Part - II Organizational Change

Part II: Organizational Change# Concept:Organization change is the process of adopting new idea or behavior by an organization. It involves alteration of the component/s (people, structure, or technology) of an organization. It is thus, a way of modifying an existing organization. It is a process of moving from a present state through a transitional state to a future state.

Organizational change is a planned effort to improve a business’s capacity to get work done and better serve its market. Organizational change is basically about people. Real change happens when people realize that a new methodology, process or technology makes them more productive, more efficient or better able to serve the customers needs. Organizations can only institute a change program when employees who are involved in the program understand and have confidence in its value.

Change management is the process of continually renewing an organization's direction, structure, and capabilities to serve the ever-changing needs of external and internal stakeholders. Mastering strategies for managing change is more important today since the rate of change is greater than at anytime in history. The marketplace is changing overnight. Organizational alliances and structures are shifting rapidly. Everything in the organization is open to scrutiny. Basic operating assumptions are questioned. Traditions are challenged. The risk of failure is greater than ever before and the tension within the workforce is great and needs constant attention.

Managers, at one point or another, will have to changes in some aspects of their organization. They have to coordinate the process of planning and implementing change in their organizations in such a way as to minimize employee resistance and cost to the organizations. When organizational change is well planned and implemented, it helps organization better achieve its goals effectively and survive continuously. Hence, change can produce many benefits, including improved competitiveness, better financial performance, and higher levels of customer and employee satisfaction, if managed well. # Forces for Change:The organizational environment is constantly changing, and an organization must adapt to these changes in order to survive. There are many forces in the environment which have impact on an organization and recognizing and responding to these forces is very important to remain competitive and surviving. Following are the major forces that make an organization to change. a) Declining effectiveness:An organization that experiences continuous loss or declining performance undoubtedly motivates to do some corrective action in it. Cost reduction, alteration in the roles and duties, participation etc. can be undertaken to get improved from the problem. b) Organizational crisis:Crisis in the resources can also cause an organization to alter its business. The resignation of a key decision maker is another crisis that causes the organization to rethink the composition of its management team and its role in the organization. Similarly, new appointment of chief executive after crisis may lead to change in every aspect of the organization.

- Mukesh Kumar Goit 1 Kantipur Valley College

c) Competition:Organizations are constantly striving to achieve a competitive advantage. Competition is a force for change because unless an organization matches or surpasses its competitors in efficiency, quality, or its capability to innovate new or improved goods or services it will not survive in the market. The adaptation of new skills or technology to be competitive usually brings a change to task relationships as workers learn new skills or techniques to operate the new technology. d) Economic and political force: Economic and political forces are general environmental forces that largely and continually affect an organization’s operation. Economic status of a state and political system and stability are factors responsible to create business environment. Change in such factors leads to change in the functioning of business organization.e) Globalization:Multinational and transnational organizations are heavily emerging as a result of globalization. Domestic organizations need to change their organizational structures to allow expansion into foreign markets, need to adopt a new and adoptive management style to operate and manage globally. Many organizations are pursuing joint ventures with organizations from other countries. f) Ethics:In the face of increasing government, political, and social demands for more responsible and honest corporate behavior, organizations need to take steps to promote ethical behavior. Conflicts are apparent in un-ethical organization today. Organizations need to make changes to allow managers and workers at all level to respond unethical behavior so that they can move quickly to eliminate such behavior and protect the general interest of its members and customers. # Forces for Resistance to Change: Resistance to change is an obstacle to make change in an organization. It is the action taken by individuals and groups when they perceive that is occurring as a threat to them. Resistance to change can also be a source of functional conflict. With every major or minor change, resistance typically occurs. The major forces that produce resistance include: a) Traditional mechanistic structure: Traditional mechanistic structure is characterized by a tall hierarchy, centralized decision making, and the standardization of behavior through rules and procedures. Mechanistic structures are more resistant to change. People who work within a mechanistic structure are expected to act in certain ways and do not develop the capacity to adjust their behavior to changing conditions. b) Organizational culture:The values and norms in an organization’s culture can be another source of resistance to change. Just as role relationships result in a series of stable expectations between people, so values and norms cause people to behave in a predictable ways. Sometimes, values and norms are so strong that even when the environment is changing and it clear that a new strategy is needed, managers cannot change because they are committed to the ways presently do business. c) Differences in functional orientation: Differences in the functional orientation are major impediments to change and a source of organizational inertia. Different functions and divisions often see the source of a problem differently because they see an issue or problem differently from their own interest and viewpoint.


