Organizational Change and Development Chapter 14 Organizational Change and Development Michael A. Hitt C. Chet Miller Adrienne Colella

Knowledge Objectives Describe two major internal pressures for change. Identify and explain six major external pressures for change Describe the three-phase model of planned change. Discuss important tactical choices involving the speed and style of a change effort.

Knowledge Objectives Explain the four general causes of resistance to change and the tactics that can be used to address each cause. Discuss the role of the DADA syndrome in organizational change. Describe the basic organization development (OD) model and discuss OD interventions, including relationship techniques and structural techniques.

Pressures for Organizational Change Aspirations Life-cycle Forces Technological Advances Growing International Interdependence Pressure for Change Introduction or Removal of Government Regulations Changes in Demographics Changes in Societal Values Shifting Political Dynamics Adapted from Exhibit 14-1: Internal and External Pressures for Organizational Change

Internal Pressures for Organizational Change Aspiration-performance discrepancies When an individual, workgroup, division, or organization is not meeting its own expectations, changes in tactics, strategies, and processes often follow Important factors in the role of aspirations Past aspirations Past performance Comparison with others

Internal Pressures for Organizational Change: Life-Cycle Forces Entrepreneurial Stage Collectivity Stage Focus on product/service ideas Acquisition of financial capital Initial entrance into exploitable niche Informal real-time decision making Informal coordination Continue focus on product/service development Continued acquisition of financial capital A family feeling as vision is pursued Strong commitment among growing pool of managers and associates Long hours often for low pay Informal coordination but more consistency than before Need for additional people Need for more stability and structure Adapted from Exhibit 14-2: Integrative Life-Cycle Model

Internal Pressures for Organizational Change: Life-Cycle Forces Formalization and Control Stage Elaboration Stage Focus on efficiency in operations Formal processes and rules Strict division of labor Increase in professional managers Increase in number of formal departments Increase in number of levels in the hierarchy Balance Focus on efficiency and innovation Formal procedures exist alongside empowered lower-level managers and associates Need for more stability and structure Need for balance Adapted from Exhibit 14-2: Integrative Life-Cycle Model

External Pressures for Change Technological advances Can lead to incremental or radical changes in how services and products are designed, produced, and delivered Technology that is inconsistent with existing culture may cause resistance to change among managers and associates Introduction and removal of government regulations Firms in deregulated industries typically must adapt to a more competitive environment Firms that prosper in a regulated environment may fail in one that is deregulated

External Pressures for Change Changes in societal values Changing values influence consumer purchases Society’s values are evidenced in employee attitudes, behaviors, and expectations Society’s values are represented in government regulations Shifting political dynamics Changes in demographics May cause alteration of internal practices to ensure fair treatment for people of all races and ages Growing international interdependence

Planned Change Planned change A three-phase process involving deliberate efforts to move an organization or a unit from its current undesirable state to a new, more desirable state Unfreezing Moving Refreezing

Process of Planned Change Unfreezing Tactics for unfreezing include: Reminding individuals that they have successfully changed in the past Communicating to individuals that managers and associates in other organizations in similar circumstances have successfully changed Letting individuals know that support and training will be available for the specific changes to be made Provide rationale for change Create minor levels of guilt/anxiety about not changing Create sense of psychological safety concerning change Adapted from Exhibit 14-3: Process of Planned Change

Process of Planned Change Moving Refreezing Provide information that suspects proposed changes Bring about actual shifts in behavior Implement new evaluation systems Create minor levels of guilt/anxiety about not changing Implement new hiring and promotion systems Adapted from Exhibit 14-3: Process of Planned Change

Important Tactical Choices Speed of change Criteria for deciding speed of change Urgency Degree of support Amount and complexity of change Competitive environment Knowledge and skills available Financial and other resources Style of change Participatory Non-participatory

Resistance to Change Resistance to change is typically due to four factors Lack of understanding Communicate clearly what the change entails Different assessments Include potential or actual resisters in the decision-making process Self-interest Reason with resistors, transfer or coerce them Low tolerance for change Offer or assure support for the resistors during the learning process

The DADA syndrome DADA syndrome A sequence of stages—denial, anger, depression, and acceptance—through which individuals can move or in which they can become trapped when faced with unwanted change

Organization Development (OD) A planned, organization-wide, continuous process designed to improve communication, problem solving, and learning through the application of behavioral science knowledge Grounded in values of individual empowerment and interpersonal cooperation Fully consistent with the high-involvement management approach

Basic Organization Development Model Diagnosis of Situation Diagnostic devices for managers include interviews, surveys, group sociometric devices, process-oriented diagnosis, and accurate records (for example, performance records) Organization development interventions include t-group training, team building, and job redesign Surveys, and other techniques, may be reused to determine what progress has been made toward solving the problem The main criterion for evaluation is whether the original objective has been accomplished Feedback Introduction of interventions Progress Monitoring Adapted from Exhibit 14-4: Basic Organization Development Model

Organization Development Interventions Relationship Techniques Structural Techniques T-group Training Team Building Survey Feedback Job Redesign Management by Objectives Supplemental Organizational Processes Adapted from Exhibit 14-5: Organization Development Interventions

Relationship Techniques Team building A process in which members of a team work together and with a facilitator to diagnose task, process, and interpersonal problems within the team and create solutions Team building tips 1. Get the right people together for 2. a large block of uninterrupted time 3. to work on high-priority problems or opportunities that 4. they have identified and have them work 5. in ways that are structured to enhance the likelihood of 6. realistic solutions and action plans, which are then 7. implemented enthusiastically and 8. followed up to assess actual versus expected results

Relationship Techniques T-group training Group exercises in which individuals focus on their actions, how others perceive their actions, and how others generally react to them; participants often learn about unintended negative consequences of certain types of behavior Survey feedback Data obtained from questionnaires; managers receive the data for their units and are expected to hold unit meetings to discuss problems

Structural Techniques Job redesign Enlargement or enrichment of jobs; enrichment is the better method to enhance motivation for effective problem solving, communication, and learning Management by objectives (MBO) A management process in which individuals negotiate task objectives with their managers and then are held accountable for attainment of the objectives Supplemental organizational processes Processes in which associates and/or managers have ongoing meetings for the purpose of identifying and solving important problems