Organizational change and development

1
•Organizational
Change and
Development

Courtesy National Board of Antiquities, Finland
Continuous Change at NokiaContinuous Change at Nokia
Nokia has
continually
adapted to its
changing
environment. The
Finnish company
began as a pulp
and paper mill in
1865, then moved
into rubber, cable wiring, and computer monitors. In
the 1980s, Nokia executives sensed an emerging
market for wireless communication. Today, Nokia is a
world leader in cellular telephones.

3© 2005 Prentice Hall Inc. 18
Forces for ChangeForces for Change
E X H I B
I T 18–1
E X H I B
I T 18–1
Force Examples
Nature of the workforce More cultural diversity
Aging population
Many new entrants with inadequate skills
Technology Faster, cheaper, and more mobile computers
On-line music sharing
Deciphering of the human genetic code
Economic shocks Rise and fall of dot-com stocks
2000–02 stock market collapse
Record low interest rates
Competition Global competitors
Mergers and consolidations
Growth of e-commerce

Forces for ChangeForces for Change
E X H I B I T 18–1 (conE X H I B I T 18–1 (con
Force Examples
Social trends Internet chat rooms
Retirement of Baby Boomers
Rise in discount and “big box” retailers
World politics Iraq–U.S. war
Opening of markets in China
War on terrorism following 9/11/01

Managing Planned ChangeManaging Planned Change
Goals of Planned Change:
Improving the ability of the
organization to adapt to
changes in its environment.
Changing the behavior of
individuals and groups in
the organization.
Goals of Planned Change:
Improving the ability of the
organization to adapt to
changes in its environment.
Changing the behavior of
individuals and groups in
the organization.
Change
Making things different.
Planned Change
Activities that are
intentional and goal
oriented.
Change Agents
Persons who act as
catalysts and assume the
responsibility for managing
change activities.

Resistance to ChangeResistance to Change
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

Sources of Individual ResistanceSources of Individual Resistance
to Changeto Change
E X H I B
I T 18–2
E X H I B
I T 18–2

Sources of OrganizationalSources of Organizational
E X H I B I
T 18–2
(cont’d)
E X H I B I
T 18–2
(cont’d)

Overcoming Resistance toOvercoming Resistance to
ChangeChange
Tactics for dealing with resistance to
change:
• Education and communication
• Participation
• Facilitation and support
• Negotiation
• Manipulation and cooptation
• Coercion
Tactics for dealing with resistance to
change:
• Education and communication
• Participation
• Facilitation and support
• Negotiation
• Manipulation and cooptation
• Coercion

The Politics of ChangeThe Politics of Change
• Impetus for change is likely to come from
outside change agents.
• Internal change agents are most threatened
by their loss of status in the organization.
• Long-time power holders tend to implement
only incremental change.
• The outcomes of power struggles in the
organization will determine the speed and
quality of change.

11
Organizational Change: An International
Phenomenon
0 10 20 30 40 50 60 70 80
0 10 20 30 40 50 60 70 80
Percentage of Respondents by Country
International
expansion
Reduction in
employment
Mergers,
divestitures,
acquisitions
Major
restructuring
Hungary
Mexico
S. Korea
Germany
United States
Japan
(Source: Kanten, R., 1991.)

12
Changing People: Some BasicChanging People: Some Basic
StepsSteps
Recognizing the
need for change
Attempting to
create a new state
of affairs
Incorporating the changes,
creating and maintaining a
new organizational system
Step 1: Unfreezing
Step 3: Refreezing
Step 2: Changing
Current State
New
State

13
TeamTeam
Building:Building:
Its BasicIts Basic
StepsSteps
Sensitivity
groups
Objective
data
Group members
recognize problem
Diagnose group’s
strengths and
weaknesses
Develop desired
change goals
Develop action plan
to make changes
Implement plan
Evaluate plan
Process
completed
if successfulif successful
if unsuccessfulif unsuccessful
RestartprocessRestartprocess

14
When Will It Occur?
Benefit of
making
change
Compared
to
Cost of
making
change
Change
is made
Change is
not made
Amount of dissatisfaction
with current conditions
Availability of a
desirable alternative
Existence of a plan for
achieving a desirable
alternative
If benefits exceed costs
If costs exceed benefits

Some External Forces for ChangeSome External Forces for Change
InformationInformation
TechnologyTechnology
GlobalizationGlobalization
& Competition& Competition
DemographyDemography
Courtesy National Board of Antiquities, Finland