d) Traditions: The traditions are established in the organization with a long history. Change implies uncertainty, and uncertainty is uncomforting. There is resistance to trying a new approach as people unknown and have fear that they will not be able to supply the required technology and skills. e) Individual resistance: There are several reasons why individuals within an organization may be inclined to resist changes. Individual tend to resist change feeling uncertain and insecure about out outcomes will be. Workers might be given new tasks. Roles relationships may be reorganized. Some workers might loose their jobs. Some people might benefit at the expense of others. Absenteeism and turnover may increase as change takes place, workers may become uncooperative, attempts to delay and slow the change process, and otherwise passively resist the change. f) Group resistance: There are formal and informal groups in an organization to carryout different jobs. The characteristics of these groups can produce resistance to change. A change may alter task and role relationships in a group, it disrupts group norms and the informal expectations that group members have of one another. As a result, members of a group may resist change because a whole new set of norms may have to be developed to meet the needs of the new situation. Group cohesiveness, the attractiveness of a group to its members, also produces the resistance.

# Types or Forms of Organizational Change:There are several types of change that managers can adopt to help their organizations achieve desired future states. In general, types of change fall into two broad categories: Evolutionary Change and Revolutionary Change. a) Evolutionary Change:Evolutionary change is gradual, incremental, and narrowly focused. Evolutionary change involves not a drastic or sudden altering of the basic nature of the organization’s strategy and structure but a constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate to changes taking place in the environment. Hence, Evolutionary change is accomplished gradually and incrementally in every aspects of an organization. There are three instruments (forms) of evolutionary change. i) Socio-technical System Theory:Socio-technical theory proposes the importance of changing role and task or technical relationships to increase organizational effectiveness. It emerged from a study of changing work practices in British coal mining industry.Socio-technical system theory argues that managers need to fit the workings of an organization’s technical and social systems. A poor fit between an organization’s technology and social system leads to failure, but close fit leads to success. This theory argues that when managers change task and role relationships, they must recognize the need to adjust the technical and social system gradually so that group norms and cohesiveness are not disrupted. Managers need to be sensitive to the fact that the way they structure the work process affects the way people and group behave. Indeed, Socio-technical system is that method of change where new technology and way of doing business is supported by participative shared social system.


This theory emphasizes the team works which are empowered to monitor and control important aspects of their own performance. Team based system will promote the development of values and norms that will boost efficiency and product quality.

ii) Total Quality Management (TQM):Total quality management is an ongoing and constant effort by all of an organization’s functions to find new ways to improve the quality of the organization’s goods and services. TQM leads to continuous, incremental change, and all functions are expected to cooperate with each other to improve quality. Total Quality Management is a comprehensive and structured approach to organizational management that seeks to improve the quality of products and services through ongoing refinements in response to continuous feedback. TQM requirements may be defined separately for a particular organization or may be in adherence to established standards.More and more organizations are employing the continuous, incremental type of change that results from the implementation of TQM programs. Changing cross-functional relationship to help improve quality is very important in TQM. Members of the different functions work together to find new ways to reduce the number of inputs needed. Hence, the changes associated with TQM are change in task, role and group relationships.iii) Flexible Work Teams:Flexible work teams is a participative approach in the era of evolutionary change. A flexible work team is a group of workers who assume responsibility for performing all the operations necessary for completing a specified stage in the manufacturing process. It is an important method to change employees’ attitudes and behavior. A worker first develops the skills needed to accomplish one task and overtime is trained to perform other tasks. Each worker can substitute for any other workers. As the demand for components or finished products rises or falls, flexible workers can be transferred to the task most needed by the organization. As a result, the organization is able to respond quickly to changes in its environment.

