1. Managing Human Resources
Joerg Dietz
Faculty of Business and Economics
University of Lausanne 1

2. Review Organizational Design
Contingency theory:
Design is contingent upon the environment and strategy of an organization.
Thus: There is a best design for each organization, but there is not one best design for all organizations.
Principle of alignment:
All elements of the design must fit with each other (principle of alignment)
Thus: When an organization's environment changes, then its design must change
Systematic process for analyzing organizational design
From external fit to internal fit
From strategy to tasks to people to structures, systems, and a culture that support performance.
Org. design has formal and informal elements
HR policies must support both elements

3. Alto Chemicals Europe: Organizational Change3 3

4. Understanding Organizational Change
Change in the organization typically means changing behaviors.
Change usually brings discomfort and, often, resistance.
Effective communication is essential.
“Telling” is not communication or execution.
People “see” and understand the same situation differently.
Understand what other people “see”.
They need to understand what you “see”.
Create a shared frame of reference.
Your way
Their way
New way

5. Understanding Change Change targets need to understand
Cost of the status quo vs. payoffs of the new way
You need to work with
People (individuals and groups)
Structures, systems and practices
You need a way of thinking about the process - a framework

6. Teamwork (30 minutes)
What are the key trends that Alto faces in the environment as of late 1990? Is Graff’s strategy the right response to the changing environmental conditions? Why or why not?
Evaluate the actions taken so far by Graaff to implement his strategy. 6

7. Alto Chemicals Europe: 1991
January to June 1991:
Formal presentation of new strategy to
subsidiary sales managers:
“central monitoring” on price and volume
Emphasis on smaller accounts in less price
sensitive segments
Selling task more technical (emphasis on
quality and performance)
Collaboration between sales stuff and
technical service staff at HQ
Monthly meetings at HQ with subsidiary sales managers
Setting price, volume, and account targets
Volume redistribution: lower volume in highly competitive markets (shift of volume to more profitable markets)
New account targets by size, end-use, and need for conversion
Elimination of price-cutting accounts
Review of progress 7

8. Alto Chemicals Europe: 1991
Results up June 1991:
A few new small and medium-sized accounts (no discounts)
A few medium and large-sized accounts were lost
Industry sales down by 8% (impact of strategy on volume targets hard to assess)
Margins increased in some countries, but not others
Relationship to subsidiary sales managers deteriorated:
Monthly meetings as shouting matches
“Our customers don’t understand our ratios that justify your strategy.”
“For every account I lose, I have to run after several small ones.”
“You are destroying what took me years to build.”
Hansen, Graff’s boss, became impatient. However, he kept giving Graff a free hand. 8

9. Alto Chemicals Europe: 1993
Actions between June 1991 and 1993:
Industry sales continued to decline. Volume targets adjusted downward (only change to strategy).
Monthly meetings continued.
New performance appraisal for subsidiary sales managers:
Public
Merit raises in response to reaching account and price targets (even if volume targets were not met)
“Encounter sessions” with a trained expert to discuss issues/problems openly (“some of the most difficult moments of my career”) 9

10. 1990 1993 % Change Accounts Served 170 284 +67 Volume (‘000 Tons)
ACE Results
1990
1993
% Change
Accounts Served
170
284
+67
Volume (‘000 Tons)
Industry
ACE
Market Share
600
108
18%
510
132
26%
-15
+22
+44
Contribution
Per Ton
Total
$ 40
$ 4.3M
$80
$10.6M
+100
+147 10

11. Organizational Change
DETERMINE REQUIRED
CHANGES
REINFORCE NEW BEHAVIORS
ASSESS READINESS FOR CHANGE
INITIATE CHANGE
ADOPT
NEW BEHAVIORS
Goals
New Behaviors
New Org. Design
Situational Analysis - Urgency
Top Management Support
Key Player Analysis (Change Targets)
Change Agent Appraisal
Establish Need for Change
Obtain Commitment
Use Transition Devices
- Facilitators
- Task Forces
- Resources
Develop Skills
Manage Resistance
Showcase Short-Term Wins
Monitor
Reward
Support
Showcase Success
Organizational Change
Source: on the basis of Lane, Maznevski, DiStefano & Dietz (2009)

12. ORGANIZATIONAL CHANGE: EARLY STEPS
Establish Need for Change:
- show that past behavior is costly
- overcome resistance
- allocation of resources by top management
Obtain Commitment:
- involve target group and top management
- provide feedback on change process
- build coalitions
Goals: difficult, specific, measurable
New Behaviors: observable, vivid,
focus for action plan
New Org. Design: implications for org.
components; fit
DETERMINE DESIRED STATE
ASSESS READINESS FOR CHANGE
INITIATE CHANGE
Situational Analysis - Urgency: external, internal (perceived)
Top Management Support: visibility
Key Player Analysis: motivation, K(nowledge)S(kills)A(billities), constraints on behaviors
Change Agent Appraisal: motivation (commitment), KSAs*, power (authority, credibility)

