MGT 507 Management of Organization Change

Assignment 1

MGT 507 Management of Organization

Change

Assignment 1

Introduction

Foxconn Terry Gou founded Hon Hai Precision Industry Company Ltd, the anchor
company of Hon Hai / Foxconn Technology Group in 1974.

Hon Hai Precision Industry Co. , Ltd. , trading as Foxconn Technology Group, is a
Taiwanese multinational electronics contract manufacturing company headquartered
in Tucheng, New Taipei, Taiwan. It is the world's largest electronics contract
manufacturer measured by revenues. Foxconn is primarily an original design
manufacturer and its clients included American, European, and Japanese electronics
and information technology companies. The company manufactures notable product
included the iPad, iPhone, iPod, Kindle, PlayStation 3, and Wii U.

Foxconn Technology Group is the world's 3C (Computer Computer, Communications

Communication, Consumer Electronics Consumer) foundry Regulation Mold largest
international enterprises. (Foxconn, 2013). There are various admirable achievements
and entrepreneurs in the world, Gou is one of the successful company of them. Hon
Hai's performance continues to expand under Guo’s military operation. He is not only
their leader but also their role model. He believes employees are indispensable to the
company.

Early in the financial tsunami, Hon Hai efforts to develop more new business
opportunities, such as to strived Apple iPhone3G mobile phone order when other
1
 MGT 507 Management of Organization Change
Assignment 1

companies appeared tiredness. Gou driving the company's revenue rapidly up in 2009.
In such a slump era, the company's business strategy and internal competitiveness is
far higher than other companies. The company has a good leader can make the
company sustained progress. Leadership with Foxconn Gou states that a successfully
enterprises should pay attention to efficiency, rather than democracy.

"Democracy is the most inefficient way of work, democracy is an atmosphere, a

feeling, so that we can communicate, but…, in the fast-growing company, leaders
should be a little more domineering. " For enterprises, discipline is more important
than democracy. This kind of leadership is between Autocratic and Paternalistic. Due
to Gou's strong leadership, everything goes efficiently according to table drills of the
company. Gou considered that the executive power is mainly pressure to force the
company to rich the company goal. Gou also requiring employees to work even
during the typhoon day. Ordinary companies only operate 24 hours per days, Hon
Hai was able to operate 28 hours. By the time difference between the U. S. and
Taiwan, Hon Hai works 4 more hours than others. "Reward and punishment" is his
leadership spirit. At work, once they accept the consumer’s order, they will finish the
work within the time. The employee will be punished by the company if they did not
submit the products in the deadline. However, despite the military discipline, they will
not stingy to distribute the commission to the employees. As the outstanding
performance of the employee, it is not difficult to get share stocks at the end of
assigned. (Chang, 2005)

The leadership of Gou’s management finally causes some problem. Foxconn has been
involved in several controversies relating to how it manages employees in China.
There were a series of suicide incidents of the manufactory in Mainland China during
the 2010. The main causes of the event pointed out that employees work in a deep
pressure working environment. It reveals a huge drawback of the management. The
company began to concern the issue of the working environment and working hours.
In 2012 Apple hired the Fair Labor Association to conduct an audit of working
conditions at Foxconn.
2
 MGT 507 Management of Organization Change
Assignment 1

After the events, FoxConn decided to increase wages, and stop issuing compensation
for suicides at the same time. (China Labor Watch, 2011) Conclusion To conclude,
Hon Hai presents the standard Autocratic leadership and also involved the
Paternalistic style. This essay has introduced the leadership of Gou, and also
well-present the managed way of Foxconn. Gou's management makes the company
operation much more efficiency than other well-known company. Foxconn knocked
out other competitors and win the chance to take the order which other company also
wanted. Gou's specialized leadership will continuously lead Hon Hai to a higher
position. In order to lead the road to success, a leader must fully understand its
mission and tasks. In short, leadership is the main key to successful of a company.