Flexible work teams approach is followed by the principal – “Generalization”. Performing more than one task also cuts down on repetition, boredom, and fatigue and rises workers’ incentives to improve product quality. When workers learn one another’s tasks, they also learn how the different tasks relate to each other. This understanding often leads to new ways of combining tasks to make the manufacturing process more efficient and less costly. b) Revolutionary Change:Some organizations may need to make major changes quickly. They do not want to take time to setup and implement programs that foster evolutionary change. Faced with drastic, unexpected changes in the environment (for example, a new technological breakthrough) or with impending disaster resulting from years of inaction and neglect, an organization needs to act quickly and decisively, the change takes place in this form is said to be a revolutionary change. Hence, revolutionary change is a rapid, dramatic, and broadly focused. It involves a bold attempt to quickly find new ways to be effective. It is likely to result in a radical shift in ways of doing things, new goals, and a new structure. The three important instruments (forms) of revolutionary change are:


i) Reengineering:In an organizational setting reengineering has been used to refer to the process by which managers redesign how tasks are bundled into roles and functions to improve organizational effectiveness. It is fundamental rethinking and radical redesign of business process to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality, service, and speed. Reengineering involves going the root of every step in work process to identify a better way to coordinate and integrate the activities necessary to provide customers with goods and services. Instead of focusing on an organization’s functions, the managers of a reengineered organization focus on business process. Processes, not organizations, are the object of reengineering. Companies don’t reengineer their sales or manufacturing departments; they reengineer the work the people in those departments.

Reengineering deliberately ignore the existing arrangement of task, roles, and work activities. They start the reengineering process focusing customers with the aim of providing best quality products at lowest cost. The major guidelines for performing reengineering successfully are:a) Organize around outcomes, not task. Where possible, organize works so that one person or one function can perform all the activities necessary to complete the process, thus avoiding the needs for transfer between functions.b) Involve the people who are concerned stakeholders of the process, to make necessary rules and arrangements. c) Decentralize decision making to the point where the decision is made. Allow the people on the spot to decide how best to respond to specific problems that arise.

ii) Restructuring: Restructuring refers to the process by which managers change task and authority relationships and redesign organizational structure and culture to improve organizational effectiveness. The move from a functional to some form of divisional structure or either form represents one of the most common kinds of restructuring effort. In the course of time, as the environment changes, and as the organization’s strategy changes, managers must analyze how well their structure fits them. In a new context, there might be a better way of grouping the products they now make to serve the customers needs and wants. A very popular restructuring in recent years is downsizing, the process by which managers streamline the organizational hierarchy and layoff managers and workers to reduce bureaucratic costs. The drive to reduce bureaucratic costs is often a response to increase competitive pressures in the environment as companies fight to increase their performance. The wave of mergers and acquisitions that has occurred in many industries such as telecommunications, banking and other industries has also resulted in downsizing because merged companies typically requires fewer managers. Often, after one industry company downsizes, other industry companies are forced to examine their own structures to search out inefficiencies; thus downsizing wave take place across companies in an authority. Similarly, the other reasons to downsize include; decline in the demand, loss of market share, inefficient tall structure, high operating cost etc.


iii) Innovation:If the organizations are to avoid being left behind in the competitive race to produce new goods and services, they must take steps to introduce new products or develop new technologies to produce those products reliably at a low cost. Innovation is the successful use of skills and resources to create new technologies or new goods and services so that an organization can change and better respond to the needs of customers. The taste and preference of customers regarding goods and services, an organization offers, have been changing. Hence, organizations must pay attention to innovation. Products or services need continuous improvement, upgradation, and modification. In order to beat competitors in the market place, managers must flow innovative products and services.Although innovation brings about change, it is also associated with a high level of risk because the outcomes of research and development activities are often uncertain.

# Process of Planned Organizational Change (Change Process): Organizational change is a well-known phenomenon; in order to survive organizations have to adapt themselves regularly to be able to meet the demands of the changing environment. In dealing with organizational change it is important to consider the need and results of organizational change as well as the dynamics of change processes.

