Organizational change and development

1

•Organizational Change and Development

Courtesy National Board of Antiquities, Finland

Continuous Change at NokiaContinuous Change at NokiaContinuous Change at NokiaContinuous Change at Nokia

Nokia has continually adapted to its changing environment. The Finnish company began as a pulp and paper mill in 1865, then movedinto rubber, cable wiring, and computer monitors. In the 1980s, Nokia executives sensed an emerging market for wireless communication. Today, Nokia is a world leader in cellular telephones.

3© 2005 Prentice Hall Inc. All rights reserved.

18–3

Forces for ChangeForces for ChangeForces for ChangeForces for Change

E X H I B I T 18–1

E X H I B I T 18–1

Force Examples

Nature of the workforce More cultural diversityAging populationMany new entrants with inadequate skills

Technology Faster, cheaper, and more mobile computersOn-line music sharingDeciphering of the human genetic code

Economic shocks Rise and fall of dot-com stocks 2000–02 stock market collapseRecord low interest rates

Competition Global competitors

Mergers and consolidationsGrowth of e-commerce

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18–4

Forces for ChangeForces for ChangeForces for ChangeForces for Change

E X H I B I T 18–1 (cont’d)E X H I B I T 18–1 (cont’d)

Force Examples

Social trends Internet chat rooms Retirement of Baby BoomersRise in discount and “big box” retailers

World politics Iraq–U.S. war

Opening of markets in China War on terrorism following 9/11/01

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18–5

Managing Planned ChangeManaging Planned ChangeManaging Planned ChangeManaging Planned Change

Goals of Planned Change:

Improving the ability of the organization to adapt to changes in its environment.

Changing the behavior of individuals and groups in the organization.

Goals of Planned Change:

Improving the ability of the organization to adapt to changes in its environment.

Changing the behavior of individuals and groups in the organization.

ChangeMaking things different.Planned ChangeActivities that are intentional and goal oriented.

Change AgentsPersons who act as catalysts and assume the responsibility for managing change activities.

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18–6

Resistance to ChangeResistance to ChangeResistance to ChangeResistance to Change

Forms of Resistance to Change

– Overt and immediate

• Voicing complaints, engaging in job actions

– Implicit and deferred

• Loss of employee loyalty and motivation, increased errors or mistakes, increased absenteeism

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18–7

Sources of Individual Resistance Sources of Individual Resistance to Changeto ChangeSources of Individual Resistance Sources of Individual Resistance to Changeto Change

E X H I B I T 18–2

E X H I B I T 18–2

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18–8

Sources of Organizational Sources of Organizational Resistance to ChangeResistance to ChangeSources of Organizational Sources of Organizational Resistance to ChangeResistance to Change

E X H I B I T 18–2 (cont’d)

E X H I B I T 18–2 (cont’d)

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18–9

Overcoming Resistance to Overcoming Resistance to ChangeChangeOvercoming Resistance to Overcoming Resistance to ChangeChange

Tactics for dealing with resistance to change:

• Education and communication

• Participation

• Facilitation and support

• Negotiation

• Manipulation and cooptation

• Coercion

Tactics for dealing with resistance to change:

• Education and communication

• Participation

• Facilitation and support

• Negotiation

• Manipulation and cooptation

• Coercion

10© 2005 Prentice Hall Inc. All rights reserved.

18–10

The Politics of ChangeThe Politics of ChangeThe Politics of ChangeThe Politics of Change

• Impetus for change is likely to come from outside change agents.

• Internal change agents are most threatened by their loss of status in the organization.

• Long-time power holders tend to implement only incremental change.

• The outcomes of power struggles in the organization will determine the speed and quality of change.

11

Organizational Change: An International Phenomenon

0 10 20 30 40 50 60 70 80

0 10 20 30 40 50 60 70 80

Percentage of Respondents by Country

Internationalexpansion

Reduction inemployment

Mergers,divestitures,acquisitions

Majorrestructuring

HungaryMexicoS. KoreaGermanyUnited StatesJapan

(Source: Kanten, R., 1991.)

