Organizational Behavior Chp 15

Instructors Manual to Accompany

Organizational Behavior 5/eemerging knowledge and practice for the real world

by Steven L. McShane and Mary Ann von Glinow

Chapter 15Organizational Change

Prepared by:Steven L. McShane, University of Western Australia

ThisInstructorsManual1ileispartoftheInstructorsResourceCDROMforOrganizationalBehavior:EmergingKnowledgeandPracticefortheRealWorld,5thedition.10digitISBN:007336434713digitISBN:9780073364346PublishedbyMcGrawHill/Irwin,abusinessunitofTheMcGrawHillCompanies,Inc.,1221AvenueoftheAmericas,NewYork,NY,10020.Copyright2010,2008,2005,2003,2000byTheMcGrawHillCompanies,Inc.Allrightsreserved.Nopartofthispublicationmaybereproducedordistributedinanyformorbyanymeans,orstoredinadatabaseorretrievalsystem,withoutthepriorwrittenconsentofTheMcGrawHillCompanies,Inc.,including,butnotlimitedto,inanynetworkorotherelectronicstorageortransmission,orbroadcastfordistancelearning.Someancillaries,includingelectronicandprintcomponents,maynotbeavailabletocustomersoutsidetheUnitedStates.

McGraw-HillIrwin

Organizational Change

LEARNING OBJECTIVESAfterreadingthischapter,studentsshouldbeableto:1. DescribetheelementsofLewinsforce1ieldanalysismodel.2. Outlinesixreasonswhypeopleresistorganizationalchange.3. Discusssixstrategiesforminimizingresistancetochange.4. Outlinetheconditionsforeffectivelydiffusingchangefromapilotproject.5. Describetheactionresearchapproachtoorganizationalchange.6. OutlinetheFourDmodelofappreciativeinquiryandexplainhowthisapproachdiffersfromactionresearch.7. Explainhowparallellearningstructuresassistthechangeprocess.8. Discussthreeethicalissuesinorganizationalchange.CHAPTER GLOSSARY

15

actionresearchaproblemfocusedchangeprocessthatcombinesactionorientation(changingattitudesandbehavior)andresearchorientation(testingtheorythroughdatacollectionandanalysis).appreciativeinquiryanorganizationalchangestrategythatdirectsthegroupsattentionawayfromitsownproblemsandfocusesparticipantsonthegroupspotentialandpositiveelements.force1ieldanalysisKurtLewinsmodelofsystemwidechangethathelpschangeagentsdiagnosetheforcesthatdriveandrestrainproposedorganizationalchange

futuresearchsystemwidegroupsessions,usuallylastingafewdays,inwhichparticipantsidentifytrendsandidentifywaystoadapttothosechangesparallellearningstructurehighlyparticipativearrangements,composedofpeoplefrommostlevelsoftheorganizationwhofollowtheactionresearchmodeltoproducemeaningfulorganizationalchange.refreezingthelatterpartofthechangeprocessinwhichsystemsandconditionsareintroducedthatreinforceandmaintainthedesiredbehaviors.unfreezingthe1irstpartofthechangeprocesswherebythechangeagentproducesdisequilibriumbetweenthedrivingandrestrainingforces.

Chapter 15: Organizational Change

Page 15-1 2010 The McGraw-Hill Companies, Inc. All rights reserved

CHAPTER SYNOPSISLewinsforce1ieldanalysismodelstatesthatallsystemshavedrivingandrestrainingforces.Changeoccursthroughtheprocessofunfreezing,changing,andrefreezing.Unfreezingproducesdisequilibriumbetweenthedrivingandrestrainingforces.Refreezingrealignstheorganizationssystemsandstructureswiththedesiredbehaviors.Restrainingforcesaremanifestedasemployeeresistancetochange.Resistancetochangeshouldbeviewedasaresource,notaninherentobstacletochange.Themainreasonswhypeopleresistchangearedirectcosts,savingface,fearoftheunknown,breakingroutines,incongruentteamdynamics,andincongruentorganizationalsystems.Resistancetochangemaybeminimizedbykeepingemployeesinformedaboutwhattoexpectfromthechangeeffort(communicating);teachingemployeesvaluableskillsforthedesiredfuture(learning);involvingtheminthechangeprocess;helpingemployeescopewiththestressofchange;negotiatingtradeoffswiththosewhowillclearlylosefromthechangeeffort;andusingcoercion(sparinglyandasalastresort).Organizationalchangealsorequiresdrivingforces.Thismeansthatemployeesneedtohaveanurgencyforchangebybecomingawareoftheenvironmentalconditionsthatdemandchangeintheorganization.Thechangeprocessalsorequiresrefreezingthenewbehaviorsbyrealigningorganizationalsystemsandteamdynamicswiththedesiredchanges.Everysuccessfulchangealsorequireschangeagentswithaclear,wellarticulatedvisionofthedesiredfuturestate.Thechangeprocessalsooftenappliesadiffusionprocessinwhichchangebeginsasapilotprojectandeventuallyspreadstootherareasoftheorganization.Actionresearchisahighlyparticipative,opensystemsapproachtochangemanagementthatcombinesanactionorientation(changingattitudesandbehavior)withresearchorientation(testingtheory).Itisadatabased,problemorientedprocessthatdiagnosestheneedforchange,introducestheintervention,andthenevaluatesandstabilizesthedesiredchanges.Appreciativeinquiryembracesthepositiveorganizationalbehaviorphilosophybyfocusingparticipantsonthepositiveandpossible.Ittriestobreakoutoftheproblemsolvingmentalitythatdominatesorganizationalchangethroughtheactionresearchmodel.Thefourstagesofappreciativeinquiryincludediscovery,dreaming,designing,anddelivering.Largegroupinterventions,suchasfuturesearchconferences,arehighlyparticipativeeventsthattypicallytrytogettheentiresystemintotheroom.Afourthorganizationalchangeapproach,calledparallellearningstructures,reliesonsocialstructuresdevelopedalongsidetheformalhierarchywiththepurposeofincreasingtheorganization'slearning.Theyarehighlyparticipativearrangements,composedofpeoplefrommostlevelsoftheorganizationwhofollowtheactionresearchmodeltoproducemeaningfulorganizationalchange.Onesigni1icantconcernisthatorganizationalchangetheoriesdevelopedwithaWesternculturalorientationpotentiallycon1lictwithculturalvaluesinsomeothercountries.Also,organizationalchangepracticescanraiseoneormoreethicalconcerns,includingincreasingmanagementspoweroveremployees,threateningindividualprivacyrights,underminingindividualselfesteem,andmakingclientsdependentonthechangeconsultant.POWERPOINT SLIDESOrganizationalBehaviorFifthEditionincludesacompletesetofMicrosoftPowerPoint1ilesforeachchapter.(PleasecontactyourMcGrawHill/Irwinrepresentativeto1indouthowinstructorscanreceivethese1iles.)Inthelectureoutlinethatfollows,athumbnailillustrationofeachPowerPointslideforthischapterisplacedbesidethecorrespondinglecturematerial.Theslidenumberhelpsyoutoseeyourlocationintheslideshowsequenceandtoskipslidesthatyoudontwanttoshowtotheclass.(Tojumpaheadorbacktoaparticularslide,justtypetheslidenumberandhittheEnterorReturnkey.)