The workers of the factory are one of the groups of stakeholders that are considered
by Guo to any process of making the decision. In general, welfare and the morale of
the workers are mostly affected due to the aspect of the small wages and the
environment in which they work. A component that may be troubling may be,
employees are motivated by money making them commit suicide, since on the
contracts it stipulates in the event of their death their families be compensated RMB
100,000. This amount is 50 times the amount they get at the end of the month on their
salaries. Therefore, if such an issue is not clearly addressed the cases of suicide may
significantly increase. Moreover, Guo should also consider the comments and views
of the shareholders of Hon Hai Company and Foxconn. In the event of the
announcement of the news of suicides, it saw the share price of Hon Hai Company
failing significantly to more than 5.1% Taipei, and the Foxxonn’s Company shares
also fell by approximately 8.5% margin on the index of Hang Seng. The negative
publicity led to the decrease in the investors’ confidence level on the ability of the
company in handling the situation that had resulted from the decline of the share price.
Moreover, Guo ought to think of client Foxconn provides services to. The company
can be the supplier of the major electronic companies due to their low costs.
Nonetheless, if Guo increases on the wages of the workers and provides more
facilities to them, Foxconn Company may be affected adversely, and some of the
3
 MGT 507 Management of Organization Change
Assignment 1

increased cost is shifted to the clients. This aspect would result in the Foxconn losing
most of their customers to the competitors who are offering lower cost than them.

On the model of Burke-Litwin, it usually revolves on the aspects of defining and

being able to formulate a cause and effect on the relationship, which exists among the
twelve organizational dimensions, which are vital to the organizational change. This
model essential strives in bringing changes on the performance of the team and the
organization in general, through the establishment of the interjectory between the
performance and between both internal and external factors, which mostly effect on
the performance.

On the issue of the culture of the organization study, it should strive to seek on the
information to explicit more so on the rules that are implied, regulations, the values,
and principles, which most influence on the behavior of the organization. It, therefore,
would immense the first suicide that occurred was primarily sparked on the failure of
the workers in adjusting to the factory’s life. Apparently, it is the plant life that is
difficult to adjust to. Therefore we can understand from these that entering into any
new place or even ’life’ requires a person to first learn on the rules and the
requirements of that particular location. This mostly applies to someone who is
coming from the rural background to the urban environment. When such individual
enters to such a radical differentiated and a more constructed environment, it entails
the person grasping the understanding of the world and working conditions should be
rewritten. This may apply more so in the factory environment that has machines, and
work with the electronic equipment that is expensive to complete a given task that
pertains parts of the greater assembly apparatus.

The next aspects are the responsibilities and the skills factors. They involve the
understanding of a particular job position and the necessary requirements, in terms
knowledge an employee is required to have so as to fully perform on the
responsibilities of the job. It is imperative to clearly know how good various
employment positions and the workers are matched. The Foxconn Company has

4
 MGT 507 Management of Organization Change
Assignment 1

adopted a production process that is not complex so that the workers do not require
any specialized training or the knowledge to undertake the given duties. Mostly the
technicians from the Department of the industrial engineering primarily uses regularly
the stopwatches and the computerized manufacturing devices so as to test the workers.
If these employees can meet target on their quota, these target are increased then to
the maximum. In an example of the assembly of iPhone line, an employee had
elaborated on how the work she did was even measured on the exact seconds. She
said her task involved on taking of the motherboard of the iPhone from the line, logo
scanning, putting into the anti-static bag, sticking on the label and displaying it to the
line, took two seconds. Besides she, explained that for every ten seconds she finished
five tasks.

As the production increases the workers face encounters serious short-comings more
so, if they do not meet their specific orders within the required time periods. In some
of the departments in which the workers take ten minutes break, lf they fail meeting
on the target of the production then they are not entitled for a rest until they meet.

The people values and the need is usually the dimension that entails exportation of the
opinions of the employee’s in regards to the work, so as to identify on the factors of
quality which would result to the enrichment of job and the job satisfaction. There
was discrepancy that existed between what was expected and what they really found
in reality. This was concluded after the eleventh employee by name Li after
committing suicide note was found. The note that the police found said that he had
lost the confidence of his own future, and the expectations of what he ought to have
undertaken on his work. In addition, and his family outweighed on what he can then
achieve. On this note brings to the previous question, what is the kind of the future is
entitled for these workers?

It is also observed that the latest generation of the migrants are experiencing the
Rupture. There is no hope for them to transform themselves into urban workers or
even returning themselves to their rural areas to undertake the occupation of a peasant.
The system that is regarded as hukou is preventing migrant from getting their
5
 MGT 507 Management of Organization Change
Assignment 1

permanent residences to the city. These individual do not have sufficient experience to
run the farm, nor do they have enough income of starting their own business therefore
going back home is not an option either. Therefore they find themselves in an areas
that do not belong there nor here, in the unfinished proletarianization. Nonetheless,
this new generation has found the reform have occurred which offer good education
and a better wealth material than their previous predecessors, thus, the individuals
want of what life can offer. But the anger, the frustration and the resentfulness they
encounter prevents them from achieving it.

