Organizational Change Part 2 Steven E. Phelan July 2005

Plan Resistance to change Shaping approaches to change Controlling approaches to change Merger plan simulation

Dilbert The goal of change management is to dupe slow-witted employees into thinking change is good for them by appealing to their sense of adventure and love of challenge This is like convincing a trout to leap out of a stream to experience the adventure of getting deboned

Signs of Resistance to Change Active signs of resistance Being critical Finding fault Ridiculing Appealing to fear Using facts selectively Blaming or accusing Sabotaging Intimidating or threatening Manipulating Distorting facts Blocking Undermining. Starting rumors Arguing Passive signs of resistance Agreeing verbally but not following through (“malicious compliance”) Failing to implement change Procrastinating or dragging one’s feet Feigning ignorance Withholding information, suggestions, help, or support Standing by and allowing change to fail Which of the various ways of resisting change are the most common? Which are the most difficult to deal with?

Why Do People Resist Change? Dislike of change  People don’t resist change, they resist pain!  Boredom can be pain, too. Discomfort with uncertainty  Low tolerance for ambiguity Perceived negative effects of interests  Authority, status, rewards, salary, social ties Attachment to the established culture/ways of doing things Perceived breach of psychological contract

Why Do People Resist Change? Lack of conviction that change is needed Lack of clarity as to what is needed Belief that the specific change being proposed is inappropriate Belief that the timing is wrong Excessive change Cumulative effects of other changes in one’s life Perceived clash with ethics Reaction to the experience of previous changes Disagreement with the way the change is being managed

Why do people support change? Security Money Authority Status/prestige Responsibility Better working conditions Self-satisfaction Better personal contacts Less time and effort

Managing Resistance – The Situational Approach The classic steps:  Education and communication  Participation and involvement  Facilitation and support  Negotiation and agreement  Manipulation and cooptation  Explicit and implicit coercion Does a successful change manager needs skills in all six areas? Where do you need development?

The Resistance Cycle Resistance is a natural (even necessary) psychological stage in any change:  Denial/Shock  Resistance/Anger  Exploration/Mourning  Commitment /Acceptance Do we just ‘let nature take its course’ then? Can people get stuck in a stage?

Behavioral Strategies Creative counters (Karp)  Prepared counters to blocks, stalls, rollovers, threats, etc. Thought Self-Leadership  Based on RET  Activating event -> (Beliefs) ->Emotional Consequence  Change dysfunctional beliefs and thus change emotional consequences Assumptions, self-talk, mental imagery Rooting out: Shoulds, musts, oughts From ‘obstacle thinking’ to ‘opportunity thinking’ Monitoring self-cognition

Behavioral Strategies 2 Tinkering, Kludging, & Pacing (Abrahamson)  The reconfiguration of existing practices and business models rather than the creation of new ones  Tinkering is small (e.g. sharing of best practice or adapting a process from another business)  Kludging creates a new business from existing capabilities  Pacing is mixing disruptive change with tinkering and kludging Deliberately avoids lots of large scale change because that generates ‘change fatigue’ and major resistance

The “Power of Resistance” (Maurer) Use the power of resistance to build support  Showing respect towards resistors creates stronger relationships and thereby improves the prospects of success Fundamental touchstones  Maintain clear focus  Embrace resistance  Respect those who resist (assume good faith)  Relax  Join with the resistance Look for points of commonality

Maurer’s Default Options Use power Manipulate those who oppose Apply force of reason Ignore resistance Play off relationships Make deals Kill the messenger Give in

Question Which approach to the management of resistance attracts you? Why?

Shaping Approaches to Change

Organization Development Values  Humanistic Openness, honesty, integrity  Democratic Social justice, freedom of choice, involvement  Developmental Authenticity, growth, self-realization

History of OD T-groups (Lewin, 1946)  Training groups – a form of group therapy Socio-technical systems  Tavistock Institute  Focus on social teams and industrial democracy Surveys with Likert scales from 1946  Often used for diagnosis of organizational climate and post-intervention Participative Action research  A Plan-Do-Check-Act cycle that involves those who are affected by the changes

Role of OD practitioner Steps  Problem identification  Consultation/collaboration with OD consultant  Data gathering and problem diagnosis  Feedback  Joint problem diagnosis (with group)  Joint action planning (with group)  Change actions  Further data gathering

Second generation OD Focus on transformational change, culture, and learning organizations  Argyris undiscussables, double loop learning, and triple loop learning  Senge’s system dynamics for learning New interest in teams  High performance work organizations  Self managed teams TQM Visioning, diversity, large meetings Large-scale OD

The New Agenda for OD Loss of community  People pretend to care more about one another than they really do Loss of employer-employee social contract  I must take care of myself Employability  Is my employer giving me the skills to find another job if I have to? Trust  Widening gap between have and have nots  Difference between what managers say and do  Lack of openness Culture Clash  Need for negotiation and conflict resolution skills

Appreciative Inquiry Participation by large-scale intervention Shows a shift from problem solving to joint envisioning of the future Involves a four-step technique:  Discovering current best practices  Building on existing knowledge  Designing changes  Sustaining the organization’s future

