organization change / organization development. structure should follow strategy growth...
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Organization Change / Organization Development
Structure should follow strategy
• Growth– Concentration– Diversification
• Stability– No change
• Retrenchment– Turnaround– Divestment– Liquidation
Definition of OD
Organization Development (OD) is a planned process of change in an
organization’s culture through the utilization of behavioral science
technology, research, and theory.
Definition of OD
OD refers to a long-range effort to improve an organization’s problem-
solving capabilities and its ability to cope with changes in its external environment
with the help of external or internal behavioral-scientist consultants.
Definition of OD
OD is an effort (1) planned, (2) organization-wide, and (3) managed from
the top, to (4) increase organization effectiveness and health through (5)
planned interventions in the organization’s “processes,” using
behavioral science knowledge.
Organization Development is...
a systemwide application and transfer of behavioral science knowledge to the
planned development, improvement, and reinforcement of the strategies,
structures, and processes that lead to organization effectiveness.
Action Research Model
Feedback to ClientData gathering after
action
Problem Identification
Joint action planningConsultation with a behavioral scientist
Data gathering & preliminary diagnosis
Joint diagnosis
Action
Initiate the Inquiry
Inquire into Best Practices
Discover Themes
Envision a Preferred Future
Design and Deliver Ways to Create the Future
Positive Model
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
General Model of Planned Change
Evaluatingand
InstitutionalizingChange
Planningand
ImplementingChange
DiagnosingEntering
andContracting
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
Process of Organizational Change
Processes for Planned 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
Continuous Change Process Model of Organization Change
Processes for Planned 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 action plans• 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
OD: Group and Individual Change
To set team goals and priorities
To set team goals and priorities
To examine relationships among those
doing the work
To examine relationships among those
doing the work
To analyze and allocate the way work is performed
To analyze and allocate the way work is performed
To examine how a group is working
To examine how a group is working
Team Building GoalsTeam Building Goals
Resistance to Change
• The Resistance to Change Paradox
– Organizations invite change when change offers competitive advantage
– Organizations resist change when change threatens the organization’s 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
Resistance to Change: Sources of Resistance to Change
• Organizational Sources
– Overdetermination
– Narrow focus of change
– Group inertia
– Threatened expertise
– Threatened power
– Resource allocation changes
• Individual Sources
– Habit
– Security
– Economic factors
– Fear of the unknown
– Lack of awareness
– Social factors
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 by the change
– Foster open communication
– Reward those who contribute to change
Different Types of Planned Change
• Magnitude of Change– Incremental– Quantum
• Degree of Organization– Over organized– Underorganized
• Domestic vs. International Settings
Diagnosing Organizational Systems
• The key to effective diagnosis is… – Know what to look for at each
organizational level
– Recognize how the levels affect each other
Organization-Level Diagnostic Model
Inputs
Technology
Strategy Structure
HR Measurement Systems Systems
GeneralEnvironment
IndustryStructure
Design ComponentsCulture
Organization
Effectiveness
Outputs
Organization Environments and Inputs
• Environmental Types– General Environment– Task Environment and Industry Structure– Rate of Change and Complexity– Enacted Environment
• Environmental Dimensions– Information Uncertainty– Resource Dependency
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 inputs
into products and services
• Structure– how attention and resources are focused
on task accomplishment
Organization Design Components
• 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 of groups and individuals in organizations
Organization Design Components
• Organization Culture– The basic assumptions, values, and norms
shared by organization members– Represents both an “outcome” of organization
design and a “foundation” or “constraint” to change
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
Goal Clarity
Task GroupStructure Functioning
Group PerformanceComposition Norms
Group-Level Diagnostic Model
Inputs Design Components Outputs
OrganizationDesign
GroupEffectiveness
Group-Level Design Components
• Goal Clarity– extent to which group understands its objectives
• Task Structure– the way the group’s 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
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
Possible Effects of FeedbackFeedback occurs
What is the direction of the feedback?
Is the energy createdby the feedback?
NoChange
Do structures andprocesses turn energy
into action?
Change
Failure,frustration,no changeAnxiety,
resistance,no change
Energy to usedata to identify and
solve problemsEnergyto deny orfight data
NO
YES
NO
YES
The Design of Effective Interventions
• Contingencies Related to the Change Situation
• Readiness for Change• Capability to Change• Cultural Context• Capabilities of the Change Agent
The Design of Effective Interventions
• Contingencies Related to the Target of Change
• Strategic Issues• Technology and structure issues• Human resources issues• Human process issues
Intervention Overview
• Human Process Interventions
• Technostructural Interventions
• Human Resources Management Interventions
• Strategic Interventions
Human Process Interventions
• Process Consultation and Team Building• Third-party Interventions (Conflict
Resolution)• Organization Confrontation Meeting• Intergroup Relationships• Large-group Interventions
Technostructural Interventions
• Structural Design
• Downsizing
• Reengineering
• Parallel Structures
• High Involvement Organizations
• Total Quality Management
• Work Design
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
Strategic Interventions
• Transformational Change– Integrated Strategic Change
– Organization Design
– Culture Change
• Continuous Change– Mergers and Acquisitions
– Alliances and Networks
Strategic Interventions
• Transorganizational Change– Self-designing Organizations
– Organization Learning and Knowledge Management
– Built to Change Organizations
Motivating Change
Creating Vision
DevelopingPolitical Support
Managing the Transition
Sustaining Momentum
EffectiveChange
Management
Change Management Activities
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
Creating a Vision
• Discover and Describe the Organization’s Core Ideology– What are the core values that inform
members what is important in the organization?
