1. Managing Change and Organizational Learning
Chapter Sixteen
Managing Change and Organizational Learning
McGraw-Hill/Irwin
Copyright © 2010 The McGraw-Hill Companies, Inc. All rights reserved.

2. After reading the material in this chapter, you should be able to:
Discuss the external and internal forces that can create the need for organizational change.
Describe Lewin’s change model and the systems model of change.
Explain Kotter’s eight steps for leading organizational change.

3. After reading the material in this chapter, you should be able to:
Review the 11 reasons employees resist change.
Identify alternative strategies for overcoming resistance to change.
Discuss the process organizations use to build their learning capabilities.

4. Forces of Change External forces for change Internal forces for change
originate outside the organization
Internal forces for change
originate inside the organization.

5. External Forces Demographic characteristics Technological advancements
Customer and market changes
Social and political pressures

6. Internal Forces Low job satisfaction High turnover Conflict
Management pressure
Organizational culture

7. Question?
ABC Trucking, conducted an analysis of employee job satisfaction and turnover, and concluded that its turnover rate was 48%. This was primarily attributed to job dissatisfaction by employees. This represents a(n) ______ for ABC.
External force for change
Social and political pressure
Technological advancements
Internal force for change
The correct answer is “D” – internal force for change
AACSB:  Group-individual dynamics Bloom's Taxonomy:  Application
Difficulty:  Medium Page:  401

8. Lewin’s Change Model Unfreezing
Focus is to create the motivation to change
Begin by disconfirming the usefulness or appropriateness of employees’ present behaviors or attitudes

9. Lewin’s Change Model Benchmarking
process by which a company compares its performance with that of high-performing companies

10. Question?
Fredfirst, a securities trading company, regularly compares its performance with that of high performing organizations in the industry, such as Merrill Lynch. This process is described as
Change.
Refreezing.
Benchmarking.
A strategic plan
The correct answer is “C” – benchmarking.
AACSB:  Group-individual dynamics Bloom's Taxonomy:  Application
Difficulty:  Medium Page:  402

11. Lewin’s Change Model Changing
Organizational change can be aimed at improvement or growth, or it can focus on solving a problem such as poor customer service or low productivity
Can be targeted at different levels in an organization

12. Lewin’s Change Model Refreezing
Change is stabilized by helping employees integrate the changed behavior or attitude into their normal way of doing things
Giving employees the chance to exhibit new behaviors, which are then reinforced

13. A Systems Model of Change
Systems Approach
Based on the premise that any change, no matter how large or small, has a cascading effect throughout an organization
Takes a “big picture” perspective of organizational change

14. A Systems Model of Change
Mission statement
summarizes why an organization exists
Strategic plan
long-term plan outlining actions needed to achieve desired results
Target elements of change
components of an organization that may be changed

15. Target Elements of Change
Organizational arrangements
Social factors
Methods
People

16. A Systems Model of Change
Figure 16-1

17. Applying the Systems Model of Change
Aid during the strategic planning process
Using the model as a diagnostic framework to determine the causes of an organizational problem and to propose solutions

18. Steps to Leading Organizational Change
Table 16-1

19. Question?
Dale needs to change the manufacturing processes of his firm. This will cause many changes to his labor force. He shares a compelling reason to his employees. Which step is this in leading change?
Generate short term wins
Develop a vision and strategy
Establish a sense of urgency
Create a guiding coalition
The correct answer is “C”. See previous slide.

20. Creating Change Through Organization Development
a set of techniques or tools that are used to implement organizational change
Involves profound change
Value loaded
Diagnostic/prescription cycle
Process oriented

21. Some OD Interventions for Implementing Change
Table 16-2

22. OD Research and Practical Implications
Planned organizational change works
Change programs are more successful when they are geared toward meeting both short-term and long-term results
Organizational change is more likely to succeed when top management is truly committed to the change program
Effectiveness of OD interventions is affected by cross-cultural considerations

23. Why People Resist Change in the Workplace
Resistance to change
emotional or behavioral response to real or imagined work changes

24. Why People Resist Change in the Workplace
An individual’s predisposition toward change
Surprise and fear of the unknown
Climate of mistrust
Fear of failure
Loss of status and/or job security
Peer pressure

25. Question?
Jamie is not directly affected by the change introduced in her company, but she is actively resisting it to protect the interests of her friends. This describes which reason for resistance to change?
Surprise and fear of the unknown
Personality conflicts
Peer pressure
Lack of tact
The correct answer is “C” – peer pressure.
AACSB:  Group-individual dynamics Bloom's Taxonomy:  Application
Difficulty:  Medium Page:  411

26. Why People Resist Change in the Workplace
Disruption of cultural traditions and/or group relationships
Personality conflicts
Lack of tact and/or poor timing
Nonreinforcing reward systems
Past success

27. Overcoming Resistance to Change
Commitment to change
a mind-set of doing whatever it takes to effectively implement change

28. Overcoming Resistance to Change
Provide as much information as possible to employees about the change
Inform employees about the rationale for the change
Conduct meetings to address employee’s concerns
Provide employees the opportunity to discuss how the proposed change might affect them

