This paper examines the factors that drove resistance to organizational change at two companies — Ajax Minerals and Perrier Company — and evaluates the strategies each used to address that resistance. For Ajax Minerals, poor management–employee relations, low trust, failed past initiatives, and inadequate communication created significant barriers to change. The paper assesses the interactive and transparency-based approach Ajax adopted and proposes additional consultant-level recommendations. For Perrier, it identifies job-security fears and a powerful union (CGT) as primary resistance forces, and recommends education, facilitation, and negotiation strategies. Together, the two cases illustrate how trust, communication, and employee engagement are central to successful change management.
This paper examines resistance to change at two organizations — Perrier Company and Ajax Minerals. It discusses the factors that resisted change in each organization, analyzes the effectiveness of the approach adopted by Ajax Minerals to manage that resistance, and proposes ways through which these organizations can manage change more effectively.
Ajax Minerals is a mining company in the United States of America. Although the company operates at full capacity, it is not cost-efficient. It is expected that within three to four years, the Pacific Rim Companies — a competing group — will be able to mine and ship the same minerals to the United States at a cost lower than what Ajax Minerals incurs simply to extract those minerals from the ground.
Ajax Management had a poor history of change management, and the relationship between employees and management was also very weak. Employees did not trust management or its decisions regarding change, and resistance to change was consequently very strong within the organization.
The Perrier Company was established in 1898 when a French doctor, Louis-Eugène Perrier, purchased a mineral water source near Vergèze, France. The company grew steadily from its inception, but demand increased heavily during the 1980s when the brand became fashionable and attracted widespread attention, including from Wall Street professionals.
When the company was at its peak in 1989, it sold 1.2 billion bottles of mineral water, capturing approximately half of all mineral water consumers in the United States. Workers were satisfied and happy, as the company's substantial profits translated into good salaries, fringe benefits, and social benefits.
The golden period ended in 1990, when small traces of benzene were found in a bottle. This discovery severely damaged sales in the U.S., and by 1992 the company's output had decreased by 50%. The company came close to bankruptcy and was ultimately purchased by Nestlé for 2.7 billion dollars.
The Perrier Company is situated on a 234-acre site on the Mediterranean coastal plain near Nîmes. Workers follow a 35-hour workweek, and the average salary of approximately $32,000 exceeds the industry average. However, the average Perrier worker produces around 600,000 bottles per year — considerably lower than the 1.1 million bottles produced by an average worker at comparable international French water brands such as Vittel and Contrex, also owned by Nestlé.
The major factor that resisted change at Ajax Minerals was the poor relationship between employees and management. Because management and employees did not support one another appropriately, employees were unwilling to support management's strategies and initiatives regarding change (Lunenburg, 2010).
A related factor was the low level of trust prevailing between employees and management. Ajax Minerals had a very poor history of change management, which meant employees did not find management's change-related initiatives credible or reliable. Trust is a critical element of change management; numerous studies have suggested that when change is introduced in an environment where trust is low, the first and natural reaction of employees is to resist it (Lunenburg, 2010).
Additionally, employees perceived that taking steps toward change would be a mistake and that proposed changes would not prove productive for the organization. This perception arose largely because most previous change initiatives undertaken by management had ended in failure (Yuh-Shy, 2010).
Finally, management did not communicate its plans effectively. Effective communication between management and employees is an essential component of successful change management. Studies consistently report that employees resist change when they are not adequately informed about the rationale for it or about their own responsibilities within that rationale. The absence of clear communication therefore served as an additional and significant driver of resistance (Yuh-Shy, 2010).
Historically, Ajax Minerals management never involved employees in the process of making change management decisions. The new approach being adopted represented a meaningful departure from that pattern. Management sought to motivate employees by sharing stories about the difficulties faced by organizations in similar competitive situations that had failed to change — helping employees understand the real consequences of inaction.
Management also employed transparency as a tool by giving employees access to the company's financial books for the first time. Because transparency contributes significantly to the development of trust, and trust is a cornerstone of effective change management, this approach had the potential to reduce prevailing levels of change resistance considerably.
Furthermore, management adopted an interactive approach, discussing the concept of change directly with employees and inviting them to engage with key financial ratios and figures. This interactive method was likely to enhance employee performance by fostering a sense of autonomy and personal responsibility. Overall, the approach adopted by Ajax Minerals management had strong potential to reduce change resistance and to deliver lasting benefits to the organization.
"Consultant proposals for effective change at Ajax"
"Union power and job-security fears at Perrier"
"Education, support, and negotiation recommendations for Perrier"
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