Conceptions of planned change have tended to focus on how change can be implemented in organizations. Called “theories of changing,” these frameworks describe the activities that must take place to initiate and carry out successful organizational change. Lewin’s change model and the action research model have received widespread attention in organizational development (OD) and serve as the primary basis for a general model of planned change. However, due to current conditions, these management models can not be considered as a panacea, they must be adapted constantly, being revised in order to lead, finally, the successful implementation of the changes initiated.

a) Lewin’s Change Model: German-American psychologistGenerally, managers anticipate change and prepare a strategy to respond to it. Kurt Lewin, a social psychologist, suggested that efforts to bring about planned change in organizations should approach change as a multi-stage process. He developed the “Field Force Analysis Model” to help us understand how the change process works. This model emphasizes that effective change occurs by unfreezing the current situation, moving to a desired condition, and then refreezing the system so that it remains in this desired state. The planned change is thus made up of three steps: Unfreezing, Change, and Refreezing.

a) Unfreezing: It is the first stage of change process. It is a process by which people become aware of the need for change. The key factor in unfreezing is making employees understand the importance of a


UNFREEZING CHNAGE(TRANSITION)

REFREEZING

change and how their jobs will be affected by it. Unfreezing starts from the members’ understanding of the organizational crisis or vision that motivates them to change, normally, unfreezing will go through three stages. First of all, there must be enough information indicating that the current organizational condition is not ideal. Secondly, this information has to be related to the important goal of the organization, thus elicits members’ anxious feeling. Finally, a solution has to be proposed that will reduce the members’ insecure feeling and resistance to change.

b) Change (Transition/movement):Once you have unfrozen the people, the next question is how you keep them going. Kurt Lewin was aware that change is not an event, but rather a process. He called that process a transition. Transition is the inner movement or journey we make in reaction to a change. This second stage occurs as we make the changes that are needed. People are 'unfrozen' and moving towards a new way of being. It is said this stage is often the hardest as people are unsure or even fearful. This is not an easy time as people are learning about the changes and need to be given time to understand and work with them. Support is really important here and can be in the form of training, coaching, and expecting mistakes as part of the process.Using role models and allowing people to develop their own solutions also help to make the changes. It's also really useful to keep communicating a clear picture of the desired change and the benefits to people so they don't lose sight of where they are heading.

c) Refreezing: Refreezing is the third of Lewin's change transition stages, where people are taken from a state of being in transition and moved to a stable and productive state. Kurt Lewin refers to this stage as freezing although a lot of people refer to it as 'refreezing'. As the name suggests this stage is about establishing stability once the changes have been made. The changes are accepted and become the new norm. People form new relationships and become comfortable with their routines. This can take time.Freezing is to stabilize the change achieved in moving stage. The individual, the department, and the organization, all have an inertial way of thinking and doing, so that the change achieved in moving state will return to the previous stage if freezing is not done. Form new rules, regulate members’ new behavior directly, reinforce appropriate responses, are all possible ways to internalize the new value or behavior into the organizational culture.b) Action Research Model:Action research is a strategy for generating and acquiring knowledge that managers can use to define an organization’s desired future state and to plan a change program that allows the organization to reach the state. The techniques and practices of action research, developed by experts, help managers to stabilize change and move to the desired future sate.

The classic action research model focuses on planned change as a cyclical process in which initial research about the organization provides information to guide subsequent action. Then the results of the action are assessed to provide further information to guide further action, and so on. This iterative cycle of research and action involves considerable collaboration among organization members and OD practitioners. It places heavy emphasis on data gathering and diagnosis prior to


action planning and implementation, as well as careful evaluation of results after action is taken. Following are major steps involved in action research.

a) Diagnosing the Organization: In the first step in action research managers are required to recognize the existence of a problem that needs to be solved and acknowledge that some type of change is needed to solve it. In general, reorganization of the needs for change arises because somebody in the organization perceives a gap between desired performance and actual performance. Customers’ complaints about the quality of goods and services, decline in performance level and profit, employees’ turnovers, etc. can be the problems in the organization. In this stage managers need to analyze what is going on and why problems are occurring. Managers have to carefully collect information about the organization to diagnose the problem correctly and get employees committed to the change process. At this early stage of action research it is important for managers to collect information from people at all levels in the organization and outsiders such as customers and suppliers. Questionnaire surveys given to employees, customers, and suppliers or interviews may be taken to gather information to correctly diagnose the organizational present state. b) Determining the desired future state: After identification of the present state, the next step is to identify where the organization needs to be – its desired future state. It involves a complex planning process, as a manager work out various alternative course of action that could move the organization to where they would like to


