Chapter 18Organizational Change

and Development

Learning Goals

• Discuss the pressures on managers to change their organizations

• Describe different types of organizational change

• Explain the phases and targets of planned organizational change

Learning Goals (Cont.)

• List some reasons for resistance to change in organizations

• Describe the organizational development techniques managers can use to change their organizations

• Understand some international aspects of organizational change and development

Chapter Overview

• Introduction

• Forces For and Against Change

• Unplanned and Planned Organizational Change

• Targets of Organizational Change

• Planned Organizational Change

• Resistance to Change

Chapter Overview (Cont.)

• Organizational Development

• International Aspects of Organizational Change and Development

• Ethical Issues About Organizational Change and Development

Introduction

• Organizational change involves movement from the present state of the organization to some future or target state

• Future state can include a new strategy, new technology, or changes in the organization’s culture

Introduction (Cont.)

TimeA A’

Organizational change: moving from thepresent state of the organization to some

future or target state.

Introduction (Cont.)

• Many sources of pressure on managers to change their organizations exist and will continue in the future

• Identify the pressures on organizations and their managers to change

• Want to know the probable effects on you as a member of a changing system

Introduction (Cont.)

• Know how to deliberately change an organization

• Understand the sources of resistance to change

• Learn how to manage the change process to reduce resistance

Forces For and Against Change

• External forces for change– Competitors and markets– Acquisition threats– International: global markets– Workforce diversity– Quality management

Forces For and Against Change (Cont.)

• Internal forces for change– High dissatisfaction– Felt stress– Loss of control of processes– Dysfunctionally high conflict– Slow decision making– High turnover and absenteeism– Communication dysfunctions

Forces For and Against Change (Cont.)

• Forces against change– Internal: resistance to change from individuals

and groups– External: special interest groups such as

consumer groups and unions

View the forces for and against change asa force field working on the organization

Forces For and Against Change (Cont.)

Present state ofthe organization

Desired state ofthe organization

A A’Time

Forces forchange

Forces againstchange

A Force Field

Text book Figure 18.1

Unplanned and PlannedOrganizational Change

• Unplanned organizational change: forces for change overwhelm resistance to change

• Planned organizational change: A deliberate, systematic change effort

Unplanned and PlannedOrganizational Change (Cont.)

• Unplanned organizational change– Forces for change overwhelm resistance to

change– Usually unexpected– Chaotic, uncontrolled change effects– Example: economic changes leading to

reductions in workforce

Unplanned and PlannedOrganizational Change (Cont.)

• Planned organizational change – A deliberate, systematic change effort– Change organizational design, information

systems, job design, and people’s behavior– Although managers try to follow a plan, the

change does not always move smoothly– The change effort often hits blockages, causing

managers to rethink their goals and plan

Unplanned and PlannedOrganizational Change (Cont.)

• Planned organizational change (cont.)– Phases

• Define the desired future state of the organization• Diagnose the present state of the organization• Move the organization to the desired future state

– A change agent helps managers to bring about planned change. An external or internal consultant

Targets of PlannedOrganizational Change

• Organizational culture

• Decision processes

• Communication processes

• Job design

• Organizational design

Targets of PlannedOrganizational Change (Cont.)

• Technology

• Strategy

Managers should choose the target only after careful assessment of the current state of the organization

and the need for change.

Targets of PlannedOrganizational Change (Cont.)

Externalenvironment Strategy

Targets

CultureTechnology

Organizational designJob design

Mission

A model for thinking about planned organizational change

Planned Organizational Change

• Reasons for planned organizational change– Managers react to environmental shifts– They anticipate the future state of the external

environment– Often a difficult task. As noted by an

organizational change scholar, “planned organization change is messy and never as clear as we have written in our books and articles”

Planned Organizational Change (Cont.)

• Models of planned organizational change– Evolutionary model

• Incremental change

• Example: changing the organization’s pay scale to stay market competitive

– Revolutionary model• Change many parts of an organization

• Example: strategic shift

Planned Organizational Change (Cont.)

• Evolutionary model of organizational change– Three phases with no distinct boundaries. Each

phase blends into the next phase• A manager or other change agent develops a need

for change among those affected• The change agent then tries to move the

organization or part of it toward the changed state• The change agent tries to stabilize the change and

make it a part of the organization

Planned Organizational Change (Cont.)

