Strategic Change Interventions

Technostructural Interventions♦ Chapter 14: Restructuring

Organizations♦ Chapter 15: Employee

Involvement♦ Chapter 16: Work design

Nurul Amal Shaik Mohd Rodhi (G1126196)

Fairuz Rusdi (G1122444)

PSYC 6220-Organizational Change & Development

Technostructural Interventions

Change programs focusing on the

technology and structure of organizations

(Cummings & Worley, 2009)

Restructuring organizations

Organization structure describes how overall work

of the organization is divided into subunits and how these subunits are

coordinated for task completion.Designed to fit at least 4 factors :

environment, organization size, technology & organization

strategy

Common Organizational

Structure1) Functional structure

Advantages

Promotes skill specialization

Facilitate communication

Reduce duplication of

work

Disadvantages

Reduces communication &

cooperation between

departments

2) Unit Structure / Divisional Structure

Advantages

Provide employees with opportunities for

learning new skills & expanding knowledge

Recognize key interdependencies & coordinate resources

toward an overall outcome

Disadvantages

May not have enough specialized work to

use people’s skill and abilities fully

Specialist may feel isolated from their

professionals colleagues & may

fail to advance their career specialty

3) Matrix Structure

Advantages

Allows multiple orientation

Maintains consistency between different

departments & projects

Provide mechanisms to deal with multiple

sources of power in the org

Disadvantages

Can cause role conflict for the individual who can be

caught between the demands of two managers

Very difficult to introduce

Heavy managerial costs & support

Developing New Products Process

Process Owner Cross-Functional Team Members

Senior Management Team

Chair and Key Support Process Owners

Acquiring and Filling Customer Orders Process


Supporting Customer Usage Processes


4) Process Structure

Advantages

The work flow & each department’s

connections to the customer are much

clearer to all organizational

members

Disadvantages Less useful in

organizations that have automated or outsourced many

processes & thus do not have job assigned

to them as the structure intends

5) Network Structure

Broker organization

Producer organization

Distributor organization

Supplier organization

Designer organization

Advantages

Cost effective & flexible

Focus the organization on its central

purpose

Disadvantages

Can cause problems when the

organization must rely on

the performance of an external

company over which it

may have little control

DownsizingRefers to interventions aimed at reducing the size

of the organization, accomplished by decreasing

the number of employees through layoffs, attrition,

redeployment or early retirement or by reducing number of organizational units or managerial levels

through divestiture, outscoring, reorganization

or delayering (Cummings & Worley, 2009)

Application StagesClarify the organization’s strategy

Assess downsizing options & make relevant choicesImplement the

changes Address the needs of survivors and those who leave

Follow through with growth plans

Tactic Characteristics

Examples

Workforcereduction

• Reduces headcount• Short-term focus• Fosters transition

• Attrition•Retirement/buyout• Lay-offs

Organization

redesign

• Changes organization• Medium-term focus• Fosters transition andtransformation

• Eliminate functions, layers,products• Merge units• Redesign tasks

Systemic • Changes culture• Long-term focus• Fosters transformation

• Change responsibilities• Foster continuousimprovement• Downsizing is normal

Downsizing tactics

(Cameron et al.,1993)

ReengineeringThe fundamental rethinking & radical

redesign of business processes to achieve dramatic

improvements in performance


• Work units change from functional departments toprocess teams• Jobs change from simple tasks to multidimensional work• People’s roles change from controlled toempowered• The focus of performance measures andcompensation shifts from activities to results• Organisation structures change from hierarchical to flat• Managers change from supervisors to coaches;executives change from scorekeepers to leaders

Characteristics of Reengineering in

Organisations

Re-engineering Process

• • Prepare the organisation• Specify the organisation’s strategy andobjectives• Fundamentally rethink the way workgets done– Identify and analyse core businessprocesses– Define performance objectives– Design new processes• Restructure the organisation around thenew business processes

Employee InvolvementSeeks to increase

members’ input decisions that affect

organization performance and employee well-

being (Cummings & Worley, 2009)

Lead to quicker, more responsive decisions, continuous performance improvements & greater employee flexibility, commitment and satisfaction.

