PowerPoint Presentation

Change Drivers: The effects of large scale changes on organizations

1Organizations are engaged in adapting to their environment as an ongoing challenge. These adaptations are required by what have come to be called, change drivers. These are large scale, complex, and interacting forces that create the environment in which organizations compete for positioning and survival. Understanding the change drivers better enables leaders to plan organizational strategies that assist with adaptation. This slide presentation is intended to identify and give examples of change drivers, but since these are constantly changing, you will need to revising your own thinking about them just as frequently. The change drivers include the environment, technology, globalization, complexity, demographics, and information.The way it used to be

How has the workplace changed since your grandparents and parents?

Before we discuss specific change drivers, lets first reflect on what has actually changed in the workplace as an indication of hos organizations have adapted to these forces. Think about the workplace that your grandparents and parents have described to you; even your own workplace and how that has changed over the years you have worked.2They way it used to be

1- 4 employers 1- 2 careers 42-year working life lifetime job security 6- 10 employers 3- 5 careers 50-year working life new psychological contract

and now

3For example, for out parents and certainly our grandparents generation, most people had one, perhaps two employers, and one, perhaps 2 careers during their 42 year working life. For the most part, they were employed by a particular business for life with high job security. Today, things have changed. Even for college students: Of students who declare a major, 70% do not have a high level of confidence in their choice; Of students who have graduated with a bachelors degree, 23% were in jobs unrelated to their majors, and this continues to grow. Recent reports on career development indicate that the average worker will have 6010 employers and 3-5 careers over at least a 50 year working life. This kind of change requires a new psychological contract between employer and employee.

The old psychological contractEmployer: I will provide secure employment (unless you really screw up)Worker: I will provide consistent & loyal workThe new psychological contractEmployer: I will provide you with an opportunity to bring value to the organization and keep you so long as you continue to bring valueWorker: I will stay so long as I am provided what I need & dont find something better

4A psychological contract is an implicit agreement about what people expect from each other in the workplace. In days past, the employer would essentially say, I will provide you with secure employment, unless you make serious mistakes. In exchange, the worker said I will provide consistent and loyal work. As most of us know, secure employment and loyalty to employers is not what it used to be. Today it is the obligation of the employer for the contract to retain employees so long as the employee brings value to the organization through high performance and updated skills. The worker, likewise, has more flexibility and agrees to remain with an employer so long as they are provided with what they need and dont find something better. The rules have changed.

Change Drivers environment globalism demographics technology information economics politics complexityOrganizational Response: paradigm shift new psychological contract decentralizing downsizing telecommuting virtual organization reengineering teamwork Learning Organization mergers/acquisitions strategic alliances target marketing out-sourcing temps innovationDemands timeliness (JIT) efficiency speed quality customization adaptabilityWorker Impact lifelong learning adaptability/flexibility networking self-loyaltyCompetition !

5We will talk a lot in this course about a systems view of business. Systems are connections among events and can form long chains with feedback loops that continue to modify some of the original events. In this case, in the upper left of the slide you see the change drivers that require organization to adapt. Essentially, adaptation involves what organizations can do in a competitive environment to stay healthy. Organization respond to these demands by increasing the timeliness of their response, work efficiency, speed of delivery, quality of workmanship, customization to customers, and so on. In order to meet these demands a variety of responses or initiatives have been created. These have included such things as downsizing, teamwork, strategic alliances, outsoursing, use of temps, etc. In response to these initiatives, the nature of work and the workers themselves have had to change. Instead of working off of what they learned at one time in the past, they must continually learn new skills to bring value to the organization. They must be more flexible in their scheduling and skill sets and networking. Finally, they cannot rely on the good will of the organization to keep them on, and their loyalty is to themselves and their careers and families. These changes feedback to the change drivers that make change a constant, or as business guru Peter Vail suggests, continuous whitewater.Environmental change drivers limited resources & environmental degradationonly .5% of worlds available water is fresh & accessible54% of available freshwater is currently being used by 6.1 billion peoplehalf the population lives in unsanitary conditionssince 1950, the amount of irrigated land has tripled70% of worlds drylands have soil degradation (over cultivated, over-grazed, improperly irrigated, erosion, monoculture, deforestation)decreased space for trash (200 million tons/day in US); 29 million T of hazardous waste each yearocean pollution (60 million gallons oil; Mississippi R has 4000 Sq. miles of dead water around LA and TX; toxic bacteria levels)70% of worlds oceans are overexploited (90% reduction in tuna)global warming & flooding (1-3.5 C by 2100)decrease in biodiversity (by 2040 2/3 of all species extinct EPA)

