ch -18 organizational change

Chapter 14, Stephen P. Robbins and Nancy Langton, Organizational Behaviour, 3rd ed.Copyright © 2004 by Pearson Education Canada Inc.

Chapter 14

Organizational Change


Chapter Outline

• Forces for Change• Types of Organizational Change• What Do Organizations Change?• Undergoing Change to Improve Products and Services• Managing Organizational Change• Communicating Effectively When Undergoing Change• Resistance to Change• Caveats on Undergoing Change


Organizational Change

• What forces create the need for organizational change?

• What kinds of changes do organizations make? Can organizations stop changing?

• What causes resistance to change? How can it be overcome?

Questions for Consideration


• More cultural diversity• Increase in professionals• Many new entrants with inadequate skills

• More computers and automation• TQM programs

• Reengineering programs• Dot-com crashes

•Ethics scandals• Interest rate fluctuations• Foreign currency fluctuations• Global competitors• Mergers and consolidations• Growth of specialty retailers

Nature of the work force

Technology

Economic shocks

Competition

Force Examples

Forces for Change


Managing Change

• Change– Making things different.

• Planned Change– Change activities that are intentional and goal oriented.

• First-Order Change– Linear and continuous.

• Second-Order Change– Change that is multidimensional, multilevel,

discontinuous, and radical.


Exhibit 14-1Change Options

Technology

What are the change

options?

Physicalsetting PeopleStructureCulture


What Do Organizations Change?

• Culture– changing the underlying values and goals of the

organization• Structure

– altering authority relations, coordination mechanisms, job redesign, or similar structural variables

• Technology– modifying how work is processed and methods and

equipment used


What Do Organizations Change?

• Physical Settings– altering the space and layout arrangements in the

workplace

• People– changes in employee skills, expectations and/or

behaviour


Undergoing Change to Improve Products and

Services• TQM and Continuous Improvement

Processes• Re-engineering Work Processes• Flexible Manufacturing Systems


Total Quality Management

• Philosophy of management that’s driven by the constant attainment of customer satisfaction through the continuous improvement of all organizational processes– seeks to reduce variability in output, resulting in

lower costs and higher quality


Exhibit 14-2 What Is Total Quality Management?

• Intense focus on the customer• Concern for continuous improvement• Improvement in the quality of everything the

organization does• Accurate measurement• Empowerment of employees


Exhibit 14-3 The PDCA Cycle

Plan

Check Do

Act


Why TQM Fails

• Some firms were not performing TQM, just calling it that

• Some managers have unrealistic expectations, and effect results too quickly

• Some programs did not assure employees’ job security

• Some firms did not provide adequate training• Some firms did not appreciate the complexity of

changes involved


Elements of Re-engineering

• Identifying an organization’s distinctive competencies

• Assessing core processes• Reorganizing horizontally by process


Re-engineering versus TQM

• TQM• Incremental

improvements• Bottom-up participative

decision-making

• Re-engineering• Quantum leaps in

performance• Driven by top

management


Flexible Manufacturing Systems

• Integration of computer-aided design, engineering, and manufacturing to produce low-volume products at mass-production costs

• Change happens by changing computer programs, not producing new parts– Pratt and Whitney in Halifax can produce 127 different

engine models, up from 20 models for the flexible mfg. system was introduced

• Best used with– Employees: high tech skills, initiative, self-managing– Organizations: organic structures, teams


Exhibit 14-4 Lewin’s Three-Step Change Model

RefreezingMovingUnfreezing


Implementing Change

• Unfreezing: getting ready for change– Minimizing resistance

• Moving: making the change– Changing people (individuals and groups);

Tasks; Structure; Technology• Refreezing: stabilizing the change

– Reinforcing outcomes, evaluating results, making constructive modifications


Exhibit 14-5 Unfreezing the Status Quo

Time

Drivingforces

Restrainingforces

Desiredstate

Statusquo


Unfreezing

• Arouse dissatisfaction with the current state– Tell them about deficiencies in organization