4 key elements (Cummings & Worley, 2009) :

EI

Power

Information

Knowledge & skills

Rewards

EI Applications: Parallel Structures (Cummings & Worley, 2009)

♦ Provide members with an alternative setting in which to address problems & to propose innovative solutions free from the existing, formal organization structure & culture

♦ 2 most common parallel structure:1) Cooperative union-management

projects2) Quality circles

EI Applications: Parallel Structures

Define the purpose & scope

Form steering committee

Communicate with organization members

Create forums for employee problem solving5)Address the problems &

issues6)Implement & evaluate the changes

12

5, 6

43

EI Applications: Total Quality Management (TQM)

Quality is achieved when organizational processes reliably

produce products and services that meet or exceed customer

expectations (Cummings & Worley, 2009)

Emphasize the concept of quality

Total Quality Management (TQM)Is a combination of a number of

organization improvement techniques and approaches including the use of

quality circles, statistical quality control, statistical process control,

self-managed teams and task forces & extensive use of employee

participation.(French & Bell, 1999)

EI Application: Total Quality Management (TQM)Gain long-term senior

management commitment

Train members in quality methods

Start quality improvement projects

Measure progress

Rewarding accomplishment

EI Application: High-Involvement organizations (HIOs)

Create organizational conditions that support high levels of employee participation

Address almost all organizational features (org. structure, job design, information system, career system, selection, training, reward system, personnel policies, physical layout)


Work Design♦ Work design – creating jobs & work

groups that generate high levels of employee fulfillment and productivity

Engin

eeri

ng a

ppro

ach Focuses

on efficiency & simplification M

oti

vati

onal appro

ach Focuses on motivational theories & attempts to enrich the work experience

Soci

ote

chn

ical sy

stem

s appro

ach Focuses to

optimize both the social & the technical aspects of work systems

The Complete Job Characteristic Model

Hackman & Oldham have provided an OD approach to work redesign based on a

theoretical model of what job characteristics lead to the psychological states that

produce “high internal work motivation”

(French & Bell, 1999)

STRATEGIC CHANGE

INTERVENTIONS

PSYC 6220-Organizational Change & Development

http://www.irshad.com.my/index.html

Understanding the Balanced Scorecard

IntroductionUNDERSTANDING

STRATEGIC INTERVENTIONS

“Without a strategy, an organisation is like a ship without a rudder, going round in circles. It’s like a tramp; it has no places

to go.” (Ross and Kami)

Cummings and Worley (2009) describes Strategic Interventions as:

“ Interventions that involve managing the organisation’s relationship to its external

environment and the internal structure and process necessary to

support a business strategy”

What is Strategic Interventions ?

Strategic interventions contribute to align the organization with its

environment and that which links the internal functioning of the organization

to the larger environment; transforming the organization to keep

pace with changing conditions.

– Cummings and Worley (2009)


Strategic intervention help

organizations to gain a better understanding of their current state,

and their environment, that allow them to better target strategies for

competing or collaborating with other organizations

– Cummings and Worley (2009)


Integrated Strategic ChangeOrganisation Design

Culture Change

Self-designing OrganisatonsLearning Organisation

Built-to-change Organisation

Mergers & AcquisitionsAlliance InterventionNetwork Intervention

1

2

3

Transformational Change

Continuous Change

Transorganisational Change


Part 1Transformational

Change



What is Transformational Change?

Organisation transformation implies radical changes from its members behavior, internal functions,

corporate structures, company values and norms, and the organisational arrangement.

-Cummings and Worley (2009)Organisational transformation involves creation of a new organizational vision (Porras and Silvers as cited in Smither, Houston, & McIntire, 1996)

A change in which the organisation moves to a radically different, and sometimes unknown,

future state. (Nelson & Quick, 2011)

Triggered by Environmental and Internal Disruption•Must experience a severe threat to survival• Some choose to change even though not subjected to external pressures due to seeing business opportunities •(Dunphy, Griffiths & Benn, 2007).

Change Is Aimed at Competitive

Advantage• Uniqueness – unique

bundle of resources which represent completive

advantage• Value – higher-than-

average price or exceptionally low in cost

• Imitation difficulty

Change Is Systematic and Revolutionary Involves reshaping organisation’s design elements and its entire nature

Change Demands a New Organizing ParadigmInvolving gamma types of change (Bartunek & Louis, as cited in Cummings and Worley, 2009) - discontinuous shifts in mental or organisational frameworks.

