Managing Change and Innovation

Learning Outcomes Describe the change variables a manager can control Study internal and external forces of change Analyze managers as change agents Explain why people resist change

Learning Outcomes Learn how to reduce resistance to change Define organization development and learn four OD techniques Review the causes and symptoms of stress Compare creativity and innovation Learn how organizations can stimulate innovation

Categories of Change Change is defined an alternation of an organization’s environment, structure, technology, or people Managers can change Structure (e.g., Technology people Change is an alteration of an organization’s environment, structure, technology, or people. Because change is an organizational reality, handling it is an integral part of every manager’s job. What can a manager change? There are three categories: structure, technology, and people. Changes in structure consist of altering relationships, redesigning jobs, coordinating mechanisms, and modifying spans of control. Changes in technology consist of revising work processes, revamping work methods, and acquiring new equipment. Changes in people consist of altering expectations, attitudes, perceptions, and behavior.

External Forces of Change Competition Government Programs Economic Conditions Technology The external forces of change come from various sources. In recent years, the marketplace has affected firms by introducing new competition. Bell Atlantic, for example, is experiencing competition from cable companies to provide local phone service. Government laws and regulations are also an impetus for change. In 1990 the passage of the Americans with Disabilities Act required businesses to widen doorways, reconfigure restrooms, add ramps, and take other actions to improve accessibility. Technology also causes change. In the new millennium, the e-commerce and the Internet have changed how we sell products and access information. Economic changes, of course, affect almost all organizations. Dramatic decreases in interest rates in the late 1990s fostered significant growth in the housing market. This meant more jobs, more people working, and more sales for other businesses that support the building industry.

Internal Forces of Change Operations Impact of External Events Internal forces originate from the operations of the organization or from the impact of external changes: such as management redefining its strategies, new equipment entering the workplace, and demographic changes in the organization’s workforce. These forces lead to changes in the policies and practices of management.

Agents of Change Staff Managers Specialists Outside Consultants People who are the catalysts for change and manage the change process are change agents. A manager may be a change agent. However, the change agent can be a nonmanager—for example, an internal staff specialist or outside consultant. Management often uses outside consultants because they can offer a fresh perspective which insiders lack. But, they may not understand the organization’s history, culture, operating procedures, and personnel. Furthermore, outside change agents often initiate more drastic changes because they do not have to live with the repercussions after the changes have been implemented.

The “Calm Waters” Metaphor Lewin’s Three-Step Process Unfreezing Changing Refreezing Two metaphors exemplify the process of change. The calm waters metaphor likens the organization to a large ship making a predictable trip across a calm sea and experiencing an occasional storm. The white water rapids metaphor likens an organization to a group of strangers on a small raft navigating the uninterrupted white water rapids of an unfamiliar river to an unknown destination in the dark of night. Until recently, the calm waters metaphor dominated the thinking of practicing managers and academics. Kurt Lewin’s three-step description of the change process epitomizes this metaphor. According to Lewin, successful change requires unfreezing the status quo, changing to a new state, and refreezing the change to make it permanent. The status quo represents a state of equilibrium that must be thawed in one of three ways for change to occur: 1. The driving forces which direct behavior away from the status quo can be increased. 2. The restraining forces which hinder movement from equilibrium can be decreased. 3. The two approaches can be combined. In the relatively calm environment of the 1950s through the early 1970s, Lewin’s model may have been workable. Given chaotic change and the global village, however, this metaphor is moribund. The “Calm Waters” Metaphor

White-Water Rapids Lack of Stability Constant Change Virtual Chaos Predictability White-Water Rapids The white water rapids metaphor reflects uncertain, dynamic environments. The concepts of stability and predictability are relics of days gone by. Disruptions in the status quo are no longer occasional and temporary, only to be followed by “smooth sailing” and halcyon days. Many managers today never get out of the rapids. They face constant, wrenching change that boarders on chaos. These managers are playing a game that they have never played before that is governed by rules which are created as the game progresses. Few organizations today can treat change as the occasional ripple in a still pool. Too much is changing too fast! Complacency is a “luxury” because most competitive advantages last less than eighteen months. According to Tom Peters, the old saying, “If it ain’t broke, don’t fix it” is no longer relevant. In its place, he suggests “If it ain’t broke, you just haven’t looked hard enough. Fix it anyway.” Peters’ observation is consistent with current reengineering trends. And, the quantum changes required to remain competitive in the global marketplace cannot be overstated.