AI Exercise Goal: Quality executive education  Step 1: Describe your peak experience in quality education  Step 2: Generate some ‘provocative propositions’ for the UNLV EMBA program based on step 1.  Step 3: Describe times when the UNLV program approached peak experience  Step 3: Develop a vision of what could be  Step 4: What needs to change in skills, structure, processes and systems, management style, and staffing to enhance this vision

Sense-Making Approach Eight Lessons  Sense-making and identity construction have a symbiotic relationship  Social relations influence sense making  People look at a variety of cues to make sense of their situation  Sense making changes over time in response to new cues and events  Sense making often occurs retrospectively  Stories have to be plausible but not necessarily accurate  Our own actions (enactments) influence sense making  Powerful actors can shape the interpretations of others through their actions – how?

Controlling Approaches to Change

Change Management Approach Focuses on strategic, intentional and usually large-scale change Entails following a variety of steps; the exact steps vary depending upon the model used Belief that achieving organizational change is possible through a coordinated and planned approach

Some Systems Ten Steps  Define the vision  Mobilize  Catalyze  Steer  Deliver  Obtain participation  Handle emotions  Handle power  Train and coach  Actively communicate 12 Actions  Get support of key power groups  Get leaders t model change behavior  Use symbols and language  Define areas of stability  Surface dissatisfaction  Promote participation  Reward behavior that supports change  Disengage from the old  Communicate image of future  Use multiple leverage points  Develop transition mgt arrangements  Create feedback

Some Systems 10 Commandments  Analyze the need for change  Create a shared vision  Separate from the past  Create a sense of urgency  Support a strong leader role  Line up political sponsorship  Craft an implementation plan  Develop enabling structures  Communicate and involve people  Reinforce and institutionalize change Eight-step model  Establish the need for urgency  Ensure there is a power change group to guide the change  Develop a vision  Communicate the vision  Empower staff  Ensure there are short term wins  Consolidate gains  Embed the change in the culture

Exercise Compare and contrast the various steps in these models. What is left out of different models? Create your own composite model.  Is there a preferred sequence of steps? Why? Identify the key management skills associated with each step  Which ones are you strongest on? Weakest on? In your experience:  Which steps have been best handled?  Worst handled? Why?

Change Management vs. OD Critics of change management depict it as being “faddish” and the product of management consultancy firms There is a debate between proponents of OD and proponents of change management:  OD is criticized for being less relevant to modern organizations which require strategic, often large scale change rather than slower, incremental change often associated with a traditional OD  Change management is criticized for lacking a humanistic set of values and for having a focus on the concerns of management rather than on those of the organization as a whole

Contingency Approach Contingency approaches challenge the view that there is “one best way”  The style of change will vary, depending upon the scale of the change and the receptivity of organizational members for engaging in the change. In the Dunphy-Stace model the style of change varies from collaborative to coercive  What are the implications of this?  Why are almost all large scale changes seen as coercive (by top management and employees)  How does this knowledge change your step-model?

Processual Approach Draws on a navigator approach and views change as a continuous process which unfolds differently depending upon the time and the context  It sees the outcome of change as occurring through a complex interplay of different interest groups, goals, and politics. Only some outcomes will be able to be achieved given the “messiness” of change This approach does not provide a list of “what to do” steps as in the change management approaches.  Rather it alerts the change manager to the range of influences which they will confront and the way in which these will lead to only certain change outcomes being achieved

Rules of thumb for change agents Shepard (1975) Stay alive  Learn to greet absurdity with laughter  Use your skills, emotions, labels, and positions don’t be used by them  Don’t get trapped in other people’s games Start where the system is  Understand how others see themselves (empathy) Never work uphill  Work in the most promising arenas  Don’t build hills as you go  Build resources  Don’t over organize  Don’t argue if you can’t win  Don’t drift – remain focused on your purpose

More rules of thumb Light many fires  Load experiments for success Innovation requires a good idea, initiative, and a few friends  Find the people who are ready and able to work, introduce them to one another, and work with them  Those who need to rebel or submit are not reliable partners Keep an optimistic bias Capture the moment  timing is everything

Quinn’s logical incrementalism revisited Key propositions  Proceed experimentally and flexibly  Conceal true goals and intentions  Build awareness and credibility to legitimize new viewpoints  Tactical shifts, partial solutions Use serendipity to promote supporters, replace opponents, fund pet projects  Broaden political support and overcome opposition  Encourage others to trial new ideas and create pockets of commitment (but don’t be associated with failure). Why is this a navigator/processual view of change?

The Merger Plan Simulation Task  Develop a formal integration plan (with decisions on branch closures, systems conversion, product alignment, layoffs, and communication strategy) that will maximize shareholder value while keeping as much support as possible from the stakeholders at the two banks and external organizations.  5 minutes = 1 news cycle = 1 day

Roles Integration manager 2 HR directors 2 CEOs 2 Heads of retail banking Rest to choose from:  Largest customers, newspaper editors, funds managers, regulators, banking unions, CIOs, CFOs, branch managers