lecture 9 organization change

8/11/2019 Lecture 9 Organization Change

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Organization Change /

Organization Development

Professor Alexander Settles


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Structure should follow strategy

Growth

Concentration

Diversification

Stability No change

Retrenchment

Turnaround Divestment

Liquidation


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Definition of OD

Organization Development (OD) is aplanned process of change in an

organizations culture through theutilization of behavioral science

technology, research, and theory.


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Definition of OD

OD refers to a long-range effort to

improve an organizations problem-

solving capabilities and its ability to cope

with changes in its external environment

with the help of external or internal

behavioral-scientist consultants.


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Definition of OD

OD is an effort (1)planned, (2)

organization-wide, and (3)managed from

the top, to (4)increase organizationeffectiveness and health through (5)

planned interventions in the

organizations processes, usingbehavioral science knowledge.


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Organization Development is...

a systemwide application and transfer of

behavioral science knowledge to the

planned development, improvement, andreinforcement of the strategies,

structures, and processes that lead to

organization effectiveness.


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Action Research Model

Feedback to ClientData gathering after

action

Problem Identification

Joint action planning

Consultation with a

behavioral scientist

Data gathering &

preliminary diagnosis

Joint diagnosis

Action


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Initiate the Inquiry

Inquire into Best Practices

Discover Themes

Envision a Preferred Future

Design and Deliver Ways to

Create the Future

Positive Model


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Comparison of

Planned Change Models Similarities

Change preceded by diagnosis or preparation

Apply behavioral science knowledge Stress involvement of organization members

Recognize the role of a consultant

Differences

General vs. specific activities

Centrality of consultant role

Problem-solving vs. social constructionism


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General Model of Planned Change

Evaluating

and

InstitutionalizingChange

Planning

and

ImplementingChange

Diagnosing

Entering

andContracting


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Processes for Planned

Organization Change

Process Model

Planned organization change requires a

systematic process of movement from one

condition to another Unfreezing

Process by which people become aware of the need

for change

Change

Movement from the old way of doing things to a new

way

Refreezing

Process of making new behaviors relatively

permanent and resistant to further change


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Process of Organizational Change


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Organization Change

The Continuous Change Process Model

Incorporates the forces for change, a problem-

solving process, a change agent, and transition

management

Takes a top management perspective

Perceives forces and trends that indicate

need for change Determines alternatives for change

Selects the appropriate alternative


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Continuous Change Process Model of

Organization Change


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Organization Change The Continuous Change Process Model

Change agent: a person responsible for managing a

change effort

Assists management with problem recognition/definition

Can be involved in generating/evaluating potential actionplans

Can be from inside or outside of the organization

Implements the change

Measures, evaluates, controls the desired results

Transition management Process of systematically planning, organizing, and

implementing change


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OD: Group and Individual

Change

To set team

goals and

priorities

To examine

relationships

among thosedoing the

work

To analyze

and allocate

the way workis performed

To examine

how a group

is working

Team Building Goals


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Resistance to Change

The Resistance to Change Paradox

Organizations invite change when change offers

competitive advantage

Organizations resist change when change threatens

the organizations structure and control systems

Organizations must balance stability (permanence)

with the need to react to external shifts (change)

Resistance can warn of the need to reexamine the

need for change


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Resistance to Change:Sources of Resistance to Change

Organizational

Sources

Overdetermination

Narrow focus of

change

Group inertia

Threatenedexpertise

Threatened power

Resource allocationchanges

Individual

Sources

Habit

Security

Economic factors

Fear of the

unknown

Lack of

awareness

Social factors


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Managing Successful Organization

Change and Development

Keys to Managing Change in

Organizations

Consider international issues

Take a holistic view

Start small

Secure top management support

Encourage participation by those affected bythe change

Foster open communication

Reward those who contribute to change


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Different Types of

Planned Change Magnitude of Change

Incremental

Quantum

Degree of Organization

Over organized

Underorganized

Domestic vs. International Settings


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Diagnosing

Organizational Systems The key to effective diagnosis is

Know what to look for at eachorganizational level

Recognize how the levels affect each

other


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Organization-Level

Diagnostic ModelInputs

Technology

Strategy Structure

HR Measurement

Systems Systems

GeneralEnvironment

Industry

Structure

Design Components

Organizatio

n

Effectiveness

Outputs


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Organization Environmentsand Inputs

