Organization Change

Processes for Planned Organization Change

• Process Model– Planned organization change requires a systematic

process of movement from one condition to another• Unfreezing

– Process by which people become aware of the need for change

• Change– Movement from the old way of doing things to a new way

• Refreezing– Process of making new behaviors relatively permanent and

resistant to further change

Process of Organizational Change

Processes for Planned Organization Change

• The Continuous Change Process Model

– Incorporates the forces for change, a problem-solving process, a change agent, and transition management

– Takes a top management perspective

• Perceives forces and trends that indicate need for change

• Determines alternatives for change

• Selects the appropriate alternative

Continuous Change Process Model of Organization Change

Processes for Planned Organization Change

• The Continuous Change Process Model – Change agent: a person responsible for managing a change

effort• Assists management with problem recognition/definition• Can be involved in generating/evaluating potential action plans• Can be from inside or outside of the organization• Implements the change• Measures, evaluates, controls the desired results

– Transition management• Process of systematically planning, organizing, and

implementing change

OD: Group and Individual Change

To set team goals and priorities

To set team goals and priorities

To examine relationships among those

doing the work

To examine relationships among those

doing the work

To analyze and allocate the way work is performed

To analyze and allocate the way work is performed

To examine how a group is working

To examine how a group is working

Team Building GoalsTeam Building Goals

Resistance to Change

• The Resistance to Change Paradox

– Organizations invite change when change offers competitive advantage

– Organizations resist change when change threatens the organization’s structure and control systems

– Organizations must balance stability (permanence) with the need to react to external shifts (change)

– Resistance can warn of the need to reexamine the need for change

Resistance to Change: Sources of Resistance to Change

• Organizational Sources

– Overdetermination

– Narrow focus of change

– Group inertia

– Threatened expertise

– Threatened power

– Resource allocation changes

• Individual Sources

– Habit

– Security

– Economic factors

– Fear of the unknown

– Lack of awareness

– Social factors

Managing Successful Organization

Change and Development• Keys to Managing Change in Organizations

– Consider international issues

– Take a holistic view

– Start small

– Secure top management support

– Encourage participation by those affected by the change

– Foster open communication

– Reward those who contribute to change

Different Types of Planned Change

• Magnitude of Change– Incremental– Quantum

• Degree of Organization– Over organized– Underorganized

• Domestic vs. International Settings

Diagnosing Organizational Systems

• The key to effective diagnosis is… – Know what to look for at each

organizational level

– Recognize how the levels affect each other

Organization-Level Diagnostic Model

Inputs

Technology

Strategy Structure

HR Measurement Systems Systems

GeneralEnvironment

IndustryStructure

Design ComponentsCulture

Organization

Effectiveness

Outputs

Organization Environments and Inputs

• Environmental Types– General Environment– Task Environment and Industry Structure– Rate of Change and Complexity– Enacted Environment

• Environmental Dimensions– Information Uncertainty– Resource Dependency

Organization Design Components

• Strategy– the way an organization uses its resources

(human, economic, or technical) to gain and sustain a competitive advantage

• Technology– the way an organization converts inputs

into products and services

• Structure– how attention and resources are focused

on task accomplishment

Organization Design Components

• Human Resource Systems– the mechanisms for selecting, developing,

appraising, and rewarding organization members

• Measurement Systems– methods of gathering, assessing, and

disseminating information on the activities of groups and individuals in organizations

Organization Design Components

• Organization Culture– The basic assumptions, values, and norms

shared by organization members– Represents both an “outcome” of organization

design and a “foundation” or “constraint” to change

Outputs

• Organization Performance– e.g., profits, profitability, stock price

• Productivity– e.g., cost/employee, cost/unit, error rates,

quality

• Stakeholder Satisfaction– e.g., market share, employee satisfaction,

regulation compliance

Goal Clarity

Task GroupStructure Functioning

Group PerformanceComposition Norms

Group-Level Diagnostic Model

Inputs Design Components Outputs

OrganizationDesign

GroupEffectiveness

Group-Level Design Components

• Goal Clarity– extent to which group understands its objectives

• Task Structure– the way the group’s work is designed

• Team Functioning– the quality of group dynamics among members

• Group Composition– the characteristics of group members

• Performance Norms– the unwritten rules that govern behavior

Group-Level Outputs

• Product or Service Quality

• Productivity– e.g., cost/member, number of decisions

• Team Cohesiveness– e.g., commitment to group and

organization

• Work Satisfaction

Possible Effects of FeedbackFeedback occurs

What is the direction of the feedback?

Is the energy createdby the feedback?

NoChange

Do structures andprocesses turn energy

into action?

