Module 2Organizational Change

Manjunath VSAssistant ProfessorAcharya Institute of

Technology

Learning Objectives Understand the meaning of

organizational change Describe the nature and types of

organizational change. Describe the forces for

organizational change. Describe the models for

organizational change.

Learning Objectives Understand the change process. Understand the concept of leading

a change process.

What is Change? Change is defined as “To make or become

different, give or begin to have a different form”.

Change means dissatisfaction with the old and belief in the new.

Dissatisfaction may arise due out of perceived deficiency in the existing system, which may be inherent deficiency gone unnoticed or one perceived in comparative evaluation with a better system.

Organizational Change Organizational change may be defined as

the adoption of a new idea or a behavior by an organization-Daft.

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

An organization in decline may need to restructure its resources to improve its fit with the environment.

Organizational Change It is the way of altering an existing

organization to increase organizational effectiveness for achieving its objectives.

Organizational change is primarily the change in organizational structure, methods or processes.

Nature of Organizational Change 1.Change can be continuous and intrinsic

to an organization. 2.Change can be extrinsic and

discontinuous. 3.Change can be patterned and predictable

or complex and unpredictable. 4.Change can exhibit bipolarity or duality. 5.Changes can be micro or macro

Forces of Change 1.External Forces: These are the

changes which are forced by the environment in which an organization operates.

1.Internal forces: These are the forces within the organization due to deficiencies in the existing system.

External Forces of Change Political forces Economic forces Technological forces Government forces Global competition Changing customer needs

Political forces Political forces within and outside

country have an important influence on large business houses.

Organizations have no control over political forces but they have to adapt to meet pressures of these forces.

Last decade has seen unforeseen changes in world politics which has a tremendous impact on business.

Political forces Collapse of Soviet Union Opening up of economy in many

Asian countries including India. Gulf war Current crisis in Iraq Formation of European union

Political forces North American Free Trade

Agreement (NAFTA) paving way for free trade among Canada, United States and Mexico.

Emergence of India and China as major political and economic forces.

Changing political ideologies.

Economic Forces The uncertainty about future trends

in the economy is a major cause of change.

Time and again, economic shocks have continued to impose changes on organizations.

If organizations have to survive they have adapt to these economic changes.

Economic Forces Maturation and slowdown of

domestic markets, leading to greater emphasis on exports and deregulation.

Fall out of social economies and their reorientation toward capitalist economies.

Fluctuating interest rates. Uncertainties arising out of inflation.

Economic Forces Low capital investments Fluctuating oil prices Recession and lowering of

consumer confidence. Interrelatedness of financial

systems of different countries. Changing economic policies.

Technological Forces The rate of technological change is

greater today than any time in the past and technological changes are responsible for changes in the nature of the job performed at all levels in the organizations.

The technological advancements particularly in IT and communications, have revolutionized the work place.

Technological Forces Creation of more and more new products

and services. Newer methods of work. Automation of routine and traditional works. Reduced supervision Redesign of jobs. Need of newer skills among the employees. Downsizing.

Technological Forces Virtual organizations Networked Society Knowledge based organizations Advances in technology leads to

development of new economies (Singapore).

Government Forces Governmental interventions in the form

of regulations can also lead to change. Changes in the industrial policies,

business and labour law will have an impact on business organizations.

Liberalization, privatization and globalization paved way for unforeseen changes in Indian organizations.

Government Forces Deregulation has reduced

government intervention. Government sector services and

industries are handed over to private sectors. (Telecom, Airlines etc)

Changes in foreign exchange rates have an influence in international trade.

Government Forces Government also influences

business activities through many acts on trade practices.

Anti dumping duties Suspension agreements Protectionism

Global competition Competition is a force for change because

unless an organization matches or surpasses its competitors in efficiency, quality, or its capability to innovate new or improved products or services it will not survive.

In global economy competitors are likely to come from across the ocean as from across the town.

In order to survive and grow, companies increasingly making their presence felt globally.

Global competition Multinational companies have are increasing

every day. Successful organizations will be the one that

can change in response to the competition. They will be fast on their feet, capable of

developing new products quickly, and marketing them quickly.

Short production cycles are order of the day. Organizations need to be highly flexible.

Changing customer needs Customer needs and preferences

are always changing. Organizations are forced to adapt

and constantly innovate their products and services to meet such demands.

