WHAT IS ORGANIZATIONAL CHANGE?

Organizational change: the process by which organizations move from their present state to some desired future state to increase their effectiveness.

Goal is to find improved ways of using resources and capabilities in order to increase an organization’s ability to create value.

Targets of change include improving effectiveness at four different levels:

1. Human resources 2. Functional resources 3. Technological capabilities 4. Organizational capabilities

1. Human Resource changes include:

1. Investment in training and development 2. Socializing employees into the organizational culture 3. Changing organizational norms and values to motivate a multicultural and

diverse workforce 4. Promotion and reward systems 5. Changing the composition of the top- management team

2. Functional Resources changes Include:I. Transferring resources to the functions where the most value can be created in

response to environmental changeII. An organization can improve the value that its functions create by changing its

structure, culture, and technology

3. Technological capabilities changes include:i. Efforts intended to give an organization the capacity to change itself in order

to exploit market opportunities ii. Adoption and use of new technologies

iii. Development of new products/ technologies and the changing of existing one’s Technological capabilities are a core competence

4. Organizational capabilities changes include: Changing organizational design Culture and structure Changing strategy Changes that permeate entire organization

LEVIN’S FORCE-FIELD THEORY OF CHANGE

Argues that two sets of opposing forces within an organization determine how change will take place.

1. Forces for change and forces making organizations resistant to change

2. When forces for and against change are equal, the organization is in a state of inertia

3. To change an organization, managers must increase forces for change and/or decrease forces resisting change

TYPES OF CHANGE IN ORGANIZATIONS

Evolutionary change:

change that is gradual, incremental, and narrowly focused

Revolutionary change:

change that is sudden, drastic, and broadly focused

DEVELOPMENTS IN EVOLUTIONARY CHANGE

Sociotechnical systems theory: a theory that proposes the importance of changing role and task or technical relationships to increase organizational effectiveness

Total quality management (TQM): an ongoing and constant effort by all of an organization’s functions to find new ways to improve the quality of the organization’s goods and services

Flexible workers and Flexible work teams.

DEVELOPMENTS IN REVOLUTIONARY CHANGE

Restructuring: changing task and authority relationships and redesigning organizational structure and culture to improve organizational effectiveness

Downsizing: the process of streamlining the organizational hierarchy and laying off managers and workers to reduce bureaucratic costs

Innovation: the process by which organizations use their skills and resources to:

Create new technologies

Develop new goods and services

Better respond to the needs of their customers

One of the most difficult instruments of change to manage

LEVIN’S THREE-STEP CHANGE PROCESS

CHANGE MODELS: MCKINSEY’S 7S

CHANGE MODELS: KOTTER

CHANGE MODELS: ADKAR

MANAGING CHANGE: ACTION RESEARCH

Action research: a strategy for generating and acquiring knowledge that managers can use to define an organization’s desired future state.

Used to plan a change program that allows the organization to reach that state. Helps in the unfreezing, changing and refreezing process.

ORGANIZATIONAL DEVELOPMENT (OD)

Organizational development (OD): a series of techniques and methods that managers can use in their action research program to increase the adaptability of their organization.

Goal is to improve organizational effectiveness and to help people in organizations reach their potential and realize their goals and objectives.

Can be used to unfreeze, change, and refreeze attitudes and behaviors.

ORGANIZATIONAL DEVELOPMENT (OD)

OD TECHNIQUES TO DEAL WITH RESISTANCE TO CHANGE -

 Education and communication: inform workers about change and how they will be affected

 Participation and empowerment: involve workers in change

Facilitation: help employees with change

Bargaining and negotiation

 Manipulation: change the situation to secure acceptance

Coercion: force workers to accept change

OD TECHNIQUES TO PROMOTE CHANGE:

Counseling, Sensitivity training, and Process consultation.

 Team building, Intergroup training, and Organizational mirroring.

 Total organizational interventions.

Organizational confrontation meeting.

CHANGE INITIATIVES & SUSTAINABILITY

WHY PEOPLE RESIST CHANGE

1. Fear of the unknown 2. Unaware of future dangers 3. Complacent 4. Unaware of benefits of change 5. Unable to deal with uncertainty 6. See change as a personal threat 7. Afraid own “kingdom” will be toppled 8. Cannot envisage future

OVERCOMING RESISTANCE TO CHANGE

1. Mobilize commitment 2. Develop a Shared Vision 3. Foster consensus and competence 4. Spread revitalization 5. Institutionalize revitalization 6. Monitor and adjust strategies

ORGANIZATIONAL TRANSFORMATION

It’s important for a business owner to know the different stages of organizational transformation, along with the unique opportunities and challenges that each stage entails.

Introduction

1. Start-up phase where a business determines what its core strengths and capabilities are.

2. The main challenge is to make sure the initial product or service is right.3. It’s important to document what works and what doesn’t work during this stage.