– What is the organization’s core purpose or reason for being?
• Construct the Envisioned Future– What are the bold and valued outcomes?– What is the desired future state?
Developing Political Support
• Assess Change Agent Power
• Identify Key Stakeholders
• Influence Stakeholders
Change as a Transition State
CurrentState
TransitionState
DesiredFuture State
Implementation and Evaluation Feedback
Diagnosis
Design andImplementationof Interventions
AlternativeInterventions
Implementation ofIntervention
ClarifyIntention
Plan forNext Steps
ImplementationFeedback
Measures ofthe Intervention and ImmediateEffects
EvaluationFeedback
Measure ofLong-term
Effects
Institutionalization Framework
OrganizationCharacteristics
InterventionCharacteristics
InstitutionalizationProcesses
Indicators ofInstitutionalization
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
Intervention Characteristics
• Goal Specificity
• Programmability
• Level of Change Target
• Internal Support
• Sponsor
Institutionalization Processes
• Socialization
• Commitment
• Reward Allocation
• Diffusion
• Sensing and Calibration
Indicators of Institutionalization
• Knowledge
• Performance
• Preferences
• Normative Consensus
• Value Consensus
Contingencies Influencing Structural Design
Environment
OrganizationSize
TechnologyOrganization
Goals
WorldwideOperationsStructural
Design
The Downsizing Process
• Clarify the organization’s 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
Downsizing Tactics
Tactic Characteristics Examples
Workforce Reduction
Reduces headcount Short-term focus Fosters transition
Attrition Retirement/buyout Layoffs
Organization
Redesign
Changes organization
Medium-term focus Fosters transition &
transformation
Eliminate functions, layers, products
Merge units Redesign tasks
Systemic
Changes culture Long-term focus Fosters
transformation
Change responsibilities
Foster continuous improvement
Downsizing is normal
The Reengineering Process
• Prepare the organization
• Specify the organization’s strategy and objectives
• Fundamentally rethink the way work gets done– Identify and analyze core business processes– Define performance objectives– Design new processes
• Restructure the organization around the new business processes.
Characteristics of Reengineered Organizations
Work units change from functional departments to process teams
Jobs change from simple tasks to multidimensional work
People’s roles change from controlled to empowered
The focus of performance measures and compensation shifts from activities to results.
Organization structures change from hierarchical to flat
Managers change from supervisors to coaches; executives change from scorekeepers to leaders
Characteristics of Transformational Change
• Triggered by Environmental and Internal Disruptions
• Aimed at Competitive Advantage• Systemic and Revolutionary Change• Demands a New Organizing Paradigm• Driven by Senior Executives and Line
Management• Involves Significant Learning
Integrated Strategic Change(ISC)
Integrated Strategic Change ………is a deliberate coordinated process thatleads to gradually or radically systemic realignments between the environment
and a firm’s strategic orientation resultingin improvement in performance and
effectiveness.