• Activate and strengthen top management support– Need to break down power centres

• Use participation in decision making– Get people involved

• Build in rewards– Tie rewards to change/use recognition, status symbols,

praise to get people to go along


Moving• Establish goals

– E.G. Make business profitable by end of next year

• Institute smaller, acceptable changes that reinforce and support change– E.G. Procedures and rules, job descriptions, reporting

relationships

• Develop management structures for change– E.G. Plans, strategies, mechanisms that ensure change

occurs

• Maintain open, two-way communication


Refreezing

• Build success experiences– Set targets for change, and have everyone work toward targets

• Reward desired behaviour– GOOD - reward behaviour that reinforces changes– BAD - reward old system (e.g., people relying on old systems while

computerization is going on)

• Develop structures to institutionalize the change– Organizational retreats, appropriate computer technology,

performance appraisals that examine change efforts

• Make change work


Communicating When Undergoing Change

• CEO commitment to communication• Matching actions and words• Commitment to two-way communication• Emphasis on face-to-face communication• Shared responsibility for employee communication• Positive ways of dealing with bad news• Shaping messages for intended audience• Treating communication as an ongoing process


Exhibit 14-7 Sources of Individual Resistance to

Change

Security

Economicfactors

IndividualResistance

Fear ofthe unknown

Selectiveinformationprocessing

Habit


Cynicism About Change

• Feeling uninformed about what was happening

• Lack of communication and respect from one’s supervisor

• Lack of communication and respect from one’s union representative

• Lack of opportunity for meaningful participation in decision-making


Exhibit 14-9 Sources of Organizational Resistance to

Change

OrganizationalResistance

Threat to establishedresource allocations

Structuralinertia

Threat to establishedpower relationships

Limited focus of change

Threat toexpertise

Groupinertia


Overcoming Resistance to Change

• Education and Communication– This tactic assumes that the source of resistance lies in

misinformation or poor communication.

• Participation– Prior to making a change, those opposed can be brought

into the decision process.

• Facilitation and Support– The provision of various efforts to facilitate adjustment.


Overcoming Resistance to Change

• Negotiation– Exchange something of value for a lessening of

resistance.

• Manipulation and Cooperation– Twisting and distorting facts to make them appear more

attractive.

• Coercion– The application of direct threats or force upon resisters.


Summary and Implications

• The real world is turbulent, requiring organizations to face the prospect of change.

• Change must be managed, it is not an easy process


OB at Work


For Review

1. What are the types of planned change?

2. What are the different parts of the organization that can be changed?

3. What are the implications for employees of a continuous improvement program?

4. What are the implications for employees of a re-engineering program?

5. What are flexible manufacturing systems?


For Review

6. How does Lewin’s three-step model of change deal with resistance to change?

7. What is the difference between driving forces and restraining forces?

8. What are the factors that lead individuals to resist change?

9. What are the factors that lead organizations to resist change?


For Critical Thinking

1. How have changes in the workforce during the past 20 years affected organizational policies?

2. “Managing today is easier than at the start of the 20th century because the years of real change took place between Confederation and World War I.” Do you agree or disagree? Discuss.

3. What is meant by the phrase “We live in an age of discontinuity”?

4. “Resistance to change is an irrational response.” Do you agree or disagree? Explain.


HR Implications: Managing Change in a Unionized

Environment• Requirements

– An effective system for resolving day-to-day issues – A jointly administered business education process– A jointly developed strategic vision for the

organization – A non-traditional, problem-solving method of

negotiating collective agreements


Concepts to Skills: Managing Effective

Change• Build an intricate understanding of the business • Encourage uncompromising straight talk • Manage from the future • Harness setbacks • Promote inventive accountability • Understand the quid pro quo • Create relentless discomfort with the status quo

ch -18 organizational change

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