Triggered by Senior Executives and Line Managementplay key role in actively leading transformation in deciding the when, how, who and what

Involves Significant Learning• Transformational change requires learning and innovation. Members must learn to enact new behaviors to implement new strategic directions

6 Characteris

tics of

transformational

change


Integrated Strategic Change

Comprehensive OD intervention aimed at a single organisation or

business unit.

Business strategy and organisation design must be aligned, changed together to

respond to external and internal disruption

Helps members manage transition between current

strategic orientation and the desired future orientation

Points on Integrated Strategic Change

1

2

3

ISC extends traditional OD process into a highly participative process. It has 3 key features

Worley, Hitchin, and Ross (as cited in Cummings & Worley, 2009)

1. Unit of analysis: I) Strategy and II) Organisation design = Organisation’s Strategic Orientation

Strategy and design that supports it must be considered as integrated whole.

2. Creating the strategic plan, gaining commitment and support, planning implementation and execution is one integrated process

The ability to repeat such a process effectively is rare and difficult.

3. Individuals and groups throughout the organisation are integrated into the analysis, planning and implementation

This is to create a more achievable plan, maintain strategic focus, direct attention, etc.

Integrated Strategic Change Key Features (Cummings & Worley, 2009)

Plan Implementa

tion

Strategic Change Plan

Strategic Choice

Strategic Analysis

Stages of ISC

Strategic Analysis

Exercising Strategic

Choice

Designing the

Strategic Change

Plan

Implementing the

Plan

• Readiness for change

• Senior management’s willingness to carry out change

• Understanding current organisation design

• Explain current performance levels

• Once existing orientation understood, new one must be designed

• “what” of strategic change, define products/service

• Markets to be served, way outputs will be produced

• “How”

• Change plan:• Types, magnitude,

schedule of change activities

• Associated costs• Organisation

Culture• Power and political

issues

• Alignment issues• Teamwork• Organisational/

personal learning• senior managers-

initiate actions, allocate resources, set goals, give feedback

STRATEGIC PLANNINGSTRATEGY

IMPLEMENTATION

ISC Stages

Strategy helps the organisation by

Aligns thinking

Shows distance to finish line

Guides actions

Informs key relationships

Rationalizes & justifies a focus on culture

Facilitating future state and needed changes

Why is Integrated Strategic Change Valuable ?


Organisation Design

Organisation design is “the process of constructing and adjusting an organisation’s structure to achieve its

business strategy and goals” (p. 518). Nelson and Quick (2011)

Configures the organisation ‘s structure, work designs, human resources practices, management and

information systems to guide members behaviors in strategic direction. Cummings and Worley (2009)

Key notion : “fit”, “congruence” or “alignment” among elements

The idea that the organisation is designed to support particular strategy (strategic fit) . Different design

elements must be aligned with each other Better fits, More effective Lawrence and Larsch (1986)

Organisation Design

Organisation Design ModelOrganization

Strategy

Strategic Fit

Management and Information Systems

Human Resource Practices

Structure

Work Design

Design Fit

Organisation Design

Organisation Design Model

• Innovation – competing on new products

Mechanistic Design

Strategy

Organisation Design Types (Burns & Stalker, 2009; Cummings & Worley, 2009)

Structure

Work Design

Human Resource Practices

Management and Information System

Organic Design

• Cost minimization

• Selection to fit organisation • Training is continuous• Skill-based pay

• Selection to fit job• Training only when needs arise• Job-based pay

• Employee involvement• Decentralized decision-making• Open, inclusive

• Command and control• Centralized decision-making• Closed, exclusive

• Flat, lean, and flexible•Works best in dynamic and uncertain environment

• Formal/hierarchical• Works best in stable environment

• Enriched jobs• Self-managed jobs

• Traditional jobs• Traditional work group

Clarifying the design

focus

Designing the organisation

Designing the

Strategic Change

Plan

Implementing the design

• Organisation assessment for framework

• Gap analysis – problems to address

• Configure design• “How”• Upper leadership for

overall direction• Results in design,

component design, and how to implement

• Putting into place (practices, structures, systems)