12

Changing People: Some Basic Changing People: Some Basic StepsSteps

Recognizing theneed for change

Attempting tocreate a new stateof affairs

Incorporating the changes,creating and maintaining anew organizational system

Step 1: Unfreezing

Step 3: Refreezing

Step 2: Changing

Current S

tate

New

State

13

Team Team Building: Building: Its Basic Its Basic StepsSteps

Sensitivitygroups

Objectivedata

Group membersrecognize problem

Diagnose group’sstrengths andweaknesses

Develop desiredchange goals

Develop action planto make changes

Implement plan

Evaluate plan

Processcompleted

if successfulif successfulif unsuccessfulif unsuccessful

Res

tart

pro

cess

Res

tart

pro

cess

14

When Will It Occur?

Benefit ofmakingchange

Comparedto

Cost ofmakingchange

Changeis made

Change isnot made

Amount of dissatisfactionwith current conditions

Availability of adesirable alternative

Existence of a plan forachieving a desirable

alternative

If benefits exceed costs

If costs exceed benefits

Some External Forces for ChangeSome External Forces for ChangeSome External Forces for ChangeSome External Forces for Change

InformationInformationTechnologyTechnology

GlobalizationGlobalization& Competition& Competition

DemographyDemography

Courtesy National Board of Antiquities, Finland

DesiredConditions

CurrentConditions

BeforeChange

AfterChange

DrivingForces

RestrainingForces

Force Field AnalysisForce Field AnalysisForce Field AnalysisForce Field Analysis

DuringChange

DrivingForces

RestrainingForces Driving

Forces

RestrainingForces

Resistance to Change at BP NorgeResistance to Change at BP NorgeResistance to Change at BP NorgeResistance to Change at BP Norge

• “SDWTs don’t work on drilling rigs!”

• “We already have teams!”

• “This creates more work — will we get higher pay?”

• “I don’t know how to work in teams.”

• “SDWTs will threaten my job as a supervisor!”

Employees initially resisted self-directed teams BP Norge’s North Sea drilling rigs.

AP Worldwide

Forces forChangeForces forChange

Resistance to ChangeResistance to ChangeResistance to ChangeResistance to Change

Direct Costs

Saving Face

Fear of the Unknown

Breaking Routines

Incongruent Systems

Incongruent Team Dynamics

Creating an Urgency for ChangeCreating an Urgency for ChangeCreating an Urgency for ChangeCreating an Urgency for Change

• Need to motivate employees to change

• Most difficult when organisation is doing well

• Must be real, not contrived

• Customer-driven change

MinimizingMinimizingResistanceResistancetoto ChangeChange

CommunicationCommunication

TrainingTraining

EmployeeEmployeeInvolvementInvolvement

StressStressManagementManagement

NegotiationNegotiation

CoercionCoercion

Minimizing Resistance to ChangeMinimizing Resistance to ChangeMinimizing Resistance to ChangeMinimizing Resistance to Change

Refreezing the Desired ConditionsRefreezing the Desired ConditionsRefreezing the Desired ConditionsRefreezing the Desired Conditions

Creating organizational systems and team dynamics to reinforce desired changes

– alter rewards to reinforce new behaviours

– new information systems guide new behaviours

– recalibrate and introduce feedback systems to focus on new priorities

Courtesy of CHC Helicopter Corp.

Change AgentsChange AgentsChange AgentsChange Agents

• Anyone who possesses enough knowledge and power to guide and facilitate the change effort

• Change agents apply transformational leadership– Help develop a vision– Communicate the vision– Act consistently with the vision– Build commitment to the vision

Organization Development DefinedOrganization Development DefinedOrganization Development DefinedOrganization Development Defined

A planned system wide effort, managed

from the top with the assistance of a

change agent, that uses behavioural

science knowledge to improve

organizational effectiveness.

24

Organizational Development: How Organizational Development: How Effective Is It?Effective Is It?

