1. Managing Change and Organizational Learning
Chapter Sixteen

2. After reading the material in this chapter, you should be able to:
LO16.1 Discuss the external and internal forces that can create the need for organizational change. LO16.2 Describe Lewin’s change model and the systems model of change. LO16.3 Explain Kotter’s eight steps for leading organizational change.
LO16.1 Discuss the external and internal forces that can create the need for organizational change.
LO16.2 Describe Lewin’s change model and the systems model of change.
LO16.3 Explain Kotter’s eight steps for leading organizational change.

3. After reading the material in this chapter, you should be able to:
LO16.4 Review the 11 reasons employees resist change. LO16.5 Identify alternative strategies for overcoming resistance to change. LO16.6 Define the term learning organization LO16.7 Review the factors that hinder an organization’s ability to learn from success and failure.
LO16.4 Review the 11 reasons employees resist change.
LO16.5 Identify alternative strategies for overcoming resistance to change.
LO16.6 Define the term learning organization
LO16.7 Review the factors that hinder an organization’s ability to learn from success and failure.

4. Forces of Change External forces for change Internal forces for change
originate outside the organization
Internal forces for change
originate inside the organization.
External forces for change
originate outside the organization
Internal forces for change
originate inside the organization.

5. External Forces Demographic characteristics Technological advancements
Customer and market changes
Social and political pressures
Demographic characteristics
Technological advancements
Customer and market changes
Social and political pressures

6. Internal Forces Low job satisfaction Low productivity Conflict Strikes
Internal forces for change come
from inside the organization. These forces can be
subtle, such as low job satisfaction, or can manifest
in outward signs, such as low productivity, conflict, or
strikes. In general, internal forces for change come from
both human resource problems and managerial behavior/
decisions.

7. Question?
ABC Trucking, conducted an analysis of employee job satisfaction and turnover, and concluded that its turnover rate was 48%. This was primarily attributed to job dissatisfaction by employees. This represents a(n) ______ for ABC.
External force for change
Social and political pressure
Technological advancements
Internal force for change
The correct answer is “D” – internal force for change
AACSB:  Group-individual dynamics Bloom's Taxonomy:  Application
Difficulty:  Medium Page:  423

8. Lewin’s Change Model Unfreezing
Focus is to create the motivation to change
Begin by disconfirming the usefulness or appropriateness of employees’ present behaviors or attitudes
Unfreezing
Focus is to create the motivation to change
Begin by disconfirming the usefulness or appropriateness of employees’ present behaviors or attitudes

9. Lewin’s Change Model Benchmarking
the overall process by which a company compares its performance with that of other companies, then learns how the strongest-performing companies achieve their results
Benchmarking
the overall process by which a company compares its performance with that of other companies, then learns how the strongest-performing companies achieve their results

10. Question?
Fredfirst, a securities trading company, regularly compares its performance with that of high performing organizations in the industry, such as Merrill Lynch. This process is described as
Change.
Refreezing.
Benchmarking.
A strategic plan
The correct answer is “C” – benchmarking.
AACSB:  Group-individual dynamics Bloom's Taxonomy:  Application
Difficulty:  Medium Page:  424

11. Lewin’s Change Model Changing
providing employees with new information, new behavioral models, new processes or procedures, new equipment, new technology, or new ways of getting the job done
change can be aimed at improvement or growth, or it can focus on solving a problem such as poor customer service or low productivity
Changing
providing employees with new information, new behavioral models, new processes or procedures, new equipment, new technology, or new ways of getting the job done
change can be aimed at improvement or growth, or it can focus on solving a problem such as poor customer service or low productivity

12. Lewin’s Change Model Refreezing
Change is stabilized by helping employees integrate the changed behavior or attitude into their normal way of doing things
Giving employees the chance to exhibit new behaviors, which are then reinforced
Refreezing
Change is stabilized by helping employees integrate the changed behavior or attitude into their normal way of doing things
Giving employees the chance to exhibit new behaviors, which are then reinforced

13. A Systems Model of Change
Systems Approach
Based on the premise that any change, no matter how large or small, has a cascading effect throughout an organization
Takes a “big picture” perspective of organizational change
Systems Approach
Based on the premise that any change, no matter how large or small, has a cascading effect throughout an organization
Takes a “big picture” perspective of organizational change

14. A Systems Model of Change
Mission statement
represents the “reason” an organization exists
Vision
a long-term goal that describes “what” an organization wants to become.
A mission statement represents the
“reason” an organization exists, and an organization’s vision is a long-term goal
that describes “what” an organization wants to become

15. A Systems Model of Change
Strategic plan
outlines an organization’s long-term direction and the actions necessary to achieve planned results
Target elements of change
components of an organization that may be changed
Strategic plan
outlines an organization’s long-term direction and the actions necessary to achieve planned results
Target elements of change
components of an organization that may be changed

16. Target Elements of Change
Organizational arrangements
Social factors
Methods
People
Target elements of change are the components
of an organization that may be changed. They essentially represent change levers
that managers can push and pull to influence various aspects of an organization. The
choice of which lever to pull, however, is based on a diagnosis of a problem, or problems,
or the actions needed to accomplish a vision or goal: A problem exists when
managers are not obtaining the results they desire. The target elements of change are
used to diagnose problems and to identify change-related solutions.