be and determine what type of change to implement. Identifying the desired future sate involves deciding what the organization’s structure (functional or cross-functional) and strategy should be. c) Implementing action:Implementation action is the third step of action research. It is a three step process. Firstly, managers need to identify possible impediments to change that they will encounter as they go about making changes. Managers must anticipate the obstacles they will encounter when they unfreeze the organization and make the changes. Functional managers, for example, are likely to strongly resist efforts to the change the company because the change will reduce their power and prestige in the organization. Mangers need to find ways to minimize control and co-operate resistance to change. They also need to devise strategies to bring organizational members on the board and foster their commitment to the process. The second step in implementing action is deciding who will be responsible for actually making the changes and controlling the change process. For this purpose outside consultants (experts) or managers from within organizations can be employed. Many consultants specialize in certain types of organizational change, such as restructuring, reengineering, or implementing total quality management, which is advantageous to implement change. The third step in implementing action is deciding which specific change strategy will be most effective. Basically, top-down change strategy and bottom-up change strategy are used in the course of implementing change.

Top-down change: Top-down change is a change which is implemented by managers at a high level in the organization. The result of radical organizational restructuring and reengineering is top-down change. Top level managers in the organization decide to make a change and implement it. The managers choose to manage and solve problems as they arise at the divisional, functional or individual levels.

Bottom-up change: Bottom-up change is that change that is implemented by employees at low levels in the organization and gradually rises until it is felt through out organization. Lower level employees at all levels are involved in the change process, to obtain their input and lessen their resistance. Bottom-up change process facilitates employees’ participation and thus reduces resistance.

d) Evaluating the action:The fourth step in the action research is evaluating the action that has been taken and assessing the degree to which the changes have accomplished the desired objectives. The best way to evaluate the change process is to develop measures or criteria that allow managers to assess whether the organization has reached its desired objectives. Different techniques (cost comparison, employees’ satisfaction, and customers’ satisfaction level before after change) are used to evaluate the result of change. Assessing the impact of change is not easy since the effects of change may emerge slowly. The action research process takes several years to complete. e) Institutionalizing action research:The need to make change is so vital in today’s quickly changing environment that organizations must institutionalize action research. Institutionalizing involves making a required habit or norm adopted by every members of an organization. Because change is so difficult and requires so much thought and effort to implement, members at all levels of the organization must be


rewarded for being part of successful change efforts. Effective institutionalization makes all the stakeholders learn and sustain desired behaviors.

# Organizational Transformations: Birth, Growth, Decline and Death (Organizational Life Cycle):

Organizational transformation through different stages is represented by a model of organizational life cycle. Organizational life cycle (OLC) is a model that proposes that businesses, over time, progress through a fairly predictable sequence of developmental stages. This model is linked to the study of organizational growth and development. It is based on a biological metaphor of living organisms, which have a regular pattern of development: birth, growth, maturity, decline, and death. Likewise, the OLC of businesses has been conceived of as generally having four or five stages of development: birth (start-up), growth, maturity, and decline. Organizations pass through these stages at different rates. Some organizations go directly from birth to death with out enjoying any growth stage; other may spend a long time in the growth stage. The organizational life-cycle model has been figured out here.

The way an organization can change in response to the problems it confronts determines where and when it will go on to the next stage in the life cycle and survive and prosper or fail and die.A) Organizational birth:Organizations are born when individuals, (entrepreneurs), recognize and take advantages of opportunities to the use of their skills and competencies to create value for the customers. This stage is associated with failure because new organizations experience the liability of newness (the danger of failure associated with being first in the environment). Organizations are fragile as they lack formal structure. Everything is done on trial and error basis. During the birth sage, organizations accumulate capital, hire workers, and start developing their products or services. Toward the end of this stage, companies often experience explosive growth and begin to hire new employees rapidly, because business opportunities exceed infrastructure and resources.