LECTURE OUTLINE (WITH POWERPOINT SLIDES)

Organizational ChangeSlide 1


Suncor Embraces Continuous ChangeSlide 2

Umpqua Banks Organizational Change

Umpqua Bank has become the largest regional community bank in the Pacific Northwest by applying effective organizational change practices

Lewins Force Field Analysis ModelSlide 3

Lewins Force Field Analysis Model

Highly respected model of change developed by social psychologist Kurt Lewin

Consists of driving and restraining forces in the change process

Driving forces Push organizations toward a new state of affairs Includes external forces -- e.g., competitors, technologies may be developed from leader -- divine discontent -- urge

employees to strive for higher standards or new innovations

Restraining forces resistance to change -- employee behaviors that block the change

process try to maintain the status quo



Force Field Analysis ModelSlide 4

Force Field Analysis Model

Effective change occurs by unfreezing the current situation, moving to a desired condition, and then refreezing the system

Unfreezing producing disequilibrium between the driving and restraining forces

Stability when driving and restraining forces are roughly in equilibrium

Refreezing introducing organizational systems and structures aligned with the

desired behaviors support and reinforce the new role patterns

Not Hoppy About ChangeSlide 5

Not Hoppy About Change

Mina Ishiwatari (front) wanted to improve Hoppy drinks brand image, but most staff didnt want to change. I tried to take a new marketing approach to change the image of Hoppy . . . but no one would listen to me. She improved Hoppys popularity with limited support or budget. Most employees who opposed Ishiwataris changes have since left the company.

Restraining Forces (Resistance to Change)Slide 6

Restraining Forces (Resistance to change)

Many forms -- complaints, absenteeism, passive noncompliance etc.

Subtle resistance is much more common than overt resistance -- more difficult to address because not as obvious

Need to view resistance as a resource, not impediment to change

1. resistance incidents are symptoms of deeper problems in the change process signal need for better change mgt practices occurs when employees worry about the consequences of change, or about

the process of change itself

2. A form of constructive conflict -- may produce better change decisions

3. Resistance is a form of voice -- may improve procedural justice and motivate people to act towards change



Why People Resist ChangeSlide 7

Why People Resist Change

Related to motivation, ability, and role perceptions Motivation -- perceive negative consequences of change Ability -- lack of skills/knowledge to change Role perceptions -- not clear what change is required

1. Direct costs Losing something of value due to change FBIs new intelligence mandate would reduce status in law

enforcement

2. Saving face Accepting change acknowledges own imperfection, past wrongdoing New FBI mandate acknowledges value of CIA work (source of past turf

wars)

3. Fear of the unknown Risk of personal loss Concern about being unable to adjust

Why People Resist Change (cont)Slide 8

Why People Resist Change (cont)

4. Breaking routines Organizational unlearning is part of change process But past practices/habits are valued by employees due to comfort, low

cognitive effort

5. Incongruent organizational systems Systems/structures reinforce status quo FBI career, reward, power, communication systems supported law

enforcement, not intelligence

6. Incongruent team dynamics Norms contrary to desired change

Unfreezing, Changing, and Refreezing

Shouldnt increase driving forces alone increase restraining forces to counterbalance driving forces

Preferred strategy is to destabilize status quo by:1. increasing/exposing driving forces (create urgency for change)

2. decreasing the restraining forces -- minimize resistance



Creating an Urgency for ChangeSlide 9

Creating an Urgency for Change

Inform employees about driving forces -- competitors, changing consumer trends, etc

Most difficult when organization is doing well

Customer-driven change Dissatisfied customers have real consequences for the firm Human element energizes employees

Sometimes need to create urgency to change without external drivers e.g., when company is successful Requires persuasive influence -- employees visualize future

competitive threats and environmental shifts Use positive vision of future rather than threats as driver Problem: Creating illusory drivers for change produces cynicism to

change

Minimizing Resistance to Change: CommunicationSlide 10

Minimizing Resistance to Change: Communication

Highest priority and first strategy for change

Improves urgency to change

Reduces uncertainty (fear of unknown)

Problems -- time consuming and costly

Minimizing Resistance to Change: LearningSlide 11

Minimizing Resistance to Change: Learning

Provides new knowledge and skills

Includes coaching and other forms of learning

Helps break old routines and adopt new roles

Problems -- potentially time consuming and costly

Minimizing Resistance to Change: InvolvementSlide 12

Minimizing Resistance to Change: Involvement

Employees participate in change process

Almost essential part of change process these days Employees feel personally responsible for success of change Minimizes saving face and reducing fear of unknown

Problems -- time-consuming, potential conflict



Minimizing Resistance to Change: StressSlide 13

Minimizing Resistance to Change: Stress

Change process potentially threatens self-esteem and creates uncertainty about the future

Communication, learning, and involvement reduce stress to some degree, but may require other strategies to minimize stress

Potential benefits More motivation to change Less fear of unknown Fewer direct costs

Problems -- time-consuming, expensive, doesnt help everyone

Minimizing Resistance to Change: NegotiationSlide 14

Minimizing Resistance to Change: Negotiation

Influence support for change by negotiating benefits or resources in exchange for compliance with request (e.g. supporting change)

May be necessary when people clearly lose something and wont otherwise support change

Reduces resistance due to perceived direct costs

Problems Expensive Gains compliance, not commitment

Minimizing Resistance to Change: CoercionSlide 15

Minimizing Resistance to Change: Coercion

Necessary when all other strategies fail

Assertive influence tactics e.g. monitoring behaviors to ensure compliance, confronting, threats

of sanctions etc.

Radical form of organizational unlearning -- dismissals

Problems Reduces trust May create more subtle resistance More politics to protect job security



Refreezing the Desired ConditionsSlide 16

Refreezing the Desired Conditions

When you are leading for growth, you know you are going to disrupt comfortable routines and ask for new behavior, new priorities, new skills Even when we want to change, and do change, we tend to relax and the rubber band snaps us back into our comfort zones.