Early Growth

1. Generally characterized by increasing sales and heightened complexity.2. Two important things must happen for a business to be successful in this stage.3. The founder must start working “on the business” rather “in the business.”4. Increased formalization must take place, and the business has to start developing

policies and procedures.

Continuous Growth

1. The need for structure and formalization increases.2. Often the business will start developing related products and services.3. The toughest decisions take place in this stage.4. One tough decision is whether the owner of the business and the current

management team has the experience and the ability to take the business further.

Maturity

1. A business enters the maturity stage when its growth stalls.2. At this point, a firm is typically more intently focused on managing efficiently

than developing new products.3. Well-managed firms often look for partnering opportunities or opportunities for

acquisitions or licensing deals to breath new life into the firm.4. If new growth cannot be achieved through a firm’s existing product mix, the “next

generation” of products should be developed.

Decline

1. It is not inevitable that a business enter the decline stage.2. Many American businesses have long histories and have adapted and survived

over time.3. A business’s ability to avoid decline hinges on the strength of its leadership and

its ability to adapt over time.

ORGANIZATIONAL TRANSFORMATION

Integrated Transformation Approach

• Many senior managers today are aggressively trying to transform their companies, seeking radically to improve performance by changing behavior and capabilities throughout the organization. Unfortunately, most leadership groups lack a proven way of thinking about the challenge.

• Although each company's program is unique, the successful programs have developed

points of view on three types of initiatives -

1. Top-down direction setting

2. Bottom-up performance improvement

3. Core process redesign

ORGANIZATIONAL TRANSFORMATION

1. Top-down direction setting

to create focus throughout an organization and develop the conditions for performance improvement.

2. Broad-based, bottom-up performance improvement to get people at all levels to take a fresh approach to solving problems and improving performance.

3. Cross-functional core process redesign to link activities, functions, and information in new ways to achieve breakthrough improvements in cost, quality, and timeliness.

Together, these three axes (see Exhibit 1) make up what we think of as a

"transformation triangle"—a balanced, integrated framework for

combining separate initiatives into a coherent overall program.

Each axis is necessary. If top-down initiatives are lacking or faulty,

managers will be left to guess where to aim new skills or activities.

If bottom-up involvement is absent, motivation will falter, momentum will

flag, opportunities for improvement will be overlooked, and the new skills

and behavior will not be built.

If horizontal core processes are ignored, function-specific efforts will

never add up to the critical mass of change required.

Real transformations in performance come only whenefforts along all

three axes are coordinated and engaged.

STRATEGIES FOR CHANGES

STRATEGIES FOR CHANGE

Directive Strategy:

This strategy highlights the manager's right to manage change and the use of

authority to impose change with little or no involvement of other people.

The advantage of the directive approach is that change can be undertaken quickly.

However, the disadvantage of this approach is that it does not take into

consideration the views or feelings of those involved in, or affected by, the

imposed change.

This approach may lead to valuable information and ideas being missed and there

is usually strong resentment from staff when changes are imposed rather than

discussed and agreed.

Expert Strategy:

This approach is usually applied when a “ technical ” problem requires solving, such as the introduction of a new IT system, and as such is better suited to smaller technical or operational change than a wider cultural - change requirement.

It is also appropriate that introducing technical changes does not easily lend itself to wider consultation as knowledge of the technical nuances may reside only with a limited number of individuals.

Negotiation Strategy:

This approach highlights the willingness on the part of senior managers to negotiate and bargain in order to effect change. Senior managers must also accept that adjustments and concessions may need to be made in order to implement change.

This approach acknowledges that those affected by change have the right to have a say in what changes are made, how they are implemented and the expected outcomes.

The disadvantage to this approach is that it takes more time to effect change, the outcomes cannot be predicted and the changes made may not fulfill the total expectations of the managers affecting the change.

The advantage is that individuals will feel involved in the change and be more supportive of the changes made.

Educative Strategy:

This approach involves changing people's values and beliefs - 'winning hearts and minds', in order for them to fully support the changes being made and move toward the development of a shared set of organizational values which individuals are willing, and able to support.

A mixture of activities will be used: persuasion; education; training and selection, led by consultants, specialists and in- house experts.

Again, the disadvantage of this approach is that it takes longer to implement. The advantage is that individuals within the organization will have positive commitment to the changes being made.

Participative Strategy:

This strategy stresses the full involvement of all of those involved in, and affected by, the anticipated changes. Although driven by senior managers, the process will be less management-dominated and driven more by groups or individuals within the organization.

The main disadvantages of this process are the length of time taken before any changes are made. It can be more costly due to the number of meetings that take place, the payment of consultants/ experts over a longer time period and the outcomes cannot be predicted.

However, the benefits of this approach are that any changes made are more likely to be supported due to the involvement of all those affected, the commitment of individuals and groups within the organization will increase as those individuals and groups feel ownership over the changes being implemented.