# A population Ecology Model of Organization Birth: Population ecology model seeks to explain the factors affecting the rate at which new organizations are born and die in a population of existing environment. Population of organizations comprises the organizations that are competing for the same set of resources in the environment. According to this model, the availability of resources determines the number of organizations in a population. Population ecology model assumes that growth in the number of organizational births in a new environment is rapid at first as new organizations are founded to take advantages of new environmental resources (customers).This model argues that there are two basic reasons for rapid birth rate of organization.

i) Knowledge and skill: As new organizations are founded, there is an increase in the knowledge and skills available to generate similar organizations. Many new organizations are founded by entrepreneurs who leave existing companies to set up their own organizations.

ii) Role model: When new organization is founded and survives, it provides a role model for others. The success of a new organization makes it relatively easy for promoters to found similar new organizations, because success confers legitimacy.

Once an environment is populated with a number of successful organizations, the organizational birth rate tapers-off (decreases). According to this model, there are also two factors to decrease the organizational birth rate.

i) First mover advantages: The births rates declines, as the availability of resources (customers, geographical location, preferences) for the late entrants diminishes.

ii) Difficult competition: Difficulty of competing with existing organizations for resources leads to decrease in birth rate of organizations. Potential promoters are discouraged by the existing organizations as the large numbers of organizations are already competing for resources.

# Strategies for organizational survival:Population ecology model suggests two sets of strategies that organizations can use to gain access to resources and enhance their chances of survival in the environment.

i) r-strategy versus k-strategy:Organizations that follow r-strategy are founded early in a new environment (they are early entrants) where as, k-strategy following organizations founded later (they are late entrants). The advantage of r-strategy is that an organization obtains first mover advantages and has first pick of the resources in the environment. As a result, the organization is usually able to grow rapidly and develop skills and procedures that increase the chance of surviving and prospering. Organizations that follow a k-strategy are usually established in other environment and wait to enter in the industry until the uncertainty in the environment is reduced and correct way to compete is apparent. These organizations then take the skills they have established to in other environments and use them to develop effective procedure that allow them to compete with and often dominate organizations following r-strategy. ii) Specialist strategy versus Generalist strategy:Organizations following specialist strategy (specialist) concentrate their skills to pursue a narrow range of resources in a single niche. On the other hand, generalist organizations spread their skills thinly to compete for a broad range of resources in many niches. By focusing their activities in one niche, specialists develop core competencies that allow them to out perform generalist in the niche. Specialists are likely to offer customers much better services than the service offered by generalist. They may be able to develop superior products because they invest all their resources in a narrow range of products.


Generalist can often compete specialist when there is a considerable uncertainty in the environment and when resources are changing so that niches emerge and disappear continually. Generalist can survive in an uncertain environment because they have spread their resources thinly. If one niche disappears they still have others to operate.

B) Organizational growth:After surviving in the birth stage of organizational lifecycle, organizations increase their control over resources by growing and becoming larger. In this stage organizations develop value-creation skills and competencies that allow them to acquire additional resources. Growth allows an organization to increase its division of labor and specialization and thus develop a competitive advantage. An organization that is able to acquire adequate resources is likely to generate surplus resources that allow it grow further. Overtime, organizations thus transform themselves. They become something very different than they were when they started. In this stage organizations increase their ability to grow and survive in a competitive environment by becoming legitimate in the eye of stakeholders. In the growth stage, organizations may copy one another’s strategies, structures, and cultures and try to adopt certain behaviors because they believe that doing so will increase their chances of survival. These activities lead to organizational isomorphism. Organizational isomorphism is the act of making similar to other organizations by imitating. There are three major form of organizational isomorphism. a) Coercive isomorphism:When an organization adopts certain norms because of pressure exerted by other organizations and by society, such practice is said to be coercive isomorphism. Coercive isomorphism takes place when an organization largely depends on the act of other organizations. Coercive isomorphism also results when organizations are forced to adopt non-discriminatory, equitable hiring practices because they are made mandatory by law. b) Mimetic isomorphism:Isomorphism is said to be mimetic when organizations intentionally imitate and copy another’s to increase legitimacy. A new organization is especially likely to imitate the structure and process of successful organizations to ensure success in uncertain environment. Mimetic isomorphism involves imitating other organizations’ structure, strategy, culture, technology etc. that will allow surviving. c) Normative isomorphism: Organizations may acquire norms and values in several ways. Managers and employees often move from one organizations to another and bring with in them the norms, values of former employers. Many organizations recruit managers from large organizations to acquire a good business idea. Organizations also indirectly acquire norms and values through industry, trade, and professional association. These ways of getting business ideas, norms and values is said to be normative isomorphism.