• Evolutionary model of organizational change– Sees change happening in small bits that add to

a total amount of change– Unexpected events can occur along the way,

forcing a return to an earlier phase

Planned Organizational Change (Cont.)

• Revolutionary model of organizational change– Organizational change unfolds over long periods

of stability followed by bursts of major change activities

– Uses three concepts• Equilibrium period: organization moves steadily

toward its mission and goals• Revolutionary period: a major change in the

strategic direction of the organization• Deep structures: enduring features of the

organization that let it succeed

Planned Organizational Change (Cont.)

• Revolutionary model of organizational change (cont.)– Two events trigger a revolutionary period

• Dissatisfaction with the organization's performance

• Strong feelings among organization members that it is time for change

Planned Organizational Change (Cont.)

• Revolutionary model of organizational change (cont.)– Dissatisfaction with the organization's

performance• Misfit between the organization’s deep structure and

its current environment

• Follows a clear organizational failure or when many believe failure is imminent

Planned Organizational Change (Cont.)

• Revolutionary model of organizational change (cont.)– Strong feelings among organization members

that it is time for change• Organization members feel uneasy with the current

equilibrium period

• Develop feelings of little forward movement

• Characterizes organizations that must shift direction

Resistance to Change

• No matter what the target, changes affect the social system of an organization

• People develop long-standing, familiar patterns of social interaction

• Strong resistance develops when organizational change affects these social networks

Resistance to Change (Cont.)

• Resistance can take many forms– Lack of cooperation with the change effort– Sabotage of the change effort– Dysfunctionally high conflict levels

Resistance to Change (Cont.)

• Reasons for resistance to change– Perceive the loss of something valued such as

social status– Misunderstand the goal of the change– Distrust the change agent– No common perception of the value of the

change– Low tolerance for change

Resistance to Change (Cont.)

• Manager’s orientation to resistance to change– Problem to overcome

• Forcefully reduce resistance• Can increase resistance

– Signal to get more information• Affected targets may have valuable insights about the

change’s effects• Change agent can involve the targets in diagnosing

the reasons for the resistance

Resistance to Change (Cont.)

• Manager’s orientation to resistance to change (cont.)– Absence of resistance

• Also a signal to get more information• Low commitment to the change can make the

change less effective• Resisters can focus the change agents on potentially

dysfunctional aspects of a proposed change

Resistance to Change (Cont.)

• Managing the change process to reduce resistance– Use change agents with characteristics similar

to the change target– Use dramatic ceremonies and symbols to signal

disengagement from the past– Widely communicate information about the

change

Resistance to Change (Cont.)

• Managing the change process to reduce resistance (cont.)– Involve those affected by the change– Commit enough resources

– Negotiation may be necessary, when a powerful person or group is a potential source of resistance

Resistance to Change (Cont.)

• Managing the change process to reduce resistance (cont.)– Cooptation: a political tactic that aims to gain

endorsement of the change from important individuals or groups

– Sometimes no choice other than to force change onto the target system

Organizational Development

• Organizational development is a long-term, systematic, and prescriptive approach to planned organizational change

• Although it uses a system-wide view, it can focus on single subsystems of an organization

• Applies the theories and concepts of the social and behavioral sciences to organizational change

Organizational Development (Cont.)

• Tries to develop an organization’s self-renewing capacity

• Tries to create an organization that can continuously improve

• Views conflict as an inevitable part of organizational life

Phases of Organizational Development (Cont.)

• Organizational development unfolds in a series of phases

• These are phases, not steps, because no clear boundaries exist between them

• Phases can repeat. For example, during the evaluation phase, managers may discover a need for more data from the diagnosis stage

See text book Figure 18.2

Phases of Organizational Development (Cont.)

• Entry– First contact of the consultant with the client– Usually client initiates contact– Building a client-consultant relationship– Mutual evaluation of each other– Decide they can develop a compatible working

relationship

Phases of Organizational Development (Cont.)

• Contracting– Develop an agreement between the consultant

and client– Can range from an oral agreement to a legally

binding agreement– Describes mutual expectations and each party’s

duties– Not static. Subject to renegotiation as the

organizational development program unfolds

Phases of Organizational Development (Cont.)