Ray Davis, CEO, Umpqua Bank

Refreezing the Desired ConditionsSlide 17

Refreezing the Desired Conditions

Realigning organizational systems and team dynamics with the desired changes

Alter rewards to reinforce new behaviors Change career paths Revise information systems

Change AgentsSlide 18

Change Agents

Change agent -- 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

Strategic Vision & ChangeSlide 19

Strategic Vision & Change

Need a vision of the desired future state

Identifies critical success factors for change

Minimizes employee fear of the unknown

Clarifies role perceptions



Diffusion of ChangeSlide 20

Diffusion of Change

Successful change initiatives usually begin as pilot projects Pilot projects offer greater flexibility, less risk

Effective diffusion of pilot project success considers MARS model

1. Motivation Pilot project is successful Reward and support diffusion of pilot project elsewhere

2. Ability Train employees with skills/knowledge necessary to adopt pilot project Role modeling from people in pilot project

3. Role perceptions Help employees translate pilot project practices to their specific work

environment

4. Situational factors Provide resources to implement pilot project elsewhere

Action Research ApproachSlide 21

Action Research Approach

Action orientation and research orientation Action to achieve the goal of change Research testing application of concepts

Action research principles1. Open systems perspective

2. Highly participative process

3. Data-driven, problem-oriented process

Action Research ProcessSlide 22

Action Research Process

1. Form client-consultant relationship Client readiness -- clients motivation, open to meaningful change, possess

abilities to complete change process

2. Diagnose the need for change Organizational diagnosis -- gathering and analyzing data about an ongoing

system

Includes employee involvement -- agree on change methods, determine objectives of successful change



3. Introduce intervention Applies one or more actions -- e.g. managing conflict, team building,

changing corporate culture

Incremental change vs. quantum change -- small steps or massive overhaul -- advantages and perils for either approach

4. Evaluate and stabilize change Comparing change outcomes against standards established earlier in action

research process

Problems -- (a) outcomes arent apparent for a long time, (b) difficult to separate effects of external changes

Refreeze conditions to stabilize change

BBC Takes the Appreciative JourneySlide 23

BBC Takes the Appreciative Journey

To become a more creative organization, the British Broadcasting Company sponsored an appreciative inquiry process of employee consultation, called Just Imagine. It gave me a powerful mandate for change, said BBCs chief executive at the time.

Appreciative Inquiry ApproachSlide 24

Appreciative Inquiry Approach

Frames change around positive and possible future, rather than traditional problem-focus

Builds change process around strengths, not weaknesses Form of behavioral modeling -- finding and replicating examples of

positive events Positive focus minimizes defensiveness, conflict

Application of positive OB -- success and well-being grounded in positive rather than negative aspects of life



Four-D Model of Appreciative InquirySlide 25

Four-D Model of Appreciative Inquiry

1. Discovery discovering positive elements of the observed organization (may involve

interviewing, documenting positive events and elements)

2. Dreaming considering what might be possible in an ideal organization safer revealing aspirations about an ideal than their own situation

3. Designing participants listen to each others' models and assumptions, and eventually

form a collective model for thinking within the team

4. Delivering participants establish specific objectives and direction for their own

organization based on their model of what should be

Evaluating Appreciative Inquiry

Several successful change stories from this approach, but not always successful

Requires positive rather than problem-oriented mindset Not yet clear what other conditions are best for appreciative inquiry

(i.e. contingencies not yet known)

Large Group InterventionsSlide 26

Large Group Interventions

Future search, open space, and other interventions that involve the whole system

Large group sessions May last a few days High involvement with minimal structure

Limitations of large group interventions Limited opportunity to contribute Risk that a few people will dominate Focus on common ground may hide differences Generates high expectations about ideal future



Parallel Learning Structure ApproachSlide 27

Parallel Learning Structure Approach

Highly participative social structures

Members representative across the formal hierarchy

Sufficiently free from firms constraints

Develop solutions for organizational change which are then applied back into the larger organization

Parallel Learning StructuresSlide 28

Parallel Learning Structures

Cross-Cultural and Ethical ConcernsSlide 29

Cross-Cultural and Ethical Concerns

Cross-Cultural Concerns Linear and open conflict assumptions different from values in some

cultures

Ethical Concerns Privacy rights of individuals Management power Individuals self-esteem

Organizations are About PeopleSlide 30

Organizations are About People

Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.

Andrew Carnegie (1835-1919)

Organizational ChangeSlide 31




Discussion of Activity 15.3: Strategic Change IncidentsSlide 32

Discussion of Activity 15.3: Strategic Change Incidents

Scenario #1: Greener TelcoSlide 33

Scenario #1: Greener Telco

Scenario #1 refers to Bell Canadas Zero Waste program, which successfully changed wasteful employee behaviors by altering the causes of those behaviors.

Bell Canadas Change StrategySlide 34

Bell Canadas Change Strategy

Relied on the MARS model to alter behavior: Motivation -- employee involvement, respected steering committee Ability -- taught paper reduction, email, food disposal Role perceptions -- communicated importance of reducing waste Situation -- Created barriers to wasteful behavior, e.g.. removed

garbage bins

Scenario #2: Go Forward AirlineSlide 35

Scenario #2: Go Forward Airline

Scenario #2 refers to Continental Airlines Go Forward change strategy, which catapulted the company from worst to first within a couple of years.

Continental Airlines Change StrategySlide 36

Continental 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 change



SOLUTIONS TO CRITICAL THINKING QUESTIONS

1. Chancesarethattheschoolyouareattendingiscurrentlyundergoingsomesortofchangetoadaptmorecloselywithitsenvironment.Discusstheexternalforcesthataredrivingthesechanges.Whatinternaldriversforchangealsoexist?Therearemanypossiblechangesthatyourcollegeiscurrentlyexperiencing.Someofthemorecommonchangesmightbe:(a)shiftfromquartertosemesterschedule;(b)introductionofonlinelearning;(c)changinglibraryhours;(d)newcoursesanddisciplines;(e)reassignmentofphysicalspaceduetonewconstructionorclosureofoldbuildings.Therearejustasmanypossibleexternalforcesforchangetoconsider,including:(a)increasedcompetitionforstudents;(b)emergingtechnologies;(c)costpressures(restrictedbudgets);(d)changingstudentexpectations(e.g.newcoursecontent,more1lexiblelearning);(e)collegeratings.Internalforcesforchangemainlycomefromsuchthingsasleadership,physicalstructures(e.g.agingbuildings),andstudentandfacultycoalitions.Itisimportanttodistinguishthechangesfromtheforcesforchange.Forexample,theintroductionofonlinelearningmighthaveresultedfrombothnewtechnologiesandincreasedcompetitionforstudents.

