Institutionalization Essay -- Business, Multinational Companies

The fast paced, ever changing, and volatile business climate of today affects the ability of multinational companies such as Hewlett-Packard to sustain a competitive advantage. In 2002 the company conducted a controversial acquisition of Compaq which led to lay-offs, infighting, and impacted their ability to implement structural changes. Hewlett-Packard is a widely respected company known for executing continuous improvement throughout all levels of the company. However, the challenge all companies face is the ability to implement and sustain intervention programs over a period of time to the degree that the changes become part of the organization’s functions. Thus, the strategies and framework Hewlett-Packard used to institutionalize intervention programs throughout its history will be examined. Institutionalization Process Institutionalization is embedding change processes brought on by effective interventions to an organization’s functioning for a prescribed period of time. Moreover the process of institutionalization consists of socialization, commitment, reward allocation, diffusion, and sensing and calibration. They are the by-products of two dimensions: organization characteristics (such as congruence and unionization) and intervention characteristics (goal specificity and programmability). When Hewlett-Packard (HP) acquired Compaq in 2002, the combination of these two dimensions produced the institutionalization processes. According to Cummings and Worley (2009), there are five factors of the institutionalization process (socialization, commitment, reward allocation, diffusion, and sensing and calibration) that determine long-term implementation of interventions. In other words, the degree to which these fa... ...ist organizations must maintain constant vigilance over environmental forces such as the economy and internal forces such as employee actions and behaviors that undermine the change process (Cummings & Worley, 2009). Conclusion Change strategies are part of every organization’s design. In order for an organization to have success with implementing persistent change all or the majority of institutionalization factors outlined must be present. The most compelling aspect of Hewlett-Packard’s interventions was emphasis on targeting the level of change at both the organization and department level. Finally, the aggressive structural changes Hewlett-Packard initiated during the course of its existence reflects the strategic planning and risk associated with sustaining a competitive advantage in the highly volatile information technology industry.