# Greiner’s model of organizational growth:


It is believed that organizations encounter a predictable series of problems that must be managed if organizations are to grow and survive in a competitive environment. Greiner’s model proposes that an organization passes through five sequential growth stages during the course of organizational evolution and that each ends in a crisis due to a major problem that organization encounters. To advance from one stage to the next, an organization must successfully change itself and solve the organizational problems associated with each crisis. Greiner’s model of organization change has illustrated in the given figure.

i) Phase 1: Growth through creativity and crisis of leadership: After an organization gets birth, it starts to grow through creativity and vision. Entrepreneurs develop the skills and abilities to create and introduce new products for new market. As the organization grows, the founding entrepreneurs confront the task of having to manage the organization, and they discover that management is a very different process. Thus, after securing a niche, the founding entrepreneurs are faced with the task of managing their organization, a task to which they are often not really suited and for which they lack the skills. When an entrepreneur takes control of management of the organization, significant problems arises that eventually leads to a crisis of leadership.

ii) Phase 2: Growth through direction and crisis of autonomy: The crisis of leadership ends with the recruitment of strong top-management team to lead the organization. The new top level management chooses an organization strategy and designs a structure and culture that allow the organization to meet its goal effectively. The structure designed by top managers and imposed on the organization centralizes decision making and limits the freedom of experiment, take risk and employ self senses. The centralized authority, formalized decision making often leads to another crisis. This situation leads to frustration and dissatisfaction which leads to departure of employees, reduce performance level, and also creates new competitors in the industry. Hence, a crisis of autonomy is realized. - Mukesh Kumar Goit 13 Kantipur Valley College

iii) Phase 3: Growth through delegation and crisis of control: To solve the crisis of autonomy and grow further, organizations must delegate authority to lower level managers in all functions and divisions and link their contributions. In this stage, more autonomy and responsibility are given to managers at all levels and functions. Growth through delegation allows each department or division to expand to meet its own needs and goals, and organizational growth brings a new crisis. Explosive and excessive growth can cause top managers to feel that they have lost control of the company as a whole. Thus, when top managers compete with functional managers or corporate level managers compete with divisional managers for control of organizational resources, the result leads to a crisis of control.

iv) Phase 4: Growth through coordination and crisis of red tapes/staffs: In order to fill the crisis of control, top managements take on the role of coordinating different divisions and motivating divisional managers. At this stage the organization is too large that coordination is most that facilitates international cooperation between divisions and countries. Companies also implement systems of co-ordination to enable their various business units and departments to work together. These efforts, however, tend to cause an influx of red tape. Coordination techniques such as product groups, formal planning processes, and corporate staff become, over time, a bureaucratic system that causes delays in decision making and a reduction in innovation. At this stage, companies may become too large and diversified to function effectively with inflexible regulations and dense bureaucracy.

v) Phase 5: Growth through collaboration and un-known crisis: The way to solve the crisis of red tape and push the organization up the growth, collaboration is essential. Companies must emphasize growth through collaboration, which includes using teams, empowering workers, removing red tape, reducing corporate staff, simplifying formal systems, increasing conferences and educational programs, and introducing more sophisticated information systems. Because decline and closure is likely if companies proceed in the same direction as in the maturity stage, they must adopt these kinds of policies and implement these kinds of changes to ward-off shrinking sales and employee apathy.

Greiner’s model shows organizations continuing to grow through collaborations until they encounter some new, unnamed crisis, but it is possible that organization’s growth path leads down ultimately. Hence, the next stage in the life cycle is not continued growth but organizational decline.

C) Organizational decline and death:Greiner’s model suggest that organizations at all stages of growth encounter problems (crisis) that will lead to organizational decline if the organization fails to manage them. Managers must have ability to identify and solve organizational crisis so that they can maintain organizational growth. But if they lack the ability, motivation and desire to manage such issues at some point organizations die due to organizational inertia and environmental changes. In other words, the main cause of organizational decline and finally death are: organizational inertia and environmental change. i) Organizational inertia:


Organizational inertia is a force inside the organization that produce resistant to change. Organizations are subject to considerable inertia, which prevents them from adopting and changing. Following are the major organizational forces responsible for producing inertia.