2. UseLewinsforceAieldanalysistodescribethedynamicsoforganizationalchangeatUmpquaBank(seeopeningvignettetothischapter).Theopeningvignettetothischapteridenti1iesthechangingmarketplaceasthemainexternalforceforchange.UmpquaBankwouldnotlastlongunlessitdifferentiateditself.ItisalsoclearthatCEORayDaviswasapowerfulforceforchange,particularlyhisvisionandenthusiasmforthatvision.Theopeningvignetterefersbrie1lytosomeinstancesofresistancetochange,suchasgettingthewrongpeopleoffthebus.Thespeci1iccausesofthatresistancearenotstated,butDavisreferstobreakingroutineswhenhetalksabouttherubberbandeffect.StudentsmightspeculateotherreasonswhyUmpquaBankemployeesmightresistchange.Forexample:Directcosts.Someemployeesmightlosetheirpowerandstatusinthenewbankformat.SavingFace.EmployeesresponsibleforcorporatestrategyandmarketingmightfeelslightedbyhavingtheCEOsuggestasuperioridea.FearoftheUnknown.Thissourceofresistancewouldlikelyhavebeenquiteapparent.Thevignettedescribeshowthechangesweremuchmoreradicalthanatypicalbank,soemployeeswouldnothavemuchclarityaboutthefuture.BreakingRoutines.Theradicalnatureofthechangesprobablycausedsomeresistance,becauseemployeeshadtolearnnewpractices,andadoptnewvaluesinorderforthecompanytomovetowardanadaptiveculture.IncongruentSystems.Althoughnotstatedinthecase,Umpquabankmighthavehadarewardsystem,corporateculture,informationsystemetcthatworkedagainsttheproposedchanges.IncongruentTeamdynamics.Aswiththeabove,thisfactorisnotapparentasasourceofresistanceinthecase.



3. Employeeresistanceisasymptom,notaproblem,inthechangeprocess.Whataresomeoftherealproblemsthatmayunderlieemployeeresistance?Thetextbookoutlinessixmainreasonswhyemployeesresistchange.Thefollowingreasonsexplaintherealproblemsthatemployeesexperienceandareconcernedaboutwithchangeprocesses.Directcosts.Resistancemaybeasymptomthatunderliesemployeejobsecurityconcernsorfearsthechangemayaffecttheircareerdevelopmentpotential.Savingface.Whenchangeinvolvesimplementingadecisionthatwasnotrecommendedbyanindividual,theindividualmaytrytoprovethatthedecisionwaswrongorthatthepersonencouragingchangeisincompetent.Fearoftheunknown.Peopleresistchangebecausetheyareworriedtheywillnotbeabletoadoptthenewbehaviorsrequired.Breakingroutines.Peopledonotwanttogiveuptheircomfortzonesanddailyroutinesthatprovidepredictability.Incongruentorganizationalsystems.Organizationalsystemsmayactuallybediscouragingemployeesfromadoptingnewways.Forexample,theorganizationsreward,selection,trainingandothercontrolsystemsmaybecausingemployeestomaintainthestatusquo.Incongruentteamdynamics.Teamnormsmaycon1lictwiththedesiredchangeandconsequentlyreinforceconformitytothestatusquo.

4. Seniormanagementofalargemultinationalcorporationisplanningtorestructuretheorganization.Currently,theorganizationisdecentralizedaroundgeographicalareassothattheexecutiveresponsibleforeachareahasconsiderableautonomyovermanufacturingandsales.Thenewstructurewilltransferpowertotheexecutivesresponsiblefordifferentproductgroups;theexecutivesresponsibleforeachgeographicareawillnolongerberesponsibleformanufacturingintheirareabutwillretaincontroloversalesactivities.Describetwotypesofresistanceseniormanagementmightencounterfromthisorganizationalchange.Theanswertothisquestionshouldincludedirectcostsasonetypeofresistancetochangeamongthegeographicexecutives.Theywilllosestatus,power,andresponsibilityfromthechangeeffort.Theothertypeofresistancetochangemightbeincongruentorganizationalsystems,incongruentteamdynamics,orbreakingroutines.Unlessthecompanyhastakenspeci1icstepstoalterorganizationalsystems,thesesystemsmightstillsupportthedecentralizedorganizationalstructure.Forexample,communicationpatternsandphysicalstructuresmightstillbecon1iguredaroundthegeographicratherthanproductstructure.Regardingteamdynamics,departmentalnormsmightsupportthegeographicexecutive.Forexample,employeesmighthavedevelopedawetheyattitudetowardproductleadersinheadquarters.Althoughtherestructuringplacedregionalproductgroupsunderproductexecutives,theseantagonisticnormsmaycontinue.Finally,somestudentsmightarguethatresistancewilloccurbecauseemployeeswillbebreakingroutines.Forinstance,geographicexecutivesandtheiremployeesmayhaveformedhabitsregardingrelationsbetweensalesandproductionunits.Nowthatproductionunitsarenolongerundertheexecutivescontrol,thesehabitsmustbealteredandperhapssalespracticeschangedto1itthenewreportingstructure.



5. Discusstheroleofrewardsystemsinorganizationalchange.SpeciAically,identifywhererewardsystemsrelatetoLewinsforceAieldmodelandwheretheyunderminetheorganizationalchangeprocess.Studentsshouldrecognizethatrewardsystemscanbeeitherasourceofresistancetochangeorasystemthatreinforcesthedesiredchange(i.e.refreezesthesystem).Asasourceofresistance,rewardswouldbeanincongruentorganizationalsystem,suchaswhererewardsreinforceef1iciencybuttheorganizationistryingtochangetowardacustomerfocus.Asamechanismforrefreezing,rewardsareintroducedorchangesotheyarecompatiblewiththedesiredbehaviors.

6. WebCircuitsisaMalaysianbasedcustommanufacturerforhightechnologycompanies.Seniormanagementwantstointroduceleanmanagementpracticestoreduceproductioncostsandremaincompetitive.Aconsultanthasrecommendedthatthecompanystartwithapilotprojectinonedepartmentand,whensuccessful,diffusethesepracticestootherareasoftheorganization.Discusstheadvantagesofthisrecommendationandidentifythreeways(otherthanthepilotproject'ssuccess)tomakediffusionofthechangeeffortmoresuccessful.Apilotprojectisusuallyaneffectivechangemanagementstrategy.Itismore1lexibleandlessriskythancentralizedorganizationwideprograms.Thereareseveralwaystomakediffusionofthechangeeffortmoresuccessful.SeveralstrategiesaredescribedinthetextbookaroundthefourelementsoftheMARSmodel.Hereisasummaryoftheserecommendations:Motivation:Ensurethatemployeesseethatthepilotprojectissuccessfulandthatpeopleinthepilotprojectreceiverecognitionandrewardsforchangingtheirpreviousworkpractices.Supervisorsneedtoactivelysupportandreinforcethedesiredbehaviors.Theyalsoneedtoremovesourcesofresistancethatactascountermotivatorstodiffusionofchange.Ability:employeesmusthavetheabilitytherequiredskillsandknowledgetoadoptthepracticesintroducedinthepilotproject.Also,peopleadoptideasmorereadilywhentheyhaveanopportunitytointeractandlearnfromotherswhohavealreadyappliedthenewpractices.RolePerceptions:Employeesneedtounderstandhowthepracticesinapilotprojectapplytothemeventhoughinacompletelydifferentfunctionalarea.Thisrequiresguidancethatisneithertospeci1ic,becauseitmightnotseemrelevanttootherareasoftheorganization,nortooabstract.SituationalFactors:Employeesrequiresupportivesituationalfactors,includingtheresourcesandtimenecessarytoadoptthepracticesdemonstratedinthepilotproject.