• Members must be motivated to implement

• Stakeholders must support


IMPLEMENTATION

Organisation Design StagesOrganisation design follows three broad steps (Galbraith et al., as cited

in Cummings and Worley, 2009):


Culture Change

The shared beliefs and values that organisations pass on to newcomers, such as accepted ways of behaving, roles and norms

Smither, Houston and McIntire (1996)

The pattern of assumptions, values, and norms that are more or less shaped by organisation members


A pattern of basic assumptions considered valid and taught to new members as the way to perceive, think , and feel in the organisation

(Nelson & Quick, 2011)

Schein suggests that organisation culture has three levels : (1) visible artifacts, (2) testable values (3) invisible basic assumptions

(as cited in Nelson & Quick, 2011)

What is Corporate Culture ?

Basic Assumptions

Values

NormsArtifacts

Elements of Corporate Culture


Most theorists regard strong

cultures as desirable,

since having employees

holding similar views about the company

and its environment

can make organisations more effective (Smither, Houston, & McIntire, 1996).

Organisation Culture and Organisation Effectiveness

Culture affects performance indirectly through its influence on the organisations’s ability to implement change. However, certain accounts where change failed due to the culture not supporting the new strategy.

(Cummings and Worley, 2009)

Behavioral Approach

Competing Values Approach

Deep Assumption Approach

Guidelines for Cultural Change

(Cummings and Worley 2009; Senior, 2002)

1

2

3

4

5

Large scale cultural change may be necessary in certain situations such as if the firm’s culture does not fit a

changing environment or if the industry is extremely competitive (Cummings and Worley, 2009).

Changing corporate culture is not always easy but at times risky due to organisational culture, is much less visible and with many layers, dimensions and types

therefore more difficult to change (Senior, 2002).

Failure of culture change efforts due to change introduced to employees requires them to function in

new and different ways which contradict with powerful norms and values of organisation.

(Smither, Houston, & McIntire, 1996)

Evaluating Culture Change


Part 2Continuous Change



What is Continuous Change?

Continuous change interventions extends transformational change into a nonstop process of strategy setting, organisation designing, and implementing the change(Lawrence, Dyck, Maitlis, & Mauws, as cited in Cummings and Worley,

2009)Focus is on learning, changing, and adapting and on how to produce constant flow of new strategies and designs and not only transforming existing ones


Continuous learning at individual level : changing behavior of one’s skills, knowledge, and worldviewAt organisational level: deepening and broadening

of organisational capabilities (Sessa & London, 2006)


Self-Designing Organisations

Developed by Mohrman and Cummings in response to demands of organisations in adapting to turbulent

environments (adaptive change).

This approach helps members translate corporate values and general prescriptions for change into

specific structures, processes and behaviors suited for change

(Cummings and Worley, 2009).This intervention includes considerable innovation and learning as organisations gain the capacity to

design and implement significant changes continually (Cummings and Worley, 2009).

Self-Designing Organisations

Laying the foundation Designing

Designing the

Strategic Change

Plan

Implementing and

assessing

• Acquiring knowledge about how the organisations function

• Valuing corporate values that guide change process

• Diagnosing to determine what needs to be changed

• What needs to be refined and modified for the change

• Involves ongoing cycle of action learning: changing structures and behaviors, assessing progress and making necessary modifications


IMPLEMENTATION

Application StagesThe self-design approach is described in three stages (Cummings and Worley, 2009):

The Self Design Strategy enables organisations to adapt to demands of change from five important

perspectives: (Cummings and Worley, 2009)

Adaptive Change Demand

s

Attends to interest of multiple

stakeholders Systematic change process

Dynamic change process

Occurring at multiple levels

of the organisation

Constant organisational

learning 9


Learning Organisations

Senge (1990) defines the learning organization as “…organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the

whole together” (p. 14).This intervention is aims at helping organisations

develop and use knowledge to change and improve themselves constantly (Cummings and Worley,

2009).At the organisational level, learning is demonstrated

through changes in vision, strategy, policies, structure, products or services (Sessa & London,

2006) Includes two interrelated change process: (1) Organisation Learning (OL) and (2) Knowledge

Management (KM).