Another factor that is essential is the level of the motivation.it entails to identify on
the level of motivation of the employees, would make it easier for the determination
of how willing they would put effort to achieve the organizational goals. Moreover,
this would require to identify the motivational trigger points. The reasons why the
young people seek employment in the city is because they get more money at the end
of the month than what farming can bring them at the end of year. In most of the cases
the majority of the young workers some of their wages they earn goes back home to
support their families. Nonetheless, the motivation for the young immigrant is more
than that to work in the city. Working at the city hold dreams of independence and
also modernity of these individuals. Ngai highlighted that the female workers she
worked with their desires to consumer was drove by their desire of reduction the
aspect of disparities. It also depended of living on their calling to the modern model in
regards to the female beauty that was increasingly by the mass media. On the eyes of
the workers you clearly see desiring subject who want to fulfil their needs of their
families at home and the own interest to becoming the modern people. These desires
would not be achieved if they are rejected from the system.

On study of the structure it does not need to be confined on the structure of the
hierarchical. It should be based on the function structure that focus on responsibility ,
the will of the authority, decision making, and communication of the structure that
exist between individuals of entity. According to Gou he based his model of
management from his military experience and insists on entire obedience from the
6
 MGT 507 Management of Organization Change
Assignment 1

hierarchy of the top to bottom chain of command. It stipulates that it is easy to get
thousand individual of the army but tough to find one general. The thirteen
management level of Foxconn hierarchy is in the form of a pyramid that has a clear
line of command. The senior managers are responsible to formulating on the strategy
of corporate development and the annual profit goals for the company. The
management at the middle is to devise on the implementation plans and delegation of
the responsibility. While at the workshop, the production operators faces intense
supervision from various layers of management, from assistant line managers, the
team leaders, and even the supervisors. According to Yu who is a worker he
highlighted that while they are preparing to begin on the production line, the frontline
managers demand the workers to respond to the question like; how are you? By
shouting together very good.

Generally the system include all the policies and procedures that include both the
individuals and the operations of the organization. The Foxxonn’s company 8s’ policy
is was essentially built on the 5s’ method of Japanese the management so as to
improve on both efficiency and o performance of the organization that refer to Seiri
(sort), Seiton (the set in the order), Seiso (clean), Seiketsu (standardize on the first 3s’
procedures), Shitsuke (sustain on the efforts of the Seiri, Seiton, Seiso and seiketsu),
of which are added the aspect of security, the saving and security to the Chinese
system. These principles are usually enforced very rigorously as just as Yu had
experienced. The employees on the frontline their postures are monitored more as the
work itself. The aim of the Foxxonn’s industrial engineering is to show all the
workers operations, to the minute’s movements, rationalized, planned.

Every assembly worker majorly specializes to one task and performs various
repetitive motions to a high speed that can be either hourly, and for months on end.
This type of the advanced production systems removes any feelings of the freshness,
accomplishment towards the work.

The essence of the management practice is to study how the managers conforms to the
strategy of the organization more so dealing with the workers and the resources.
7
 MGT 507 Management of Organization Change
Assignment 1

Management of Foxconn practices and culture of the corporate that are essentially
punishment-oriented, despite the resource of human advocating to the mutual care and
the love. During the working month there was several public humiliations, it mostly
happens when the employee is punished.

In an example, a girl is essentially forced to stand to an attention to read aloud to all

statement of the self-criticism, and she ought to be loud to be heard by all. Often the
line leader would ask the individual at the far end heard the mistake she made. This
clearly is very embarrassing.

The work climate entails a collection of the study of essentially how the employees
think, their feelings and their expectation. Besides, relationship that exists with
employees share with their team members and members of the other groups is
significant in the work unit climate. When Guo puts the interest of the firm ahead of
the well-being of the employees he basis his decisions on the economic efficiency
principle, that the company acts in the maximization of the profits to the most
appropriate efficiency manner. This should be within the constraints of the law and
the market. Nonetheless, there was implementation of actions by Foxconn Company
to minimize on the number of suicide cases and improve on the conditions of working
of the factory. There was an increase of the wages, and invitation of the media
members and suppliers to tour the factory so as to allow the public scrutiny on the
working conditions. These actions, are founded on the principles of the personal
virtues in which the measures taken are honest, open and also truthful. Guo is
optimistic of the working condition at the factory.