2020

3030

4040

5050P

erce

ntag

e of

Stu

dies

Sh

owin

g P

osit

ive

Cha

nges

Per

cent

age

of S

tudi

es S

how

ing

Pos

itiv

e C

hang

es

IndividualIndividualoutcomesoutcomes(e.g., job(e.g., job

satisfaction)satisfaction)

OrganizationalOrganizationaloutcomesoutcomes

(e.g., profit)(e.g., profit)

(23.55)(23.55)

(48.70)(48.70)Organizational outcomesmore often benefited fromOD interventions than did

individual outcomes

(Source: Porras and Robertson, 1992.)

25© 2005 Prentice Hall Inc. All rights reserved.

18–25

Kotter’s Eight-Step Plan for Implementing ChangeKotter’s Eight-Step Plan for Implementing ChangeKotter’s Eight-Step Plan for Implementing ChangeKotter’s Eight-Step Plan for Implementing Change

E X H I B I T 18–5

E X H I B I T 18–5

1. Establish a sense of urgency by creating a compelling reason for why change is needed.

2. Form a coalition with enough power to lead the change.

3. Create a new vision to direct the change and strategies for achieving the vision.

4. Communicate the vision throughout the organization.

5. Empower others to act on the vision by removing barriers to change and encouraging risk taking and creative problem solving.

6. Plan for, create, and reward short-term “wins” that move the organization toward the new vision.

7. Consolidate improvements, reassess changes, and make necessary adjustments in the new programs.

8. Reinforce the changes by demonstrating the relationship between new behaviors and organizational success.

Source: Based on J. P. Kotter, Leading Change (Boston: Harvard Business School Press, 1996).

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18–26

Action ResearchAction ResearchAction ResearchAction Research

Process Steps:

1. Diagnosis

2. Analysis

3. Feedback

4. Action

5. Evaluation

Process Steps:

1. Diagnosis

2. Analysis

3. Feedback

4. Action

5. Evaluation

Action research benefits:

Problem-focused rather than solution-centered.

Heavy employee involvement reduces resistance to change.

Action research benefits:

Problem-focused rather than solution-centered.

Heavy employee involvement reduces resistance to change.

Action Research

A change process based on systematic collection of data and then selection of a change action based on what the analyzed data indicate.

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18–27

Organizational DevelopmentOrganizational DevelopmentOrganizational DevelopmentOrganizational Development

OD Values:1. Respect for people

2. Trust and support

3. Power equalization

4. Confrontation

5. Participation

OD Values:1. Respect for people

2. Trust and support

3. Power equalization

4. Confrontation

5. Participation

Organizational Development (OD)

A collection of planned interventions, built on humanistic-democratic values, that seeks to improve organizational effectiveness and employee well-being.

28© 2005 Prentice Hall Inc. All rights reserved.

18–28

Organizational Development Organizational Development TechniquesTechniquesOrganizational Development Organizational Development TechniquesTechniques

Sensitivity Training

Training groups (T-groups) that seek to change behavior through unstructured group interaction.

Provides increased awareness of others and self.

Increases empathy with others, improves listening skills, greater openess, and increased tolerance for others.

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18–29

Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)

Survey Feedback Approach

The use of questionnaires to identify discrepancies among member perceptions; discussion follows and remedies are suggested.

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18–30

Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)

Process Consultation (PC)

A consultant gives a client insights into what is going on around the client, within the client, and between the client and other people; identifies processes that need improvement.

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18–31

Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)

Team Building Activities:

• Goal and priority setting.

• Developing interpersonal relations.

• Role analysis to each member’s role and responsibilities.

• Team process analysis.

Team Building Activities:

• Goal and priority setting.

• Developing interpersonal relations.

• Role analysis to each member’s role and responsibilities.

• Team process analysis.

Team Building

High interaction among team members to increase trust and openness.

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18–32

Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)

Intergroup Problem Solving:Intergroup Problem Solving:

• Groups independently develop lists of perceptions.Groups independently develop lists of perceptions.

