©2007 Prentice Hall Organizational Behavior: An Introduction to Your Life in Organizations Chapter 18 Changing Organizations

©2007 Prentice Hall Preview What is large scale organizational change and why do companies attempt it? In large scale organizational change, what, exactly, changes? How do managers structure a planned change? How does the change process work?: Models During planned change, how do individuals and organizations learn? What are some key ethical dilemmas during organizational change? What are some common problems during organizational change? Which assumptions about change are important? How do individuals react to change and how do managers deal with their reactions? Are Western approaches to change exportable?

©2007 Prentice Hall Planned and unplanned change A major reason managers institute change is to control change rather than being victimized by it Planned change: change that is systematic and relatively controlled

©2007 Prentice Hall Forces for stability versus forces for change Companies pursue organizational stability when they value:  Institutionalism  Reduction of transaction costs  Sustained competitive advantage Companies pursue organizational change when they value:  Adaptability  Cost containment  Meeting the demands of impatient capital markets  Consolidation of control  Competitive advantage through organizational design

©2007 Prentice Hall Traditional change: Implementing a corporate strategy To effectively implement a change in a company’s strategy, managers must have skills in:  mobilizing the executives and employees  responding to objections and resistance  creating a sense of urgency  articulating the strategy  building coalitions to support the strategy  locating the right people for key jobs  preventing distractions

©2007 Prentice Hall Organizational development Organizational development (OD) is the use of social science knowledge to improve organizational effectiveness Process for behavioral systems change that includes the five steps of:  Diagnosis  Feedback  Planning  Intervention  Follow-up evaluation

©2007 Prentice Hall Appreciative inquiry Identifies the positive characteristics of an organization and builds on them Steps:  discovering and valuing the best of what has already existed in the organization  dreaming and envisioning what might be  dialoguing about what can be  co-constructing - democratically discussing and creating - what will be

©2007 Prentice Hall Positive organizational behavior The study and application of positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed to improve performance Researcher Fred Luthans suggests strengthening self-efficacy strengthens organizations

©2007 Prentice Hall A three-stage model of change Kurt Lewin’s three-stage model of change:  Unfreezing  Changing  Refreezing Force-field theory: there are always two sets of opposing forces - forces for change and forces against change; organization changes only when balance is changed

©2007 Prentice Hall Punctuated equilibrium change Suggests that in some organizations, long periods of equilibrium, when change is minimal and incremental, are interrupted by brief periods of radical organizational change Organizations coast along indefinitely until forced to change by some mobilizing event

©2007 Prentice Hall Continuous change Significant change that is ongoing Companies undergoing continuous change neither rigidly plan for change nor chaotically react to it Managers may use semistructures, where some organizational features are determined and structured, while others are undetermined and flexible

©2007 Prentice Hall Where do people learn best? And What do people learn? Training consultants or own trainers Self training or online training Emphasis on real world training for applicability Could be straightforward cognitive knowledge to complicated behavioral patterns (large range of possible topics)

©2007 Prentice Hall How do organizations learn? Building an organizational memory involves understanding how organizations learn, how knowledge is retained and transferred within an organization, and how errors are detected Parallel learning structures: create the supplemental structures to enhance organizational learning, innovation and other issues related to organizational adaptation

©2007 Prentice Hall What are some key ethical dilemmas during organizational change? The nature of the information individuals are required to give to their organization for purposes of the change The nature of the changes which are espoused Who is to have a voice in creating the targeted organizational values

©2007 Prentice Hall What are some common problems during organizational change? permitting complacency failing to create a sufficiently powerful guiding coalition underestimating the power of vision undercommunicating the vision allowing obstacles to get in the way of the new vision failing to create short-term wins declaring victory too soon neglecting to anchor changes firmly in corporate culture weak transfer of training employee silence

©2007 Prentice Hall Which assumptions about change are important? Should the change focus on the process or the problem? Is change logical, or emotional? Does change start at the top or the bottom of the company? How is change disseminated?

©2007 Prentice Hall How do individuals react to change and how do managers deal with their reactions? People react to a change in complex ways that can be understood in terms of three factors: beliefs, emotions, and behaviors First, people develop beliefs about a change Second, they react emotionally to the change Third, they plan or resolve to take some action based on the change

©2007 Prentice Hall Individual predispositions toward change Individuals differ in their readiness for change Some people resist change because they strongly prefer routine, they react emotionally to change, or they have a short-term focus Others resist because, regardless of the circumstances, they seldom change their mind Still others enjoy change

©2007 Prentice Hall What managers can do to foster change Communicate to their employees the need for the change Involve any likely resistors Be supportive Negotiate Manipulate and co-opt Coerce people to accept the change

©2007 Prentice Hall Are Western approaches to change exportable? Issues with using these ideas internationally:  Values may not support change methods  Cultural assumptions about the change process  Differences in attitudes toward OD interventions  Consider how the change process works in companies in transitional economies

©2007 Prentice Hall Apply what you have learned World Class Company: BP Advice from the Pro’s Gain Experience Can you solve this manager’s problem?

©2007 Prentice Hall Summary – What is large scale organizational change and why do companies attempt it? Large scale organizational change is organization-wide Companies attempt planned, large scale organizational change because they seek adaptability, cost containment, or competitive advantage, among other things

©2007 Prentice Hall Summary – In large scale organizational change, what, exactly, changes? Typically, companies change:  their strategy and their systems for implementing their strategy  power and decision making  organizational culture

©2007 Prentice Hall Summary – How do managers structure a planned change? The traditional way is by choosing a new corporate strategy and changing organizational systems accordingly Other ways include organizational development, appreciative inquiry, and positive organizational behavior

©2007 Prentice Hall Summary – How does the change process work? Models of change include:  Lewin’s model  The punctuated equilibrium model  The continuous change model

©2007 Prentice Hall Summary – During planned change, how do individuals and organizations learn? Individuals learn either in training settings or on the job Organizations are also said to learn, by developing such processes as organizational memory and parallel learning structures

©2007 Prentice Hall Summary – What are some key ethical dilemmas during organizational change? The nature of the information individuals are asked to give to their organization (should they have to reveal their individual values?) The nature of the changes to be adopted

©2007 Prentice Hall Summary – What are some common problems during organizational change? Typical problems in organizational change are:  failures of communication  weak transfer of training from the training class to the organization  employee silence

©2007 Prentice Hall Summary – Which assumptions about change are important? Assumptions to examine include:  whether a change should focus on the process or the problem  whether it is logical or emotional  whether it should start at the top or the bottom of the company  how change is disseminated

©2007 Prentice Hall Summary – How do individuals react to change and how do managers deal with their reactions? Some individuals enjoy change and some don’t Managers can deal with individual reactions by, among other things, communicating clearly the need for the change and involving potential resistors in the change

©2007 Prentice Hall Summary – Are Western approaches to change exportable? Only to some extent While some change is logically based, many aspects of change are culture- dependent