Change

Failure,frustration,no changeAnxiety,

resistance,no change

Energy to usedata to identify and

solve problemsEnergyto deny orfight data

NO

YES

NO

YES

The Design of Effective Interventions

• Contingencies Related to the Change Situation

• Readiness for Change• Capability to Change• Cultural Context• Capabilities of the Change Agent

The Design of Effective Interventions

• Contingencies Related to the Target of Change

• Strategic Issues• Technology and structure issues• Human resources issues• Human process issues

Intervention Overview

• Human Process Interventions

• Technostructural Interventions

• Human Resources Management Interventions

• Strategic Interventions

Human Process Interventions

• Process Consultation and Team Building• Third-party Interventions (Conflict

Resolution)• Organization Confrontation Meeting• Intergroup Relationships• Large-group Interventions

Technostructural Interventions

• Structural Design

• Downsizing

• Reengineering

• Parallel Structures

• High Involvement Organizations

• Total Quality Management

• Work Design

Human Resources Management Interventions

• Goal Setting

• Performance Appraisal

• Reward Systems

• Coaching and Mentoring

• Career Planning and Development

• Management and Leadership

• Managing Work Force Diversity

• Employee Wellness Programs

Strategic Interventions

• Transformational Change– Integrated Strategic Change

– Organization Design

– Culture Change

• Continuous Change– Mergers and Acquisitions

– Alliances and Networks

Strategic Interventions

• Transorganizational Change– Self-designing Organizations

– Organization Learning and Knowledge Management

– Built to Change Organizations

Motivating Change

Creating Vision

DevelopingPolitical Support

Managing the Transition

Sustaining Momentum

EffectiveChange

Management

Change Management Activities

Motivating Change

• Creating Readiness for Change– Sensitize the organization to pressures for change

– Identify gaps between actual and desired states

– Convey credible positive expectations for change

• Overcoming Resistance to Change– Provide empathy and support

– Communicate

– Involve members in planning and decision making

Creating a Vision

• Discover and Describe the Organization’s Core Ideology– What are the core values that inform

members what is important in the organization?

– What is the organization’s core purpose or reason for being?

• Construct the Envisioned Future– What are the bold and valued outcomes?– What is the desired future state?

Developing Political Support

• Assess Change Agent Power

• Identify Key Stakeholders

• Influence Stakeholders

Change as a Transition State

CurrentState

TransitionState

DesiredFuture State

Implementation and Evaluation Feedback

Diagnosis

Design andImplementationof Interventions

AlternativeInterventions

Implementation ofIntervention

ClarifyIntention

Plan forNext Steps

ImplementationFeedback

Measures ofthe Intervention and ImmediateEffects

EvaluationFeedback

Measure ofLong-term

Effects

Institutionalization Framework

OrganizationCharacteristics

InterventionCharacteristics

InstitutionalizationProcesses

Indicators ofInstitutionalization

Organization Characteristics

• Congruence– Extent to which an intervention supports or

aligns with the current environment, strategic orientation, or other changes taking place

• Stability of Environment and Technology

• Unionization

Intervention Characteristics

• Goal Specificity

• Programmability

• Level of Change Target

• Internal Support

• Sponsor

Institutionalization Processes

• Socialization

• Commitment

• Reward Allocation

• Diffusion

• Sensing and Calibration

Indicators of Institutionalization

• Knowledge

• Performance

• Preferences

• Normative Consensus

• Value Consensus

Contingencies Influencing Structural Design

Environment

OrganizationSize

TechnologyOrganization

Goals

WorldwideOperationsStructural

Design

The Downsizing Process

• Clarify the organization’s strategy

• Assess downsizing options and make relevant choices

• Implement the changes

• Address the needs of survivors and those who leave

• Follow through with growth plans

Downsizing Tactics

Tactic Characteristics Examples

Workforce Reduction

Reduces headcount Short-term focus Fosters transition

Attrition Retirement/buyout Layoffs

Organization

Redesign

Changes organization

Medium-term focus Fosters transition &

transformation

Eliminate functions, layers, products

Merge units Redesign tasks

Systemic

Changes culture Long-term focus Fosters

transformation

Change responsibilities

Foster continuous improvement

Downsizing is normal

The Reengineering Process

• Prepare the organization

• Specify the organization’s strategy and objectives

• Fundamentally rethink the way work gets done– Identify and analyze core business processes– Define performance objectives– Design new processes

• Restructure the organization around the new business processes.

Characteristics of Reengineered Organizations

Work units change from functional departments to process teams

Jobs change from simple tasks to multidimensional work

People’s roles change from controlled to empowered

The focus of performance measures and compensation shifts from activities to results.

Organization structures change from hierarchical to flat

Managers change from supervisors to coaches; executives change from scorekeepers to leaders

Characteristics of Transformational Change

• Triggered by Environmental and Internal Disruptions

• Aimed at Competitive Advantage• Systemic and Revolutionary Change• Demands a New Organizing Paradigm• Driven by Senior Executives and Line

Management• Involves Significant Learning

Integrated Strategic Change(ISC)

Integrated Strategic Change ………is a deliberate coordinated process thatleads to gradually or radically systemic realignments between the environment

and a firm’s strategic orientation resultingin improvement in performance and

effectiveness.