7. SupposethatyouarevicepresidentofbranchservicesattheBankofEastLansing.Younoticethatseveralbrancheshaveconsistentlylowcustomerserviceratingseventhoughtherearenoapparentdifferencesinresourcesorstaffcharacteristics.Describeanappreciativeinquiryprocessinoneofthesebranchesthatmighthelptoovercometheseproblems.Appreciativeinquiryreframesrelationshipsaroundthepositiveandthepossible.Thebankbranchesshouldlookatanotherbranchthathasbeensuccessful.Thisincreasesopendialoguebyredirectingattentionawayfrominternalproblems.Therearefourmainstagestoappreciativeinquiry.Theprocessbeginswiththediscoverystage,wherebytheparticipantsidentifythepositiveelementsoftheobservedorganization.Astheydiscusstheir1indings,participantsshiftintothedreamingstagebyconsideringwhatmightbepossibleinanidealorganization.Thethirdstageofappreciativeinquiryisknownasdesigning,inwhichparticipantslistenwithsel1lessreceptivitytoeachothersmodelsandassumptions,andeventuallyformacollectivemodelforthinkingwithintheteam.Throughoutthisstage,teammembersshiftthefocusbacktotheirownorganizationandeventuallyenterthedeliveringstage.Thisisthephaseinwhichparticipantsbegindiscussingtheirownorganizationagain.Theyestablishspeci1icobjectivesanddirectionfortheirownorganizationbasedontheirmodelofwhatshouldbe.



8. Thischaptersuggeststhatsomeorganizationalchangeactivitiesfaceethicalconcerns.YetseveralconsultantsactivelyusetheseprocessesbecausetheybelievetheybeneAittheorganizationanddolessdamagetoemployeesthanitseemsonthesurface.Forexample,someactivitiestrytoopenuptheemployeeshiddenarea(reviewtheJohariWindowdiscussioninChapter3)sothatthereisbettermutualunderstandingwithcoworkers.Discussthisargument,andidentifywhereyouthinkorganizationalchangeinterventionsshouldlimitthisprocess.Thetextbookidenti1iesthreeethicalproblemswithorganizationalchange.Studentsareaskedtoconsiderreasonswhyeachofthesepracticesisacceptableratherthanunethical.Theideahereisthatsituationsarerarelypurelygoodorbad.Thereareusuallytwosidestotheargument.IndividualPrivacyRights.Actionresearchcollectsinformationfromemployees,someofwhichtheymaynotwanttodivulge.Someinterventionsmaythreatenindividualprivacyrightsbecauseemployeesareaskedtopubliclydisclosetheirpersonalbeliefsandexperiences.Thecounterpointhereischangeisbothapersonalandinterpersonaljourney.Changeagentsneedtounderstandindividualattitudestowardthechange,notjustthestructuralneedforchange.Inusingchangetechniquesthatinvolveindividualdisclosure,organizationsneedtoensurethatemployeesmaintaincontrolovertheirlevelofdisclosureandarenotundulypressuredtorevealmorepersonalinformationthattheyarecomfortablewith.ManagementPower.Manychangeinterventionscreateuncertaintyandreestablishmanagementspositionindirectingtheorganization.Studentsmightcounterwiththenotionthatmostchangesrequiretheuseandstrengthening(atleasttemporarily)ofmanagementpowertobringaboutmeaningfulchange.Asnotedinthetextbook,nearlytwothirdsofcompaniesrelyonsomecoerciontobringaboutchange.However,organizationscandealwiththisconcernbyensuringthatcoercionisonlyusedasalastresortandbyensuringthatconsiderationandcareisusedatalltimesindealingwiththeorganizationsmostimportantresourcespeople.IndividualSelfEsteem.Somechangeactivitiesmayunderminetheindividualsselfesteem.Theunfreezingprocessrequiresparticipantstodiscon1irmtheirexistingbeliefs,sometimesincludingtheirowncompetenceatcertaintasksorinterpersonalrelations.Somespeci1icchangepracticesinvolvedirectexposuretopersonalcritiquebycoworkersaswellaspublicdisclosureofone'spersonallimitationsandfaults.Studentsmightsuggestinsupportofthispracticethatanychangerequiresgivingupsomeselfesteem.Itinvolvesrecognizingpastimperfections,whichmotivatespeopletochangeforthefuture.Employeesmayrequiresupportand/orresourcestosustainhighlevelsofselfef1icacy.



CASE STUDY 15-1: TRANSACT INSURANCE CORPORATION

Case SynopsisTransActInsuranceCorporation(TIC)providesautomobileinsurancethroughouttheSoutheasternUnitedStates.JimLeonwashiredasvicepresidentofClaimsandimmediatelybeganaseriesofchanges.Hedecidedtomakemoraleandsupervisoryleadershiphistoppriority.OneofLeonsmostpronouncedsymbolsofchangewasthe"ClaimsManagementCredo"outliningthephilosophythateveryclaimsmanagerwouldfollow.Afterthecredowasapprovedbyclaimsmanagers,Leonannouncedplanstofollowupwithanannualsurveytoevaluateeachclaimsmanager'sperformance.Oneyearlater,asurveyofclaimscenteremployeeswasheld.ClaimsmanagersdidntbelievethatLeonwouldreallyconductthesurvey.Thesurveyhadahighresponserate,withmostmanagersreceivingmoderateorpoorratingsonthetencredoitems.Thesurveyresults,includingeverycommentmadebyemployeesatthatclaimscenter,wereshowntoemployees.Claimscentermanagerswereshocked.Discussionmeetingswithemployeeswereattendedbytheregionaldirectortocontroloravoidconfrontations.Soonafterthesemeetings,someclaimsmanagersquitoraskedfortransfersintononmanagementjobs.Epilogue.Shortlyafterthe1irstsurvey,thenewsletterwassuspended.Jimhadmanymoremeetingswithhismanagersanddirectors.Jimeventuallyconcludedthattoomanyofhismanagersweretechnicalexpertsininsuranceandlackedthepeopleskillsnecessaryformanagement.Toresolvethisproblem,managerswereaskedtocompeteforrevisedpositionswithagreateremphasisonmanagementabilityratherthantechnicalprowess.Afewnewmanagerswerebroughtinbutmostofthesuccessfulcandidateswereselectedfromtheexistingrosterofmanagers.Employeesurveysstoppedafterfouryears.Jimleftandwentintosemiretirement.Suggested Answers to Case Questions

