© 2005 Prentice-Hall, Inc Chapter 14 Organizational Change

© 2005 Prentice-Hall, Inc Learning Objectives Define organizational change and understand why managing organizational change is an important part of international management Understand the individual, group, and structural levels of change Know what internal and external factors influence organizational change Explain the role of national and organizational culture on organizational stability and change

© 2005 Prentice-Hall, Inc Learning Objectives Understand the processes involved in planned organizational change, including sources of resistance to change and ways to overcome them Understand how macro level theories of organizational change influence the management of change

© 2005 Prentice-Hall, Inc Organizational Change Reconfigures components of an organization to increase efficiency and effectiveness

© 2005 Prentice-Hall, Inc Levels of Organizational Change Individual Change Behavior of a person is different as a result of new information, training, experience, or rearrangement of an organization's structure Group Change Can take several forms including new leadership, increased or diminished cohesiveness, transition into a team

© 2005 Prentice-Hall, Inc Levels of Organizational Change Structural Change Deliberate rearrangement of positions, departments, or other major units of organization

© 2005 Prentice-Hall, Inc Internal Change Factors Technical production processes Production New technologies Quality Political processes New organizational goals Conflict New leadership

© 2005 Prentice-Hall, Inc Internal Change Factors Organizational culture Values Norms New member socialization

© 2005 Prentice-Hall, Inc External Change Factors The immediate environment Domestic competition Population trends Social trends Government actions

© 2005 Prentice-Hall, Inc External Change Factors The general environment Foreign competition Social movements Political-economic movements Technology Professionalization Culture contact

© 2005 Prentice-Hall, Inc Change Variables and Culture Relationship between values and behavior may vary with culture so in some cultures individuals can change behavior without changing their values Internal and external variables exist in context of national and organizational culture; simultaneously influence culture and are influenced by it

© 2005 Prentice-Hall, Inc National Culture and Organizational Change Time orientation Resistance to change Tradition Habit Resource limitations Power and influence Fear of the unknown Values

© 2005 Prentice-Hall, Inc Resistance to Change in Different Clusters of Countries Dimension Scores Resistance level PD ID UA Country Clusters 4 (strongest) 3 (strong) highlow high medmedhigh highhighhigh high medhigh highlowmed Most of Latin America, Portugal, Korea, the former Yugoslavia Japan Belgium, France Spain, Argentina, Brazil, Greece, Turkey, Arab Countries Indonesia, Thailand, Taiwan, Iran, Pakistan, African countries

© 2005 Prentice-Hall, Inc Resistance to Change in Different Clusters of Countries Dimension Scores Resistance level PD ID UA Country Clusters 2 (medium) 1 (week) 0 (weakest) highlowlow lowmedhigh medhighmed medhighlow lowhighlow Philippines, Malaysia, India Austria, Israel Italy, Germany, Switzerland, South Africa Singapore, Hong Kong, Jamaica Anglo countries, Nordic countries, Netherlands

© 2005 Prentice-Hall, Inc Organizational Culture and Change Managing change Top-down vs. bottom-up Which components to change and how Organization development Tries to improve organizational efficiency and effectiveness, create organizational "health," build capacity for continuous change

© 2005 Prentice-Hall, Inc Lewin’s Model of Change Phase 1 - Diagnosis Phase 2 - Unfreezing Phase 3 - Movement Phase 4 - Refreezing Phase 5 - Renewal

© 2005 Prentice-Hall, Inc Managing Resistance to Change Education and communication Participation and involvement Negotiation and agreement Manipulation and co-optation Coercion

© 2005 Prentice-Hall, Inc The Interaction of National and Organizational Cultures Determining extent to which national values resist change and fit a change strategy to them More technologically- and knowledge-oriented organizational cultures less likely to resist change

© 2005 Prentice-Hall, Inc Change Strategies for Different Groups of Countries Change Strategy PD ID MA UA Country Clusters 5 (power) 4 (power, manipulation/ persuasion) highlowhighhigh highlow medhigh Columbia, Ecuador, Venezuela, Mexico Rest of Latin America, Spain, Portugal, former Yugoslavia, Greece, Turkey, Arab countries, Korea Dimension Scores

© 2005 Prentice-Hall, Inc Change Strategies for Different Groups of Countries Change Strategy PD ID MA UA Country Clusters Dimension Scores 3 (manipulation/ persuasion) 2 (manipulation/ persuasion, consultation) 1 (consultation, participation) medmedhighhigh highhighmedhigh highlowmedlow medlowhighlow lowmedmedhigh medhighhighmed lowhighhighlow lowhighlowlow Japan Belgium, France Indonesia, Thailand, Taiwan, Iran, Pakistan, African countries Philippines, Malaysia, India Singapore, Hong Kong, Jamaica Austria, Israel Italy, Germany,Switzerland, South Africa Anglo countries Nordic countries, Netherlands

© 2005 Prentice-Hall, Inc Macro-Organizational Change Theories Life-cycle theory Implies organizations have developmental patterns that managers have to recognize and adapt to Teleological theory Relies on philosophical doctrine that purpose or goal is final cause for guiding movement of organization

© 2005 Prentice-Hall, Inc Macro-Organizational Change Theories Dialectical theory Change product of conflict Evolutionary theory Views change as proceeding through a continuous cycle of variation, selection, and retention Cultural implications Theories useful for analyzing organizational change in societies with different cultural orientations

© 2005 Prentice-Hall, Inc Convergence or Divergence? Competitive pressures Attempts to standardize product quality on a worldwide basis Diffusion of advanced management techniques Transfer of technological innovations Problems with diffusion of organizational innovations Culture and local conditions act as barriers to change

© 2005 Prentice-Hall, Inc Implications for Managers Culture influences organizational change When formulating a change program, assess need for change, what change appropriate, nature of resistance to change, success of planned change Be aware of internal and external forces for change and how different cultures respond to them Understand larger processes affecting organizational change and how they limit change