Environmental Types General Environment

Task Environmentand Industry Structure

Rate of Change and Complexity

Enacted Environment

Environmental Dimensions

Information Uncertainty Resource Dependency


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Organization Design Components

Strategy

the way an organization uses its resources(human, economic, or technical) to gain

and sustain a competitive advantage Technology

the way an organization converts inputsinto products and services

Structure

how attention and resources are focusedon task accomplishment


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Human Resource Systems

the mechanisms for selecting, developing,

appraising, and rewarding organization

members

Measurement Systems

methods of gathering, assessing, and

disseminating information on the activities ofgroups and individuals in organizations


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Organization Culture

The basic assumptions, values, and norms

shared by organization members

Represents both an outcome of organizationdesign and a foundation or constraint to

change


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Outputs

Organization Performance

e.g., profits, profitability, stock price

Productivity

e.g., cost/employee, cost/unit, error rates,

quality

Stakeholder Satisfaction e.g., market share, employee satisfaction,

regulation compliance


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Goal Clarity

Task Group

Structure Functioning

Group Performance

Composition Norms

Group-Level Diagnostic Model

Inputs Design Components Outputs

Organization

Design

Group

Effectiveness


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Group-Level Design Components

Goal Clarity

extent to which group understands its objectives

Task Structure

the way the groups work is designed Team Functioning

the quality of group dynamics among members

Group Composition

the characteristics of group members Performance Norms

the unwritten rules that govern behavior


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Group-Level Outputs

Product or Service Quality

Productivity

e.g., cost/member, number of decisions

Team Cohesiveness

e.g., commitment to group and

organization

Work Satisfaction


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Possible Effects of FeedbackFeedback occurs

What is the directionof the feedback?

Is the energy created

by the feedback?

No

Change

Do structures and

processes turn energy

into action?

Change

Failure,

frustration,

no changeAnxiety,resistance,

no change

Energy to use

data to identify and

solve problemsEnergy

to deny or

fight data

NO

YES

NO

YES


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The Design of

Effective Interventions

Contingencies Related to the

Change Situation Readiness for Change Capability to Change Cultural Context

Capabilities of the Change Agent


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The Design of

Effective Interventions

Contingencies Related to the

Target of Change

Strategic Issues

Technology and structure issues

Human resources issues

Human process issues


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Intervention Overview

Human Process Interventions

Technostructural Interventions

Human Resources ManagementInterventions

Strategic Interventions


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HumanProcess Interventions

Process Consultation and TeamBuilding

Third-party Interventions (ConflictResolution)

Organization Confrontation Meeting

Intergroup Relationships

Large-group Interventions


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Technostructural Interventions

Structural Design

Downsizing

Reengineering Parallel Structures

High Involvement Organizations

Total Quality Management

Work Design


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Human Resources Management

Interventions

Goal Setting

Performance Appraisal

Reward Systems Coaching and Mentoring

Career Planning and Development

Management and Leadership Managing Work Force Diversity

Employee Wellness Programs


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Transformational Change

Integrated Strategic Change

Organization Design Culture Change

Continuous Change

Mergers and AcquisitionsAlliances and Networks


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Transorganizational Change

Self-designing Organizations

Organization Learning and KnowledgeManagement

Built to Change Organizations


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Motivating Change

Creating Vision

Developing

Political Support

Managing the Transition

Sustaining Momentum

Effective

Change

Management

Change Management Activities


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Motivating Change

Creating Readiness for Change

Sensitize the organization to pressures for change

Identify gaps between actual and desired states

Convey credible positive expectations for change

Overcoming Resistance to Change

Provide empathy and support

Communicate

Involve members in planning and decision making


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Creating a Vision

Discover and Describe the

Organizations Core Ideology

What are the core values that inform

members what is important in the

organization?

What is the organizations core purpose or

reason for being? Construct the Envisioned Future

What are the bold and valued outcomes?