29. Six Strategies for Overcoming Resistance to Change
Table 16-3

30. Creating a Learning Organization
proactively creates, acquires, and transfers knowledge throughout the organization

31. Building an Organization’s Learning Capability
Figure 16-2

32. Building an Organization’s Learning Capability
Learning capabilities
set of core competencies and internal processes that enable an organization to adapt to its environment

33. Building an Organization’s Learning Capability
Facilitating factors
represent the internal structure and processes that affect how easy or hard it is for learning to occur and the amount of effective learning that takes place

34. Factors that Facilitate Organizational Learning
Insert new Table 16-4

35. Learning Modes Learning modes
various ways in which organizations attempt to create and maximize their learning

36. Six Dominant Modes of Learning
Analytical learning
Synthetic learning
Experimental learning
Interactive learning
Structural learning
Institutional learning

37. Question?
Grant learns through systematic gathering of information. He is a(n) __________ learner.
Analytic
Synthetic
Experimental
Interactive
The correct answer is “A” – analytic. See previous slide.

38. Key Functions in Building a Learning Organization
Building a commitment to learning
Working to generate ideas with impact
Working to generalize ideas with impact
Working to Generate Ideas with Impact
Implement continuous improvement programs
Increase employee competence through training, or buy talent from outside the organization
Experiment with new ideas, processes, and structural arrangements
Go outside the organization to identify world-class ideas and processes
Instill systems thinking throughout the organization
Working to Generalize
Ideas with Impact
Measuring and rewarding learning
Increasing open and honest dialog among organizational members
Reducing conflict
Increasing horizontal and vertical communications
Promoting teamwork
Rewarding risk taking and innovation
Reducing the fear of failure
Increasing the sharing of successes, failures, and best practices across organizational members
Reducing stressors and frustration
Reducing internal competition
Increasing cooperation and collaboration
Creating a psychologically safe and comforting environment

39. Supplemental Slides
Slides contain extra non-text examples to integrate and enhance instructor lectures
Slide 40: Change Approaches
Slides 41: Rational Approach to Change
Slide 42: Emotional Approach to Change
Slide 43: Change Management
Slide 44: Video discussion slide

40. Change Approaches
Some companies focus on change by making hard economic decisions to improve their profitability like downsizing, layoffs, restructuring – Like Chainsaw Al Dunlap at Scott Paper.
His approach at Scott Paper was first and foremost consider your shareholders and do whatever you need to drive the stock price up. He fired thousands of people, sold company assets; and the stock price exploded. He then sold the company to Kimberly-Clark at an inflated price. Within three months, Kimberly-Clark realized that the company wasn’t really worth what they purchased it for. It turned out that none of what Dunlap did was designed to build for the future, only sell off the present in the name of shareholder value. He then attempted to do the same thing at Sunbeam which turned out to be a big failure. This approach to change is likely to only have short-term benefits.
Sunbeam had stacked retailers with more inventory than they could sell in a year, creating current sales to the detriment of future earnings.  The highly efficient plants he closed in Mississippi, Tennessee, Texas, and Louisiana were replaced with plants in Mexico, where a less efficient labor force was willing to work for $1 per hour.  And by the time the Sunbeam Board finally fired him, the stock had fallen to $12 a share.  Today it is less than $5 a share.
Others take more of an organizational approach to change that focuses on development of the corporate culture, human capabilities, information feedback, etc. (e.g., Denny’s). You’ll recall in our discussion of Denny’s that that change was effective because of the leadership from senior management, socially responsible reasons for change, a thorough and deliberate approach to change through diversity training and accountability.
There are some situations where an economic focus is necessary but to do it successfully you have to focus on the organizational “soft” side also. For example, we were hired to facilitate an major change initiative for a collections call center which had economic purposes but instead of just going in and changing everything, we held organizational change sessions with the first-level and group managers to help them and their employees handle this change.
Economic focus: Firms value financial return to stockholders using downsizing, layoffs, restructuring.
Al “Chainsaw” Dunlap - Scott Paper, Sunbeam
Focus on organizational capabilities: Firms value corporate culture, human capabilities, information feedback, measurements.
Denny’s approach to achieving court-ordered change

41. Change Management
Read an article on “An Improvisational Model of Change Management”

42. Video Case: Louisville Slugger – Hillerich & Bradsby
What role do information systems play at H&B? What were the internal and external trade-offs between reconfiguring the old information system and designing a new one?
Why was the transition to the new system difficult? How could Kotter’s eight steps be used to facilitate such a transition?
Why did some people resist change and experience stress? What strategies could H&B have used to overcome resistance to change?
H&B had to decide whether to reconfigure the old system or implement a new one. A new system would streamline information flow in sales, supply chain management, accounting, finance, and marketing. However, the new system also caused a decrease in morale and increase in stress as employees struggled to learn the new system and change the way they operated. Kotter’s steps to leading organizational change include establishing a sense of urgency, creating a guiding coalition, developing a vision and strategy, empowering broad-based action, generating short-term wins, consolidating gains, and anchoring new approaches in the organization’s culture. Successful implementation of these steps facilitate organizational change. Surprise and fear of the unknown, fear of failure, and loss of status or job security were likely reasons H&B employees resisted change and experienced stress in the transition process.