The Integrated Strategic Change Process

StrategyS1

OrganizationO1

OrganizationO2

StrategyS2Strategic

ChangePlan

Strategic Analysis Strategic Choice

Implementation

ISC Application Stages• Strategic Analysis

– Assess the readiness for change and top management’s ability to carry out change

– Diagnose the Current Strategic Orientation

• Strategic Choice– Top management determines the content of the

strategic change

• Designing the Strategic Change Plan– Development of a comprehensive agenda to

achieve the change

• Implementing the Strategic Change Plan

Organizational Design

Conceptual Framework• Strategy• Structure• Work Design• Human Resources Practices• Management and Information Systems

Key Point• Fit, Congruence, Alignment among

Organizational Elements

Organization Design Model

Organization Strategy

Strategic Fit

Structure

Work Design

Human Resource Practices

Design Fit

Organization Design

Management and Information Systems

Organization Designs

Organization Design Application Stages

• Clarifying the Design Focus

– Create the overall framework, begins with examining strategy and objectives and determining organization capabilities needed

• Designing the Organization

– Results in an overall design for the organization, detailed designs for the components, and preliminary plans for how to implement

• Implementing the Design

– Puts the new structures, practices and systems into place, draws heavily leading and managing change methods

The Concept of Organization Culture

BasicAssumptions

Values

NormsArtifacts

Diagnosing Organization Culture

• Behavioral Approach– Pattern of behaviors (artifacts) most related

to performance

• Competing Values Approach– Pattern of values emphasis characterizing

the organization

• Deep Assumptions Approach– Pattern of unexamined assumptions that

solve internal integration and external adaptation problems well enough to be taught to others

Competing Values Approach

Flexibility & Discretion

Stability & Control

External Focus & D

ifferentiationInte

rnal

Foc

us &

Inte

grati

on

MarketHierarchy

Clan Adhocracy

Culture Change Application Stages

• Establish a clear strategic vision

• Get top-management commitment

• Model culture change at the highest level

• Modify the organization to support change

• Select and socialize newcomers; downsize deviants

• Develop ethical and legal sensitivity

Self-Designing Organizations

• Systemic change process altering most features of the organization

• Process is ongoing, never finished—continuous improvement and change

• Learning as You Go—on-site innovation• Need support of multiple stakeholders• All levels of the organization adopt new

strategies and change behaviors

Organization Learning & Knowledge Management

• Organization Learning interventions emphasize the structures and social processes that enable employees and teams to learn and share knowledge

• Knowledge Learning focuses on the tools and techniques that enable organizations to collect, organize, and translate information into useful knowledge

Organization Learning: An Integrative Framework

OrganizationCharacteristics

StructureInformation SystemsHR PracticesCultureLeadership

OrganizationLearning Processes

DiscoveryInventionProductionGeneralization

OrganizationKnowledge

TacitExplicit

CompetitiveStrategy

OrganizationPerformance

Knowledge ManagementOrganization Learning

Characteristics of a Learning Organization

• Structures emphasize teamwork, information sharing, empowerment

• Information systems facilitate rapid acquisition and sharing of complex information to manage knowledge for competitive advantage

• Human resources reinforce new skills and knowledge

• Organization culture encourages innovation • Leaders model openness and freedom to try new

things while communicating a compelling vision

Organization Learning Processes

• Single loop learning– Most common form of learning– Aimed at adapting and improving the status

quo

• Double loop learning– Generative learning – Questions and changes existing assumptions

and conditions• Deuterolearning

– Learning how to learn– Learning how to improve single and double

loop learning

Knowledge and Performance

• Organization knowledge must be relevant and applied effectively to the competitive strategy

• Link organization learning processes to organization performance

• Growing emphasis on the value of intellectual assets and services

Knowledge Management Interventions

• Generating Knowledge– Identify knowledge for competitive strategy– Develop ways to acquire or create that

knowledge

• Organizing Knowledge– Put knowledge into a usable form – Codification and Personalization

• Distributing Knowledge– Making knowledge easy to access, use &

reuse

Built-To-Change Organizations

• Organizations are designed with the ability to change constantly to create the best sustainable source of competitive advantage.