What is the desired future state?


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Developing Political Support

Assess Change Agent Power

Identify Key Stakeholders

Influence Stakeholders


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Change as a Transition State

Current

State

Transition

State

Desired

Future

State

I l t ti d E l ti


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Implementation and Evaluation

Feedback

Diagnosis

Design and

Implementation

of Interventions

Alternative

Interventions

Implementation of

Intervention

Clarify

Intention

Plan for

Next Steps

Implementation

Feedback

Measures ofthe Intervention

and Immediate

Effects

Evaluation

Feedback

Measure ofLong-term

Effects


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Institutionalization Framework

Organization

Characteristics

Intervention

Characteristics

Institutionalization

Processes

Indicators of

Institutionalization


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Organization Characteristics

Congruence

Extent to which an intervention supports or

aligns with the current environment, strategic

orientation, or other changes taking place

Stability of Environment and Technology

Unionization


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Intervention Characteristics

Goal Specificity

Programmability

Level of Change Target

Internal Support

Sponsor


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Institutionalization Processes

Socialization

Commitment

Reward Allocation

Diffusion

Sensing and Calibration


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Indicators of Institutionalization

Knowledge

Performance

Preferences

Normative

Consensus Value Consensus


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Contingencies Influencing

Structural Design

Environment

Organization

Size

Technology

Organization

Goals

Worldwide

OperationsStructural

Design


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The Downsizing Process

Clarify the organizations strategy

Assess downsizing options and make

relevant choices

Implement the changes

Address the needs of survivors and those

who leave

Follow through with growth plans

D i i T ti


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Downsizing Tactics

Tactic Characteristics Examples

Workforce

Reduction

Reduces headcount

Short-term focus

Fosters transition

Attrition

Retirement/buyout

Layoffs

OrganizationRedesign

Changes

organizationMedium-term focus

Fosters transition &

transformation

Eliminate functions,

layers, productsMerge units

Redesign tasks

SystemicChanges culture

Long-term focus

Fosters

transformation

Changeresponsibilities

Foster continuous

improvement

Downsizing is normal


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Characteristics of


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Characteristics of

Reengineered Organizations

Work units change from functional departments to process

teams

Jobs change from simple tasks to multidimensional work

Peoples roles change from controlled to empowered

The focus of performance measures and compensation shiftsfrom activities to results.

Organization structures change from hierarchical to flat

Managers change from supervisors to coaches; executiveschange from scorekeepers to leaders


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Characteristics of

Transformational Change

Triggered by Environmental and InternalDisruptions

Aimed at Competitive Advantage Systemic and Revolutionary Change

Demands a New Organizing Paradigm

Driven by Senior Executives and LineManagement

Involves Significant Learning


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(ISC)


is a deliberate coordinated process thatleads to gradually or radically systemic

realignments between the environment

and a firms strategic orientationresulting

in improvement in performance and

effectiveness.


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The Integrated Strategic Change Process

Strategy

S1

Organization

O1

Organization

O2

Strategy

S2Strategic

ChangePlan

Strategic Analysis Strategic Choice

Implementation


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ISC Application Stages

Strategic Analysis

Assess the readiness for change and top

managements ability to carry out change

Diagnose the Current Strategic Orientation

Strategic Choice Top management determines the content of the

strategic change

Designing the Strategic Change Plan

Development of a comprehensive agenda to

achieve the change

Implementing the Strategic Change Plan


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Organizational Design

Conceptual Framework Strategy

Structure

Work Design Human Resources Practices

Management and Information Systems

Key Point Fit, Congruence, Alignment among

Organizational Elements


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Organization Design Model

Organization Strategy

Strategic Fit

Structure

Work

DesignHuman Resource

Practices

Design Fit

Organization Design

Managementand InformationSystems


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Organization Designs

Organization Design


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Organization Design

Application Stages

Clarifying the Design Focus

Create the overall framework, begins with examining strategyand objectives and determining organization capabilitiesneeded

Designing the Organization

Results in an overall design for the organization, detaileddesigns for the components, and preliminary plans for how toimplement

Implementing the Design

Puts the new structures, practices and systems into place,draws heavily leading and managing change methods


