TOPIC 10 – CHAPTER 8Managing Change and Innovation

BPA10202/BPK20502 PRINCIPLES OF MANAGEMENT

Robbins, S.P., DeCenzo, D. A., and Coulter, M., (2015), Fundamentals of Management: Essential Concepts and

Applications, Global Edition (9th ed.) Upper Saddle River , New Jersey, Pearson.

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Learning Outcomes Define organizational change and compare

and contrast views on the change process. Explain how to manage resistance to change. Describe what managers need to know about

employee stress.

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LO1Define organizational change and compare and contrast views on

the change process

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What is Organizational Change? The three kinds of organizational change are shown in

Exhibit 8-1 Changes in structure includes any alteration in

authority relationships, coordination mechanisms, degree of centralization, job design, or similar variables. For example, restructuring can result in decentralization,

wider spans of control, reduced work specialization, and work teams

Changing technology includes modifications to the way work is done or to the methods and equipment used. Examples include computerizing work processes, adding

robotics to work areas, and equipping employees with mobile communication tools

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What is Organizational Change? Changes in people refer to changes in

employee attitudes, expectations, perceptions, or behaviors. Examples include using team building efforts to

make a team more innovative.

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What is Organizational Change?

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External Factors External forces that create the need for organizational

change include: Marketplace reflects intense competition in recent

years. Government laws and regulations are another

impetus for change. Technology creates the need for organizational change.

The Internet has changed how we get information, how products are sold, and how we get our work done..

Fluctuations in labor markets can force managers to initiate changes.

Economic changes affect almost all organizations

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Internal Factors Redefining or modifying an organization’s

strategy causes change. Another internal force for change is a shift in

the composition of an organization’s workforce in terms of age, education, gender, nationality, and so forth.

Employee attitudes, such as increased job dissatisfaction, may lead to increased absenteeism, resignations, and even strikes. Such events will likely lead to changes in organizational policies and practices.

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Initiating Change Organizational changes need a catalyst. People who act as catalysts and assume the

responsibility for managing the change process are called change agents

A change agent can be a manager, internal staff specialist, or outside consultant

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Two Different Approaches “Calm waters” metaphor

envisions the organization as a large ship crossing a calm sea.

Change appears as the occasional storm, a brief distraction in an otherwise calm and predictable trip.

“White-water rapids” metaphor the organization is seen as a small raft navigating a raging

river with uninterrupted white-water rapids. Aboard the raft are half a dozen people who have never

worked together before, who are totally unfamiliar with the river, and who are unsure of their eventual destination.

In this metaphor, change is the status quo and managing change is a continual process.

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Calm Waters ChangeExhibit 8-2. Kurt Lewin’s three-step description of the change process

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Calm Waters Change Successful change requires unfreezing the status

quo, changing to a new state, and freezing the new change to make it permanent.

The status quo can be considered a state of equilibrium.

Unfreezing is necessary to move from this equilibrium and can be achieved in one of three ways: The driving forces, which direct behavior away from the

status quo, can be increased. The restraining forces, which hinder movement from the

existing equilibrium, can be decreased. The two approaches can be combined.

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Calm Waters Change Once the situation has been unfrozen, the

change can be implemented. However, for the change to take hold it needs

to be frozen so it can be sustained over time. Otherwise the change will be short-lived and

employees will revert to the previous state of equilibrium.

Therefore, the objective of freezing the new state of equilibrium is to stabilize the new situation by balancing the driving and restraining forces.

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White-Water Rapids Change Leading a company in change, in an industry in change. The “white-water rapids” metaphor is consistent with a

world that’s increasingly dominated by information, ideas, and knowledge

Not every manager faces such a world but it is becoming more the norm.

Disruptions in the status quo are no longer occasional and temporary, and they are not followed by a return to calm waters.

Many managers never get out of the rapids and face constant forces in the external and internal environment that bring about the need for organizational change.

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Implementing Change Organization development (OD):

Efforts that assist organizational members with a planned change by focusing on their attitudes and values

Essentially, organization leaders attempt to change the organization’s culture.

However, OD relies on employee participation to foster an environment of open communication and trust because change can create stress for employees.

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Organization Development Efforts OD tries to involve organizational members in changes that

will affect their jobs and seeks their input about how the change is affecting them.

The more popular OD efforts in organizations rely heavily on group interactions and cooperation, and include the following:

Survey feedback efforts are designed to assess employee attitudes about, and perceptions of, the change they are encountering. Employees generally respond to a set of specific questions

regarding how they view such organizational aspects as decision making, leadership, communication effectiveness, and satisfaction with their jobs, coworkers, and management.

This data is used to clarify problems that employees may be facing and to initiate action to remedy the problems.

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Organization Development Efforts In process consultation, outside consultants help

managers to perceive, understand, and act on organizational processes they face, such as workflow, informal relationships among unit members, and formal communication channels. Consultants give managers insight into what is going on and

help managers diagnose the interpersonal processes that need improvement.

A primary function of OD is to help organizational members become a team. Team-building is generally an activity that helps work groups set goals, develop positive interpersonal relationships, and clarify the roles and responsibilities of each team member. The primary focus of team-building is to increase members’

trust of and openness toward one another.

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Organization Development Efforts Intergroup development focuses on helping

different work groups to become more cohesive. It attempts to change attitudes, stereotypes, and

perceptions that one group may have toward another in order to improve coordination of efforts among the various groups.

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LO2Explain how to manage resistance

to change.