• Share and discuss lists.Share and discuss lists.

• Look for causes of misperceptions.Look for causes of misperceptions.

• Work to develop integrative solutions.Work to develop integrative solutions.

Intergroup Problem Solving:Intergroup Problem Solving:

• Groups independently develop lists of perceptions.Groups independently develop lists of perceptions.

• Share and discuss lists.Share and discuss lists.

• Look for causes of misperceptions.Look for causes of misperceptions.

• Work to develop integrative solutions.Work to develop integrative solutions.

Intergroup Development

OD efforts to change the attitudes, stereotypes, and perceptions that groups have of each other.

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18–33

Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)Organizational Development Organizational Development Techniques (cont’d)Techniques (cont’d)

Appreciative Inquiry (AI):

• Discovery: recalling the strengths of the organization.

• Dreaming: speculation on the future of the organization.

• Design: finding a common vision.

• Destiny: deciding how to fulfill the dream.

Appreciative Inquiry (AI):

• Discovery: recalling the strengths of the organization.

• Dreaming: speculation on the future of the organization.

• Design: finding a common vision.

• Destiny: deciding how to fulfill the dream.

Appreciative Inquiry

Seeks to identify the unique qualities and special strengths of an organization, which can then be built on to improve performance.

EstablishClient-

ConsultantRelations

DisengageConsultant’s

Services

Action Research ProcessAction Research ProcessAction Research ProcessAction Research Process

DiagnoseNeed forChange

IntroduceChange

Evaluate/StabilizeChange

Discovery

Discovering the best of “what is”

Dreaming

Forming ideas about “what might

be”

Designing

Engaging in dialogue

about “what should be”

Delivering

Developing objectives

about “what will be”

Appreciative Inquiry ProcessAppreciative Inquiry ProcessAppreciative Inquiry ProcessAppreciative Inquiry Process

36

The Ethics of OD:The Ethics of OD:Summary of the DebateSummary of the Debate

OD is unethical

• Imposes values of theorganization; coerciveand manipulative

• Potential for abuse

OD is ethical

• The imposition of valuesis an inherent part of life,especially on the job

• Abuse comes from individuals, not fromthe technique itself,which is neither goodnor evil

37

Discussion of Activity 15.3Discussion of Activity 15.3Strategic Change ManagementStrategic Change ManagementDiscussion of Activity 15.3Discussion of Activity 15.3Strategic Change ManagementStrategic Change Management

Scenario #1: “Greener Telco”Scenario #1: “Greener Telco”Scenario #1: “Greener Telco”Scenario #1: “Greener Telco”

Scenario #1 refers to Bell

Canada’s Zero Waste

program, which

successfully changed

wasteful employee

behaviours by altering the

causes of those

behaviours. Courtesy of Bell Canada

Bell Canada’s Change StrategyBell Canada’s Change StrategyBell Canada’s Change StrategyBell Canada’s Change Strategy

Courtesy of Bell Canada

Relied on the MARS model to alter behaviour:

Motivation -- employee involvement, respected steering committee

Ability -- taught paper reduction, email, food disposal

Role perc. -- communicated importance of reducing waste

Situation -- Created barriers to wasteful behaviour, eg. removed garbage bins

Courtesy of Continental Airlines

Scenario #2: “Go Forward Airline”Scenario #2: “Go Forward Airline”Scenario #2: “Go Forward Airline”Scenario #2: “Go Forward Airline”

Scenario #2 refers to

Continental Airline’s “Go

Forward” change strategy,

which catapulted the

company “from worst to

first” within a couple of

years.

Continental Airlines’ Change StrategyContinental Airlines’ Change StrategyContinental Airlines’ Change StrategyContinental Airlines’ Change Strategy

Communicate, communicate, communicate

Introduced 15 performance measures

Established stretch goals (repainting planes in 6 months)

Replaced 50 of 61 executives

Rewarded new goals (on-time arrival, stock price)

Customers as drivers of changeCourtesy of Continental Airlines