Organization Restructuring

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Organization Restructuring and Change
Management
May 23, 2003
Amway Korea Ltd.
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Table of Contents
For a Better Life
Helping People Live Better Lives

• About Amway Corporation
• Organization Restructuring
  Change Management

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For a Better Life
Helping People Live Better Lives
About Amway Corp.
I
4
VISION
TO HELP PEOPLE LIVE BETTER LIVES
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Amway Corporation

• Amway corporation is based in ADA, Michigan, USA
• In 1959, Jay Van Andel and Rich DeVos founded the
  direct-selling company Amway
• Amway is the biggest direct selling company in
  the world
• Amway possesses 380 patent rights as of Mar.
  2001, and submitted 430 applications for the
  patent right
• Amway's largest sales come from Korea, Japan,
  China, India and Taiwan.

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(No Transcript)
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Amway Korea Ltd.

• Amway Korea was established in 1988,
• and started its operations in 1991
• There are 2 RDC (Regional Distribution Center)
  and 12 IBO (Independent Business Owner) Plazas
• Amway Korea is No. 3 market within Amway
  Corporation, and it reached over 1.2 trillion won
  sales in FY02
• There are 300,000 active IBOs in Amway Korea
• About 400 employees are working in Amway Korea
  Ltd.

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?
Eumsung RDC
Daegu IBO Plaza
?
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Amway Korea Business Process
Home Delivery
IBOs taking in products at home
ADA
Sungnae IP
IBOs Direct Taking of Amway Products
Kayang IP
Daejon IP
(RDC)
Taegu IP
Kwangju IP
Pusan IP
One-For-One
Cheju IP
Ulsan Kangnung
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Visit us at http//www.amwaykorea.co.kr
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For a Better Life
Helping People Live Better Lives
Organization Restructuring Change Management
II.

• 1. Background
• 2. Scope and Process Organization
  Diagnosis
• 3. Output Organization Diagnosis
• 4. Current Task
• 5. Future Tasks and Direction

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1. Background
Organizational Situation
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1. Background (Contd)
Employees Initial Attitude of the Project
Sensitiveness
Junior and Senior
?
?
Leader
Defensiveness
All Employees
?
?
Expectation
?
?
All Employees
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1. Background (Contd)
To resolve the problems concerned, 1)
in-depth organization diagnosis was conducted
2) change management tools were utilized to
improve employees readiness for change
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2. Scope and Process Org. Diagnosis
Organization Diagnosis Scope and Process
Phase I
Phase II
Phase III
Determination of Issues
Diagnosis Task Development
Action Planning to Strengthen Org. Capability
Focus Group Interview (Junior)
EOS Result Review
Top Mgt. Workshop to determine tasks
Focus Group Interview (Senior)
Action Plan
Main Issues Determined
Tasks Identified
External/ Internal Environment Review
Focus Group Interview (Leader)
Solution Development
Task Development
Exec. Interview
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2. Scope and Process Org. Diagnosis (Contd)
Change Management Tools

• Develop Business Case to attract employees
  attention
• Identify and analyze Key Stakeholder
• Assess Communication Channel

Communication Plan
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3. Output Org. Diagnosis

• Each task has been ranked based on their
  strategic importance, easy implementation,
  urgency and short-term effectiveness.

Priority
Tasks
Urgency
Short-Term Effectiveness
Remarks
Easy Implementa-tion
Strategic Importance
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3
1
1
3
Redefining and Sharing of Vision Strategy
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5
5
1
5
Org. Structure Re-design
10
1
5
1
3
Manpower Structure Re-design
3
10
1
3
Job Analysis
3
5
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5
5
One of the 3 main objectives of 2003
3
Succession Planning
10
Korean Title Promotion Policy Re-design
3
3
3
1
14
3
3
3
5
Performance Mgmt System Re-design
3
1
1
3
Communication Effectiveness Planning
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14
5
1
3
5
Leadership Development
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3. Output Org. Diagnosis (Contd)
ltPriority Tasksgt
Org. Structure Re-design
Succession Planning
Leadership Development
Performance Mgmt System Re-design
Infrastructure for Change Mgmt
ltSupporting Tasksgt
Manpower Structure Re-design
Redefining and Sharing of Vision Strategy
Effective Communication Planning
Job Analysis
Implement Team-Based Org. Structure
Korean Title Promotion Policy Re-design
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3. Output Org. Diagnosis (Contd)
Changes in Employees Attitude after the Project

• Positive attitude of project intention among team
  leaders increased
• Employees trust of the top management increased
• Employees expectation of the project increased
• But, lets wait and see attitude still exists
  especially among the juniors
• There are still some managers who are not
  prepared to buy the project objectives, hence
  not willing to participate in current initiatives
  for change

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4. Current Task
Key Findings

• HRM and HRD are separated HRD is tied with
  GA(Usually HRM and HRD form one HR department
  alternatively, each of the three functions
  operate independently)
• Despite the increase in number of IBOs, sales
  function has remained unchanged.
• Local Sourcing serves as an independent unit,
  with an executive as the department head.

Amway Korea
Sales MKT
Logistics
ManagementService
PR GovtAffair
Implications Solutions
Biz. Relations
Distribution
Finance
PR Govt Affair

• Review HRDs roles and relocate as necessary.
• Review the capacity of sales function in line
  with the increase in both revenue and number of
  IBOs.
• Review Local Sourcings position in the org., and
  investigate potential linkage with other
  function(s).
• Due to the rapid growth of the org. there exists
  possibility of moral hazard, which may lead to
  need for internal audit function.
• Review span of control Sales MKT, Management
  Service

Treasury
Marketing
Logistics Planning
Legal Affairs
HRM
Special Event
BCR BSM
CSD
GA/HRD
Tech. Reg/QA
RDC
ISD
RM GDS
Import Export
Purchasing
Local Sourcing
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5. Future Tasks and Direction
? Change Management ? Succession Planning
based on the New Org. Structure ? Performance
Management - Identify future leadership
competency ? Establish Training Development
Plan based on succession planning -
Leadership Development - Performance
Management Coaching Skills Training -
Executive Development Program - Customized
in-house MBA program ? Others -
Introduce Cafeteria Benefit Program -
Talent Management and Retention - Develop
Total Compensation Strategy
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Thank You