Organizational Change at Pearson PLC

Description of the Organization and its Recent Change

Pearson PLC is one of the largest educational companies and largest book publisher in the world. It is a multinational educational and publishing company with its headquarters in London. The company has a primary listing on London Stocks Exchange. It also makes up the FTSE 100 Index. New York Stock Exchange lists it in its secondary listings as American Depository Receipts. Pearson PLC was founded in 1844 by Samuel Pearson as an engineering and building company in Yorkshire. Over the years, the company has been undergoing change both in its administration and in what it does. For instance, between 1990 and 2000, the company acquired broadcasting and TV production assets (Pearson Publishing Ltd, 2016). Between 2000 and 2005, the company acquired Dorling Kindersley, a publisher that was integrated within Penguin in 2000.

In May 2013, Pearson made announcements on its intended change after John Fallon succeeded Marjorie Scardine, the longtime CEO. It was all about its plan to invest in the emerging markets and in digital learning (Reingold, 2015). This was after the company predicted low earnings. There were changes that were taking place in the company’s business organizations and stakeholders predicted that the company’s response to those changes were critical for the success of the company. The three major disruptive changes that the company was facing in its business environment included the rise of the digital technology creatively destroying the entire publishing industry, change in the educational world where a publisher does not have to print and ship textbooks, and the sluggish growth of the developed countries (Strauss, 2016).

Disruption of Change and How Pearson Responded

Two years down the line after John Fallon took over and initialized the change process at Pearson, the fallout could be felt. Around 2010, Pearson was sparkling as it was boosted by demand from the markets that were emerging as a result of Americans who were unemployed and heading to colleges in the financial crisis wake. Since the change initiation, the firm has been experiencing one percent annual loss. In October 2015, John Fallon informed the investors that the conditions within the industry were yet to improve. This statement led to investors wiping about 25 percent (£2bn) from Pearson’s market (Mansell, 2015). According to analysts, revenues had fallen by 1 percent within the first months of 2015. This change also resulted to the loss of Texas business, which was worth £100m. In order to deal with these disruptive changes, Pearson took several steps. In July 2015, the firm decided to sell Financial Times in order to shore its balance sheet up. Its sale of the software business PowerSchool and Financial Times brought in about £1.5bn. Apart from carrying on with its strategies, Pearson issued more marketing among its employees. The support of employees helped the firm to overcome the dynamics created by the change.

Evaluation of Strategies taken by Pearson PLC

The world’s largest book publisher and educational company, with its three business divisions- Pearson Higher Education, Pearson School, and Pearson Professional made about US $9 billion in 2012 in revenue. This amount went down in the later years – 2014 to 2015 – because of the major organizational change that the company was going through (Reingold, 2015). The external environmental changes that the company was facing precipitated internal changes within Pearson. There were several strategies that the company engaged in during the change. First, a new post of chief educational advisor was created and was later filled by Sir Michael Barber who was appointed by the top executives of Pearson.

At Pearson, Barber was tasked to create efficacy within the subject of education central in everything the organization does, set a “creative insurgency” in the firm so as to drive the culture of innovation forward, design and implement strategies of delivering high quality education at a lower cost, and minimize financial and human resources to achieve all tasks. Some of the other strategies that the firm set included decoupling of Penguin publishing business with the Random House; and combining educational companies that were separate, that is, Pearson North America and Pearson International, to form one Pearson Company. The company organized around several global lines including Professional, Higher education and School. These strategies have scaled the firm to new heights as it is evident that its revenue has been increasing.

Effect of Change had on Stakeholders and How Resistance was addressed

Organizational change always impacts the firm’s stakeholders. As an educational and publishing company, the main stakeholders of Pearson are education ministries, schools, teachers, parents and students. As the firm’s top executive, John Fallon was determined to reinvent the publishing company to maintain its name within the international textbook business. According to Reingold (2015), Fallon’s goal of change was to improve the lives of millions of people worldwide even as the firm strived for a successful and more sustainable business. In its quest for change, the stakeholders felt that the firm was influencing the education process. For instance, in North America where 60% of the firm’s sales are made, schools, teachers, and parents argued that Pearson was controlling curriculums, teacher qualifications, and tests that were used in the evaluation of students.

These stakeholders argued that a publishing company was not supposed to be the controller of education as the firm was. Some US citizens pointed out that a private company was not supposed to have as great influence over policymaking on education as Pearson, the London-based company was doing. In order to address these restrictions, the firm launched a campaign to convince the communities that its main aim was to improve the learning outcomes of students. At some point, Fallon was heard saying that no matter the hundreds of thousands of school districts within America that were using its products, the aim of the company is to improve learning.

Evaluation of the Overall Change Implications on Interdepartmental Collaboration

Fallon’s restructuring of Pearson cut $215 million in costs and 4,000 jobs in its quest to acquire digital and other businesses in the education environment overseas. Some of the businesses that the firm acquired included Brazil’s Grupo, a multi chain of English-language school centers (Mansell, 2015). These implications of the cut costs and lost jobs was a result of the merging of departments that took place to form the current Pearson. Strategies created to see through the change implementation mainly focused on efficacy, learning and research, and the affordable learning funds. In order to achieve the set goals, different departments had to be created and even merged at some point. The remaining employees had to cooperate and help the organization achieve its purpose.

Leaders’ Responses and Strategies

Pearson’s management was prepared for change. The three strategic projects that the leaders came up with were helpful in achieving the objectives of the change. The three strategic projects focused on efficacy, learning and research, and the affordable learning funds. The newly created post of chief educational advisor that was filled by Sir Michael Barber worked out in achieving change objectives. Barber’s team focused on putting efficacy at the center of Pearson’s global strategy. When trying to overcome resistance from the shareholders, the team was able to demonstrate how the firm’s products had a measurable impact on the lives of the users through learning (Strauss, 2016). Combining the separate companies – Pearson North America and Pearson International – helped to reduce costs and create a stronger company. However, the selling of Financial Times did not work out because investors saw it as a threat towards the bankruptcy of the company.
            I would suggest a strategy that involves leaders bringing together all the employees within the firm. Such strategies would be ones that follow change management theories such as Kotter’s 8-step process, Lewin’s Change management model, or McKinsey’s 7- S Model. Adjusting to change is a difficult process for the employees and to the organization. However, using one of these models would be helpful because leaders have a guideline to follow as well as the ability of determining the expected results. It is also important to place a timeline for how long the change process is expected to take in order to achieve the set objectives. However, as Pearson has done, change is an important process as it sometimes helps in the elimination of business endeavors that are no longer profitable to the business.

References

Mansell, W. (2015). Should Pearson, a giant multinational, be influencing our education policy? The Guardian. Retrieved 13 September 2016, from https://www.theguardian.com/education/2012/jul/16/pearson-multinational-influence-education-poliy

Pearson Publishing Ltd, (2016). About Pearson Publishing Ltd. Retrieved 13 September 2016, from http://www.pearson.co.uk/about.html

Reingold, J. (2015). Everybody hates Pearson. Fortune.com. Retrieved 13 September 2016, from http://fortune.com/2015/01/21/everybody-hates-pearson/

Strauss, V. (2016). Brace yourself: Pearson has a ‘new global education strategy’. The Washington Post. Retrieved from https://www.washingtonpost.com/news/answer-sheet/wp/2013/11/25/brace-yourself-pearson-has-a-new-global-education-strategy/