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Organization Change andInnovation
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The Nature of Organization ChangeThe Nature of Organization Change
(contd)(contd)
Planned Change
Change that is designed and
implemented in an orderly andtimely fashion in anticipation of
future events.
Reactive Change
Change that is a piecemealresponse to events and
circumstances as they develop.
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What Is Change?What Is Change?
Change
alterations in people, structure, or
technology
change is an organizational realitymanaging change is an integral part of
every managers job
complicates the jobs of managers
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Forces For ChangeForces For ChangeExternal Forces
marketplace - adapt to changing consumerdesires
governmental laws and regulations -frequent impetus for change
technology- source of change in almost allindustries
labor markets - HRM activities must change
to attract and retain skilled employees in theareas of greatest need
economic- uncertainties about interest rates,budget deficits, and currency exchange rates
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Forces For Change (cont.)Forces For Change (cont.)Internal Forces
originate from the operations of the organizationforces may include strategy, workforce, new equipment, or
employee attitudes
Manager as Change Agentchange agents - act as catalysts and assume responsibility
for change
manager may serve as change agent
may be more thoughtful, overcautious
outside consultant - used for systemwide changes produce more drastic changes than insiders
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Managing Change in OrganizationsManaging Change in Organizations
Steps in the Change Process(Kurt Lewins Model)
Unfreezing
Individuals must be shown why the change is necessary.
Implementing change The change itself is implemented
Refreezing
Involves reinforcing and
supporting the change sothat it becomes a integral
part of the system.
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Figure 7.1Figure 7.1
Steps in theSteps in theChange ProcessChange Process
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Understanding Resistance to ChangeUnderstanding Resistance to Change
People resist change because of:
Uncertainty about the extent and effects of change.
Threats to self-interests, power, and influence.
Different perceptions of change effects and outcomes.
Feelings of loss in disrupted social networks, power,
security, and familiarity with existing procedures.
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Understanding Resistance to ChangeUnderstanding Resistance to Change
(contd)(contd) Overcoming Resistance to Change
Encourage active participation in the change process.
Provide education and communication about the
change process.
Facilitate the change process by making only
necessary changes, announcing changes in advance,
and allowing time to adapt to change.
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Figure 7.2Figure 7.2
Understanding Resistance to ChangeUnderstanding Resistance to Change(contd)(contd)
Force-Field Analysis for Plant Closing
at General Motors
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Managerial Actions to Reduce Resistance to ChangeManagerial Actions to Reduce Resistance to Change
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Contemporary Issues In Managing ChangeContemporary Issues In Managing Change
Changing Organizational Culture
culture resistant to change because it is made up of
relatively stable and permanent characteristics
strong cultures are particularly resistant to change
Understanding the Situational Factors - makescultural change more likely
dramatic crisis occurs
leadership changes hands
organization is young and small
culture is weak
Prentice Hall, 2002 13-12
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ContemporaryContemporary Issues (cont.)Issues (cont.)
Changing Organizational Culture (cont.)
How Can Cultural Change Be
Accomplished?
requires a comprehensive and coordinatedstrategy
unfreeze the current culture
implement new ways of doing things
reinforce those new values
change, if it comes, is likely to be slow
protect against any return to old, familiar
practices and traditions
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The Road to Cultural ChangeThe Road to Cultural Change
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Contemporary Issues (cont.)Contemporary Issues (cont.)
Continuous Quality Improvement Programscontinuous, small, incremental changes
fix and improve current work activities
rely on participative decision making from the bottom
levelsProcess Reengineering
dramatic shift in the way an organization does its work
begins with the redesign of work
define customer needs
design work processes to best meet those needs
requires participation from managers and workers
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 716
Reengineering in OrganizationsReengineering in Organizations
Business Process Change (Reengineering)The radical redesign of all aspects of a business to
achieve major improvements in cost, service, or time.
Need for Business Process Change
Entropy is a normal process leading to system
decline.
Cause of entropy is that maintenance of the status
quo puts the organization out of synch with its
environment and the organization starts consuming itsown resources.
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 717
Reengineering in Organizations (contd)Reengineering in Organizations (contd)
Approaches to Business Process ChangeRecognizing the need for change and acting on it with
a sense of urgency.
Starting with a clean slate helps open up the process.
Using a blend of top-down and bottom-upinvolvement.
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 718
Figure 7.3Figure 7.3
T
he Reengineering ProcessT
he Reengineering Process
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Continuous Quality Improvement Versus ReengineeringContinuous Quality Improvement Versus Reengineering
Continuous Quality Improvement
Continuous, incremental change
Fixing and improving
Mostly as is
Works from bottom up in
organization
Reengineering
Radical change
Redesigning - starting over
Mostly what can be
Initiated by top management
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 720
Organization Development (OD)Organization Development (OD)
Organization DevelopmentA planned, organization-wide effort managed from the
top, intended to increase organizational effectiveness
and health through interventions in the organizations
processes using behavioralscience knowledge.
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 721
Organization Development (OD) (contd)Organization Development (OD) (contd)
OD AssumptionsEmployees desire to grow and develop.
Employees have a strong need
to be accepted by others
within the organization.Individuals will influence
the organization and the
organization will influence
the attitudes, perceptions,behaviors, and expectations
of individuals.
