1. Managing Change and Innovation
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2. LEARNING OUTLINE Follow this Learning Outline as you read and study this chapter.
Forces for Change
Define organizational change.
Discuss the external and internal forces for change.
Contrast internal and external change agents.
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3. LEARNING OUTLINE (cont’d) Follow this Learning Outline as you read and study this chapter.
Two Views of the Change Process
Contrast the calm waters and white-water rapids metaphors of change.
Explain Lewin’s three-step model of the change process.
Discuss the environment that managers face today.
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4. LEARNING OUTLINE (cont’d) Follow this Learning Outline as you read and study this chapter.
Managing Change
Explain how managers might change structure, technology, and people.
Explain why people resist change and how resistance might be managed.
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5. LEARNING OUTLINE (cont’d) Follow this Learning Outline as you read and study this chapter.
Stimulating Innovation
Explain why innovation isn’t just creativity.
Explain the systems view of innovation.
Describe the structural, cultural, and human resources variables that are necessary for innovation.
Explain what idea champions are and why they’re important to innovation.
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6. LEARNING OUTLINE (cont’d) Follow this Learning Outline as you read and study this chapter.
Contemporary Issues in Managing Change
Explain why changing organizational culture is so difficult and how managers can do it.
Describe employee stress and how managers can help employees deal with it.
Discuss what it takes to make change happen successfully.
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7. Managing change is an integral part of every manager’s job
What Is Change?
Organizational Change
Any alterations in the people, structure, or technology of an organization
Characteristics of Change
Is constant yet varies in degree and direction
Produces uncertainty yet is not completely unpredictable
Creates both threats and opportunities
Managing change is an integral part of every manager’s job
Organizational change is defined as any alteration in people, structure, or technology. Change is ever present in organizations and cannot be eliminated. Instead, we need to look at the key issues related to managing change. There are external and internal forces that create the need for change.
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8. Forces for Change External forces Internal Forces Marketplace
Governmental laws and regulations
Technology
Labour markets
Economic changes
Internal Forces
Changes in organizational strategy
Workforce changes
New equipment
Employee attitudes
External forces that create the need for change come from various sources.
1. The marketplace
2. Government laws and regulations
3. Technology
4. Labour markets
5. Economic changes
Internal forces tend to originate primarily from the internal operations of the organization or from the impact of external changes.
1. Changes in strategy
2. Changes in the workforce
3. New equipment
4. Changes in employee attitudes
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9. The Manager as Change Agent
Change Agents
People who act as catalysts and assume the responsibility for changing process
Types of Change Agents
Managers: internal entrepreneurs
Nonmanagers: change specialists
Outside consultants: change implementation experts
Change requires a catalyst. The manager may act as a change agent, which is an individual who acts as a catalyst and manages the change process.
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10. Change Process Viewpoints
The Calm Waters Metaphor
Lewin: a break in the organization’s equilibrium state
Unfreezing the status quo
Changing to a new state
Refreezing to make the change permanent
White-water Rapids Metaphor
The lack of environmental stability and predictability requires that managers and organizations continually adapt (manage change actively) to survive
Two very different metaphors can be used to describe the change process.
The calm waters metaphor characterizes the process of change as being like a ship crossing a calm sea. It’s best illustrated by Lewin’s three-step process for change (see Exhibit 16.1).
a. Unfreezing the equilibrium is the first step. This can be accomplished in one of three ways.
1) Increasing driving forces, which direct behaviour away from the status quo.
2) Decreasing restraining forces, which hinder movement from the existing equilibrium.
3) Combining the two approaches.
b. The next step is to implement the change itself.
c. The final step is to refreeze the situation.
The white-water rapids metaphor describes change that takes place in uncertain and dynamic environments.
If we put the two views in perspective, we must note that not every manager faces a world of constant and chaotic change. However, the number of managers who don’t face this type of environment is dwindling fast!
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11. The Change Process Unfreezing Refreezing Changing
Up until the late 1980s, the calm waters metaphor was pretty descriptive of the situation that managers faced. It’s best illustrated by Kurt Lewin’s three-step description of the change process (see Exhibit 16.1).
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12. Three Categories of Change
Work specialization, departmentalization,
chain of command, span of control,
centralization, formalization,
job redesign, or actual structural design T
echnology
Work processes, methods,
and equipment
People
Attitudes, expectations, perceptions,
and behaviour
Structure
The manager’s options for change essentially fall into three categories: structure, technology, and people (see Exhibit 16.2).
1. Changing Structure
a. Managers can alter one or more of the structural components such as work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization.
b. Changing Structure—the design of the organizational structure can be changed to meet new demands.
2. Changing Technology.
a. Competitive factors or new innovations often require introduction of new equipment, tools, or operating methods.
b. Automation is a technological change that replaces certain tasks done by people with machines.
c. Computerization has probably been the most visible technological change in recent years.
3. Changing People. Attitudes, expectations, perceptions, and behaviours. Exhibit 16.3 provides descriptions of the most popular Organization Development (OD) approaches.
a. Organizational development focuses on techniques or programs to change people and the nature and quality of interpersonal work relationships.
