1. PowerPoint Presentation by Charlie Cook The Environment of Managing Gary Dessler Principles and Practices for Tomorrow’s Leaders Copyright © 2004 Prentice Hall, Inc. All rights reserved. Managing Organizational Change Managing Organizational Change 8 C H A P T E R

2. Copyright © 2004 Prentice Hall. All rights reserved.8–2 Chapter Objectives After studying this chapter and the case exercises at the end, you should be able to: 1.Decide if the company should reorganize, and, if so, what the new structure should look like. 2.“Read” the company’s organization culture and make specific recommendations to improve it. 3.Tell the manager what he or she did wrong in implementing the change. 4.Decide what conflict-resolution style is right for the situation.

3. Copyright © 2004 Prentice Hall. All rights reserved.8–3 Basic Questions for Change Agents What are the forces acting upon me?  What are the pressures I should take into consideration as I decide what to change and how I should change it? What should we change?  Should the changes be strategic and companywide or relatively limited? How should we change it?  How should we actually implement the change?

4. Copyright © 2004 Prentice Hall. All rights reserved.8–4 Model for Planned Organizational Change FIGURE 8–1 Source: Adapted from Larry Short, “Planned Organizational Change,” MSU Business Topics, Autumn 1973, pp. 53–61 ed. Theodore Herbert, Organizational Behavior: Readings and Cases (New York: McMillan, 1976), p. 351.

5. Copyright © 2004 Prentice Hall. All rights reserved.8–5 Strategic Change Strategic change  A change in a firm’s strategy. Sources and Effects of Strategic Change  Strategic changes are usually triggered by factors outside the company.  Strategic changes are often required for survival.  Strategic changes implemented under crisis conditions are highly risky.

6. Copyright © 2004 Prentice Hall. All rights reserved.8–6 Other Approaches to Change Technological Change  Changing the way the company creates and markets its products or services. Structural Change  Changing one or more aspects of the company’s organization structures.  Reorganizing: changing the firm’s organization chart and structural elements.

7. Copyright © 2004 Prentice Hall. All rights reserved.8–7 Is a New Structure Really Required? FIGURE 8–2 Source: Adapted from Michael Goold and Andrew Campbell, “Do You Have a Well-Designed Organization?” Harvard Business Review, March 2002, p. 124. When you identify a problem with your design, first look for ways to fix it without substantially altering it. If that doesn’t work, you’ll have to make fundamental changes or even reject the design. Here’s a step-by-step process for resolving problems.

8. Copyright © 2004 Prentice Hall. All rights reserved.8–8 Is Your Organization Well-Designed? The market advantage test The parenting advantage test The people test The feasibility test The specialist culture test The difficult-links test The redundant- hierarchy test The accountability test The flexibility test

9. Copyright © 2004 Prentice Hall. All rights reserved.8–9 Is a New Structure Really Required? (cont’d) FIGURE 8–2b Source: Adapted from Michael Goold and Andrew Campbell, “Do You Have a Well-Designed Organization?” Harvard Business Review, March 2002, p. 124. When you identify a problem with your design, first look for ways to fix it without substantially altering it. If that doesn’t work, you’ll have to make fundamental changes or even reject the design. Here’s a step-by-step process for resolving problems.

10. Copyright © 2004 Prentice Hall. All rights reserved.8–10 Checklist 8.1 How to Read an Organization’s Culture  Observe the physical surroundings.  Sit in on a team meeting.  Listen to the language.  Note to whom you are introduced and how they act.  Get the views of outsiders, including vendors, customers, and former employees.

11. Copyright © 2004 Prentice Hall. All rights reserved.8–11 Creating and Sustaining the Right Corporate Culture 1.Make it clear to your employees what you pay attention to, measure, and control. 2.React appropriately. 3.Use “signs, symbols, stories, rites, and ceremonies.” 4.Deliberately role model, teach, and coach the values you want to emphasize. 5.Communicate your priorities by how you allocate rewards. 6.Make your HR procedures and criteria consistent.

12. Copyright © 2004 Prentice Hall. All rights reserved.8–12 Why Do People Resist Change? Lack of information or honest disagreement over the facts concerning change. Personal and emotional fear of loss of job, relationships, and/or status. Personality traits: poor self-image, low tolerance for ambiguity and risk. Change creates competing commitments.

13. Copyright © 2004 Prentice Hall. All rights reserved.8–13 FIGURE 8–3 How Immune Is the Person to Change Source: Robert Kegan and Lisa Lahey, “The Real Reason People Won’t Change,” Harvard Business Review, November 2001, p. 89.

