1. No category

Organization Restructuring
and
Change Management
May 23, 2003
Amway Korea Ltd.
Table of Contents
For a Better Life
Helping People Live Better Lives
I.
About Amway Corporation
II. Organization Restructuring &
Change Management
For a Better Life
Helping People Live Better Lives
I
About Amway Corp.
“TO HELP
PEOPLE LIVE
BETTER LIVES”
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.
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.

Daegu IBO Plaza

Eumsung RDC
Amway Korea Business Process
Home Delivery
ADA
Kayang IP
Daejon IP
Taegu IP
Kwangju IP
Pusan IP
One-For-One
Cheju IP
Ulsan
Kangnung
IBOs’ Direct Taking of Amway Products
(RDC)
IBO’s taking in products at home
Sungnae IP
Visit us at
http://www.amwaykorea.co.kr
For a Better Life
Helping People Live Better Lives
II.
Organization Restructuring
& Change Management
1. Background
2. Scope and Process : Organization Diagnosis
3. Output : Organization Diagnosis
4. Current Task
5. Future Tasks and Direction
1. Background
Organizational Situation
Decreased Org.
Efficiency due to
rapid growth
(particularly in
terms of org. size)
Need for
Change
Lowered
Managerial
Capacity of Mid.
Mgmt. due to
considerable
increase in
headcount
Lack of Customercentered Mindset
of Employees due
to increased
bureaucracy within
the org.
1. Background (Cont’d)
Employees’ Initial Attitude of the Project
Junior
and
Senior
All
Employees

Sensitiveness


Defensiveness


Expectation

Leader
All
Employees
1. Background (Cont’d)
To resolve the problems concerned,
1) in-depth organization diagnosis was conducted
2) change management tools were utilized to
improve employees’ readiness for change
2. Scope and Process : Org. Diagnosis
Organization Diagnosis Scope and Process
Phase I
Phase II
Determination of Issues
Focus
Group
Interview
(Junior)
Focus
Group
Interview
(Senior)
Focus
Group
Interview
(Leader)
Exec.
Interview
Phase III
Diagnosis & Task Development
EOS Result
Review
Main
Issues
Determined
External/ Internal
Environment
Review
Action Planning
to Strengthen Org. Capability
Top Mgt.
Workshop
to determine
tasks
Tasks
Identified
Action Plan
Solution
Development
Task
Development
2. Scope and Process : Org. Diagnosis (Cont’d)
Change Management Tools
 Develop Business Case to attract employees’ attention
 Identify and analyze Key Stakeholder
 Assess Communication Channel
Communication Plan
3. Output : Org. Diagnosis
•
Each task has been ranked based on their strategic importance, easy implementation, urgency
and short-term effectiveness.
Tasks
Redefining and Sharing of
Vision & Strategy
Strategic
Importance
Easy
Implementation
Short-Term
Effectiveness
Urgency
Priority
Remarks
3
1
3
1
8
5
1
5
5
16
Manpower Structure
Re-design
3
1
1
5
10
Job Analysis
3
3
3
1
10
Succession Planning
5
3
5
5
18
Korean Title Promotion
Policy Re-design
1
3
3
3
10
Performance Mgmt System
Re-design
5
3
3
3
14
Communication
Effectiveness Planning
3
1
3
1
8
5
3
5
1
14
Org. Structure Re-design
Leadership Development
One of the 3 main
objectives of 2003
3. Output : Org. Diagnosis (Cont’d)
<Priority Tasks>
Org. Structure
Re-design
Succession
Planning
Leadership
Development
Performance Mgmt
System Re-design
Infrastructure for Change Mgmt
<Supporting Tasks>
Manpower Structure
Re-design
Redefining and
Sharing of Vision &
Strategy
Effective
Communication
Planning
Job Analysis
Implement TeamBased Org.
Structure
Korean Title
Promotion Policy
Re-design
3. Output : Org. Diagnosis (Cont’d)
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, “let’s 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
4. Current Task
Key Findings
Amway Korea
Management
Service
Finance
Treasury
Sales & MKT
Logistics
Biz. Relations
Distribution
PR & Gov’t Affair
Marketing
Logistics Planning
Legal Affairs
HRM
Special Event
GA/HRD
ISD
Import & Export
Purchasing
Local Sourcing
PR & Gov’t
Affair
Tech. Reg/QA
RM & GDS
CSD
RDC
BCR & BSM
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.
Implications & Solutions
Review HRD’s 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 Sourcing’s 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
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”
Thank You