Chapter 13 MANAGING CHANGE AND INNOVATION © 2003 Pearson Education Canada Inc.13.1

LEARNING OBJECTIVES You should be able to: – Contrast the calm waters and white-water rapids metaphors of change – Describe what managers can change in organizations – Explain why people are likely to resist change – List techniques for reducing resistance to change – Describe the situational factors that facilitate cultural change 13.2

© 2003 Pearson Education Canada Inc. LEARNING OBJECTIVES (continued) You should be able to: – Explain how process reengineering is related to change – Describe techniques for reducing employee stress – Differentiate between creativity and innovation – Explain how organizations can stimulate and nurture innovation 13.3

© 2003 Pearson Education Canada Inc. WHAT IS CHANGE? Organizational Change – Alterations in people, structure, or technology – Change is an organizational reality – Managing change is an integral part of every manager’s job 13.4

© 2003 Pearson Education Canada Inc. FORCES FOR CHANGE External Forces – Marketplace - adapt to changing consumer desires – Governmental laws and regulations - frequent impetus for change – Technology - source of change in almost all industries – Labour markets - ability to attract and retain skilled employees in the areas of greatest need – Economic - uncertainties about interest rates, budget deficits, and currency exchange rates 13.5

© 2003 Pearson Education Canada Inc. FORCES FOR CHANGE (continued) Internal Forces – Originate from the operations of the organization – Forces may include strategy, workforce, new equipment, or employee attitudes Manager as change agent – Change agents - act as catalysts and assume responsibility for change 13.6

© 2003 Pearson Education Canada Inc. TWO VIEWS OF THE CHANGE PROCESS The Calm Waters Metaphor – Unfreezing - preparing for the needed change by: increasing the driving forces that direct behaviour away from the status quo decreasing the restraining forces that push behaviour towards the status quo – Changing - move to another equilibrium level – Refreezing - make change permanent – Change is a break in the organization’s equilibrium state 13.7

© 2003 Pearson Education Canada Inc. THE CHANGE PROCESS (Exhibit 13.1) 13.8

© 2003 Pearson Education Canada Inc. TWO VIEWS OF THE CHANGE PROCESS (continued) White-Water Rapids Metaphor – Consistent with uncertain and dynamic environments – Consistent with a world increasingly dominated by information, ideas, and knowledge – Managers must continually maneuver in uninterrupted rapids – Today, managers must be ready to efficiently and effectively manage the changes facing their organizations or their work areas 13.9

© 2003 Pearson Education Canada Inc. CATEGORIES OF CHANGE (Exhibit 13.2) Work specialization, departmentalization, chain of command, span of control, centralization, formalization, job redesign, or actual design Structure Attitudes, expectations, perceptions, and behavior People Work processes, methods, and equipment Technology 13.10

© 2003 Pearson Education Canada Inc. MANAGING CHANGE Initiating Change: – Identifying what organizational areas might need to be changed – Putting the change process in motion – Managing employee resistance to change Types of Change – Changing structure - organization’s formal design, centralization, degree of formalization, and work specialization 13.11

© 2003 Pearson Education Canada Inc. MANAGING CHANGE (continued) Types of Change (continued) – Changing technology - modifications in the way work is performed – Changing people - changes in employee attitudes, expectations, perceptions, and behaviour organizational development (OD) - techniques or programs to change people and the nature and quality of interpersonal work relationships 13.12

© 2003 Pearson Education Canada Inc. ORGANIZATIONAL DEVELOPMENT TECHNIQUES (Exhibit 13.3) MORE EFFECTIVE INTERPERSONAL WORK ENVIRONMENT Process Consultation Intergroup Development Sensitivity Training Survey Feedback Team Building 13.13

© 2003 Pearson Education Canada Inc. MANAGING CHANGE (continued) Dealing with Resistance to Change – Why people resist change change replaces the known with ambiguity and uncertainty change threatens investments in the status quo belief that change is incompatible with the goals and interests of the organization – Techniques for reducing resistance a variety of actions available to managers to deal with dysfunctional resistance 13.14

