Change is only a constant factor in otherwise volatile world of business” pertain towards a constant nature of change in comparison to volatile world of business. Everything in business keeps changing from the time of its origination to the level of maturity, but the only thing that is constant is change as it always occurs with changes in trends and environment (Cameron & Green, 2009). Today, almost all business firms are confronting issues related to volatile world of business and keep changing as per the customer needs and market trends.
In this concern, one key issue confronted by most of the organizations especially multinational organizations is to apply change in organization that could be done with the help of different approaches like top-down and bottom-up approach to change as discussed here in this paper with an analysis of real world case studies of multinational organizations.
Change in Business Environment
As per the statement given “Change is only a constant factor in otherwise volatile world of business”, it is apparent that everything in this volatile world of business is changing that in turn have evolved change as a steady factor for businesses. The key drivers of change are three major developments of the world. First one is technological developments that have made it inexpensive for firms to prepare information and distribute it (Cameron & Green, 2009). A second development affected business is globalization. With globalization world has evolved as a giant marketplace. Now, companies like General Motor not only need to think about how Ford and Chrysler are doing, but also about Toyota, Volkswagen, and BMW’s performance at global level (Daft & Marcic, 2010).
Third significant change occurred throughout the world regarding business environment is the concentration of power in specific market investors. Due to this relationship between the company and its investors is also changing. Global competition and demand of customer from companies to become more responsive and efficient is also driving significant change that in turn affect business to make changes in their business strategies and approaches, structures, cultures etc (Marwah, 2011).
With ever-increasing changes in business environment due to the different developments, now most of the businesses are confronting issues related to change management (Daft & Marcic, 2010). Till now, firms operated on conventional business practices are facing the need of changing their overall approach and become more efficient by offering high quality products and different professional services. This could be done with the help of change management that could be done by applying two key approaches to change management that are top-down and bottom-up approach to change management (Paton et al., 2008).
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Top-Down Approach to Change Management:
A top-down approach to change management focuses on the need of implementing change, as an initiative that comes from company’s top. It concentrates on making use of decision-making that is centralized at company’s higher level. In this lower-level employees are excluded from the change process, whereas they are directly affected with this. Top-down changes pertain to making changes quickly and deal with the issues only if it is essential (Butler et al., 2008). Some key elements of this approach used by organizations are leadership development, training, social responsibility initiatives, equal employment and zero tolerance policies, recruitment and retention programmes, connecting diversity to business aims, and culture-change efforts (Cameron & Green, 2009).
One other leading multinational firm that once made use of top-down approach is Ernst & Young, which is one of the leading professional service firms throughout the world. The company made use of top-down approach to manage its 400 security consultants all over the world but was not able to do so due to the underlying limitations of this approach. The company used it to manage all its security consultants with an aim to create collaborative culture but was unable due to the involvement of lower lever employees.
In this approach all change decisions were taken at the top and then communicated to lower level employees. Everyone was not involved in company change efforts and most of the time message delivered was changed by the time it reaches at lower levels. Several times, the issues were misunderstood due to lack of effective involvement of all employees (McLean, 2005). In regard to the limitation of this approach, the company started confronting issues and were not able to implement planned changes so finally; it decided to switch to bottom-up approach.
Subsequent to the discussion of real world case studies, it becomes evident that the use of top down approach is not appropriate for the contemporary change management projects. Its failure in different firms like New York Time, Tribune co., Ernst & Young etc. is all because in this change management approach, change relies on one-way, intellectual and conventional approaches (Jacobs, 1997). In top-down approach decision-making is limited at the top level of the company, and there is a lack of information, recommendations, and ideas from the lower-level employees who usually come in contact with customers and know their needs in a much more effective manner (Green, 2007).
Another key limitation of this approach is ineffective employees’ motivation and performance that is all due to the lack of involvement of lower level employees. With effective motivation, it is not possible to implement change throughout an organization. In top-down approach there is very little task delegation, due to which lower level workforce is not able to give their feedbacks as well as may also feels themselves incompetent (Butler et al., 2008). This approach also direct firm towards misunderstanding due to lack of effective communication and adequate information exchange between all levels of hierarchy (Sharma, 2006).
Bottom-Up Approach to Change Management:
Bottom-up change management approach implements change from the bottom to top of the company. This approach tries to involve all those who would be affected with the process of change. It is done with an aim to avoid future issues in regard to implemented change by appropriating individuals to get involved initially (Green, 2007). Whenever, a firm want to get indulge in innovation, the use of bottom-up-approach is much more effective. Successful innovation is usually participative, and depends on different types of ideas by involving all individuals working at different organizational levels.
The use of this approach helps in developing an environment of innovation, which in turn makes it easy for a firm to change successfully. Use of this approach helps organization in taking advantage of collaborative decision making, thereby directing it towards assured success (Daft & Marcic, 2010). The key elements of this approach are:
- Focus on the individual: By identifying that change takes place one person at a time and as everyone is different in a firm, a bottom-up approach helps in developing different learning solutions and strategies by encouraging all to get indulge in the change process (Butler et al., 2008).
- Accountability at all levels: Usually accountability is seen as the key responsibility of senior management and HR, but the use of bottom-up approach puts the burden on each employee to understand his/her role in implementing change initiatives.
- Community building: In every large firm’s culture there are different sub-cultures. In this type of environment one-size implementation will not fit. Use of bottom-up approach helps every distinct community to interpret the top-down message and develop their specific diversity and inclusion strategies coherent with organization will and intent (Elearn, 2007).
- Leaders as teachers: With the use of bottom-up approach, every leader in the organization, from the team leader to the company CEO works as a teacher, both formally and informally. Here, leaders help employees to learn all essential skills and implement change in an effective manner.
Due to the significant advantages of this approach more and more companies are moving towards the use of this approach in comparison to top-down approach. One of the leading professional service firms that switched from the so-called top-down management style to bottom-up management is Ernst & Young. The use of this approach at the company helped it in becoming world’s leading professional service firm and implement different types of change in effective manner through different elements of bottom-up-approach.
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Other well-known multinational firms of the world that implemented bottom-up-approach to change management are Toyota and IBM. The use of this approach at Toyota and IBM help them in implementing different change in an effective manner by focussing on individuals and dividing accountability at all levels (Green, 2007). This is not the case with top-down approach. Involving lower-level employees help both of these firms in becoming more innovative as these employees are much more aware with customers needs and desires and are better able to suggest innovative ideas related to change (Lister, 2003).
Another key benefit of this approach to Toyota and IBM are involving all people and avoiding future issues and challenges related to employees’ resistance. With this approach, all employees are involved in the beginning so that, they could not feel discouraged and work with more enthusiasm towards change management goals. Although, the use of this approach is effective but still, it also has some specific limitations if used alone like it could direct towards a loss of focus in the absence of overall metrics, encourage contradictory application of the corporate policy etc (Zlotnick & Hinojosa, 2004).
Conclusion and Recommendations
With the help of above discussion, it becomes evident that in present volatile business environment, change is constant and need to be managed through effective approaches like top-down and bottom-up approaches. Use of these approaches if done along would not direct a firm towards successful change implementation so, it is essential to make a combined use of these approaches. In regard to attaining significant improvements in an organization performance and change management, it is essential to combine these two approaches (Miner, 2007).
Top down approach create focus and the terms for performance improvement. This, if integrated with a broad bottom-up performance improvement, would help in allowing individuals to get people from all levels to take a fresh approach to resolve problems and improve performance (Elearn, 2007). The best way to integrate these approaches is to consider a firm as a learning organization, in which people are interconnected as well as supported by leaders (Lister, 2003).
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