17. A Systems Model of Change
A systems model of change offers managers a framework or model to use for diagnosing
what to change and for determining how to evaluate the success of a change
effort. The four main components of a systems
model of change are inputs, strategic plans, target elements of change, and outputs
(see Figure 16–1).

18. Applying the Systems Model of Change
Two ways to supply the systems model:
Aid during the strategic planning process
Using the model as a diagnostic framework to determine the causes of an organizational problem and to propose solutions
Two ways to supply the systems model:
Aid during the strategic planning process
Using the model as a diagnostic framework to determine the causes of an organizational problem and to propose solutions

19. Steps to Leading Organizational Change
Table 16-1
Kotter’s eight steps shown in Table 16–1 subsume Lewin’s model of change. The
first four steps represent Lewin’s “unfreezing” stage. Steps 5, 6, and 7 represent
“changing,” and step 8 corresponds to “refreezing.”

20. Question?
Dale needs to change the manufacturing processes of his firm. This will cause many changes to his labor force. He shares a compelling reason to his employees. Which step is this in leading change?
Generate short term wins
Develop a vision and strategy
Establish a sense of urgency
Create a guiding coalition
The correct answer is “C”. See previous slide.

21. Creating Change Through Organization Development
consists of planned efforts to help persons work and live together more effectively, over time, in their organizations
Organization Development
consists of planned efforts to help persons work and live together more effectively, over time, in their organizations

22. The OD Process Diagnosis: What is the problem and its causes?
Intervention: What can be done to solve the problem?
Evaluation: Is the intervention working?
Feedback: What does the evaluation suggest about the diagnosis and the effectiveness
of how the intervention was implemented?

23. OD Research and Practical Implications
Planned organizational change works
Change programs are more successful when they are geared toward meeting both short-term and long-term results
Organizational change is more likely to succeed when top management is truly committed to the change program
Effectiveness of OD interventions is affected by cross-cultural considerations
Planned organizational change works
Change programs are more successful when they are geared toward meeting both short-term and long-term results
Organizational change is more likely to succeed when top management is truly committed to the change program
Effectiveness of OD interventions is affected by cross-cultural considerations

24. Why People Resist Change in the Workplace
Resistance to change
emotional or behavioral response to real or imagined work changes
Resistance to change
emotional or behavioral response to real or imagined work changes

25. Why People Resist Change in the Workplace
An individual’s predisposition toward change
Surprise and fear of the unknown
Fear of failure
Loss of status and/or job security
Peer pressure
Past success
An individual’s predisposition toward change
Surprise and fear of the unknown
Fear of failure
Loss of status and/or job security
Peer pressure
Past success

26. Question?
Jamie is not directly affected by the change introduced in her company, but she is actively resisting it to protect the interests of her friends. This describes which reason for resistance to change?
Surprise and fear of the unknown
Personality conflicts
Peer pressure
Lack of tact
The correct answer is “C” – peer pressure.
AACSB:  Group-individual dynamics Bloom's Taxonomy:  Application
Difficulty:  Medium Page:  434

27. Why People Resist Change in the Workplace
Disruption of cultural traditions and/or group relationships
Personality conflicts
Lack of tact and/or poor timing
Leadership style
Failure to legitimize change
Disruption of cultural traditions and/or group relationships
Personality conflicts
Lack of tact and/or poor timing
Leadership style
Failure to legitimize change

28. Overcoming Resistance to Change
Resilience to change
represents a composite characteristic reflecting high self-esteem, optimism, and an internal locus of control, was positively associated with recipients’ willingness to accommodate or accept a specific organizational change
Resilience to change
represents a composite characteristic reflecting high self-esteem, optimism, and an internal locus of control, was positively associated with recipients’ willingness to accommodate or accept a specific organizational change

29. Overcoming Resistance to Change
Commitment to change
A mind-set “that binds an individual to a course of action deemed necessary for the successful implementation of a change initiative”
Commitment to change
A mind-set “that binds an individual to a course of action deemed necessary for the successful implementation of a change initiative

30. Overcoming Resistance to Change
Provide as much information as possible to employees about the change
Inform employees about the rationale for the change
Conduct meetings to address employee’s concerns
Provide employees the opportunity to discuss how the proposed change might affect them
Employees are more
likely to resist when they perceive that the personal costs of change overshadow the
benefits. If this is the case, then managers are advised to (1) provide as much information
as possible to employees about the change, (2) inform employees about the
reasons/rationale for the change, (3) conduct meetings to address employees’ questions
regarding the change, and (4) provide employees the opportunity to discuss
how the proposed change might affect them.