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Organizational Development TechniquesOrganizational Development Techniques
More
EffectiveInterpersonal
Work
Environment
ProcessConsultation
IntergroupDevelopment
SensitivityTraining
Survey
Feedback
Team
Building
Prentice Hall, 2002 13-22
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Creating a Culture for Change: LearningCreating a Culture for Change: Learning
Learning OrganizationAn organization that has developed the continuous
capacity to adapt and change
Learning Types
Single-Loop: errors are corrected using past routines Double-Loop: errors are corrected by modifying routines
Characteristics
Holds a shared vision
Discards old ways of thinking Views organization as system of relationships
Communicates openly
Works together to achieve shared vision
2009 Prentice-Hall Inc. All rights reserved. 19-23
E X H I B I T 19-6
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Creating a Learning OrganizationCreating a Learning Organization
Overcomes traditional organization problems:Fragmentation
Competition
Reactiveness
Manage Learning by:
Establishing a strategy
Redesigning the organizations structure Flatten structure and increase cross-functional activities
Reshaping the organizations culture
Reward risk-taking and intelligent mistakes
2009 Prentice-Hall Inc. All rights reserved. 19-24
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Work StressWork Stress
StressA dynamic condition in which an individual is
confronted with an opportunity, constraint, ordemand related to what he or she desires and forwhich the outcome is perceived to be both uncertainand important
Types of StressChallenge Stressors
Stress associated with workload, pressure to completetasks, and time urgency
Hindrance Stressors Stress that keeps you from reaching your goals, such asred tape
Cause greater harm than challenge stressors
2009 Prentice-Hall Inc. All rights reserved. 19-25
E X H I B I T 19-7
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DemandsDemands--Resources Model of StressResources Model of Stress
DemandsResponsibilities, pressures, obligations, and
uncertainties in the workplace
Resources
Things within an individuals control that can be used
to resolve demands
Adequate resources help reduce the stressful
nature of demands
2009 Prentice-Hall Inc. All rights reserved. 19-26
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A Model of StressA Model of Stress
2009 Prentice-Hall Inc. All rights reserved. 19-27
E X H I B I T 19-8
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Potential Sources of StressPotential Sources of Stress
Environmental FactorsEconomic uncertainties of the business cycle
Political uncertainties of political systems
Technological uncertainties of technical innovations
Organizational Factors
Task demands related to the job
Role demands of functioning in an organization
Interpersonal demands created by other employees Personal Factors
Family and personal relationships
Economic problems from exceeding earning capacity
Personality problems arising from basic disposition2009 Prentice-Hall Inc. All rights reserved. 19-28
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Consequences of StressConsequences of Stress
Stressors are additive: high levels of stress canlead to the following symptoms
Physiological
Blood pressure, headaches, stroke
Psychological Dissatisfaction, tension, anxiety, irritability, boredom, and
procrastination
Greatest when roles are unclear in the presence of conflicting
demands
Behavioral
Changes in job behaviors, increased smoking or drinking,
different eating habits, rapid speech, fidgeting, sleep disorders
2009 Prentice-Hall Inc. All rights reserved. 19-29
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Not All Stress Is BadNot All Stress Is Bad
Some level of stress can increase productivity Too little or too much stress will reduce
performance
This model is not empirically supported
2009 Prentice-Hall Inc. All rights reserved. 19-30
E X H I B I T 19-9
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Managing StressManaging Stress
Individual Approaches Implementing time management
Increasing physical exercise
Relaxation training
Expanding social support network
Organizational Approaches Improved personnel selection and job placement
Training
Use of realistic goal setting
Redesigning of jobs
Increased employee involvement Improved organizational communication
Offering employee sabbaticals
Establishment of corporate wellness programs
2009 Prentice-Hall Inc. All rights reserved. 19-31
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Global ImplicationsGlobal Implications
Organizational ChangeCulture varies peoples belief in the possibility of
change
Time orientation will affect implementation of change
Reliance on tradition can increase resistance tochange
Power distance can modify implementation methods
Idea champions act differently in different cultures
Stress
Job conditions that cause stress vary across cultures
Stress itself is bad for everyone
Havin friends and famil can reduce stress 19-322009 Prentice-Hall Inc. All rights reserved.
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Summary and Managerial ImplicationsSummary and Managerial Implications
Organizations and the individuals within themmust undergo dynamic change
Managers are change agents and modifiers of
organizational culture
Stress can be good or bad for employees
Despite possible improvements in job
performance caused by stress, such
improvements come at the cost of increased job
dissatisfaction
19-332009 Prentice-Hall Inc. All rights reserved.
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 734
Figure 7.4Figure 7.4
Organizational InnovationOrganizational Innovation
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 735
Forms of InnovationForms of Innovation
Radical InnovationA new product, service, or technology developed by
an organization that completely replaces the existing
one.
Radical innovation fundamentally changes the natureof competition in an industry.
Incremental Innovation
A new product, service, or technology that modifies an
existing one.Incremental innovation does not significantly affect
competition in an industry.
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 736
Forms of Organizational Innovation (contd)Forms of Organizational Innovation (contd)
Technical Versus Managerial InnovationsTechnical innovation
A change in the physical appearance or performance of a
product or service, or the physical processes through which a
product or service is manufactured.
Managerial innovation
A change in the management
process by which products
and services are conceived,
built, and delivered to
customers.
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Copyright 2005 by Houghton Mifflin Company. All rights reserved. 737
Forms of Organizational Innovation (contd)Forms of Organizational Innovation (contd)
Product Versus Process InnovationsProduct innovation
A change in the physical characteristics or performance of
existing products or service or the creation of brand-new
products or services.
Process innovation
A change in the way a product
or service is manufactured,
created, or distributed.
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Copyright 2005 by Houghton Mifflin Company All rights reserved 738
InnovationInnovation
Reasons forFailing to InnovateLack of resources
Failure to recognize opportunities
Resistance to change
Promoting Innovations in Organizations
Using the reward system
Having a supportive organizational culture
Intrapreneurship in larger organizations
Inventors
Production champions
Sponsors
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