• Diagnosis– Consultant gets information about the client

system and diagnoses its current state• Observe the client’s behavior and reactions

• Observe physical characteristics of system

• Systematic data collection using surveys, interviews, and company records

– Consultant summarizes this phase’s results for feedback to the client system

Phases of Organizational Development (Cont.)

• Feedback– Consultant has a series of feedback meetings

with client system members– The number of meetings varies according to the

scope of the organizational development program

– Several steps: (1) consultant’s analysis; (2) discussion; (3) consultant’s preliminary diagnosis; and (4) actively work with members of client system to arrive at collaborative diagnosis

Phases of Organizational Development (Cont.)

• Planning the change– A collaborative activity between the consultant

and client system– Identify alternative courses of action and the

effects of each– Lay out the steps in the change program– Client decides the nature of the change

program--not the consultant

Phases of Organizational Development (Cont.)

• Intervention– Collaborative intervention to move the client

system to the desired future state– Includes job and organizational design changes,

conflict reduction program, and the like. See the “Organizational Development Interventions” section of the chapter

– Consultant’s role: help the intervention and forecast dysfunctional results

– Earlier client involvement helps reduce resistance to change in the intervention phase

Phases of Organizational Development (Cont.)

• Evaluation– Focuses on whether the organizational

development effort had the desired effect– Ranges from simply asking how the client feels

to a well-designed research effort– Done independently of the consultant– Should also give the client system information

about the next steps to take

Phases of Organizational Development (Cont.)

• Termination– Ends at some point

• Client terminates consultant• As the client system changes and develops, the

external consultant reduces involvement

– Internal consultants are part of the organization and can continue contact

– The goal is independence of the client system from the consultant. Build client system self-reliance

Organizational Development Interventions

• Many interventions exist for organizational development programs

• Systematic techniques drawn from the behavioral sciences

• Earlier chapters have detailed descriptions of the interventions summarized here

Organizational Development Interventions (Cont.)

• Human process interventions– Focus on interpersonal, intra-group, and

intergroup processes– Includes conflict, communication and decision

making– Goal: improve human processes to get more

effective organizational functioning

Organizational Development Interventions (Cont.)

• Structural and technological interventions– Focus on organizational design, job design, and

the addition of new technology– New technology focuses on improving

organizational processes– Goal: improve human productivity and

organizational effectiveness

Organizational Development Interventions (Cont.)

• Human resource management interventions– Draws on the human resource management or

personnel practices of an organization– Includes motivation and rewards, career planning

and development, and stress management– Goal: change individual behavior and

performance to get improved organizational effectiveness

Organizational Development Interventions (Cont.)

• Strategy interventions– Changes in an organization’s strategic position

to better align it with the external environment– Includes changes in the organization’s culture

to create values and beliefs more congruent with the new environment

– Goal: strategic shifts to gain competitive advantage

Organizational Development Interventions (Cont.)

• Multiple interventions have the strongest effects

• Structural/technological interventions and human resource management interventions had the strongest effects

• Effects stronger in small organizations than in large organizations

• Survey feedback has weaker effects than other interventions

International Aspects of Organizational Development

• Intellectual roots of organizational development are mainly in the United States, England, northern Europe, and Scandinavia

• Values and assumptions of organizational development consultants likely reflect these cultural values

• Nature of interventions also reflect these cultural values

International Aspects of Organizational Development (Cont.)

• Cultural differences and effect of organizational development approaches– Latin American workers often accept a

directive management style– France and Italy: view organizations as

hierarchical systems that use power and political behavior

– Sweden and the United States: view organizations as less hierarchical

International Aspects of Organizational Development

(Cont.)• Cultural differences and effect of

organizational development approaches (cont.)– Conflict management approaches vary

depending on tolerance of uncertainty– Tend to use nonconfrontational approaches to

conflict reduction

Ethical Issues AboutOrganizational Development

• Ethical dilemmas that can undermine an organizational development effort– Misrepresentation of consultant’s capabilities,

skills, or experience– Misrepresentation of client’s problems– Data confidentiality and voluntarism in

providing data– Full awareness of and consent to the behavioral

changes asked of participants