6The environment is the largest change driver as well as the context in which all businesses operate. These points are only a few examples of environmental concerns and scarce resources that must be considered in strategic planning and organizational change. Take a moment and browse these and consider what the implication might be for businesses you are familiar with. For example, as trash disposal becomes more expensive and restrictive, and as public awareness grows, there is greater pressure on organizations for corporate social responsibility to recycle, use less disposable products, and contribute to environmental sustainability.The Technology change driver

What the takes the average person 1 day to do now, took 3 days in 1950, 1 month in 1800, lifetime in 1600In 1900 85% of workers were in agriculture (now 3%), in 1950 73% were in manufacturing (15%), now service & knowledge workersMoores Law: chip capacity double every 6 months while price stays the samecurrent annual growth rate of Internet is 100%artificial intelligence is expected to affect 60-90% of jobs, augmenting, displacing or eliminating workersin the next five years people in the industrial world will be doing jobs differently from the past 50 yearswith innovation, everything goes back to zero

7Technology has always been a change driver but not quite at the phenomenal rate at which it now drives change. Consider the first point that what it takes the average person to do in a day now, took three days in 1950, 1 month in 1800, and a lifetime in 1600. For those of you who remember or have heard of typewriters and paper filing and mailing used to be done, consider how computers have changed these. The pace and style of work is continuing to change at a rapid pace.Buy American-OwnedAlka SeltzerAlpo DogfoodAim ToothpasteBaskin Robbins IcecreamBactine AntisepticBall Park FranksBayer AspirinPic Pens, Lighter, RazorBurger KingCapitol RecordsCBS RecordsChesterfield CigarettesChristian Brothers wineDiamond Stick MatchesDove SoapDunlop TiresEverReady BatteriesEureka Vacuum CleanersFirestone TiresFour Roses WhiskyFrenchs MustardFrigidaire AppliancesFriskies & Might Dog foodGlidden PaintGoodyear Tire & RubberGood Humor IcecreamGreen Giant VegetablesHumpty Dumpty MagazineHires Root BeerHills Brothers CoffeeHungry Jack PancakesImperial MargerineInstant Potato MixIndian Head TextilesJenos PizzaKelvinator AppliancesKnox GelatineKool CigarettesKeebler CookiesLibbys FruitsLifebuoy SoapMagnavoxMassey-Ferguson TractorsMaxell TapesMichelin TiresMr. CoffeeNorelco AppliancesNescafe CoffeeNew Yorker HotelOvaltine Drink MixOne-A-Day VitaminsPanasonicPearle Vision CenterPepsodent ToothpastePillsbury Cake MixNestle Quik Chocolate MixQuasar TelevisionRay-O-Vac BatteriesRona Barrets magazineSeven Seas Salad DressingShell OilStandard OilStouffer Frozen FoodsTappan AppliancesValium TranquilizersZig-Zag Cigarette Papers

8Take a moment and browse these products. Most of us grew up with these products and they are as American as Mom and apple piearent they? Which of these products are actually owned by corporations in other countries? See if you can identify them..the secret, they all are owned by other countries, although many of them continually change hands.

US has 280 million consumers, 330 in EC, billion in ChinaOf the top 50 world banks, only three US banks hold 13-15th place20-40% unsuccessful repatriationIncreasing workforce diversification: one LA company conducted orientation in 17 languagesAfrican American purchasing power will increase 55% in each of next two decadesCultural diversity demonstrates many ways to work and manageGlobalization the new marketplace

9The marketplace also continues to expand, and the US is really quite a small collection of customers compared to China and India. In addition, the top banks in the world are no longer US banks. Even a sizeable group of American employees who are transferred overseas to work are not successfully repatriated back home. We have a highly complex and interconnected global economy in that what affects one economy affects them all.Unemployment rates opportunities for outsourcing

1 billion workers are un- (150m) or underemployed worldwide by 2010 Asia will account for 60% of the worlds population 1999-2050 US adds about million workers each year

10The workforce is also changing due to globalization. Although we decry the loss of business being outsourced overseas, if you are a business and trying to save money on employment costs, and other countries have a lower cost of living and wages while at the same time have highly skilled workers why wouldnt you consider outsourcing? 20-30% of the elite skilled workforce changes jobs every year69% believe it is acceptable to change jobs every 5 years40% believe that for under age 30 should change jobs every 2-3 years14% are proud of their company & only 30% remain loyalWorking Woman identifies 32 desired family-friendly benefitsIncreased preference for flex, family and personal time and independence (alt scheduling by 25% employers)Southwestern Air receives 3,000 online resume a monthInstitute of Personnel and Development, April 2000

The changing workforce

11Out own workforce is also change in the US. There is more churn or employee turnover in organization, and in some careers it is the norm and expected. Given all the change that organizations experience, at a time when they need employee stability and loyalty, there is less of both.Demographic change drivers

60-70% of Boomers plans to work past age 65 (and 20+ hours/week in retirement)by 2050 18-31 million will be older than 8525% of Americans 35-54 have saved