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The Concept of Organization Culture

Basic

Assumptions

Values

Norms

Artifacts


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Diagnosing Organization Culture

Behavioral Approach Pattern of behaviors (artifacts) most related

to performance

Competing Values Approach Pattern of values emphasis characterizingthe organization

Deep Assumptions Approach

Pattern of unexamined assumptions thatsolve internal integration and externaladaptation problems well enough to betaught to others

Competing Val es Approach


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Competing Values Approach

Flexibility & Discretion

Stability & Control

Intern

alFocus&In

tegration

MarketHierarchy

Clan Adhocracy


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Culture Change Application Stages

Establish a clear strategic vision

Get top-management commitment

Model culture change at the highest level Modify the organization to support change

Select and socialize newcomers; downsize

deviants Develop ethical and legal sensitivity


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Organization Learning &

Knowledge Management

Organization Learninginterventions

emphasize the structures and social

processes that enable employees and

teams to learn and share knowledge

Knowledge Learningfocuses on the

tools and techniques that enable

organizations to collect, organize, and

translate information into useful

knowledge

Organization Learning:


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Organization Learning:

An Integrative Framework

Organization

Characteristics

Structure

Information

SystemsHR Practices

Culture

Leadership

Organization

Learning Processes

Discovery

Invention

ProductionGeneralization

Organization

Knowledge

Tacit

Explicit

Competitive

Strategy

Organization

Performance

KnowledgeManagementOrganization Learning

Characteristics of a


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Characteristics of a

Learning Organization

Structuresemphasize teamwork, informationsharing, empowerment

Information systemsfacilitate rapid acquisition

and sharing of complex information to manageknowledge for competitive advantage

Human resourcesreinforce new skills andknowledge

Organization cultureencourages innovation Leadersmodel openness and freedom to try

new things while communicating a compellingvision

Organization Learning Processes


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Organization Learning Processes

Single loop learning Most common form of learningAimed at adapting and improving the status

quo

Double loop learning Generative learning

Questions and changes existing assumptionsand conditions

Deuterolearning Learning how to learn

Learning how to improve single and doubleloop learning

K l d d P f


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Knowledge and Performance

Organization knowledge must berelevant and applied effectively to the

competitive strategy

Link organization learning processes toorganization performance

Growing emphasis on the value of

intellectual assets and services



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Interventions

Generating Knowledge Identify knowledge for competitive strategy

Develop ways to acquire or create that

knowledge Organizing Knowledge

Put knowledge into a usable form Codification and Personalization

Distributing Knowledge Making knowledge easy to access, use &

reuse

B ilt T Ch O i ti


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Built-To-Change Organizations

Organizations are designed with theability to change constantly to create

the best sustainable source of

competitive advantage.

Organizations operate in complex

and rapidly changing environments

Built to Change


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Built to Change

Application Stages

Create a Change-Friendly Identity

Pursue Proximity

Build an Orchestration Capability Establish Strategic Adjustment a Normal

Condition

Seek Virtuous Spirals

A li ti St f


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Application Stages for

Transorganizational Development

Identification Convention Organization Evaluation

Who should

belong to the

transorganizationalSystem (TS)?

Relevant skills,

knowledge,

and resources

Key stakeholders

Should a TS

be created?

Costs andbenefits

Task

perceptions

How to organize

for task

performance?Communication

Leadership

Policies and

procedures

How is the TS

performing?

Performance

outcomes

Quality of

interaction

Member

satisfaction

Mergers and Acquisitions


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Mergers and Acquisitions

Merger - the integration of two previously

independent organizations into a completely

new organization

Acquisition - the purchase of one organizationby another for integration into the acquiring

organization.

Distinct from transorganizational systems,such as alliances and networks, because at

least one of the organizations ceases to exist.