Uncertainty and Ambiguity Resistance to Change Uncertainty and Ambiguity Fear of Personal Loss Lack of Faith in Change Managers make changes to increase the effectiveness of their organizations. Change, however, can be a threat to managers and nonmanagers alike. So, organizations resist change, even when it is beneficial. People resist change for three reasons. In the first place, change substitutes ambiguity and uncertainty for the known. Even if workers do not like the current system of management, at least they know the ropes. People also resist change because they fear losing something they already possess. The greater their investment in the status quo, the more they resist change because they fear losing their position, money, friendships, or personal conveniences. Finally, people will resist any changes they do not believe are in the organization’s best interests.

Techniques for Reducing Resistance Education and Communication Participation Negotiation Facilitation and Support Six tactics can be used by change agents to deal with resistance. 1. Education and communication can help employees to understand why change is necessary. 2. Participation encourages individuals to support the changes that they decided upon. 3. Facilitation and support can be used to reduce resistance. 4. Negotiation means exchanging something of value for lessening resistance. 5. Manipulation involves covert influence attempts; cooptation uses participation and manipulation. 6. Coercion is the application of direct threats or force on the resisters. Manipulation and Cooptation Coercion

Techniques for Managing Change Authority Coordination Centralization Attitudes Expectations Behavior Processes Methods Equipment People Technology Structure Change is an alteration of an organization’s environment, structure, technology, or people. Because change is an organizational reality, handling it is an integral part of every manager’s job. Changing structure means altering authority relationships, coordination mechanisms, centralization of authority, job design, or similar structural variables. Changing technology means modifying methods and equipment used to complete work processes. Changing people involves adjusting employee attitudes, expectations, perceptions, or behaviors.

Organizational Development Techniques Intergroup development Process consultation Survey feedback Team building The term organizational development refers to a collection of techniques for understanding, changing, and developing work force effectiveness: process consultation, survey feedback, team building, and intergroup development. Intergroup development can change attitudes, stereotypes, and perceptions that groups have of each other. One method emphasizes problem solving. Once problems have been identified, team members can move to the integration phase of working together to develop solutions to improve intergroup relations. In process consultation, outside consultants help managers to perceive, understand, and act upon events with which they must deal. Consultants are not there to solve problems. Rather, they act as coaches to help managers diagnose which internal processes need improvement. Management can use the survey feedback approach to assess the attitudes of organizational members in order to identify and address the discrepancies among their perceptions. The following team building activities promote trust and openness between team members: goal setting, interpersonal development, role analysis, and team process analysis.

What Is Stress? Importance Uncertainty Demands Constraints Stress is a force or influence that a person feels when facing opportunities, constraints, or demands which are important yet uncertain. Stress can be positive in a situation that offers an opportunity for gain. But, stress is most often associated with constraints (barriers that keep someone from doing what he or she wants) and demands (things that take up someone’s time and require the person to shift priorities). Furthermore, when constraints or demands have an effect on an important event and the outcome is unknown, pressure is added—pressure resulting in stress.

Interpersonal Demands Structural Dimensions Leadership Techniques Organizational Stress Factors Task Demands Role Demands Interpersonal Demands Structural Dimensions Leadership Techniques Factors that create stress can be grouped into two categories: organizational and personal. Organizational stress can be be classified in five ways. Task demands are related to an employee’s job: for example, the design of the job, working conditions, and physical work layout. Interdependence between an employee’s tasks and the tasks of others creates stress. Autonomy, on the other hand, tends to reduce stress. Role demands relate to pressure placed on an employee as a function his or her role in the organization. Role conflicts create expectations that may be hard to reconcile or satisfy. Role overload occurs when an employee is expected to do more than time permits. Role ambiguity occurs when role expectations are not clearly understood, and the employee is not sure what he or she should do. Interpersonal demands are created by other employees. Lack of social support from colleagues and poor interpersonal relationships can be stressful. Organization structure can increase stress. A nonparticipative decision-making process or excessive rules can be potential sources of stress. Organizational leadership represents the supervisory style of management. Some managers establish unrealistic short-run performance pressures and excessively tight controls. When employees don’t measure up, they are fired. This leadership style flows down through the organization and affects all employees.

