Chapter 11 Organizational change and development

Forces for Change Competition and changing markets – Growth of e-commerce; Mergers Economic Shocks – Mortgage meltdown; Financial crises Advances in Technology – Faster, cheaper, more flexible – Internet, e-commerce, Globalization Nature of the Workforce – Greater cultural diversity; different generational groups working side by side

Emergent change Also known as «continuous» or «evolutionary» change Organizations are «open systems» that sense the external and internal environment Changes in the environment will effect equilibrium and lead to adjustment processes in order to maintain the organization’s purpose and optimum state.

Planned radical change Change – Making things different due to external forces Planned Change – Activities that are proactive and purposeful – Goals of planned change Improving the ability of the organization to adapt to changes in its environment Changing employee behavior Change Agents – Persons who act as catalysts and assume the responsibility for managing change activities

Resistance to Change Resistance to change appears to be a natural and positive state. Forms of Resistance to Change: – Overt and Immediate Voicing complaints, engaging in job actions – Implicit and Deferred Loss of employee loyalty and motivation, increased errors or mistakes, increased absenteeism Deferred resistance clouds the link between source and reaction

Sources of Resistance to Change ?

Employee adjustment to change Individual factors, Personal circumstances and External factors such as competition for jobs being high. Selecting people who accept change  individual differences – Hire people who enjoy change in the first place; high risk tolerant Education and Communication – Those who are effected needs to be shown the logic behind the change; eliminate misinformation – Implementing change fairly; consistency and procedural fairness helps Employability and Lifelong learning – Employees need to maintain their employability by developing their skills and keeping up-to-date, because life time employment is no longer central – Knowledge on how change is implemented

Figure 11.1 Lewin’s process model of organizational change (Source: Lewin, 1951) Unfreezing Change efforts to overcome the pressures of both individual resistance and group conformity Refreezing Stabilizing a change intervention by balancing driving and restraining forces; quicker the better Change starts a chain of events

Lewin: Unfreezing the Status Quo Driving Forces Forces that direct behavior away from the status quo increasing pay, liberal moving expenses Restraining Forces Forces that hinder movement from the existing equilibrium cab be decreased individual counseling to reduce fear

Kotter’s Eight-Step Plan Builds from Lewin’s Model To implement change: 1.Establish a sense of urgency; reason 2.Form a coalition to lead the change 3.Create a new vision and strategies 4.Communicate the vision 5.Empower others by removing barriers 6.Create and reward short-term “wins” 7.Consolidate, reassess, and adjust 8.Reinforce the changes Unfreezing Movement Refreezing

Organizational Development If organizations want to increase their effectiveness without imposing radical or emergent change Organizational Development (OD) – A collection of planned interventions, built on humanistic- democratic values, that seeks to improve organizational effectiveness and employee well-being from bottom-up OD Values – Respect for people, trust and support – Power equalization – Confrontation of problem – Participation in decisions

Action labs A process based on systematic collection of data and then selection of a change action based on what the analyzed data indicates Action research benefits: – Problem-focused, rather than solution-centered – Heavy employee involvement reduces resistance and thus used for accelerating a change process. Process steps: 1.Diagnosis 2.Analysis: key people, problem areas, possible actions 3.Feedback: sharing with employees; employees develop action plans with change agent 4.Action: setting in motion 5.Evaluation: effectiveness of action plan

Organizational culture and change Can play an important role in helping or hindering the process of change Develops from many sources, such as founders’ goals and core values, organization’s history, lessons learned over the years, past experiences..

Figure 11.3 The organizational iceberg Source: adapted from Davidson (2005). Image: Corbis/Matthias Kulka

What is organizational culture? Dominant culture: shared values, beliefs and norms that influence the employees think – Values: core criteria to determine desirable outcomes e.g., quality, innovativeness, maintaining high standards, creativity.. – Beliefs: underlying assumptions the organization endorses – Norms: expected behavior in the organization; such as staying late or not leaving during lunch time

What do cultures do? Defining boundary Conveying a sense of identity Facilitating generation of commitment Enhancing the stability of social system Serving as sense-making and control mechanism

Culture Culture as liability – Barrier to change (e.g., in case of mergers and aquisitions) – Barrier to diversity Keeping a culture alive – Top management role – Selection – Socialization

Do organizations have uniform cultures? Dominant Culture – Core Values: primary importance attributed customer orientation; competitiveness, sustainability focus.. – Expresses the core values that are shared by a majority of the organization’s members Strong Culture (vs. Weak Culture) – A culture in which the core values are intensely held and widely shared creates predictability, orderliness and consistency high cohesiveness and commitment to organization increases behavioral consistency results in reduced turnover

Organizational Culture vs. National Culture This line of research indicates that national culture has a greater impact on employees than does their organization’s culture. Hofstede’s Framework Power distance Individualism vs. Collectivism Masculinity vs. Femininity Uncertainty avoidance Long-term vs. Short-term Orientation Check for further info and country graphicswww.geert-hofstede.com/

5-HTTLPR may be related to personality traitspersonality traits

Culture Time orientation?

Applications for Consumer Behavior If you want to advertise cell phones in China, you may show a collective experience, whereas in the USA you may show how an individual uses it to save time and money. If you want to market cars in a country where the uncertainty avoidance is high, you should emphasize on their safety, whereas in other countries you may base your advertisement on the social image they give you.