Transactional Leadership
Transactional leadership styles are more concerned with maintaining the normal flow
of operations. Transactional leadership can be described as "keeping the ship afloat."
Transactional leaders use disciplinary power and an array of incentives to motivate
employees to perform at their best. The term "transactional" refers to the fact that this
type of leader essentially motivates subordinates by exchanging rewards for
8
 MGT 507 Management of Organization Change
Assignment 1

performance. A transactional leader generally does not look ahead in strategically

guiding an organization to a position of market leadership; instead, these managers
are solely concerned with making sure everything flows smoothly today.

Terry Gou is a workaholic with great vigor and has worked nearly 16 hours a day for
over three decades. His working attitude transmits a signal to his subordinates of
never slacking off at work. His morning meeting often starts at 8 am and lasts until 11
am and he takes charge of all the discussions from information system integration to
materials distribution . During his visits to factories in china, he always dines with
employees, and often reminds assembly-line workers not to ignore the tiny details of
their work.

With a million employees dispersed around more than 20 factories in china, it is a

staggering challenge to administer the entire Foxconn Group. terry gou carries out an
autocratic leadership and militarized administration, practicing militarized training
with employees so as to constitute an obedient work culture. To maintain the strong
morale and employees discipline, there are many encouraging signs displayed on the
walls of the foxconn factory, similar to what is usually perceived in a military
barracks. the headquarters even looks like a command module. The Lunghwa campus ,
drab but utilitarian , is a fully functioning city, with a food store, gym, and even a
book store. By implementing a strict work schedule, having controlled rest times,
frequent spiritual education, and requesting a demanding work performance of his
employees, Foxconn has enabled its manufacturing centers in china to maintain stable
production and attain rapid service response times to meet customers demands from
around the world. With a steady stream of mass production lines, these manufacturing
centers generate vast cash inflows to maintain Foxconns financial stability.

As the leader of Foxconn , Terry Gou exhibits both severity and kindness. He may ask
a manager to remain standing for more than 10 minutes as a punishment in a meeting
with 200 people if this managers reply appears unsatisfactory. Terry Gou did not
spare his family from his sternness for perfection, even his younger brother Tai

9
 MGT 507 Management of Organization Change
Assignment 1

Chiang Gou, who was a division executive in Foxconn, was not eempt. Tai Chiang
Gou was once scolded by Terry Gou in front of Foxconns customer for his
unsatisfactory performance. Onthe other hand, Terry Gou also gives compelling
bonuses out of his own pocket to reward his employees for good performance. At
Foxconns annual Chinese Lunar New Year party raffle, Terry Gou often offers a big
prize to employees.

Transformational Leadership
A transformational leader goes beyond managing day-to-day operations and crafts
strategies for taking his company, department or work team to the next level of
performance and success. Transformational leadership styles focus on team-building,
motivation and collaboration with employees at different levels of an organization to
accomplish change for the better. Transformational leaders set goals and incentives to
push their subordinates to higher performance levels, while providing opportunities
for personal and professional growth for each employee.

With a strong personality and a lot of executive ability, Terry Gou is the indispensable
factor that has turned Foxconn into a huge and successful MNC. TG has often been in
the vanguard of leading Foxconn to venture abroad into China, North America,
Scotland, Ireland, the Czech Republic , and Germany. With an unremitting business
expansion, the organization of Foxconn frequently goes through a transformation. For
an organization constantly in expansion, how to motivate and inspire people are
daunting challenges for its leaders. It is usually the mindset that lags behind.
Transformational leadership encourages individuals to think outside of the box and
pursue a firms exploratory innovation, which transforms and motivates followers
through and entrepreneurs idealized influence, intellectual stimulation, and individual
consideration.

TG imposes a division shift upon Foxconns managers in order to abandon the way
they used to do things when dealing with their businesses. To blend cultures and help

10
 MGT 507 Management of Organization Change
Assignment 1

the employees adapt, TG adopts three steps: gathering, integration, and amalgamation.
Although employees of a department come from different nations with diverse culture
backgrounds, he gathers them together at first and then arranges them to live, work, or
meet together so as to integrate them with a common consensus , and eventually they
are amalgamated into a work team.

Conclusion
Using the case study of Foxconn, this chapter has presented entrepreneurship as a key
element and has drawn upon the research fields of strategic management and
leadership to study firm formation, growth and transformation.

11