13. Analyzing Urgency Time to execute the change
Anticipatory Reactive Crisis

14. Execution: Adopting the New Behavior
Ability to perform
new behavior
Training or selection
Initiating the Change
Establish Need for Change:
- show that past behavior is costly
- overcome resistance
- allocation of resources by top management
Obtain Commitment:
- involve target group and top management
- provide feedback on change process
- build coalitions
Belief in valued outcome
from the new behavior
Goal or
desired outcome

15. Continuation: Reinforcing the Change
Achievement:
Expected payoffs
realized (results, rewards)
Success showcases itself
Env.
Re-alignment:
Structures, systems
and power groups
Org.
Task
People
Continuation of the New Behavior

16. A Change Checklist: Kotter’s Eight Steps
Establish a sense of urgency
Form a powerful guiding coalition
Create a vision
Commu-nicate
the
vision
Empower others to act on the vision
Plan for and create short-term wins
Consoli-date improve-ments and produce more change
Institu-tionalize new approach
Source: Kotter (1995) 16

17. Kotter’s Steps 1 - 3 Stage Actions Needed  Pitfalls 
Establish a sense of urgency
Examine market and competitive realities for potential crises and untapped opportunities
Convince at least 75% of your managers (“critical mass”) that the status quo is more dangerous than the unknown.
Underestimating the difficulty of driving people from their comfort zones
Becoming paralyzed by risks
Form a powerful guiding coalition
Assemble a group with shared commitment and enough power to lead the change effort
Encourage them to work as a team outside the normal hierarchy
No prior experience in teamwork at the top
Relegating team leadership
Create a vision
Create a vision to direct the change effort
Strategic goals and new design
New employee behaviors
Develop strategies (measurable benchmarks) for realizing that vision
Presenting a vision that’s too complicated or vague to be communicated in five minutes 17
Source: adopted from Kotter (1995)

18. Kotter’s Steps 4 - 6 Stage Actions Needed  Pitfalls 
Commu-nicate the vision
Use every vehicle possible to communicate the new vision and strategies for achieving it
Teach new behaviors by the example of the guiding coalition
Undercommunicating the vision
Behaving in ways antithetical to the vision (resulting in cynicism)
Empower others to act on the vision
Remove or alter systems and structures undermining the vision
Encourage risk taking and nontraditional ideas, activities, or actions
Failing to remove powerful individuals who resist the change effort
Plan for and create short-term wins
Design and engineer visible performance improvements
Recognize and reward employees contributing to those improvements
Leaving short-term success up to chance
Failing to score successes early enough (12-24 months) 18
Source: Kotter (1995)

19. Kotter’s Steps 7 & 8 Stage Actions Needed  Pitfalls 
Consoli-date improve-ments and produce more change
Use increased credibility from early wins to change systems, structures, and policies undermining the vision
Hire, promote, and develop employees who can implement the vision
Reinvigorate the change process with new change projects and agents
Declaring victory too soon – with the first performance improvement
Allowing resistors to convince “troops” that the war has been won
Institutio-nalize new approach
Articulate connections between new behaviors and corporate success
Create leadership development and succession plans consistent with the new approach
Not creating new social norms and shared values consistent with changes
Promoting people into leadership positions who don’t personify the new approach 19

20. Process Issues in Change Management
Desired end state Analysis (motivation, skills) + Inittation Execution
Vision
Skills
Incentive
Resources
Action
Plan + + + +
= Change
Vision
= Gradual
Change
Skills
Resources
Action
Plan + + +
Vision
Skills
Incentive
Action
Plan + + +
= Frustration
Vision
Skills
Incentive
Resources + + +
= False Start
Vision
Incentive
Resources
Action
Plan + +
= Anxiety +
Skills
Incentive
Resources
Action
Plan + + +
= Confusion

21. Evaluating the Success of Change
Poor ? :(
(2)
(3)
Model (Strategy /Design) ?
Good :)
(1)
(4)
Good
Poor
Process (Implementation)

22. Change Project: Small Team Meeting
Identify one change project that you are executing or would like to execute. A good change project is one that is important to your organization, one that might keep you awake at night, and one that needs to be addressed, i.e., there is a sense of urgency in the situation. For example, the compensation system may need revisiting, you may need to think about reorganizing your team or branch, you may need to rethink what your team needs to do in the face of changing company strategy.
Describe this change project and its importance. If it helps you, in one slide or two. This allows you to confirm in your own mind that this project is important to you and to your organization. You will present these slides in your small team during the second class.