Learning Organisations

Single-loop learning Improving the status quo

Double-loop learning Changing the status quo

Deutero-learning Learning how to learn

OL ProcessesOrganisations may apply learning process to

three types of learning:

1

2

3

•Where an objective or goals is defined and an individual works out the most favored way of reaching the goal however which the goal itself is not questioned (Argyris, as cited in Senior, 2002).

Single –loop Learning

•Where error is detected and corrected in ways determining why the error occurred in the first place (Sessa & London, 2006).

Double-loop Learning

•Where members of an organisation learn how to carry both single and double loop learning(Sessa & London, 2006).

Deuterolearning

3 Types of Learning

Organisation Characteristics• Structure• Information system•Human Resources practice• Culture• leadership

Organisation Learning Processes:• Discovery• Invention• Production• Generalization

Organisation Knowledge:• explicit• tacit

Competitive Strategy

Organisation

Performance

How OL Affects Organisation Performance

Organisational Learning Knowledge

Management

KM interventions focuses on tools and techniques that enable organisations to collect, organize

and translate information into useful knowledge


Includes formal debriefing sessions,

organized learning programs, attended and supported by senior managers and

executives. Recognition and reward systems are key ingredients of effective KM process

(Oden, 1999)

What are Knowledge Management Interventions ?

Application Stages for KM

Generating Knowledge

•Identifying the kinds of knowledge that creates most value

Organizing

Knowledge

•Organizing the valued knowledge into a form that members can use readily

Distributing Knowledge

•Creates mechanisms for members to gain access to needed knowledge


Built-To-Change Organisations

Built-To-Change (B2C) Organisations

B2C organisations are designed for change, not stability. They are based on design guidelines that promote change capability in the management, reward systems, structure information, decision processes, and leadership


“In a rapidly changing environment, this change capability can be a source of sustained competitive advantage”

(Cummings and Worley, 2009).

Managing Talent Reward System Structure&

Leadership

Information and Decision Process

Selection practices Enhance employee motivation level

Internal Structure and Leadership

importance

Dynamic flow of information & transparency

• Seek quick learners wanting to take initiative, desire professional growth and thrives change

• Key role :

motivating and reinforcing change

• Flat, lean, flexible organisation structures • Shared & spread leadership

• Moved throughout the organisation, information is transparent and current

Design Guidelines for B2C

Create a

Change-

Friendly

Identity

Pursue Proximi

ty

Build an

Orchestration Capabil

ity

Establish Strategic

Adjustment as a

Normal Condition

Seek virtuous spirals

• Addresses organisation identity – core values, norms, beliefs

• Intervention looks outward to gain insight of environmental demands• Seniors executives commit time to think about future paths – scenario-planning

i. Skills for change developed among employees

ii. Organisation effectiveness function created

iii. Members learn how to apply change

• Employee empowerment practices

• Periods in the life of an organization

• Involves bringing all prior processes together

B2C Stages Lawler and Worley (2006)

The following 5 initiatives can help the transition to a B2C organisation :

Organization Design Is the Issue

The Built to Change LogicLawler and Worley (2006)

Human Nature is Not

The Problem

Traditional Design Is a

Problem

Change is

Inevitable and Normal

Competitive Advantage is

Change


Part 3Transorganizational

Change



Transorganizational Change

Cummings and Worley (2009) states that transorganzational change involves interventions that move beyond the single organization to include merging, allying or networking with other organisations.

Transorganizational strategies allows organisation to perform tasks that are too costly and complicated for single organisations to perform.


Mergers and acquisition (M&As) involve the combination of two

organisations(Cummings and Worley, 2009)

•Integration of two previously independent organisations into a new organisation

“Merger”

•Involves the purchase or “buyout” of one organisation by another for integration into the acquiring organisation

“Acquisition”

Mergers and Acquisition

Why M&As are Done? (Cummings and Worley, 2009; Galpin & Herndon, 2009)

To achieve operational efficiencies

Resource sharing

To gain access to global markets, technology, etc

To grow revenue

Improve innovation1 2

3

4

5

The high failure rate of M&As are the results of serious limitations in how companies approach it

(Saint-onge & Chatzkel, 2009).

Why Do M&As Fail ?