31. Six Strategies for Overcoming Resistance to Change
As shown in Table 16–2, Participation 1
Involvement does have its place, but it takes time that is not always available. Also as indicated
in Table 16–2, each of the other five methods has its situational niche, advantages, and drawbacks

32. Creating a Learning Organization
proactively creates, acquires, and transfers knowledge throughout the organization
Learning organization
proactively creates, acquires, and transfers knowledge throughout the organization

33. Creating a Learning Organization
Team mental model
Represents team members’ “shared, organized understanding and mental representation of knowledge about key elements of the team’s relevant environment”
Team mental model
Represents team members’ “shared, organized understanding and mental representation of knowledge about key elements of the team’s relevant environment

34. Leadership Is the Foundation of a Learning Organization
Building a commitment to learning
Working to generate ideas with impact
Working to generalize ideas with impact
Helping the organization to “unlearn” old mental models
Building a commitment to learning
Working to generate ideas with impact
Working to generalize ideas with impact
Helping the organization to “unlearn” old mental models

35. Factors That Detract from an Organization’s Ability to Learn from Failure
Professor Edmonson studied organizational failures for 20 years and concluded that
there are a host of factors that deter the extent to which organizations learn from failure
(see Table 16–3).51 She recommends that organizations need to focus on overcoming
the barriers shown in Table 16–3 in order to maximize
learning from failure. A review of these barriers reveals
that managers need to use evidence-based decision making,
which was discussed in Chapter 10, if they want to
learn from failure

36. Working to Generate Ideas with Impact
Implement continuous improvement programs.
Increase employee competence through training, or buy talent from outside the organization.
Experiment with new ideas, processes, and structural arrangements.
Go outside the organization to identify world-class ideas and processes.
Implement continuous improvement programs.
• Increase employee competence through training, or buy talent from outside the
organization.
• Experiment with new ideas, processes, and structural arrangements.
• Go outside the organization to identify world-class ideas and processes.
• Instill systems thinking throughout the organization.

37. Working to Generalize Ideas with Impact
Measuring and rewarding learning.
Increasing open and honest dialogue among organizational members
Reducing conflict.
Increasing horizontal and vertical communication.
Promoting teamwork.
Measuring and rewarding learning.
Increasing open and honest dialogue among organizational members.
Reducing conflict.
Increasing horizontal and vertical communication.
Promoting teamwork.

38. Working to Generalize Ideas with Impact
Rewarding risk taking and innovation.
Reducing the fear of failure.
Increasing the sharing of successes, failures, and best practices across organizational members.
Reducing stressors and frustration.
Reducing internal competition.
Rewarding risk taking and innovation.
Reducing the fear of failure.
Increasing the sharing of successes, failures, and best practices across organizational
members.
Reducing stressors and frustration.
Reducing internal competition.
Increasing cooperation and collaboration.
Creating a psychologically safe and comforting environment

39. Helping the Organization to Unlearn Old Mental Models
Management must seriously question and challenge the ways of thinking that worked in the past if they want to create a learning organization.
For example, the old management paradigm of planning, organizing, and control might be replaced with one of vision, values, and empowerment.
Management must seriously question and challenge the ways of thinking that worked in the past if they want to create a learning organization.
For example, the old management paradigm of planning, organizing, and control might be replaced with one of vision, values, and empowerment.

40. Video Case: Louisville Slugger – Hillerich & Bradsby
What role do information systems play at H&B? What were the internal and external trade-offs between reconfiguring the old information system and designing a new one?
Why was the transition to the new system difficult? How could Kotter’s eight steps be used to facilitate such a transition?
Why did some people resist change and experience stress? What strategies could H&B have used to overcome resistance to change?
H&B had to decide whether to reconfigure the old system or implement a new one. A new system would streamline information flow in sales, supply chain management, accounting, finance, and marketing. However, the new system also caused a decrease in morale and increase in stress as employees struggled to learn the new system and change the way they operated. Kotter’s steps to leading organizational change include establishing a sense of urgency, creating a guiding coalition, developing a vision and strategy, empowering broad-based action, generating short-term wins, consolidating gains, and anchoring new approaches in the organization’s culture. Successful implementation of these steps facilitate organizational change. Surprise and fear of the unknown, fear of failure, and loss of status or job security were likely reasons H&B employees resisted change and experienced stress in the transition process.