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Merger and Acquisition Rationale

Diversification

Vertical integration

Gaining access to global markets,technology, or other resources

Achieving operational efficiencies,

improved innovation, or resource sharing

Merger and Acquisition


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Merger and Acquisition

Application Stages

Pre-combination Phase The organization must identify a candidate

organization, work with it to gather informationabout each other, and plan the implementation

and integration activities Legal Combination Phase The two organizations settle on the terms of the

deal, gain approval from regulatory agenciesand shareholders, and file appropriate legal

documents Operational Combination Phase

Implementing the operational, technical andcultural integration activities


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Strategic Alliances

When two organizations formally agree topursue a set of goals

There is sharing of resources, intellectual

property, people, capital, technology,capabilities or physical assets

Common alliances are licensingagreements, franchises, long-termcontracts, and joint ventures

Alliance Intervention


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Alliance Intervention

Application Stages

Alliance Strategy Formulation

Clarify the business strategy and why an alliance is

needed

Partner Selection Leverage similarities and differences to create

competitive advantage

Alliance Structuring and Start-up

Build and leverage trust in the relationship

Alliance Operation and Adjustment

Network Interventions


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Network Interventions

Involves three or more companies joined

together for a common purpose

Each organization in the network has goals

related to the network as well as thosefocused on self-interest

Characterized by two types of change:

creating the initial network

(transorganizational development) and

managing change within an established

network

Cultural Context for Change


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Cultural Context for Change

Context Orientation

Power Distance

Uncertainty Avoidance Achievement Orientation

Individualism


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Power Distance


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Power Distance

Extent to which members of a societyaccept that status and power are

distributed unequally in an organization

Organizations in these cultures tend to be

autocratic, possess clear status

differences, and have little employee

participation

Uncertainty Avoidance


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Uncertainty Avoidance

The extent to which members of asociety tolerate the unfamiliar and

unpredictable

Organizations in these cultures tend to

value experts, prefer clear roles, avoid

conflict, and resist change

Achievement Orientation


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Achievement Orientation

The extent to which people in a societyvalue assertiveness and the acquisition of

material goods

Organizations in these cultures tend toassociate achievement with wealth and

recognition, value decisiveness, and

gender roles are clearly differentiated.

Individualism


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Individualism

The extent to which people in a societybelieve they should be responsible for

themselves and their immediate family

Organizations in these cultures tend toencourage personal initiative, value time

and autonomy, accept competition, and

autonomy is highly valued

International Strategic


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g

Orientation

Characteristics of the International Design

Sell existing products/services to nondomestic

markets

Goals of increased foreign revenues

Implementing the International Orientation

OD facilitates extending the existing strategy

into the new market

Cross-cultural training and strategic planning

The Global Strategic Orientation


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e G oba St ateg c O e tat o

Characteristics of the Global Design

Centralized with a global product structure

Goals of efficiency through volume

Implementing the Global Orientation

OD supports career planning, role clarification,employee involvement, conflict management andsenior management team building to help achieveimproved operational efficiency

OD helps the organization transition to globalintegration from local responsiveness

The Multinational

Strategic Orientation


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Strategic Orientation

Characteristics of the Multinational Design

Operate a decentralized organization

Goals of local responsiveness through

specialization Implementing the Multinational Orientation

OD helps with intergroup relations, local

management selection and team building

OD facilitates management development,

reward systems, and strategic alliances

Transnational Strategic


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Orientation

Characteristics of the Transnational Design Tailored products

Goals of learning and responsiveness through

integrations

Implementing the Transnational Orientation

Extensive selection and rotation

Acquire cultural knowledge and develop intergroup

relations Build corporate vision

Gl b l S i l Ch O i ti


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Global Social Change Organizations

Their primary task is a commitment to serve as an agent ofchange in the creation of environmentally and socially

sustainable world futures

They have discovered and mobilized innovative social-

organizational architectures They hold values of empowerment in the accomplishment of

their global change mission

They are globally-locally linked in structure, membership, orpartnership and thereby exist as entities beyond the nation-state

They are multi-organizational and often cross-sectoral

Application Stages of


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Application Stages of

Global Social Change Organizations

Build the local organization Using values to create the vision

Recognizing that internal conflict is often a function of externalconditions

Understanding the problems of success Create horizontal linkages

Build a network of local organizations with similar views andobjectives

Develop vertical linkages Create channels of communication and influence upward to

governmental and policy-level, decision-making processes

lecture 9 organization change

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