Desired
Conditions
Current
Conditions
Before
Change
After
Change
Driving
Forces
Restraining
Forces
Force Field AnalysisForce Field Analysis
During
Change
Driving
Forces
Restraining
Forces Driving
Forces
Restraining
Forces

Resistance to Change at BP NorgeResistance to Change at BP Norge
• “SDWTs don’t work on drilling rigs!”
• “We already have teams!”
• “This creates more work — will we
get higher pay?”
• “I don’t know how to work in teams.”
• “SDWTs will threaten my job as a
supervisor!”
Employees initially resisted self-
directed teams BP Norge’s North
Sea drilling rigs.
AP Worldwide

Forces for
Change
Forces for
Change
Direct Costs
Saving Face
Fear of the Unknown
Breaking Routines
Incongruent Systems
Incongruent Team Dynamics

Creating an Urgency for ChangeCreating an Urgency for Change
• Need to motivate employees to change
• Most difficult when organisation is doing
well
• Must be real, not contrived
• Customer-driven change

MinimizingMinimizing
ResistanceResistance
toto ChangeChange
CommunicationCommunication
TrainingTraining
EmployeeEmployee
InvolvementInvolvement
StressStress
ManagementManagement
NegotiationNegotiation
CoercionCoercion
Minimizing Resistance to ChangeMinimizing Resistance to Change

Refreezing the Desired ConditionsRefreezing the Desired Conditions
Creating organizational systems and team
dynamics to reinforce desired changes
– alter rewards to reinforce new behaviours
– new information systems guide new
behaviours
– recalibrate and introduce feedback systems
to focus on new priorities

Courtesy of CHC Helicopter Corp.
Change AgentsChange Agents
• Anyone who possesses
enough knowledge and
power to guide and facilitate
the change effort
• Change agents apply
transformational leadership
– Help develop a vision
– Communicate the vision
– Act consistently with the vision
– Build commitment to the vision

Organization Development DefinedOrganization Development Defined
A planned system wide effort, managed
from the top with the assistance of a
change agent, that uses behavioural
science knowledge to improve
organizational effectiveness.

24
Organizational Development: HowOrganizational Development: How
Effective Is It?Effective Is It?
2020
3030
4040
5050
PercentageofStudiesShowingPositiveChangesPercentageofStudiesShowingPositiveChanges
IndividualIndividual
outcomesoutcomes
(e.g., job(e.g., job
satisfaction)satisfaction)
OrganizationalOrganizational
outcomesoutcomes
(e.g., profit)(e.g., profit)
(23.55)(23.55)
(48.70)(48.70)
Organizational outcomes
more often benefited from
OD interventions than did
individual outcomes
(Source: Porras and Robertson, 1992.)

Kotter’s Eight-Step Plan for Implementing ChangeKotter’s Eight-Step Plan for Implementing Change
E X H I B
I T 18–5
E X H I B
I T 18–5
1. Establish a sense of urgency by creating a compelling reason for why
change is needed.
2. Form a coalition with enough power to lead the change.
3. Create a new vision to direct the change and strategies for achieving the
vision.
4. Communicate the vision throughout the organization.
5. Empower others to act on the vision by removing barriers to change and
encouraging risk taking and creative problem solving.
6. Plan for, create, and reward short-term “wins” that move the organization
toward the new vision.
7. Consolidate improvements, reassess changes, and make necessary
adjustments in the new programs.
8. Reinforce the changes by demonstrating the relationship between new
behaviors and organizational success.
Source: Based on J. P. Kotter, Leading Change (Boston: Harvard Business School Press, 1996).

Action ResearchAction Research
Process Steps:
1. Diagnosis
2. Analysis
3. Feedback
4. Action
5. Evaluation
Process Steps:
1. Diagnosis
2. Analysis
3. Feedback
4. Action
5. Evaluation
Action research benefits:
Problem-focused rather than
solution-centered.
Heavy employee involvement
reduces resistance to change.
Action research benefits:
Problem-focused rather than
solution-centered.
Heavy employee involvement
reduces resistance to change.
Action Research
A change process based on systematic collection of
data and then selection of a change action based on
what the analyzed data indicate.

Organizational DevelopmentOrganizational Development
OD Values:
1. Respect for people
2. Trust and support
3. Power equalization
4. Confrontation
5. Participation
OD Values:
1. Respect for people
2. Trust and support
3. Power equalization
4. Confrontation
5. Participation
Organizational Development (OD)
A collection of planned interventions, built on
humanistic-democratic values, that seeks to improve
organizational effectiveness and employee well-being.