Internal forces of change System dynamics Inadequacy of administrative processes Individual/ group expectations Structural changes Technological changes Person-focused changes Profitability issues Resource constraints

Types of changes 1.Happened change

Globalization in India Privatization

2.Reactive change Technological changes Changes in product design Changes in organizational policies

Types of changes 3.Anticipatory change

Product diversification Mergers

4.Planned changes Introduction of new products Organizational restructuring Training programs to bring in new

competencies

Types of changes 5.Incremental changes

Kaizen Expansions

6.Operational changes Re-engineering New technology Work methods

Types of changes 7.Strategic change

BPRE New products/services Expansion

8.Directional change Changes due to government

regulations Changes due to competetion

Types of changes 9.Fundamental change

Change in mission New leadership Take over

10.Total change New vision Privatization of a public sector Organizational turnaround

Types of changes 11.Transformationmal change

Product driven to technology driven Centralization to Decentralization Automation Cultural transformation

12.Revolutionary change Envisioning-New vision Policies, Work systems

Types of changes 13.Recreation

Drastic changes Becoming different in terms product

quality-from poor to best Reorientation in terms core

competencies of organization

Who Likes Change?Nobody!!!

Why don’t people like change?

What do you expect?

Organizational Future ShockProject

A

Project B

Project C

ProjectD

Project E

ProjectF

ProjectG

Project H

Project I

ProjectJ

Models for organizational change Change can happen naturally in an

organization or it can be due to planned intervention to enhance organizational effectiveness.

A change model is one which can be used to implement the planned changes in organization smoothly and effectively.

Kurt Lewin’s Change model It is one of the earliest model of

planned change proposed by KURT LEWIN in 1975.

According to Lewin change is modification of those factors which keeps a system’s behavior stable.

Lewin proposes Three step model for planned change.

Kurt Lewin’s Change model Changes can be at three levels

Individual level-changes is behavior, attitude, skills, knowledge

Structure and system level-changes in work design, recruitment system, information systems etc.

Organizational climate-changes in leadership, culture, etc.

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The “Calm Waters” Simile

Unfreezing Changing Refreezing

Lewin’s Three-Step Process

Kurt Lewin’s Change model Unfreezing-Reducing the forces

marinating the organization’s behavior at present level or status-quo.

Changing-Moving from present behavior to new desired behavior

Refreezing-Stabilizing the new state of equilibrium

Force Field Analysis

Forces Supporting Change Forces Resisting Change

New organization structure Threats to power and influence

Reward systems Habits

Change of leadership Organization culture

Communication channels Perceptions

Kurt Lewin’s Change model Moving from the status quo (equilibrium)

can be achieved in three ways: 1. The driving forces, which direct

behavior away from the status quo, can be increased.

2. The restraining forces, which hinder movement away from the status quo, can be increased.

3.The two approaches can be combined.

Kurt Lewin’s Change model Once unfreezing has been accomplished,

the change can be implemented. But merely introducing change does not ensure that it will take hold. The new situation must be refrozen so it can be sustained over time. Unless this is done, employees will revert to the previous state of equilibrium. The objective, then, of refreezing is to stabilize the new situation by balancing the driving and restraining forces.

Commitment ModelVIII. Internalization

VIII. Institutionalization

VI. Adoption

V. Installation

I. Contact

III. Understanding the Change

IV. Positive Perception

II. Awareness of Change

CommitmentPhaseAcceptance Phase

Preparation Phase Unawareness

Confusion

Negative Perceptions

Decision not to

attempt/ support

Change Aborted after

initial utilization

Change aborted after

extensive utilization

Project / Work Plan

Transition / People Plan

CommitmentPhase

Acceptance Phase

Preparation Phase

7. Evaluate final results

6. Monitor progress & problems

5. Implement/ Executive Plan

4. Develop implementation plan

3. Conduct diagnosis

Steps in Human Due Diligence

2. Communicate about the change1. Clarify the project

Planning phase- LippitScouting

Entry

Diagnosis

Planning

Action

Stabilization and evaluation

Termination

Action Research ModelProblem Identification

Consultation with a behavioral expert

Data gathering and preliminary diagnosis

Feedback

Joint diagnosis

ActionData gathering after action

Re diagnosis

Integrated model of planned change Bullock and Batten developed this

model in 1985. It consists of four phases.

Exploration phase Planning phase Action phase Integration phase

Integrated model of planned change Exploration phase

Search Contracting

NeedAwareness

Integrated model of planned change Planning phase

Design Decision

Diagnosis

Integrated model of planned change Action phase

Implementation

Evaluation

Integrated model of planned change Integration phase

Diffusion Renewal

Stabilization

Motivating change

Leading change

Creating a Vision

Effective ChangeManagementDeveloping Political Support

Managing the Transition

Sustaining Momentum

Mega trends In his world famous book Mega

trends, written in 1982, John Naisbitt had identified 10 major trends the world economy will witness. Most of these projections have become the major changes in organizations.

Mega trends The 10 trends are Industrial society to Information

society Forced technology to High tech/high

touch technology National economy to world economy Short term to long term Centralization to Decentralization

Mega trends Institutional help to self-help Representative democracy to

participative democracy Hierarchies to Networking North to South (with respect to US

economy) Either/or to multiple options