1. Whatsymptom(s)existinthiscasetosuggestthatsomethinghasgonewrong?ThereareseveralsymptomssuggestingthatJimLeonschangeprocessisnotgoingwell.First,employeesandmanagersalikearedissatis1iedwiththeprocess,althoughfordifferentreasons.someofthedebrie1ingsessionsrevealedlevelsofunhealthycon1lict.Afewmanagershavequittheirjobsoraskedfortransfers.Earlier,managersquietlyresistedthechangesbynottakingtheprocessseriously(i.e.theyignoredituntilthenextroundofevents).2. Whataretherootcausesthathaveledtothesesymptoms?JimLeonwasunsuccessfulwiththischangeprocess.Althoughhissmallchangesdescribedatthebeginningofthecaseseemtohaveworked,thesurveyprocesscreatedsuchresistanceandreactionfrommanagersthatchangeprobablybecamemoredif1icultafterwards.Bylookingattheactionresearchmodel,wecanseethatatleastthe1irsttwostageswerenotconductedsuf1icientlywell.Themaincausescanbeidenti1iedfromevidenceof(a)thelackofurgencytochangeamongmanagers,(b)varioussourcesofresistancetochange,and(c)lackofdiagnosisforthechangeintervention.

Lackofurgency.JimLeondidnotdiagnosethereadinessforchangeofhisclaimsmanagersandemployees.Theclaimsmanagersdidnotbelievethatthesurveywouldbeconducted,theydoubtedtheimportanceoftheClaimsManagementcredo,andtheydidnotsupporttheopensurveyfeedbackprocess.Consequently,Leondidnotprovideenoughevidenceandargumenttomotivatetheclaimsmanagerstoembraceoratleastpreparethemselvesforthechangeprocess.SourcesofResistance.Theclaimsmanagersengagedinpassiveresistancetothechange.Studentsshouldbeabletoidentifylikelyreasonsforthisresistance.Theinterventionmightrequirechangingmanagerialpractices,whichrelatestobreakingroutines,fearoftheunknown,andpossiblydirectcosts(wheremanagerslosepower,resources,orstatus).Managerialnormsofbehaviormightalsobepresentthatinterferewiththedesiredchanges.Wedonthaveinformationaboutsystemsorstructures,buttheymightalsoactasbarriers.Studentsmightnotethelackof



involvementofmanagersinthechangeprocess.Althoughtheyidenti1iedthesurveyperformancefactors,thislistwasreallyrestrictedtothepointthatLeonwasmoreincontrolofthefactorstobeconsidered.DiagnoseNeedforChange.Theemployeesurveyisanintervention,becauseitwasintendedtobeanongoingsysteminmanagementdevelopmentatTransAct.However,theinitialsurveywasalsoadiagnostictooltohelpLeonandclaimsmanagersidentifyareasthatneedimprovement.Althoughstudentsmaydebatetheappropriatenessofasurveyfordatacollection,themainproblemisthatthedatawerenotfedbacktoclaimsmanagersinawaythatminimizesperceptualdefense.Thisisimportant,becauseitaffectsthewillingnessofparticipantstocontinuewiththeintervention.Forexample,thesurveydatawerebothanevaluationtoolandaorganizationalchangeassessmenttool.Moreover,theprocesswasdelayedforoneyear,somanagersmayhavelostanyinertiatowardchangethatoccurredwhenthecredowasformedayearearlier.Anotherconcernisthatsomeofthesurveyitemsmayrelatetofactorsoverwhichtheclaimsmanagershavenocontrol.EmployeeshadlowmoraleandoverworkbeforeLeontookoverasVPofclaims.Severalyearsofpentupfrustrationwereventedinthesurvey,andclaimsmanagerswerenotcompletelyresponsibleforthosefeelings.Thereareargumentsinfavorofusingtheemployeesurveyprocess,suchasthatthisiscostef1icientforalargegroupofpeople.However,thesurveydesignandfeedbackshouldbechangedtoimprovetheirrelevanceandacceptabilitytoeveryoneinvolved.Theclaimsmanagersshouldbeputinabetterstateofreadinesstoparticipateinthesurveydesignprocess.Thequestionsshouldbeclearlyandobjectivelyrelatedtotheclaimsmanagersjobs.Thesurveyfeedbackshouldbemorecon1idential,perhapswithfeedbacksessionsbasedonlyonoverallstatisticalresultsacrosstheclaimsdivision(i.e.,notwithinthesmallclaimscentersandnotwithindividualcomments).

3. Whatactionsshouldthecompanytaketocorrecttheseproblems?Thecompanyshouldbeginthechangeprocessagain.Thiswouldbeginbyidentifyingonwhatneedstochange(morecustomerfocus?costef1iciency?employeeengagement?).Next,thechangeprocessrequiresstrongermechanismstocreateanurgencytochange,suchasmoredirectevidenceofcompanyproblems,ofincreasedcompetition,orofagreaterpotentialeffectiveness.Third,employeeandmanagementinvolvementintheprocessneedstoberealratherthanhighlyrestricted.Thus,inlinewithactionresearch,thepreferredinterventionandindicatorsofitseffectivenessshouldrelyoninputfromthesestakeholders,notjustJimLeonortheCEO.Thelattermayhaveultimatedecisioncontrol,butinvolvementiscriticalforbuyin.TheCEOandLeonmightalsoconsiderapilotprojectifthechangeisdif1icultandrisky.However,sincetheunitisintegrated,apilotprojectmaybedif1icult.Finally,thechoiceofinterventionneedstobecarefullychosensuchthatitisalignedwiththechangeobjectives.Thismayinvolvetraining,changingrewardsandinformationsystems,orothersystemsalterations.StudentsshouldalsodiscussJimLeonasachangeagent.Speci1ically,thereisreasontobelievethatLeonhaslosttrust,respect,andcredibilitytoleadthechangeprocess.Thisdoesnotnecessarilymeanthatheneedstobereplacedasheadofclaims.Rather,anexternalconsultantwhoworkswithmanagementandemployeesmayberequiredtoengageinthenextattempttochange.