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13. Types of Change People Structural Technological
Changing attitudes, expectations, perceptions, and behaviours of the workforce.
Structural
Changing the organization’s structure or its structural components
Technological
Adopting new equipment or operating methods that displace old skills and require new ones
Automation: replacing certain tasks done by people with machines
Computerization
The manager’s options for change essentially fall into three categories: structure, technology, and people (see Exhibit 16.2).
1. Changing Structure
a. Managers can alter one or more of the structural components, such as work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization.
b. Changing Structure—the design of the organizational structure can be changed to meet new demands.
2. Changing Technology.
a. Competitive factors or new innovations often require introduction of new equipment, tools, or operating methods.
b. Automation is a technological change that replaces certain tasks done by people with machines.
c. Computerization has probably been the most visible technological change in recent years.
3. Changing people. Attitudes, expectations, perceptions, and behaviours. Exhibit 16.3 provides descriptions of the most popular Organization Development (OD) approaches.
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14. Organizational Development Techniques
MORE
EFFECTIVE
INTERPERSONAL
WORK
RELATIONSHIPS
Process
Consultation
Survey
Feedback
Sensitivity
Training
Intergroup
Development
Team
Building
A method of changing behaviour
through unstructured group interaction.
Activities that help team
members learn how each
member thinks and works.
Changing the attitudes,
stereotypes, and perceptions that
work groups have about each other.
A technique for assessing attitudes
and perceptions, identifying
discrepancies in these, and resolving
the differences by using survey
information in feedback groups.
An outside consultant helps the
manager understand how interpersonal
processes are affecting the way work
is being done.
Organizational Development (OD): focuses on techniques or programs to change people and the nature and quality of interpersonal work relationships.
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15. Managing Resistance to Change
Why People Resist Change
The ambiguity and uncertainty that change introduces
The comfort of old habits
A concern over personal loss of status, money, authority, friendships, and personal convenience
The perception that change is incompatible with the goals and interests of the organization
Resistance to change is well documented.
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16. Helping Employees Accept Change
Unfreezing
Refreezing
Changing •
Give reasons.
Be empathetic.
Communicate clearly.
Show top
management’s support.
Publicize successes.
Make midcourse
corrections.
Help employees deal
with stress.
Explain the benefits.
Identify a champion.
Get input from
employees.
Watch timing.
Maintain job security.
Provide training.
Proceed at a
manageable pace.
Resistance will be lower if managers involve people in the change, offer training where needed, and are open to revisions once the changes have been implemented.
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17. Stimulating Innovation
Creativity
The ability to combine ideas in a unique way or to make an unusual association
Innovation
Turning the outcomes of the creative process into useful products, services, or work methods
Innovation is important to organizational success in the marketplace.
A. There is a difference between creativity and innovation.
1. Creativity is the ability to combine ideas in a unique way or to make unusual associations between ideas.
2. Innovation is the process of taking a creative idea and turning it into a useful product, service, or method of operation.
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18. Systems View of Innovation
Inputs
Creative individuals,
groups,
organizations
Transformation
Creative environment,
process, situation
Outputs
Innovative product(s),
work methods
We see from Exhibit 16.5 that getting the desired outputs (innovative products) involves both the inputs and the transformation of those inputs. Inputs include creative individuals and groups within the organization.
Source: Adapted from R.W. Woodman, J.E. Sawyer, and R.W. Griffin, “Toward a Theory of Organizational Creativity,” Academy of Management Review, April 1993, p. 309.
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19. Innovation Variables STIMULATE INNOVATION Structural Variables •
Organic Structures
Abundant Resources
High Interunit
Communication
Minimal Time Pressure
Work and Nonwork Support
Human Resource Variables
High Commitment to
Training and Development
High Job Security
Creative People
Cultural Variables
Acceptance of Ambiguity
Tolerance of the Impractical
Low External Controls
Tolerance of Risks
Tolerance of Conflict
Focus on Ends
Open-System Focus
Positive Feedback
Innovation Variables
Three sets of variables have been found to stimulate innovation: structural variables, cultural variables, and human resources variables (see Exhibit 16.6).
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20. Creating the “Right” Environment for Innovation
Structural Variables
Adopt an organic structure
Make available plentiful resources
Engage in frequent interunit communication
Minimize extreme time pressures on creative activities
Provide explicit support for creativity
How can managers foster innovation? By using the systems model, we can see how to foster innovation (see Exhibit 16.5). Three sets of variables have been found to stimulate innovation: structural variables, cultural variables, and human resources variables (see Exhibit 16.6).
1. Structural Variables. Structural variables can be summarized as follows:
a. Organic structures positively influence innovation.
b. The easy availability of organizational resources provides a critical building block for innovation.
c. Frequent interunit communication helps break down barriers to innovation.