• Organizations operate in complex and rapidly changing environments

Built to Change Application Stages

• Create a Change-Friendly Identity

• Pursue Proximity

• Build an Orchestration Capability

• Establish Strategic Adjustment a Normal Condition

• Seek Virtuous Spirals

Application Stages for Transorganizational Development

Identification Convention Organization Evaluation

Who shouldbelong to the transorganizational System (TS)?• Relevant skills, knowledge, and resources• Key stakeholders

Should a TSbe created?• Costs and benefits• Task perceptions

How to organize for task performance?• Communication• Leadership• Policies and procedures

How is the TSperforming?• Performance outcomes• Quality of interaction• Member satisfaction

Mergers and Acquisitions

• Merger - the integration of two previously independent organizations into a completely new organization

• Acquisition - the purchase of one organization by another for integration into the acquiring organization.

• Distinct from transorganizational systems, such as alliances and networks, because at least one of the organizations ceases to exist.

Merger and Acquisition Rationale

• Diversification

• Vertical integration

• Gaining access to global markets, technology, or other resources

• Achieving operational efficiencies, improved innovation, or resource sharing

Merger and Acquisition Application Stages

• Pre-combination Phase– The organization must identify a candidate

organization, work with it to gather information about each other, and plan the implementation and integration activities

• Legal Combination Phase– The two organizations settle on the terms of the

deal, gain approval from regulatory agencies and shareholders, and file appropriate legal documents

• Operational Combination Phase– Implementing the operational, technical and

cultural integration activities

Strategic Alliances

• When two organizations formally agree to pursue a set of goals

• There is sharing of resources, intellectual property, people, capital, technology, capabilities or physical assets

• Common alliances are licensing agreements, franchises, long-term contracts, and joint ventures

Alliance InterventionApplication Stages

• Alliance Strategy Formulation– Clarify the business strategy and why an alliance is

needed

• Partner Selection– Leverage similarities and differences to create

competitive advantage

• Alliance Structuring and Start-up– Build and leverage trust in the relationship

• Alliance Operation and Adjustment

Network Interventions

• Involves three or more companies joined together for a common purpose

• Each organization in the network has goals related to the network as well as those focused on self-interest

• Characterized by two types of change: creating the initial network (transorganizational development) and managing change within an established network

Cultural Context for Change

• Context Orientation

• Power Distance

• Uncertainty Avoidance

• Achievement Orientation

• Individualism

Context

• The extent to which meaning in communication is carried in the words

• Organizations in high context cultures tend to value ceremony and ritual, the structure is less formal, there are fewer written policies, and people are often late for appointments

Power Distance

• Extent to which members of a society accept that status and power are distributed unequally in an organization

• Organizations in these cultures tend to be autocratic, possess clear status differences, and have little employee participation

Uncertainty Avoidance

• The extent to which members of a society tolerate the unfamiliar and unpredictable

• Organizations in these cultures tend to value experts, prefer clear roles, avoid conflict, and resist change

Achievement Orientation

• The extent to which people in a society value assertiveness and the acquisition of material goods

• Organizations in these cultures tend to associate achievement with wealth and recognition, value decisiveness, and gender roles are clearly differentiated.

Individualism

• The extent to which people in a society believe they should be responsible for themselves and their immediate family

• Organizations in these cultures tend to encourage personal initiative, value time and autonomy, accept competition, and autonomy is highly valued

International Strategic Orientation

• Characteristics of the International Design– Sell existing products/services to nondomestic

markets– Goals of increased foreign revenues

• Implementing the International Orientation– OD facilitates extending the existing strategy

into the new market– Cross-cultural training and strategic planning

The Global Strategic Orientation

• Characteristics of the Global Design

– Centralized with a global product structure

– Goals of efficiency through volume

• Implementing the Global Orientation

– OD supports career planning, role clarification, employee involvement, conflict management and senior management team building to help achieve improved operational efficiency

– OD helps the organization transition to global integration from local responsiveness

The Multinational Strategic Orientation

• Characteristics of the Multinational Design– Operate a decentralized organization– Goals of local responsiveness through

specialization• Implementing the Multinational Orientation

– OD helps with intergroup relations, local management selection and team building

– OD facilitates management development, reward systems, and strategic alliances

Transnational Strategic Orientation

• Characteristics of the Transnational Design– Tailored products– Goals of learning and responsiveness through

integrations

• Implementing the Transnational Orientation– Extensive selection and rotation– Acquire cultural knowledge and develop intergroup

relations– Build corporate vision

Global Social Change Organizations

Their primary task is a commitment to serve as an agent of change in the creation of environmentally and socially sustainable world futures

They have discovered and mobilized innovative social-organizational architectures

They hold values of empowerment in the accomplishment of their global change mission

They are globally-locally linked in structure, membership, or partnership and thereby exist as entities beyond the nation-state

They are multi-organizational and often cross-sectoral

Application Stages of Global Social Change Organizations

• Build the local organization– Using values to create the vision– Recognizing that internal conflict is often a function of external

conditions– Understanding the problems of success

• Create horizontal linkages– Build a network of local organizations with similar views and

objectives

• Develop vertical linkages– Create channels of communication and influence upward to

governmental and policy-level, decision-making processes