TechniquesTechniques
Sensitivity Training
Training groups (T-groups) that
seek to change behavior through
unstructured group interaction.
Provides increased awareness of
others and self.
Increases empathy with others,
improves listening skills, greater
openess, and increased tolerance
for others.

Techniques (cont’d)Techniques (cont’d)
Survey Feedback Approach
The use of questionnaires to identify
discrepancies among member perceptions;
discussion follows and remedies are suggested.

Process Consultation (PC)
A consultant gives a client insights into what is going
on around the client, within the client, and between the
client and other people; identifies processes that need
improvement.

Team Building Activities:
• Goal and priority setting.
• Developing interpersonal relations.
• Role analysis to each member’s role and
responsibilities.
• Team process analysis.
Team Building Activities:
• Goal and priority setting.
• Developing interpersonal relations.
• Role analysis to each member’s role and
responsibilities.
• Team process analysis.
Team Building
High interaction among team members to
increase trust and openness.

Intergroup Problem Solving:Intergroup Problem Solving:
• Groups independently develop lists of perceptions.Groups independently develop lists of perceptions.
• Share and discuss lists.Share and discuss lists.
• Look for causes of misperceptions.Look for causes of misperceptions.
• Work to develop integrative solutions.Work to develop integrative solutions.
Intergroup Problem Solving:Intergroup Problem Solving:
• Groups independently develop lists of perceptions.Groups independently develop lists of perceptions.
• Share and discuss lists.Share and discuss lists.
• Look for causes of misperceptions.Look for causes of misperceptions.
• Work to develop integrative solutions.Work to develop integrative solutions.
Intergroup Development
OD efforts to change the attitudes, stereotypes, and
perceptions that groups have of each other.

Appreciative Inquiry (AI):
• Discovery: recalling the strengths of the organization.
• Dreaming: speculation on the future of the organization.
• Design: finding a common vision.
• Destiny: deciding how to fulfill the dream.
Appreciative Inquiry (AI):
• Discovery: recalling the strengths of the organization.
• Dreaming: speculation on the future of the organization.
• Design: finding a common vision.
• Destiny: deciding how to fulfill the dream.
Appreciative Inquiry
Seeks to identify the unique qualities and special
strengths of an organization, which can then be built
on to improve performance.

Establish
Client-
Consultant
Relations
Disengage
Consultant’s
Services
Action Research ProcessAction Research Process
Diagnose
Need for
Change
Introduce
Change
Evaluate/
Stabilize
Change

Discovery
Discovering
the best of
“what is”
Dreaming
Forming
ideas about
“what might
be”
Designing
Engaging in
dialogue
about “what
should be”
Delivering
Developing
objectives
about “what
will be”
Appreciative Inquiry ProcessAppreciative Inquiry Process

36
The Ethics of OD:The Ethics of OD:
Summary of the DebateSummary of the Debate
OD is
unethical
• Imposes values of the
organization; coercive
and manipulative
• Potential for abuse
OD is
ethical
• The imposition of values
is an inherent part of life,
especially on the job
• Abuse comes from
individuals, not from
the technique itself,
which is neither good
nor evil

37
Discussion of Activity 15.3Discussion of Activity 15.3
Strategic Change ManagementStrategic Change Management

Scenario #1: “Greener Telco”Scenario #1: “Greener Telco”
Scenario #1 refers to Bell
Canada’s Zero Waste
program, which
successfully changed
wasteful employee
behaviours by altering the
causes of those
behaviours. Courtesy of Bell Canada

Bell Canada’s Change StrategyBell Canada’s Change Strategy
Courtesy of Bell Canada
Relied on the MARS
model to alter behaviour:
Motivation -- employee
involvement, respected steering
committee
Ability -- taught paper
reduction, email, food disposal
Role perc. -- communicated
importance of reducing waste
Situation -- Created barriers to
wasteful behaviour, eg.
removed garbage bins

Courtesy of Continental Airlines
Scenario #2: “Go Forward Airline”Scenario #2: “Go Forward Airline”
Scenario #2 refers to
Continental Airline’s “Go
Forward” change strategy,
which catapulted the
company “from worst to
first” within a couple of
years.

Continental Airlines’Continental Airlines’ Change StrategyChange Strategy
Communicate, communicate,
communicate
Introduced 15 performance
measures
Established stretch goals
(repainting planes in 6 months)
Replaced 50 of 61 executives
Rewarded new goals (on-time
arrival, stock price)
Customers as drivers of change
Courtesy of Continental Airlines

Organizational change and development

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