© 2003 Pearson Education Canada Inc. WAYS TO REDUCE RESISTANCE TO CHANGE (Exhibit 13.4) 13.15

© 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN MANAGING CHANGE Changing Organizational Culture – Culture resistant to change because it is made up of relatively stable and permanent characteristics – Strong cultures are particularly resistant to change – Understanding the situational factors - makes cultural change more likely dramatic crisis occurs leadership changes hands organization is young and small culture is weak 13.16

© 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN MANAGING CHANGE (continued) Changing Organizational Culture (continued) – How Can Cultural Change Be Accomplished? requires a comprehensive and coordinated strategy – unfreeze the current culture – implement new “ways of doing things” – reinforce those new values change, if it comes, is likely to be slow protect against any return to old, familiar practices and traditions 13.17

© 2003 Pearson Education Canada Inc. THE ROAD TO CULTURAL CHANGE (Exhibit 13.5) 13.18

© 2003 Pearson Education Canada Inc. CONTINUOUS QUALITY IMPROVEMENT VERSUS REENGINEERING (Exhibit 13.6) Continuous Quality Improvement Continuous, incremental change Fixing and improving Mostly “as is” Works from bottom up in organization Reengineering Radical change Redesigning - starting over Mostly “what can be” Initiated by top management 13.19

© 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN MANAGING CHANGE (continued) Continuous Quality Improvement Programs – Continuous, small, incremental changes – Fix and improve current work activities – Rely on participative decision making from the bottom levels Process reengineering – Dramatic shift in the way an organization does its work – Begins with the redesign of work – Requires participation from managers and workers 13.20

© 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN MANAGING CHANGE (continued) Handling Employee Stress – What is Stress? a dynamic condition a person faces when confronted with an opportunity, constraint, or demand related to what s/he desires stress is not necessarily bad potential stress becomes actual stress when: – outcome is both uncertain – outcome is important 13.21

© 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN MANAGING CHANGE (continued) Handling Employee Stress (continued) – Causes of Stress found in organizational and personal factors change of any kind is potentially stressful uncertainty around important matters 13.22

© 2003 Pearson Education Canada Inc. CAUSES OF STRESS STRESS Job-Related Personal Factors 13.23

© 2003 Pearson Education Canada Inc. SYMPTOMS OF STRESS (Exhibit 13.7) Symptoms of Stress Physiological Behavioural Psychological 13.24

© 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN MANAGING CHANGE (continued) Handling Employee Stress (continued) – Reducing stress controlling certain organizational factors – employee’s abilities should match job requirements – improve organizational communications reduce ambiguity – performance planning program clarify job responsibilities provide performance feedback – job redesign reduce boredom or work overload 13.25

© 2003 Pearson Education Canada Inc. CONTEMPORARY ISSUES IN MANAGING CHANGE (continued) Handling Employee Stress (continued) – Reducing stress (continued) offering help for personal stress – general considerations – available approaches employee counseling time management program sponsored wellness programs 13.26

© 2003 Pearson Education Canada Inc. STIMULATING INNOVATION Creativity versus Innovation – Creativity - ability to combine ideas in a unique way or to make unusual associations between ideas – Innovation - process of transforming creative ideas into a useful product, service, or method of operation 13.27

SYSTEMS VIEW OF INNOVATION (Exhibit 13.8) Creative individuals, groups, organizations Creative process Creative situation Creative product(s) InputsTransformationOutputs © 2003 Pearson Education Canada Inc.13.28

STIMULATING INNOVATION (continued) Stimulating and Nurturing Innovation – Must focus on inputs – Requires appropriate environment structural variables cultural variables – encourage experimentation – reward success and failures – celebrate mistakes 13.29

© 2003 Pearson Education Canada Inc. STIMULATING INNOVATION (continued) Stimulating and Nurturing Innovation (continued) – Appropriate environment (continued) cultural variables – encourage experimentation – reward success and failures – celebrate mistakes human resource variables – promote training and development of employees – offer high job security – encourage individuals to become idea champions 13.30

INNOVATION VARIABLES (Exhibit 13.9) © 2003 Pearson Education Canada Inc.13.31