On the basis of two companies, Procter and Gamble (P&G) and Home Depot, the paper aims to explore how OD strategies are applied to ensure efficient organizational changes. Being one of the largest manufacturers of home-cleaning products, P&G was characterized by centralized management, improved manufacturing, and the alienation of employees (Brown, 2011). However, A. G. Lafley, the company’s new CEO, initiated changes underlining that they could be regarded as an inevitable process that should not be ignored. Being a persuasive though understanding leader, Lafley focused on relationships between managers and employees, stimulating their collaboration as a key to P&G’s stable growth and development.
In turn, Home Depot, the U.S. home-improvement retail chain, had a highly unstructured entrepreneurial culture – in other words, its stores were independent of headquarters. The inability to compete with other companies in the market initiated changes through the hiring of a new CEO, Bob Nardelli (Brown, 2011). Installing his managerial practices, Nardelli centralized and standardized operations. However, he faced the resistance of store managers negatively affected by a new pace of performance and the necessity to submit data to headquarters. Although changes had gradually reached the lowest levels of the company, a considerable number of workers remained dissatisfied.
P&G’s OD Strategies
In general, OD strategies traditionally include technological, structural, and behavioral ones. According to Brown (2011), technological strategies refer to innovations, such as new information systems and equipment for manufacturing. Structural strategies presuppose the restructuring of organizational processes and workflow. Finally, behavioral strategies imply the focus on human resources and their efficient use for development. In the case of P&G, it is possible to state that the company applied all three types of strategies.
First of all, P&G has always been characterized by its particular attention to technological development. However, with Lafley, it started to invest more in engineering, manufacturing technology, and product innovations strengthening the reputation of its brands. In addition, P&G began to develop new products with the use of new technologies outside the company (Brown, 2011). In relation to structural strategies, P&G changed its corporate headquarters eliminating the offices of the division presidents who moved closer to their teams (Brown, 2011). Instead, open share offices for executives were introduced, determining behavioral changes. In this case, the opinions, talents, and professionalism of employees started to be valued through collaboration.
Home Depot OD Strategies
In turn, the example of Home Depot demonstrates that the company focused on structural strategies aiming to eliminate issues caused by the autonomy of stores, however, other aspects of efficient improvement remained neglected. Thus, characterizing the company’s corporate structure as dysfunctional, Nardelli aimed to create a unified structure with a strict hierarchy in which all stores would be controlled by headquarters (Brown, 2011). Meanwhile, although Nardelli knew that efficient and smooth changes should be initiated at the lowest levels of the company to be supported by all employees, he ignored this step and faced confrontation. However, instead of applying behavioral strategies to impact human resources, he kept introducing new structure related-decisions. In particular, he hired new top managers with a military background to ensure employees’ forced confirmation of changes (Brown, 2011). At the same time, a new CEO did not apply technological strategies, and the company’s innovation declined.
Analysis and Conclusion
The examples of P&G and Home Depot demonstrate several important aspects that should be considered in the case of operational changes. First of all, they show the significance of all three types of strategies even if the improvement in a particular area is expected. In other words, no changes will be successful if they are not supported by personnel and the correction of organizational processes is not required. While P&G applied all strategies, Home Depot concentrated only on organizational processes. According to employees’ comments, Home Depot may expect workforce-related issues in the future while P&G will succeed. For Home Depot, the autonomy of stores was regarded as the main issue, however, in the longer term, it will be clear that without innovations and workers’ commitment, the company will not be able to compete in the market.
In addition, these examples underlined the exclusive role of competent leadership in organizational changes. According to Woolfe (2002), “a leader who cannot communicate clearly, powerfully, and succinctly barely qualifies as a leader” (p. 87). In addition, a competent leader tries to be as close to their subordinates as possible in order to understand how to articulate corporate visions making it understandable for them. In John 10:11, Jesus explains his mission to shepherds comparing himself with them (King James Bible, n.d.). While Lafley is a decisive leader and an active listener at the same time who respects his employees and values collaboration, his initiatives may be regarded as successful. In turn, Nardelli is focused on his personality and past experience, supposing that it will be applicable in any company. At the same time, he does not pay attention to workers’ awareness and agreement with his decisions and does not collaborate with them – in this case, his activities may lead to failure.
Finally, the efficiency of P&G’s SEO supports the notion that change is an inevitable process, and those companies who ignore it will not be able to stay competitive. That is why it is essential to analyze modern business strategies and apply them. Thus, Lafley realized that considering employees’ potential is important for the company’s performance, while Nardelli preferred to ignore his subordinates’ opinions, values, and needs.
Brown, D.R. (2011). An experiential approach to organization development (8th ed.). Pearson Prentice Hall.
King James Bible. (n.d.). John: King James version.
Woolfe, L. (2002). The Bible on leadership. AMACOM Books.