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Resistance to Change Change replaces the known with uncertainty

and people don’t like uncertainty. For example, when quality control methods are

introduced into manufacturing plants, many inspectors have to learn the new methods. Some may fear that they won’t be able to do so and may develop a negative attitude toward the change or behave poorly if required to use the new methods

Another cause of resistance is that we do things out of habit—we don’t want to have to consider the full range of options for the hundreds of decisions we make every day.

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Resistance to Change A third cause of resistance is the fear of losing

something already possessed. The more that people have invested in the current

system, the more they resist change because they fear losing status, money, authority, friendships, personal convenience, or other benefits that they value.

A final cause of resistance is a belief that the change is incompatible with the goals and interests of the organization. For instance, an employee who believes that a proposed

new job procedure will reduce product quality can be expected to resist the change. This type of resistance can actually be beneficial to the organization if expressed in a positive way.

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Reducing Resistance to Change

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Reducing Resistance to Change Strategies for dealing with resistance to change are

described in Exhibit 8-3. Managers should use the most appropriate technique

depending on the type and source of the resistance. Education and communication can reduce resistance to

change by helping employees see the logic of the change effort. But this assumes that much of the resistance lies in misinformation

or poor communication. Participation involves bringing those individuals directly

affected by the proposed change into the decision-making process. It allows these individuals to express their feelings, increase the

quality of the process, and increase employee commitment to the final decision.

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Reducing Resistance to Change Facilitation and support involve helping employees deal with

the fear and anxiety associated with the change effort. Such help may include employee counseling, therapy, new skills

training, or a short paid leave of absence. Negotiation involves exchanging something of value for an

agreement in order to lessen the resistance to the change effort. This resistance technique may be particularly useful when the

resistance comes from a powerful source. Manipulation and co-optation refer to covert attempts to

influence others about the change. These tactics may involve twisting or distorting facts to make the

change appear more attractive. Finally, coercion, which involves the use of direct threats or

force against the resisters, can also be used to deal with resistance to change.

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LO3Describe what managers need to

know about employee stress

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Employee Reactions to Change Change often creates stress for employees! Stress is the adverse reaction people have to

excessive pressure placed on them from extraordinary demands, constraints, or opportunities.

Stress isn’t always bad. Stress can be positive—especially functional

stress, which allows an athlete, stage performer, or employee to perform at his or her highest level at crucial times.

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Employee Reactions to Change However, stress is more often associated with

constraints and demands and opportunities. A constraint prevents you from doing what you desire;

demands refer to the loss of something desired; opportunities refer to the possibility of something new, something never done.

Another thing to understand about stress is that just because the conditions are right for stress to surface doesn’t always mean it will.

Two conditions are necessary for potential stress to become actual stress. First, there must be uncertainty over the outcome, and second, the outcome must be important.

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Symptoms of Stress

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Causes of Stress: Job Related Job-related stressors Include pressures to avoid

errors or complete tasks in a limited time period; changes in the way reports are filed; a demanding supervisor; unpleasant coworkers.

Task demands are factors related to an employee’s job. They include the design of a job (which includes

autonomy, task variety, and degree of automation); working conditions (temperature, noise, etc.); and the physical work layout (overcrowded or in visible location with constant interruptions; work quotas, especially when excessive, high level of task interdependence with others).

Autonomy lessens stress.

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Causes of Stress: Job Related Role demands are stresses due to one’s particular

role in the organization. Role conflicts create expectations that may be hard to

reconcile or satisfy. An employee experiences role overload when he or she is

expected to do more than time permits. An employee experiences role ambiguity when role

expectations are not clearly understood and the employee is not sure what he or she is supposed to do.

Interpersonal demands are pressures created by other employees. Lack of social support from colleagues and poor

interpersonal relationships can cause considerable stress.

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Causes of Stress: Job Related Organization structure issues like excessive

rules and an employee’s lack of opportunity to participate in decisions that affect him or her can cause stress.

Organizational leadership refers to the supervisory style of the organization’s managers. Some managers create a culture characterized by

tension, fear, and anxiety. They establish unrealistic pressures to perform in the

short run, impose excessively tight controls, and routinely fire employees who don’t measure up.

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Causes of Stress: Personal Family and personal issues Personality type

Employees’ personalities also affect how susceptible they are to stress

The Type A personality is characterized by a chronic sense of time urgency, an excessive competitive drive, and difficulty accepting and enjoying leisure time. They are more likely to show symptoms of stress.

In contrast, Type B personalities have little to no sense of time urgency or impatience.

Stress comes from the hostility and anger associated with Type A behavior.

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Reducing Stress

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Reducing Stress To reduce job-related stress, managers begin with employee

selection—making sure that an employee’s abilities match the job requirements

A realistic job preview during the selection process can help minimize stress by clarifying job expectations.

Ongoing organizational communications keep ambiguity-induced stress to a minimum.

Similarly, a performance planning program (such as MBO) states job responsibilities clearly, provides clear performance goals, and reduces ambiguity through feedback.

Job redesign can also reduce stress by increasing challenge, including employees in decision making, or reducing the workload. Allowing employees to participate in decisions and to gain social support also lessen stress.

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Reducing Stress Stress from an employee’s personal life is not easy

for a manager to control directly and there is the question of whether a manager has the right to intrude, even subtly, in an employee’s personal life.

If the manager believes it’s ethical and the employee is receptive, consider employee assistance or wellness programs.

The rationale for employee assistance programs is to get a productive employee back on the job as quickly as possible.

Wellness programs are designed to keep employees healthy.