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21. Creating the “Right” Environment for Innovation (cont’d)
Cultural Variables
Accept ambiguity
Tolerate the impractical
Have low external controls
Tolerate risk taking
Tolerate conflict
Focus on ends rather than means
Develop an open-system focus
Provide positive feedback
Cultural variables show that an innovative culture is likely to be characterized by the following:
a. Acceptance of ambiguity
b. Tolerance of the impractical
c. Low external controls
d. Tolerance of risk
e. Tolerance of conflict
f. Focus on ends rather than means
g. Open-system focus
h. Positive feedback
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22. Creating the “Right” Environment for Innovation (cont’d)
Human Resource Variables
Actively promote training and development to keep employees’ skills current
Offer high job security to encourage risk taking
Encourage individuals to be “champions” of change
Human resources variables are indicative of the important role that people play in innovative organizations.
a. Innovative organizations actively promote the training and development of their employees so their knowledge remains current.
b. Innovative organizations offer employees high job security.
c. Innovative organizations encourage individuals to become idea champions—individuals who actively and enthusiastically support a new idea, build support, overcome resistance, and ensure that the innovation is implemented.
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23. Issues in Managing Change
Changing Organizational Cultures
Cultures are naturally resistant to change
Conditions that help cultural change:
Dramatic crisis
Change of leadership
Young, flexible, and small organization
Weak organizational culture
1. Culture Is Resistant to Change.
a. Consists of relatively stable and permanent characteristics
b. Takes a long time to form
c. Strong cultures have highly committed people
2. What Might Facilitate Cultural Change?
a. Dramatic crisis occurs
b. Leadership changes hands
c. Organization is young and small
d. The culture is weak
3. How Can Cultural Change be Accomplished?
The Tips for Managers on page 503 outlines strategies for managing cultural change.
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24. Tips for Managers: Strategies for Managing Cultural Change
Set the tone through management behaviour. Managers, particularly top management, need to be positive role models.
Create new stories, symbols, and rituals to replace those currently in vogue.
Select, promote, and support employees who adopt the new values that are sought.
Redesign socialization processes to align with the new values.
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25. Tips for Managers: Strategies for Managing Cultural Change (cont’d)
Change the reward system to encourage acceptance of a new set of values.
Replace unwritten norms with formal rules and regulations that are tightly enforced.
Shake up current subcultures through transfers, job rotation, and/or terminations.
Work to get peer-group consensus through employee participation and creation of a climate with a high level of trust.
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26. Issues in Managing Change (cont’d)
Handling Employee Stress
Stress
The physical and psychological tension an individual feels when confronted with extraordinary demands, constraints, or opportunities and their associated importance and uncertainties
Functional Stress
Stress that has a positive effect on performance
Stress is the physical and psychological tension individuals feel when they’re facing or experiencing extraordinary demands, constraints, or opportunities and for which the outcome is perceived to be both uncertain and important.
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27. Causes of Stress
Exhibit 16.7 shows that stress may be related to the organization or in personal factors.
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28. Symptoms of Stress PHYSICAL PSYCHOLOGICAL SYMPTOMS OF STRESS
BEHAVIOURAL
PSYCHOLOGICAL
Job-related dissatisfaction,
tension, anxiety, irritability,
boredom, and
procrastination
Changes in productivity, absenteeism, job
turnover, changes in eating habits, increased
smoking or consumption of alcohol, rapid
speech, fidgeting, sleep disorders
Changes in metabolism,
increased heart and
breathing rates, raised
blood pressure, headaches,
and potential of heart
attacks
An employee who experiences symptoms of stress may become depressed, accident prone, or argumentative. Exhibit 16.8 groups stress under three categories: physical, psychological, and behavioural.
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29. Issues in Managing Change (cont’d)
Reducing Stress
Engage in proper employee selection
Match employees’ abilities to job requirements
Use realistic job previews to reduce ambiguity
Improve organizational communications
Develop a performance planning program
Use job redesign
Provide a counselling program
Offer time planning management assistance
Sponsor wellness programs
Employee selection, RJP, MBO, and job redesign are all methods of reducing stress in the organization.
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30. Mistakes Managers Make When Leading Change
Unfreezing
Refreezing
Changing •
Not communicating a
sense of urgency
Not forming a guiding
coalition
Quitting before change
is finished
Not making changes
part of the organizational
culture
Not creating a vision
Not communicating the
vision
Not empowering others
to act on the vision
Not planning for and
creating short-term wins
Professor John Kotter of the Harvard Business School identifies a number of places where managers make mistakes when leading change. These are illustrated in Exhibit 16.9.
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31. Issues in Managing Change (cont’d)
Making Change Happen Successfully
Embrace change
Explain why change is necessary
Communicate constantly and honestly
Encourage employee participation
Encourage employee flexibility
Remove those who resist and cannot be changed
Making Change Happen Successfully.
1. Ready the organization for change. Become a change-capable organization. Exhibit 16.9 summarizes the characteristics.
2. Managers must recognize the important role they play in the change process.
3. Get all organizational members involved.
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32. Characteristics of Change-Capable Organizations
Link the present and the future
Make learning a way of life
Actively support and encourage day-to-day improvements and changes
Ensure diverse teams
Encourage mavericks
Shelter breakthroughs
Integrate technology
Build and deepen trust
Exhibit 16–10 summarizes the characteristics of organizations that are ready for change.
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