Personal Stress Factors Family Personality Economic Personal stress can be caused by illness, divorce, death in the family, and financial problems. Because employees bring their personal problems to work with them, a manager must take such personal factors into account when trying to manage workplace stress. In addition, some employees are more prone to stress. Consider the Type A-Type B dichotomy. Type A personalities are characterized by a chronic sense of urgency and an intense drive to compete. These ambitious, achievement oriented workers have difficulty accepting and enjoying leisure time. On the other hand, type B personalities are more relaxed and easy-going. Managers must recognize that Type A employees are more likely to show symptoms of stress, even if organizational and personal stress factors are low.

Three General Symptoms Stress Three General Symptoms Physiological Psychological Stress reveals itself in three general ways: physiological symptoms, such as heart attacks or ulcers; psychological symptoms, such as boredom, anxiety, and procrastination; and behavioral symptoms, such as substance abuse sleep disorders, or excessive absence. Most of the early interest in stress management focused heavily on health-related or physiological concerns: changes in metabolism, elevated blood pressure, and increased risk of heart attacks. Many of these physiological concerns require the skills of trained medical personnel, so their immediate and direct relevance to HRM is negligible. Of greater importance to managers are psychological and behavioral symptoms of stress that can be witnessed in the employee. Behavioral

Stress Management Selection and placement Job redesign Participation Wellness programs Employee assistance Without some stress, people would have no energy. Accordingly, stress reduction programs should target the dysfunctional aspects of stress. One way to reduce stress is to make sure that employees are properly matched to their jobs and that they know the extent of their “authority.” Furthermore, by letting employees know precisely what is expected, role conflict and ambiguity can be minimized. On-the-job stress can also be reduced by redesigning jobs and encouraging employee participation. Many companies have started employee assistance and wellness programs. An extension of substance abuse programs started in the 1940s, employee assistance programs (EAPs) have focused on new areas, such as health care. And studies suggest that organizations can save $5 for every EAP dollar spent. Designed to keep workers healthy, wellness programs focus on weight control, stress management, or physical fitness. Studies show that such programs control health care costs and reduce health related absenteeism.

What Is Creativity? What Is Innovation? Combining new ideas in unique ways or associating ideas in unuual ways What Is Innovation? Turning creative ideas into useful products, services, or methods of operation Given the dynamics of the global marketplace, organizations must create new products and adopt new technologies. So, they try to emulate innovative companies like du Pont, Sharp, Eastman Chemical, and 3M Company. Creativity is the ability to combine ideas in a unique way or to make unusual associations between ideas. Creative organizations develop novel approaches or unique solutions to challenges and opportunities. Innovation is the process of turning a creative idea into a marketable product, service, or operating method. Innovative organizations channel creativity into useful outcomes.

The Creative Process Perception Incubation Inspiration Innovation While some believe that creativity is inborn, others believe that creativity can be stimulated by using a fourfold process: perception, incubation, inspiration, and innovation. Moving from creative perception to reality is not automatic. Instead, ideas go through an incubation process. During incubation, employees collect, store, retrieve, study, and reshape data until they create something new. This process can take years. Inspiration occurs when all of your prior efforts successfully come together. Innovation means turning inspiration into a useful product, service, or methodology. Innovation

Sources of Innovation Structural Variables Organizational Culture Three sets of organizational variables stimulate innovation: structure, culture, and human resource practices. Structural variables affect innovation in three ways: (1) organic structures promote innovation, (2) plentiful resources stimulate innovation, and (3) effective communication overcomes barriers to innovation. All three require the commitment of top management. Innovative organizations encourage experimentation and risk-taking behavior by rewarding both successes and failures. Such organizations are likely to have the following seven characteristics: 1. Acceptance of ambiguity 2. Tolerance of the impractical 3. Low external controls 4. Tolerance of risk 5. Tolerance of conflict 6. Focus on ends rather than on means 7. Open systems focus Innovative organizations train and develop their members to keep their knowledge, skills, and abilities current; offer job security rather than the fear of being fired to promote risk-taking; and encourage individuals to become champions of change. Once a new idea is developed, champions of change promote the idea and build support. Then, they overcome resistance to the idea and ensure that the innovation is completed. These persons are self confident, energetic, persistent, risk-takers. In addition, they have the decision-making discretion to induce and implement innovations. Human Resources