14. Copyright © 2004 Prentice Hall. All rights reserved.8–14 Kurt Lewin’s Model of Change Unfreezing  Involves reducing the forces for the status quo, usually by presenting a provocative problem or event to get people to recognize the need for change and to search for new solutions. Moving  Using techniques and actually altering the behaviors, values, and attitudes of the individuals in an organization. Refreezing  Preventing a return to old ways of doing things by instituting new systems and procedures that reinforce the new organizational changes.

15. Copyright © 2004 Prentice Hall. All rights reserved.8–15

16. Copyright © 2004 Prentice Hall. All rights reserved.8–16 Business Process Reengineering Business Reengineering  The radical redesign of business processes to cut waste; to improve cost, quality, and service; and to maximize the benefits of information technology, generally by questioning how and why things are being done as they are.

17. Copyright © 2004 Prentice Hall. All rights reserved.8–17 A Nine-step Process For Leading Organizational Change 1.Create a Sense of Urgency 2.Decide What to Change 3.Create a Guiding Coalition and Mobilize Commitment 4.Develop and Communicate a Shared Vision 5.Empower Employees to Make the Change 6.Generate Short-Term Wins 7.Consolidate Gains and Produce More Change 8.Anchor the New Ways of Doing Things in the Company Culture 9.Monitor Progress and Adjust the Vision as Required

18. Copyright © 2004 Prentice Hall. All rights reserved.8–18 FIGURE 8–4 Redesigning Mortgage Processing at Banc One Shifting from a traditional approach helped Banc One Mortgage slash processing time from 17 days to 2.

19. Copyright © 2004 Prentice Hall. All rights reserved.8–19 FIGURE 8–5 Barriers to Empowerment Source: Reprinted by permission of Harvard Business School Press. From Leading Change by John P. Kotter. Boston, MA. 1996, p. 102. Copyright © 1996 by the President and Fellows of Harvard College, all rights reserved.

20. Copyright © 2004 Prentice Hall. All rights reserved.8–20 FIGURE 8–6 Some of Nissan’s Cross- Functional Teams (FTs) Source: Adapted from Carlos Goshn, “Saving the Business Without Losing the Company,” Harvard Business Review, January 2002, pp. 40–41.

21. Copyright © 2004 Prentice Hall. All rights reserved.8–21 A Special Kind of Change: Becoming an E-Business E-Business Issues  Clicks and bricks: blending the old business and the e-business cultures.  E-business’s effects on finance, human resources, training, supply-chain management, customer- resource management, and just about every other corporate function.  How to structure the new enterprise.  Blend the new e-business into the company’s current structure  Organize the e-business as a separate entity.

22. Copyright © 2004 Prentice Hall. All rights reserved.8–22 Organizational Development Organizational Development (OD)  An approach to organizational change in which the employees themselves formulate the change that’s required and implement it, usually with the aid of a trained consultant.

23. Copyright © 2004 Prentice Hall. All rights reserved.8–23 OD Interventions Human Process Interventions  Aimed at enabling employees to develop a better understanding of their own and others’ behaviors for the purpose of improving that behavior such that the organization benefits. Sensitivity Training (Laboratory or T-groups)  Purpose is to increase participants’ insight into their own behavior and that of others by encouraging an open expression of feelings in a trainer-guided group.

24. Copyright © 2004 Prentice Hall. All rights reserved.8–24 OD Interventions (cont’d) Team Building  The process of improving the effectiveness of a team through action research or other techniques. Survey Research  The process of collecting data from attitude surveys filled out by employees of an organization, then feeding the data back to workgroups to provide a basis for problem analysis and action planning.

25. Copyright © 2004 Prentice Hall. All rights reserved.8–25

26. Copyright © 2004 Prentice Hall. All rights reserved.8–26 Technostructural Applications of OD Formal Structure Change Program  An intervention technique in which employees collect information on existing formal organizational structures and analyze it for the purpose of redesigning and implementing new organizational structures.

27. Copyright © 2004 Prentice Hall. All rights reserved.8–27 Strategic Applications of OD Strategic Intervention  An OD application aimed at effecting a suitable fit among a firm’s strategy, structure, culture, and external environments. Integrated Strategic Management  An OD program to create or change a company’s strategy by:  Analyzing the current strategy  Choosing a desired strategy  Designing a strategic change plan  Implementing the new plan.

28. Copyright © 2004 Prentice Hall. All rights reserved.8–28 FIGURE 8–7 Conflict Handling Styles Source: Source: Kenneth W. Thomas, “Organizational Conflict,” ed., Steven Kerr, Organizational Behavior (Columbus, OH: Grid Publishing, 1979), in Andrew DuBrin, Applying Psychology (Upper Saddle River, NJ: Prentice Hall, 2000), p. 223.

29. Copyright © 2004 Prentice Hall. All rights reserved.8–29