a) Traditional mechanistic structureb) Overly bureaucratic culturec) Differences in functional orientationd) Management traditione) Individuals and groups

ii) Changes in environment:Environmental changes also largely affect an organization’s ability to obtain scarce resources which finally lead to organizational decline. The major sources of uncertainty in the environment are complexity, the number of different forces that an organization has to manage (dynamism, degree of change in the environmental forces, richness, the amount of resources available etc.) The greater amount of uncertainty, the larger the chance of an organization to decline. Management inability to adopt and respond to the change in the environment may not survive in the market so far. The combination of uncertain, changing environment and organizational inertia makes it difficult for the top management to anticipate the need for change and to manage the way organizations change and adapt to the environment and make organization surviving and growth.

# Strategies for Organizational Change: (Directive Strategy, Expert Strategy, Negotiation Strategy, Educative Strategy and Participative Strategy)

Organizational change is an important issue in organizations. It is actually a process in which an organization optimizes performance as it works toward its ideal state. Organizational change occurs as a reaction to an ever-changing environment, a response to a current crisis situation, or is triggered by a leader. Successful organizational change is not merely a process of adjustment, but also requires sufficient managing capabilities.Strategy refers to the organization’s long term goals and the steps and resources needed to be considered in its decision-making. The strategy for managing organizational change can be divided into: Directive Strategy, Expert Strategy, Negotiation Strategy, Educative Strategy, and Participative Strategy. These strategies have their own value and implications.

1. Directive strategy: This strategy highlights the manager's right to manage change and the use of authority to impose change with little or no involvement of other people. The advantage of the directive approach is that change can be undertaken quickly. However, the disadvantage of this approach is that it does not take into consideration the views, or feelings, of those involved in, or affected by, the imposed change. This approach may lead to valuable information and ideas being missed and there is usually strong resentment from staff when changes are imposed rather than discussed and agreed.

2. Expert strategy: This approach sees the management of change as a problem solving process that needs to be resolved by an expert. This approach is mainly applied to more technical problems, such as the introduction of a new learner management system, and will normally be led


by a specialist project team or senior manager. There is likely to be little involvement with those affected by the change. The advantages to using this strategy is that experts play a major role in the solution and the solution can be implemented quickly as a small number of 'experts' are involved. Again, there are some issues in relation to this strategy as those affected may have different views than those of the expert and may not appreciate the solution being imposed or the outcomes of the changes made.

3. Negotiating strategy: This approach highlights the willingness on the part of senior managers to negotiate and bargain in order to effect change. Senior managers must also accept that adjustments and concessions may need to be made in order to implement change. This approach acknowledges that those affected by change have the right to have a say in what changes are made, how they are implemented and the expected outcomes. The disadvantage to this approach is that it takes more time to effect change, the outcomes cannot be predicted and the changes made may not fulfill the total expectations of the managers affecting the change. The advantage is that individuals will feel involved in the change and be more supportive of the changes made.

4. Educative strategy: This approach involves changing people's values and beliefs, 'winning hearts and minds', in order for them to fully support the changes being made and move toward the development of a shared set of organizational values that individuals are willing, and able to support. A mixture of activities will be used; persuasion; education; training and selection, led by consultants, specialists and in-house experts. Again, the disadvantage of this approach is that it takes longer to implement. The advantage is that individuals within the organization will have positive commitment to the changes being made.

5. Participative strategy: This strategy stresses the full involvement of all of those involved, and affected by, the anticipated changes. Although driven by senior managers the process will be less management dominated and driven more by groups or individuals within the organization. The views of all will be taken into account before changes are made. Outside consultants and experts can be used to facilitate the process but they will not make any decisions as to the outcomes. The main disadvantages of this process are the length of time taken before any changes are made, it can be more costly due to the number of meetings that take place, the payment of consultants/experts over a longer time period and the outcomes cannot be predicted. However, the benefits of this approach are that any changes made are more likely to be supported due to the involvement of all those affected, the commitment of individuals and groups within the organization will increase as those individuals and groups feel ownership over the changes being implemented. The organization and individuals also have the opportunity to learn from this experience and will know more about the organization and how it functions, thus increasing their skills, knowledge and effectiveness to the organization.


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Part - II Organizational Change