Case study on Change Management at Jindal Industries Limited

MBA (PT) 4th semester

Submitted by:
Rakesh Jain (S-50) Rajneesh Kapoor (S-49) Sanjay Sharma (S-63) Suman Saurabh (S-70) Pankaj Singh (S-41)

Nature of change: Organization structure Need for the change: JIL was established in early 1970s as a pipe manufacturing unit. Over years JIL has been able to grow to the leading manufacturer of steel pipes of all specifications. The turnover has reached over 800 crores in FY 2010-11. The organization has grown from just 35 people to over 450 employees in FY 2010-11. JIL is known for its quality of product and cost competitiveness however there has been limited innovation in terms of product or processes within the organization. The board of directors felt that it was the right time for the company to grow vertically. So they appointed Mr. Gupta as CEO of JIL. Mr. Gupta is a veteran of steel and pipe industry. He had started his career with SAIL and had handled leadership roles in Bhushan steel before joining JIL. Mr. Gupta joined the organization in 2008 with the mandate of transforming JIL to a 21st century organization which can capitalize on its product quality and cost competitiveness to grow through new products and markets. Mr. Gupta has been known for his bold decisions and strategic vision. However JIL was a different and difficult environment for Mr. Gupta. He found that right from the first day he was sucked in administrative jobs. All employees used to approach him for each & every financial requirement & approvals. Nobody wanted to take decisions and responsibility for their actions. The internal environment was highly politicized with open confrontations among head of different plants. Despite all this, the attrition level was practically zero because the owners had a philosophy of caring for their employees. The employees were given housing, job security, lucrative bonuses and freedom to work. The HR department had 6 employees who used to take care of salary administration, leave management and union related issues. The performance management was limited to a one page form containing space for self appraisal by the employee and comments by the head of plant. The training programs were largely an event wherein an external speaker/ trainer would impart training to select few employees of the company. The nomination to the trainings was a sought after process because it was considered an occasion of Paid holiday. One day Mr. Gupta was looking back on his performance during last over a year with JIL. He was upset with his self evaluation. He observed that he was not finding time to take new initiatives, implement innovative technology or products. He was always rushing between one to another meeting as there were so many problems/ issues to be managed. The solution: Mr. Gupta decided to put an end to this fire-fighting by bringing in solutions to handle the problems through modification of systems and processes. The first priority that Mr. Gupta identified was

to minimize the administrative issues that reach to his table. That would free him from managing things to be able to concentrate on strategic issues and priorities. Moreover he wanted to bring in a culture of performance and employee ownership by defining the clear roles and responsibilities of each employee and to empower each position with necessary authority so that decision making is decentralized. Mr. Gupta identified the key need to delegate the responsibilities from CEO. The obvious solution that came to Mr. Guptas mind was to start working on creating an organization structure within JIL. The process: Mr. Gupta initially tried to drive this initiative through JIL HR department however due to lack of competency and exposure, no one in the existing team could work on it. Then Mr. Gupta contacted external consultants who could create structure and processes within JIL. After much deliberation he finalized an external agency. The proposed structure was to be finalized within next 6 months so that effective April 2010, the proposed structure could be institutionalized and internalized. The process: The agency, XYZ consultants, appointed a team of 1 principle advisor, 1 consultant and 2 support staff for the JIL project. The team was supposed to be stationed initially at JIL complex to interact with stakeholders. On 1st June 2009, Mr. Gupta called up a meeting of all the plant heads and introduced them to the XYZ team. The principle advisor, Ms. Kabra made a presentation to the group with elaboration of entire process and schedule. However the present Head-HR of JIL expressed his skepticism to the need and process of project. In his views, JIL was doing fine and employees are already working very hard and there was no use of adding further responsibilities on them. Moreover he remarked that this kind of initiative was proposed earlier as well but it could not be implemented due to stiff resistance from the number of employees. Ms. Kabra could see a sense of anxiety amongst the participants of the meeting. However going by her rich experience she was aware of such initial responses. She finished her presentation by inviting suggestions and feedback from participants. However none except Head-HR had said anything. She requested participants to keep the process of the project confidential otherwise her team may not be able to collect the actual inputs from the environment. Next day, Ms. Kabra walked through the different plants to understand the manufacturing process at JIL. She also interacted with respective shift in-charge for some clarifications and better understanding. Some employees were surprised to see the team at the shop floor. They were not sure of the purpose of their presence on the shop floor. Though some shift in-charge tried to find out the purpose of Ms. Kabras visit, however she simple stated that the team is working in process improvements.

After 15 days, Ms. Kabra was ready with her initial organization structure. She shared her thoughts with Mr. Gupta. Mr. Gupta suggested some minor changes but overall was in agreement to the initial plan. Ms. Kabra incorporated the suggestions of Mr. Gupta in her initial plan. As next step, Ms. Kabra shared the structure with Heads of plants in a meeting on next day. She sought feedback and opinion of participants on the proposed structure but there was no response from anyone. However she could sense the skepticism now rather widespread. She tried to probe with Head-HR however he also remained silent. After the meeting Ms. Kabra went to cabins of different head of plants and interacted with them at individual level. The purpose of the interaction was to reinforce her plan and process to each person. During these interactions, she could get to understand the views of individuals on her proposed structure. The common feedback was that despite being a good plan, the employees at the lower level may resist as the structure would create a hierarchy which was looked upon as distance from the CEO. Presently the access to CEO was a symbol of pride and motivation to the employees and the new structure would have minimized the accessibility of CEO to the lower level staff. Moreover in the present system, the employees used to feel secure due to accessibility and issue escalation directly to CEO. The head of plants felt that new structure may bring de-motivation and insecurity amongst such employees which could be detrimental to the performance. As the process of pipe making included some specialized skills like zinc galvanization and threading, if any of employees from these plants leaves, it will negatively impact the JIL product quality and cost structure. Based on all the feedbacks, Ms. Kabra chalked out an elaborate communication plan. The plan included town hall meeting, department meetings and setting up of a grievance handling mechanism. She also planned for initiation of suggestion scheme to include employees view in the entire process. Mr. Gupta approved of the entire communication plan. In next six months, Ms. Kabra and her team worked hard on developing the organization chart followed by department structure. Mr. Gupta introduced the new structure through a open town hall meeting. As expected the response of the employees was mixed. While some of the young employees were positively enthusiastic about the proposed change, the elders were skeptic in approach. However Mr. Gupta, Ms. Kabra and her team were prepared with answers to all the concerns and queries of the employees. The ensuing question answer session helped in eliminating lots of myths about the process.