The Integrated Strategic Change Process
StrategyS1
OrganizationO1
OrganizationO2
StrategyS2Strategic
ChangePlan
Strategic Analysis Strategic Choice
Implementation
ISC Application Stages• Strategic Analysis
– Assess the readiness for change and top management’s 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
Organizational Design
Conceptual Framework• Strategy• Structure• Work Design• Human Resources Practices• Management and Information Systems
Key Point• Fit, Congruence, Alignment among
Organizational Elements
Organization Design Model
Organization Strategy
Strategic Fit
Structure
Work Design
Human Resource Practices
Design Fit
Organization Design
Management and Information Systems
Organization Designs
Organization Design Application Stages
• Clarifying the Design Focus
– Create the overall framework, begins with examining strategy and objectives and determining organization capabilities needed
• Designing the Organization
– Results in an overall design for the organization, detailed designs for the components, and preliminary plans for how to implement
• Implementing the Design
– Puts the new structures, practices and systems into place, draws heavily leading and managing change methods
The Concept of Organization Culture
BasicAssumptions
Values
NormsArtifacts
Diagnosing Organization Culture
• Behavioral Approach– Pattern of behaviors (artifacts) most related
to performance
• Competing Values Approach– Pattern of values emphasis characterizing
the organization
• Deep Assumptions Approach– Pattern of unexamined assumptions that
solve internal integration and external adaptation problems well enough to be taught to others
Competing Values Approach
Flexibility & Discretion
Stability & Control
External Focus & D
ifferentiationInte
rnal
Foc
us &
Inte
grati
on
MarketHierarchy
Clan Adhocracy
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
Self-Designing Organizations
• Systemic change process altering most features of the organization
• Process is ongoing, never finished—continuous improvement and change
• Learning as You Go—on-site innovation• Need support of multiple stakeholders• All levels of the organization adopt new
strategies and change behaviors
Organization Learning & Knowledge Management
• Organization Learning interventions emphasize the structures and social processes that enable employees and teams to learn and share knowledge
• Knowledge Learning focuses on the tools and techniques that enable organizations to collect, organize, and translate information into useful knowledge
Organization Learning: An Integrative Framework
OrganizationCharacteristics
StructureInformation SystemsHR PracticesCultureLeadership
OrganizationLearning Processes
DiscoveryInventionProductionGeneralization
OrganizationKnowledge
TacitExplicit
CompetitiveStrategy
OrganizationPerformance
Knowledge ManagementOrganization Learning
Characteristics of a Learning Organization
• Structures emphasize teamwork, information sharing, empowerment
• Information systems facilitate rapid acquisition and sharing of complex information to manage knowledge for competitive advantage
• Human resources reinforce new skills and knowledge
• Organization culture encourages innovation • Leaders model openness and freedom to try new
things while communicating a compelling vision
Organization Learning Processes
• Single loop learning– Most common form of learning– Aimed at adapting and improving the status
quo
• Double loop learning– Generative learning – Questions and changes existing assumptions
and conditions• Deuterolearning
– Learning how to learn– Learning how to improve single and double
loop learning
Knowledge and Performance
• Organization knowledge must be relevant and applied effectively to the competitive strategy
• Link organization learning processes to organization performance
• Growing emphasis on the value of intellectual assets and services
Knowledge Management 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
Built-To-Change Organizations
• Organizations are designed with the ability to change constantly to create the best sustainable source of competitive advantage.
• Organizations operate in complex and rapidly changing environments
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
Application Stages for Transorganizational Development
Identification Convention Organization Evaluation
Who shouldbelong to the transorganizational System (TS)?• Relevant skills, knowledge, and resources• Key stakeholders
Should a TSbe created?• Costs and benefits• Task perceptions
How to organize for task performance?• Communication• Leadership• Policies and procedures
How is the TSperforming?• Performance outcomes• Quality of interaction• Member satisfaction
Mergers and Acquisitions
• Merger - the integration of two previously independent organizations into a completely new organization
• Acquisition - the purchase of one organization by 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.
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 Application Stages
• Pre-combination Phase– The organization must identify a candidate
organization, work with it to gather information about 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 agencies and shareholders, and file appropriate legal documents
• Operational Combination Phase– Implementing the operational, technical and
cultural integration activities
Strategic Alliances
• When two organizations formally agree to pursue a set of goals
• There is sharing of resources, intellectual property, people, capital, technology, capabilities or physical assets
• Common alliances are licensing agreements, franchises, long-term contracts, and joint ventures
Alliance InterventionApplication 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
• 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 those focused 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
• Context Orientation
• Power Distance
• Uncertainty Avoidance
• Achievement Orientation
• Individualism
Context
• The extent to which meaning in communication is carried in the words
• Organizations in high context cultures tend to value ceremony and ritual, the structure is less formal, there are fewer written policies, and people are often late for appointments
Power Distance
• Extent to which members of a society accept 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
• The extent to which members of a society tolerate the unfamiliar and unpredictable
• Organizations in these cultures tend to value experts, prefer clear roles, avoid conflict, and resist change
Achievement Orientation
• The extent to which people in a society value assertiveness and the acquisition of material goods
• Organizations in these cultures tend to associate achievement with wealth and recognition, value decisiveness, and gender roles are clearly differentiated.
Individualism
• The extent to which people in a society believe they should be responsible for themselves and their immediate family
• Organizations in these cultures tend to encourage personal initiative, value time and autonomy, accept competition, and autonomy is highly valued
International Strategic 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
• 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 and senior management team building to help achieve improved operational efficiency
– OD helps the organization transition to global integration from local responsiveness
The Multinational 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 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
Global Social Change Organizations
Their primary task is a commitment to serve as an agent of change 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, or partnership and thereby exist as entities beyond the nation-state
They are multi-organizational and often cross-sectoral
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 external
conditions– Understanding the problems of success
• Create horizontal linkages– Build a network of local organizations with similar views and
objectives
• Develop vertical linkages– Create channels of communication and influence upward to
governmental and policy-level, decision-making processes