Lack of Communication, Leadership and Decision-making

People-Related Issues

Differences in Management Styles

A set of factors has been found to be to be consistently associated with poor M&A efforts according to Galpin and Herndon (2007):Cultural Incompatibility

Search/Select

Candidate

Create an M&A Team

Establish Business

Case

Perform a Due

Diligence Assessmen

t

Develop Merger

Integration Plans

1. Pre-combination Phase

Complete financial

negotiations

Close the deal

Announce the

combination

2. Legal combination

M&As Application Stages(Cummings and Worley, 2009)

3. Operational combination

Day 1 activities

Organisational & technical

integration activities

Cultural integration activities

Strategy for M&A Success

Conduct due-diligence analyses Determine the

required or desired degree of integration

Speed up decisions

Gain support of senior managers

Clearly define integration approach

Select a highly capable leader

Provide continuous communication and

feedback

Select dedicated, capable people for the

team

Recommendations for M&A SuccessFor M&A efforts to succeed, Galpin and Herndon (2007) have suggested the

following:


Strategic Alliance Interventions

Strategic Alliance Defined

Child, Faulkner, and Tallman defines strategic alliance as a “formal agreement between two or more organisations to pursue a set of private and common goals through the sharing of resources”

(as cited in Cummings and Worley, 2009, p. 568).

Roll (2009) describes it as an approach in which two or more companies agree to pool their resources together to form a combined force in the marketplace different from mergers, in which does not involve the emergence of a new combined entity.

Long-term agreements between firms that go beyond normal market transactions but fall short of merger. Forms include joint ventures, licenses, long-term supply agreements, and other kinds of inter-firm relationships

(Porter, 1990).

Alliance Strategy

Formulation

Partner Selection

Alliance Structurin

g and Start-up

Alliance Operation

and Adjustment

• Clarify business strategy• Understand why alliance isappropriate

Involves four major stages:

• Search for appropriate partner• Compatible management styles, cultures, etc.

• Structuring partnership• Relational quality – Trust Issues

• Diagnosing strategic alliance state • Making appropriate adjustments.

Alliance Application Stages(Cummings and Worley, 2009)

Hamel, Doz and Prahalad (2002) states the need for collaboration due to the following

reasons:

♦ The need to absorb skills of the partner

♦ To reduce costs and avoid investments

♦ To penetrate new markets♦ To provide short-cuts for some

companies

The Need for Strategic Alliances

Benefits of the Strategic Alliances(Soares as cited in IsoraIte, 2009)

Ease of market entry

Shared risks

Shared knowledge and expertise

Synergy & Competitive Advantage

1

3

2

4


Network Interventions

Network interventions help organisations join together for a

common purpose (Cummings and Worley, 2009).

Two types of change are involved in managing the development of multiorganisation networks:

♦ Creating the initial network♦ Managing change within that network

1. Identification

2. Conventio

n

3. Organization

4. Evaluation

Involves four major stages:

• Identifying members (existing/potential).

• Face-to-face meeting• Costs and benefits• Task perceptions

• Task performance organization

• Assessing how network is performing• Feedback

Creating the Network(Cummings and Worley, 2009)

•In order for change to occur within a network, relationships among member organisations' must become unstable

•OD practitioners can facilitate instability by changing patterns of communication among members.

Create Instability in the Network

•Gladwell (as cited in Cummings and Worley, 2009) suggested the following in facilitating network change:•The

Law of the Few (Connectors, Mavens, Salesperson)

•Stickiness – the memorable impact of ideas or practices

•The Power of Context – relevance and meaningfulness of a message to network members

Manage the Tipping Point

•Networks tend to exhibit “self-organising” behavior

•OD practitioners can rely on this feature to refreeze change – once change has occurred in the network, variety of controls can be leveraged to institutionalized it

Rely on Self-Organisation

Managing Network Change

Actualizing The Network WithinOrganization can realize its network and collaborative potential by pursuing the following path: (Camson, 2010)

Be clear about and publicize common goals and objectives that can

drive network collaboration. Support high quality

conversations and exchanges and high quality

actions to build competencies and relationshipsBuild competencies and

utilize technology that will support knowledge flow,

relationships, high quality conversationsIdentify practices,

attitudes and business models that impede knowledge flow,

relationships, high quality conversations and exchanges.

1

3

2

4

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