Organizational Change

McGraw-Hill/IrwinMcShane/Von Glinow OB 5e Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

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Umpqua Umpqua Bank’sBank’s

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

OrganizationalChange

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Lewin’s Force Field Analysis Model

Developed by Kurt Lewin

Driving forces• Push organizations toward change• External forces or leader’s vision

Restraining forces• Resistance to change -- employee

behaviors that block the change process

DrivingForces

RestrainingForces

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DesiredConditions

CurrentConditions

BeforeChange

AfterChange

Force Field Analysis Model

DuringChange

DrivingForces

RestrainingForces Driving

Forces

RestrainingForces

DrivingForces

RestrainingForces

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Not Hoppy About Change

Mina Ishiwatari(front) wanted to

improve Hoppy drink’s brand image,

but most staff didn’t 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 Hoppy’s

popularity with limited support or

budget. Most employees who

opposed Ishiwatari’s changes have

since left the company.

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Restraining Forces (Resistance to Change)Many forms of resistance

• e.g., complaints, absenteeism, passive noncompliance

View resistance as a resource1. Symptoms of deeper problems in

the change process

2. A form of constructive conflict -- may improve decisions in the change process

3. A form of voice – helps procedural justice

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Why People Resist Change

1. Direct costs• Losing something of value due to change

2. Saving face• Accepting change acknowledges own imperfection,

past wrongdoing

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

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Why People Resist Change(con’t)

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• Career, reward, power, communication systems

6. Incongruent team dynamics• Norms contrary to desired change

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Creating an Urgency for Change

Inform employees about driving forces

Most difficult when organization is doing well

Customer-driven change• Adverse consequences for firm• Human element energizes employees

Sometimes need to create urgency to change without external drivers• Requires persuasive influence• Use positive vision rather than threats

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Minimizing Resistance to Change

Highest priority and first strategy for change

Improves urgency to change Reduces uncertainty (fear of

unknown) Problems -- time consuming and

costly

Communication

Learning

Involvement

Stress Mgt

Coercion

Negotiation

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Minimizing Resistance to Change

Provides new knowledge/skills Includes coaching and other forms

of learning Helps break old routines and

adopt new roles Problems -- potentially time

consuming and costly

Communication

Involvement

Stress Mgt

Coercion

Negotiation

Learning

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Minimizing Resistance to Change

Employees participate in change process

Helps saving face and reducing fear of unknown

Includes task forces, future search events

Problems -- time-consuming, potential conflict

Learning

Involvement

Stress Mgt

Coercion

Negotiation

Involvement

Communication

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Minimizing Resistance to Change

When communication, learning, and involvement are not enough to minimize stress

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

Problems -- time-consuming, expensive, doesn’t help everyone

Learning

Involvement

Coercion

Negotiation

Stress Mgt

Communication

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Minimizing Resistance to Change

Influence by exchange -- reduces direct costs

May be necessary when people clearly lose something and won’t otherwise support change

Problems• Expensive• Gains compliance, not commitment

Learning

Involvement

Stress Mgt

Coercion

Communication

Negotiation

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Minimizing Resistance to Change

When all else fails Assertive influence Radical form of “unlearning” Problems

• Reduces trust• May create more subtle resistance• Encourage politics to protect jobCoercion

Learning

Involvement

Communication

Stress Mgt

Negotiation

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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

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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

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Change Agents

Change agent -- anyone who possesses enough knowledge and power to guide and facilitate the change effort

Engage in transformational leadership• Develop the change vision• Communicate the vision• Act consistently with the vision• Build commitment to the vision

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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

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Diffusion of Change

Begin change as pilot projects

Effective diffusion considers MARS model• Motivation – pilot project is successful, reward

diffusion of pilot project

• Ability – Train employees to adopt pilot project

• Role perceptions –Translate pilot project to new situations

• Situational factors – Provide resources to implement pilot project elsewhere

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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

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Formclient-

consultantrelations

Disengageconsultant’s

services

Action Research Process

Diagnoseneed forchange

Introduceintervention

Evaluate/stabilizechange

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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 BBC’s chief executive at the time.

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Appreciative Inquiry Approach

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

Application of positive organizational behavior

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Four-D Model of Appreciative Inquiry

DesigningDesigningDesigningDesigning

Engaging in dialogue about “what should be”

Engaging in dialogue about “what should be”

DreamingDreamingDreamingDreaming

Forming ideas about “what might be”

Forming ideas about “what might be”

DiscoveryDiscoveryDiscoveryDiscovery

Discovering the best of “what is

Discovering the best of “what is

DeliveringDeliveringDeliveringDelivering

Developing objectives about “what will be”

Developing objectives about “what will be”

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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

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Parallel Learning Structure Approach Highly participative social structures

Members representative across the formal hierarchy

Sufficiently free from firm’s constraints

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

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OrganizationParallelStructure

Parallel Learning Structures

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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

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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)

Source: Library of Congress

Discussion ofActivity 15.3Strategic Change Incidents

McGraw-Hill/IrwinMcShane/Von Glinow OB 5e

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

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Scenario #1: “Greener Telco”

Scenario #1 refers to Bell Canada’s Zero Waste program, which successfully changed employee behaviorby altering the causes of thosebehaviors.

Pilot project in Toronto – 12 floor building of 1000 staff reduced waste from 1800 lb per day to just 75 lb per day within 3 years.

Courtesy of Bell Canada

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Bell Canada’s Change StrategyRelied on the MARS model to alter behavior:

Motivation -- employee involvement, respected steering committee (photo)

Ability -- taught paper reduction, email, food disposal

Role perceptions – learned importance of reducing waste

Situation -- created barriers to wasteful behavior, eg. removed garbage bins

Courtesy of Bell Canada

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Scenario #2: “Go Forward Airline”

Scenario #2 refers to

Continental Airline’s “Go

Forward” change strategy,

which catapulted the

company “from worst to first”

within a couple of years.

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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

Organizational Change

McGraw-Hill/IrwinMcShane/Von Glinow OB 5e

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.