BOOK CODE MB – 0022SMITA CHOUDHARY FACULTY HR/OB

Unit 14 Organizational Change

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Contents

IntroductionForces of changeResistance to changeResponses to changeCharacteristics of organizational changeTheories of changeStrategies for change managementToolkit for managing change

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Introduction

Organizational change may be defined as the adoption of a new idea or a behavior by an organization (Daft, 1995).

It means changing an existing organization to increase its effectiveness in achieving its objectives.

Successful organizational change must focus on making organizations respond to changing customer preferences, norms, change in economy and technological innovations.

Only organizations that are able to change with changing times can sustain and survive.

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Learning Objectives

After studying this unit, you will be able to understand

Forces of changesResistance to changeTheories of change

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Forces of Changes

Forces for change are of two typesInternal forcesExternal forces

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Internal Forces

Change in the top management: Change in top management and change in ideas to run the organization leads to change in system, structure and processes of the organization.

Change in size of the organization: It leads to change in the internal structure and complexity of the organization.

Performance gaps: When there is a gap between targets and results, organizations have to change to reduce the gap.

Employee needs and values: Organizations change their policies with change in needs and values of its employees.

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External Forces

Technology: Technological changes are responsible for changing the nature of the job performed at all levels in an organization.

Business scenario: Business scenario is fast changing with increasing competition and globalization. Hence, the needs and demands of customers, suppliers and other stakeholders is also increasing. Organizations have to change their way of working to fulfill the demands of the stakeholders.

Environmental factors: Economic, political and demographic factors play an important role in working out organizational policies and strategies.

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Resistance to Change

Resistance to change may be of two types:Individual resistanceOrganizational resistance

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Individual Resistance

The results of a change are unknown and thus change leads to insecurity among employees.

Employees do not know whether the change will be for their betterment or not. For example, because of technological change, employees may feel that their skills will become outdated, they will be paid less wages or they may lose the job.

Change may lead to new work relationships. Employees may have to work with other people which is not liked by most of the employees.

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Organizational Resistance

Change may bring some threat to the organization power. Therefore, people try to resist change.

The structural inactivity in the bureaucratic organization also hampers change.

Limitation of resources play an important role in resistance to change.

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Responses to Change

The responses to change depend on the employee’s perception of the change.

Different people have different attitudes and hence have different perception towards change.

Therefore, management must create a positive attitude among employees regarding change

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Reactions to change

The three major reactions to change areAnger: People who believe that change has a

negative impact on their personal situation blame management. This anger, if not properly handled, may cause some people to interrupt the change process by showing non-cooperation and resistance.

Denial: Many people accept change but many people enter a denial phase. In this phase, a person makes excuses on why he or she should not be held responsible for anything wrong that happens due to change.

Acceptance: After the person accepts the change, he or she begins to change his or her role in the new situation.

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Overcoming Resistance to Change

• Some approaches to overcome resistance to change are:

• Education and communication: Proper communication and education helps employee to understand the importance of change and why it is necessary.

• Employee participation and involvement: People should be involved in the change process. This make them more committed towards the change.

• Facilitation and support: Change agents can provide support to reduce the resistance to change. Counseling sessions can be organized to reduce stress, fear and anxiety towards change.

• Negotiation and agreement: Organizations that may face resistance from the union representatives, should directly involve them in the change process. They should be educated about the need and value of change.

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Characteristics of Organizational Change

• Change is intentional, systematic and well planned.• Speed of change depends on the level of importance.• Status quo is challenged.• Reaction to change can be both negative and positive.• Focuses on long term change.

The forces for change are• Organization-environment relationship (merger,

alliances, etc.)– Organizations try to change their relationship with changing social and political environment.

• Organizational life cycle – Change in culture and structure of organization from birth to growth and to maturity.

• Political nature of organization – Change in internal control structures to handle change in political scenario

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Theories of Change

Force field analysis theory• Lewin (1951) proposed a three step model for change

process:• Unfreezing: Unfreezing means eliminating the factors

that maintain the status quo in the organization. It creates a need for change.

• Moving/changing: This stage cause a shift in the behavior of organizations by modifying system, process, technology and people.

• Refreezing – At this stage, steps are taken so that the change is sustained and becomes a part of the day-to-day routine of the organization.

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Action research model

This is also a model for planned change.According to this model, planned change is a

cyclical process in which initial research about organization provides data for future actions to make the required changes.

It highlights the importance of collection and diagnosis before planning and implementation.

This model describes change in eight steps:

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1. Problem identification: The first step is to identify one or more problems in the organization and why there should be changes in organizational practices.

2. Consultation with the expert: In this step the organization takes help from the experts in the field to get ideas for improving the situation.

3. Data gathering and preliminary diagnosis: At this stage data is collected with the help of members of the organization. Data is collected using four mode, namely, interview, observation, questionnaires and organizational performance data.

4. Feedback to key client or group: Action research is a joint activity. The diagnostic data is fed back to client.

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5. Joint diagnosis of the problem: At this stage, clients and experts jointly decide whether they want to work on the identified problems.

6. Joint action planning: The consultant and the client jointly decide on the further action. At this stage, specific actions are taken depending on the culture, technology and environment of the organization.

7. Action: At this stage, actual change takes place. It may be in the form of new methods and procedures, reorganizing structures and work designs and new behaviors.

8. Data gathering after action: Action research is a cyclic process, data is also gathered at the end of action.

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Dimensions of planned changeThe models of change describe how to implement

change but the steps of planned change can be implemented in many ways depending on the client’s needs and goals, the change agent’s skills and values, and the organizational situation.

---- Cummings and Worley (1997)Magnitude of changePlanned changes can be

Incremental changes, i.e., minor changes in the operations of the organization

Quantum changes, i.e., major changes in the structure, culture, reward system, information processes, etc.

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Degree of organization

In mechanistic and bureaucratic organizations, the organizational structure, job design, leadership styles, policies are very rigid and inflexible. In this type of organization, communication is restricted, conflicts are avoided and employees are uninterested.

In flexible organizations, the task definition is flexible, communication is uneven, and job responsibilities are not clear.

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Strategies for Change Management

According to Bennis, Benne and Chin (1969), there are four strategies to manage change:

Empirical-rational: According to this approach, people are logical and wise and will take care of their self-interest when a change is shown to them. Change is based on communication of information and the offering of incentives.

Normative-Re-educative: According to this approach, people are social beings and follow cultural norms and values. Change is based on redefining present norms and values, and make people commit to the new norms and values.

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Power-coercive: According to this approach, people generally follow what they are told. Change is based on use of authority.

Environmental-adaptive: According to this approach, people oppose loss and interference, but they adjust quickly to the new situation. Change is based on building a new organization and slowly transferring people from the old organization to the new organization.

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Toolkit for Managing Change

According to Nicklos (2004), some factors to select an effective change strategy and some tips to manage change are:

Degree of resistance: Strong resistance requires a blend of power coercive and environmental adaptive strategies. Weak resistance requires a blend of empirical-rational and normative-re-educative strategies.

Target population: Large population requires a mix of all four strategies.

The stakes: High stakes require a mix of all four strategies. This is so because when stakes are high, we can leave nothing on chance or luck.

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The time frame: Short time frame requires power coercive strategy. Long time frames require a mix of empirical-rational, normative-re-educative and environmental-adaptive strategy.

Expertise: Having proper knowledge of making changes requires a mix of strategies. Not having knowledge of making changes requires power-coercive strategy.

Dependency: If the organization is dependent on its people, management cannot command or demand very much. If people are dependent on the organization, they cannot oppose much. If both are dependent on each other, it will require some amount of negotiation.

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