I interviewed Nick Walters on the change management strategy he had implemented at Carlson Industries, which is an e-commerce business. Walters is the human resource manager of the company and has been working in this position for more than 5 years. Over the years, he has learned that some employees are often slow in the packaging of parcels, which increases the company’s operating costs, reduces its profitability, and also results in delays in the processing of orders. For these reasons and others, he implemented a performance-based payment process for workers in the company’s warehouse.
Reasons for the Change and its Impact
Nick Walters recently introduced a performance-based payment process among warehouse employees at Carlson Industries. This change was necessary for enhancing productivity, increasing accountability, and ensuring that employees were paid wages commensurate with their efforts. Under the fixed-pay mechanism, employees were guaranteed of a standard pay, which demotivated diligent employees because they were not incentivized for their efforts. Moreover, it allowed lazy workers to unfairly benefit from the efforts of the diligent workers. Worse, it increased the risks of the business having a poor corporate performance because of inefficiencies brought by lazy workers.
The current performance-based payment process ensures that employees are only paid for specific actions that they undertake in the organization. As a result, there is enhanced accountability, reduced instances of free-rider behaviors, and increased efficiency in the organization. Walters introduced watches that constant note when an employee picks an item from the warehouse and processes this order. The watch also identifies the nature of products to enable fair pay for the processing of bulky, heavy, or fragile products, which require care when handling.
Since employees are only paid for specific activities they perform in the workplace, most are now more engaged in their duties to increase their total wages. Moreover, there has been a decrease in avoidance in handling complex parcels, such as glass and electronics, since the wage rate for these items is higher than that of other products. Lastly, the company’s overall corporate performance has improved due to the increased efficiencies. There has also been an increase in the customer satisfaction levels in the organization because of a decrease in orders delivery time.
Management Implementation of Change
For effective implementation of the change process, the company assigned management roles of the entire change process to specific departments in the organization. The finance department was given the duty of allocating financial resources for the implementation of the project. This change process in the company required the acquisition of artificial intelligent (AI) watches that could identify the item that specific pickers took in the warehouse and the time when they picked for determining the correct pay for each picker. Additionally, there were also training costs and modification of the warehouse to enable the implementation of the performance-based payment system.
The human resource department had the duty of coordinating the entire change process, getting competent trainers that would teach other departments and workers on how to use the performance-based system, and also informing employees and other stakeholders of the changes in the organization. Also, the human resource department communicated the change process through emails and memos to increase the accessibility of the change process. The engineering department modified the warehouse to facilitate the use of the performance-based payment process. It also identified the specific AI based watches that would be used to track employees’ performance, and ensure they were fairly rewarded.
The organization created a timeline and communicated the change process in detail with all stakeholders. First, there was a pilot project that was used in assessing the viability and suitability of this change process in the organization. After successful implementation of the pilot project, a timeline of the actual project was designed by the human resource department, and later approved by the management. The finance department allocated capital for this project. The engineering department was given two months to make necessary changes in the warehouse to enable the implementation of this change. The department complemented the project in five weeks. The human resource department began training employees, and it completed the process in three weeks. The AI supported watches, which were configured based on recommendations of the engineering department, were delivered after 10 days. The organization began using the performance-based system in the third week.
Involvement of Stakeholders
For effectiveness of the new process, the management involved all necessary stakeholders in the implementation of the changes to its operations. In particular, employees, shareholders, and suppliers of necessary electronics were involved in designing and implementing the change. The company consulted with the employees to get their views on the intended change and ensure they would have a sense of ownership of the new process, which would ensure acceptance of the new system. Moreover, the consultations gave the management the opportunity to inform the employees of the need for the change, and to clarify that their employments were not at any risk because of the changes.
The company also involved shareholders in order to explain why it was implementing the change. In particular, the management highlighted of the increased efficiency and accountability that would occur as a result of the implementation of the performance-based payment method. Lastly, suppliers of necessary electronic components, such as the AI supported watches, were involved in the change process to enable the effective implementation of their views in the project. These stakeholders also helped in the design of important aspects of the change process such as the creation of software used in the AI watches and also in upgrading the company’s warehouse to enable the use of a performance-based payment method.
Persuasion of Other Members
Other members involved in the change process were the government, the public, and suppliers. The government is an important stakeholder since it creates necessary policies that allow businesses like Carlson to exist. The management informed the government the purpose of the change process was to enhance its operations, which would enable it to compete with foreign companies. The company also persuaded suppliers to label their items in a manner that they would be quickly recognized by the AI enabled watches. Suppliers support was essential for ensuring there was an effective implementation of the change process. Lastly, public was also involved of the change process, and they were particularly informed of its potential benefits, particularly with regards to enhanced efficiency that would enable quick delivery of products and the lowering of the companies.
The main resources needed in the change process included: finance, information technology experts, trainers, engineers, human resource officers, AI enabled watches.
Financial resource was necessary for the financing of the various activities in the change management process. Some of the finances were used to pay contractors, pay trainers and consultants, and purchase equipment that would be used in the performance-based system.
Experts in information technology helped in the creation of software that would run in the AI enabled watches that were to be used by pickers. They also helped in improving the company’s human resource software to enable the calculation of workers’ pay based on their productivity.
Trainers taught employees of the company’s new working process following the implementation of the new change. They also informed them how their salaries would be calculated based on their productivity.
Engineers worked jointly with contractors and information and technology experts in the implementation of the change. They helped in the design of the necessary software for the organization and they subcontracted and supervised various works in the organization that were affected by the change, such as the construction works during the restructuring of the warehouse.
Human resource officers coordinated the entire change process. In particular, they communicated to all stakeholders of their roles in change process. They also informed employees of the purpose of the change, and helped in the training process.
AI watches were necessary for use by pickers to enhance accountability, which ensured employees were paid fairly for their efforts.
Walter’s change management process was effective in enabling Carlson Industries to enhance its performance. The involvement of all necessary stakeholders ensured there was a sense of ownership, which made the employees accepting this new system. Also, it ensured there was no oversight of important aspects of the system, which would have undermined its success. The use of a pilot program enabled the management to make a thorough analysis of the system before they launched the project, which helped in minimizing potential losses and improving on some overlooked areas of the initial plan. Important, the new system enhanced accountability since it enabled close monitoring of workers, and ensuring that they are paid based on their performance. For increased earnings, most employees increased their productivity and were more willing to participate in complex tasks, which offered a higher wage rate. Overall, the new system improved Carlson Industry corporate performance.