CASE STUDY 15-2: INSIDE INTEL

Case SynopsisForyears,IntelthrivedonabusinessmodelthatcofounderAndyGroveperfectedandreinforcedunderhisleadershipandtheleadershipofhissuccessor,CraigBarrett.ButIntelslatestCEO,PaulOtellinihasdifferentplans.RatherthancontinuingtobuildfasterchipsjustforPCcomputers,Otelliniseesbiggeropportunitiesinnewplatforms.Otellinialsowantstoraisethepro1ileofmarketing,ratherthanletengineersdeterminewhatproductsaredeveloped.EventhefamousIntellogo(withalowerede)isbeingditchedforamorecontemporarydesign.ThisBusinessWeekcasestudyreviewsthechangesthatPaulOtelliniisintroducingatIntelandexplainshowheisbuildingmomentumtowardthesechanges.Thearticlealsodescribeshowemployeesarerespondingtothesechanges.Suggested Answers to Case Questions

1. WhatchangemanagementstrategieshasPaulOtelliniusedtohelpintroducethevariouschangesatIntel?Otellinihasengagedinafewpracticesforchange.Onestrategywastoreorganizeemployeesintoproductareas.ThishadtheeffectofdissipatingthecreosoteeffectofthePCchipdevelopmentoperations,nowallowingvariousinitiativestodevelop.Similarly,hehasstructuredproductdevelopmentaroundcrossfunctionalteamsratherthanallowingengineerstoworkinisolation.Anotherstrategyistohireavarietyofpeoplewithdifferentbackgrounds.Theirexperienceandvalueswillultimatelyreshapethecompanysvaluesandculture.Relatedtothisstrategyistheactionofhiringstarpeople,suchasaformermarketingguruatSamsung.Anotherstrategyistoalterpositionpower(probablythroughrestructuringandbudgets)suchthatsomeengineeringgroupsnolongerwieldthemostpower.Changehasalsobeeinstitutedthroughsymbolicactions,suchasslowlyphasingoutthePentiumbrandandalteringIntelslogo.2. Discussevidencethatsomeemployeesareresistingthesechanges?What,ifanything,canOtellinidoto

minimizethisresistance?Themainevidenceofresistanceisthefrustrationthatemployeessaytheyareexperiencing.ToidentifywhatactionsOtellinishouldtake,studentsshouldexaminethevariouswaystoreduceresistancetochange,particularlycommunication,training,andinvolvement.



TEAM EXERCISE 15-3: STRATEGIC CHANGE INCIDENTS

PurposeThisexerciseisdesignedtohelpstudentstoidentifystrategiestofacilitateorganizationalchangeinvarioussituations.InstructionsStep1:Theinstructorwillplacestudentsintoteams,andeachteamwillbeassignedoneofthescenariospresentedinthisexercise.Step2:Eachteamwilldiagnoseitsassignedscenariotodeterminethemostappropriatesetofchangemanagementpractices.Whereappropriate,thesepracticesshould(a)createanurgencytochange,(b)minimizeresistancetochange,and(c)refreezethesituationtosupportthechangeinitiative.EachofthesescenariosisbasedonrealeventsthatoccurredintheUnitedStatesandelsewhere.Step3:Eachteamwillpresentanddefenditschangemanagementstrategy.Classdiscussionregardingtheappropriatenessandfeasibilityofeachstrategywilloccurafterallteamsassignedthesamescenariohavepresented.Theinstructorwillthendescribewhattheorganizationsactuallydidinthesesituations.Comments for InstructorsIhaveusedthisexerciseseveraltimesinMBAclassesandexecutivedevelopmentprograms,withconsistentlygoodresults.Theactivityshouldalsoworkwellwithundergraduateuniversityandcollegeclassesbecauseitisstraightforwardandappliesconceptsfromthetextbook.TheactivityismademoreinterestingbythefactthatthesescenariosinvolveREALCOMPANIES,sotheinstructorcanadvisestudentsthattheirstrategieswillbecomparedwithwhatthecompaniesactuallydid.ThePowerPoint1ileforthischapterincludesasummaryofthesescenarios,includingtheactionstakenbythetworealorganizations.(ThesePowerPointslidesappearaftertheslidesforthechaptercontent.)Scenario 1: Greener TelcoTheBoardofDirectorsatalargetelephonecompanywantitsexecutivestomaketheorganizationmoreenvironmentallyfriendlybyencouragingemployeestoreducewasteintheworkplace.Therearealsoexpectationsbygovernmentandotherstakeholdersforthecompanytotakethisactionandbepubliclysuccessful.Consequently,themanagingdirectorwantstosigni1icantlyreducetheuseofpaper,refuse,andotherwastethroughoutthecompanysmanywidespreadof1ices.Unfortunately,asurveyindicatesthatemployeesdonotvalueenvironmentalobjectivesanddonotknowhowtoreduce,reuse,recycle.AsVPAdministration,youhavebeenaskedtodevelopastrategythatmightbringaboutmeaningfulbehavioralchangetowardtheseenvironmentalgoals.Whatwouldyoudo?WhatActuallyHappened:ThisincidentdescribestheZeroWasteprogramseveralyearsagoatBellCanada.BellCanadaisthelargesttelephonecompanyinthatcountry.Althoughtheinterventionoccurred15yearsago,itisatimelessincidentfordiscussionbecauseitappliestobehaviorchangethatmightoccurinanyorganizationandwouldinvolveemployeesatalllevels.BellCanadainvokedchangebyapplyingseveralstrategiestominimizeresistancetochange.HerearethestepsthetelephonecompanytooktobringaboutZerowaste:Communication:EmployeesattendedinformationsessionsandsawbannersatthefrontentranceaboutthebeginningofZeroWaste.Ataskforceofemployeerepresentativeskepteveryoneinformedaboutdevelopmentsleadinguptothe1irstdayofzerowaste.Training.Employeeswereshownhowtoreducepaperwastebyusingbothsidesofpaper,usingscrappaperasmemopads,reusingof1iceenvelopes,andrelyingmoreonemailandvoicemailthanwrittenmemos.Inthecafeteria,theylearnedtoseparateleftoverfoodanddeposititintotheappropriatecompostbin.Thecompanyalsoinstalledaspecialtelephonehotlinetoanswerquestionsaboutrecycling.BellCanadaemployeesalsoreceivedfeedbackabouttheir



