective management and leadership. This is achieved by addressing four perspectives. These perspective areas are financial, customer, internal and learning.
Throughout the exercise, internal, customer and learning are considered as major components of organizational transformation. While the financial aspects are not specified, it is implied to have a balanced organization and to achieve this balance through large-scale transformation.
In the companies cited, they do have their own performance management system, although it seems to be very oriented towards internal metrics and goals, which I believe to be very non-specific and generic. Furthermore, the performance management system seems to be silent as there is no reward system in place. The authors recommend attaching a small incentive to performance measurement, otherwise the outcome is black and white; you either meet the requirements and keep your job, or you get fired. To maintain a productive workforce during times of large-scale transformational change, leadership is tasked with maintaining a high level of organizational commitment and providing good communication. There was no leader guidance, according to Appelbaum et al. (2008) employee input was identified as a key factor where large-scale transformational change would be difficult to achieve.
Organizations need to change to remain competitive in the marketplace. How they learn and utilize the acquired knowledge will definitely give them a competitive advantage. Organizations need to focus on HR policies, leadership communications, organizational structures, and performance management systems as they accomplish large-scale change. All of these areas play an important role in shaping a successful transformation.
Appelbaum, Steven H, PhD., SPHR, Berke, J., MBA, Taylor, J., MBA, & Vazquez, JA, MBA (2008). The role of leadership in large-scale organizational transformation: Lessons from six empirical studies. Journal of American Business Schools, Cambridge, 13(1), 16-24.
Brauns (2013). Integrate strategic human resource management with HR, performance and rewards. Journal of International Business and Economic Research (Online), 12(11), 1405-n/a.
Chen, S., Ching-Chow, Y., and Jun-Yan Shiau. (2006). Application of the Balanced Scorecard to Performance Evaluation in Higher Education Journal of Total Quality Management, 18(2), 190-205.
Wischnevsky, JD, & Damanpour, F. (2006). Organizational Transformation and Performance: An Examination from Three Perspectives. Journal of Management Issues, 18(1), 104-128,9.
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