This assignment is a case study of a small Danish company called Oticon and shows how changes in the organization environment and personnel completely revolutionized the company. I have chosen this company because we have studied it in a previous course in November (Human Resources with Professor Alice Peinado) and this case has attracted my attention. Throughout the 1970's Oticon was the top hearing aid manufacturer in the world. However, in the 1980's, with the advent of digital technology and the entry of top electronic companies such as Sony and Phillips into the market, Oticon was losing money. In the late 1980's the company appointed a new President who decided it was time for change. Instead of trying to compete by improving the technology of their product, the new President looked at other factors including their customers, for ideas on how to improve their products and services. He decided that the company would provide a specialist customer care program that would fine-tune the hearing aid to suit each individual and the environment in which they lived and worked.
[...] III/ Change processes and systems What did Oticon do? Four types of organizational changes were initiated in order to reduce overhead costs and to create a more flexible and innovative organization: Elimination of the traditional departments Instead of organizing the company into traditional departments, the head- office was turned into one large department, and all work was organized as projects in order to highlight their temporary nature. This discourages the departments from attending to their own interests instead of those of the full company. [...]
[...] Culture A massive change of the type that took place at Oticon requires an egalitarian culture because so much is being asked of workers. The old Oticon was elitist. As an example, there were five classes of company cars depending on a person's managerial level. When Kolind joined the company, he was offered a royal-blue Jaguar XJ Sovereign with leather seats and mahogany-panels, which had been driven by the former CEO. He thanked them and said that his old Saab would be good enough. [...]
[...] We consider five dimensions along which the change in Oticon took place. Holistic vision At Oticon, the vision was a radical statement of what the company wanted to be. "Be the Number 1 hearing aid company by 1997," as Lars Kolind formulated it. At Oticon, this involved re-conceptualizing the product they were selling service with a product attached instead of a mass-manufactured product); redefining their customers (not the hearing aid clinics but the customers of the clinics - the consumer of the hearing aid); a totally new organizational structure (flexible project groups instead of a normal hierarchy); new job structure (multiple rather than single jobs); new reward and incentive structures (less prestructured and more based on informal performance appraisals from all project managers one is working for); new control structures (self control rather than middle management supervision); new office lay-out (open plan instead of individual offices); new technology (the integrated IT office support system); a new firm ownership arrangement (major portion held by workers and management rather than just held privately); and most important, acknowledging that human resources were the firm' s most important asset. [...]
[...] This assignment shows us with the real example of Oticon how that change can affect the organizational behavior of the employees and how Lars Kolind manage them in order to stimulate their motivation and increase the productivity. According to the results of the turnover and market shares, that change is a success but it also has some limits which may affect the activity of Oticon. First of all, we will make a presentation of the company. Then we will focus on the problems of Oticon and we will define the change processes and systems. [...]
[...] Employees in accounting might have views on products that marketing specialists have not considered. Having workers with different backgrounds and perspectives on a project brings diversity into play in a natural manner. New control philosophy Top management in Oticon believes that employees who have chosen to sign up for a particular project will prove to be much more interested their work than if they were assigned to jobs by management. Thus, they will be more responsible for the own work and they will be more motivated to do it effectively. [...]
Online readingwith our online reader
Content validatedby our reading committee