progresstowardthewastereductiongoal.Thetaskforceweighedthegarbagetwiceeachweekandpubliclydisplayedtheseresultsoncharts.Thegarbagewasoccasionallyauditedforincorrectbehaviors,suchasthrowingapplecoresinthepaperrecyclingbin.Offendingemployeeswerepolitelyencouragedtousethecompostbininstead.Employeeinvolvement.BellCanadadeliberatelyselectedthemorepopularemployeesineachdepartmenttoserveonaspecialtaskforcetodeveloptheZeroWasteprogram.Theseemployeesquicklybecamechampionsastheytookownershipoftheprogram.Theywerealsoconduitsofinformationandenthusiasmbacktothedepartmentswheretheyworked.Coercion.TheZeroWasteprogramcreatedbarrierstowastefulbehavior.Papertowelswerereplacedwithelectrichanddryersinthewashrooms.Styrofoamcupswerereplacedwithreusablemugsateachemployeesdesk.Metalgarbagecansateachworkstationwerereplacedwithplasticrecyclingbins.Employeeswereleftwithtinyreusablebagstocarrynonrecyclablestospeciallymarkedbinslocatedelsewhereinthebuilding.Alongwiththesestrategies,BellCanadabegantheprogramasapilotprojectinoneofitslargestbuildings.Thatpilotprojectreducedwasteby98percentfromnearly1,000poundsofwasteeachdaytolessthan25poundsofwasteeachday.Thecompanysubsequentlyappliedsimilarchangemanagementprinciplestoimproveenergyconservation.SomestudentsmightcorrectlysuggestthatthechangeprocessisessentiallyapplyingtheMARSmodeltoalterindividualbehavior.BellCanadamotivatedemployees,changedtheirroleperceptions,andimprovedtheirabilitythroughtrainingtoreducewaste.Perhapsmostimportant,BellCanadachangedtheenvironmentsothatsituationalfactorsmadeitmoredif1iculttoengageinwastefulbehavior.References:J.Mills,BellSetsExamplewithZeroWasteProgram,MontrealGazette,(February14,1993),p.C3;C.Mahood,BellZerosinonWaste,Globe&Mail,(May4,1992),pp.B1,B2;BellCanada,InsideGuide,(January1993),pp.4648;D.Hogarth,FirmsReapGreenHarvest,FinancialPost,(June1517,1991),p.18.Scenario 2: Go Forward AirlineAmajorairlinehadexperiencedadecadeofroughturbulence,includingtwoboutsofbankruptcyprotection,10managingdirectors,andmoralesolowthatemployeeshadrippedoffcompanylogosfromtheiruniformsoutofembarrassment.Servicewasterribleandtheairplanesrarelyarrivedorlefttheterminalontime.Thiswascostingtheairlinesigni1icantamountsofmoneyinpassengerlayovers.Managerswereparalyzedbyanxietyandmanyhadbeenwiththe1irmsolongthattheydidntknowhowtosetstrategicgoalsthatworked.One1ifthofall1lightswerelosingmoneyandthecompanyoverallwasnear1inancialcollapse(justthreemonthstodefaultingonpayrollobligations).ThenewlyhiredCEOandyoumustgetemployeestoquicklyimproveoperationalef1iciencyandcustomerservice.Whatactionswouldyoutaketobringaboutthesechangesintime?WhatActuallyHappened:Scenario#2describesthetroublesthatContinentalAirlinesexperiencedduringthe1980sandearly1990s.Theairlinewastheresultsofsevenmergedairlinesandhadbeenmanagedbadlyoverthepreviousdecade.ContinentalwentintobankruptcytwiceandwasalmostoutofcashwhenGordonBethuneandGregBrennemanwerehiredaschairmanandpresident,respectively.Thecompanywascontinuallylosingmoneyanditscontinuouscostcuttingonlymademattersworsebydestroyingcustomerserviceandemployeeloyalty.ContinentalexecutivesGordonBethuneandGregBrennemanappliedthefollowingchangemanagementstrategy:Communication.BethuneandBrennemanconstantlycommunicatedtheirGoForwardstrategicplantosavetheairline.GoForwardcoveredfourcornerstones:market,1inancial,product,andpeople.BethuneandBrennemanalsoworkedalongsidebaggagestaffandotheremployees,discussingtheirgoforwardplanwhileperformingthefrontlinework.Thecompanyalsopostednewsofthechangeprocessonbulletinboards,inweeklyvoicemailsfromBethune,andinmonthlyopenhousemeetingswithemployees.Training.TherewerenoapparenttrainingprogramstochangeContinentalairlines.BethuneandBrennemanarguedthatemployeesalreadyknewtheirjobs,butlackedtheopportunityandstrategytoputtheirskillsandknowledgetouse.However,Continentalintroducednewgoals(suchasontimedepartures)andusedDepartmentofTransportationmonthlymeasuresasfeedbackonhowwellthecompanyperformedontheseperformancemetrics.EmployeeInvolvement.BethuneandBrennemancollectedtheThouShaltnotmanualtheguidebookonwhatemployeesarenotallowedtodoandpubliclyburnedthemintheparkinglot.ThenBethuneandBrennemantoldemployeestomakecustomerservicehappen.



Coercion.Fiftyoneofthe60executiveswerereplacedwithinacoupleofmonths.BethuneandBrennemanstatedthatitisdif1icultforpeoplewhogetacompanyintoamesstogetthemout.Moreover,theexecutiveswhomadethesemistakesforsolongwouldnotbetrustedbyemployeestoleadthemintothefuture.Alongwiththesestrategies,Continentalintroducedrewardsthatalignedemployeeswiththecompanysnewstrategicgoals.Ratherthanreducecosts,Continentalwasgoingtoimproveservice.Thus,employeeswereeachpaid$65foreachmonththatContinentalplacedinthetop1iveairlinesforontimeservice,accordingtotheDepartmentofTransportation.Inchangemanagement,rewardsrelatetointroducingsystemsandstructurestorefreezethedesiredconditions.BethuneandBrennemanalsobroughtaboutrapidchangebyhiringseniorexecutives(replacingthose1ired)withcompetenciesandvaluesthatweremorealignedwiththeGoForwardplan.References:G.Brenneman,RightAwayandAllatOnce:HowWeSavedContinental,HarvardBusinessReview,SeptemberOctober1998,pp.16279;T.Kennedy,Con1idencereturnswithContinental'sstrongcomeback,MinneapolisStarTribune,February1,1998,p.1A.



SELF-ASSESSMENT 15-4: ARE YOU TOLERANT OF CHANGE?

NOTE: This self-assessment may be completed at the Online Learning Center.

PurposeThisexerciseisdesignedtohelpstudentsunderstandhowpeopledifferintheirtoleranceofchange.BackgroundSomepeoplearenaturallylesscomfortablethanotherpeoplewiththecomplexityanduncertaintyofchange.Thisselfassessmentprovidesanestimateofhowtolerantpeopleareofchange.Studentsareaskedtoreadeachofthestatementsandcircletheresponsethatbest1itstheirpersonalbelief.Theythenusethescoringkeytocalculatetheirresults.Thisselfassessmentiscompletedalonesothatstudentsratethemselveshonestlywithoutconcernsofsocialcomparison.However,classdiscussionwillfocusonthemeaningoftoleranceofchange,howthisscalemightbeappliedinorganizations,andthelimitationsofmeasuringtoleranceofchangeinworksettings.Feedback for the Tolerance of Change ScaleThismeasurementinstrumentisformallyknownasthetoleranceofambiguityscale.Althoughitwasdevelopedover40yearsago,theinstrumentisstillusedtodayinresearch.Peoplewithahightoleranceofambiguityarecomfortablewithuncertainty,suddenchange,andnewsituations.Thesearecharacteristicsofthehyperfastchangesoccurringinmanyorganizationstoday.ThefollowinggraphcomparesyourscoreonthisscaletoresultsforasampleofMBAstudents.Scoresonthisscalerangefrom16to112.Ahigherscoreindicatesahighertoleranceofchange.Score Interpretation

81 to 11263 to 8016 to 62

High tolerance of changeModerate tolerance of changeLow tolerance of change



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Organizational Behavior Chp 15