Organizational Change

Steven E. Phelan, November 2007

Final thoughts on project management

Outline

• Friday• Why change?• Top down approaches to change• Resistance to change• Cases

• Saturday• Bottom up approaches• Merger plan simulation

Why change?

• Change is a risky activity– Many organizational changes fail or do not

realize their intended outcomes (50-70%). – This raises the question of why change is so

prevalent?• Pressure to change comes from:

– External, environmental pressures– Internal, organizational pressures

External, environmental pressures

Pressure Examples Description

Fashionpressures Boeing Co.

This is based on mimetic isomorphism – imitating companies that are legitimate and successful

Mandated pressures Chevron Texaco

This is based on coercive isomorphism – when change is demanded by outside sources.

Geopolitical pressures 3M

This is when global crises greatly impact an organization and change is necessary

for survival.

External, environmental pressures

Pressure Examples Description

Market decline pressures Harley Davidson

When current markets that the organization operates in begin to decline there is pressure to find newer, more viable markets.

Hypercompetition pressures Intel

This affects the way organizations respond to their consumers and their competitors to cater for the increasingly rapid pace of business.

Reputation and credibility pressures

Walt Disney Company

In light of recent corporate governance scandals in organizations, the pressure to maintain a good reputation and high level of credibility has increased.

Internal organizational pressures

Pressure Examples Description

Growth pressures Microsoft

Existing systems and processes in a smaller organization may no longer be applicable when the size of the organization increases.

Integration and collaboration

pressuresEDS

Integration and creating economies of scale can lead to pressure for change in organizations.

Identity pressures Forte Hotel

A common organizational identity and the unified commitment of staff in different areas/departments of an organization can be difficult to manage and may encourage change.

Internal organizational pressures

Pressure Examples Description

New broom pressures UNLV

New authority figures in an organization can herald a new era and often signal significant changes an organization in an organization.

Power and political

pressures

Morgan Stanley

Power relationships and politicking can change internal processes and decision making. This has significant flow on effects within the organization.

Top Down Approaches to

Change

Change Management Approach

• Focuses on strategic, intentional and usually large-scale change

• Entails following a variety of steps; the exact steps vary depending upon the model used

• Belief that achieving organizational change is possible through a coordinated and planned approach

Some Systems• Ten Steps

• Define the vision• Mobilize• Catalyze• Steer• Deliver• Obtain

participation• Handle emotions• Handle power• Train and coach• Actively

communicate

• 12 Actions• Get support of key power groups• Get leaders to model change behavior• Use symbols and language• Define areas of stability• Surface dissatisfaction• Promote participation• Reward behavior that supports change• Disengage from the old• Communicate image of future• Use multiple leverage points• Develop transition mgt arrangements• Create feedback

Some More Systems

• 10 Commandments• Analyze the need for change• Create a shared vision• Separate from the past• Create a sense of urgency• Support a strong leader role• Line up political sponsorship• Craft an implementation plan• Develop enabling structures• Communicate and involve

people• Reinforce and institutionalize

change

• Eight-step model (Kotter)• Establish the need for

urgency• Ensure there is a power

change group to guide the change

• Develop a vision• Communicate the vision• Empower staff• Ensure there are short

term wins• Consolidate gains• Embed the change in the

culture

Exercise

• Compare and contrast the various steps in these models. What is left out of different models?

• Create your own composite model. • Is there a preferred sequence of steps? Why?

• Identify the key management skills associated with each step• Which ones are you strongest on? Weakest on?

• In your experience:• Which steps have been best handled?• Worst handled? Why?

Dilbert

• The goal of change management is to dupe slow-witted employees into thinking change is good for them by appealing to their sense of adventure and love of challenge

• This is like convincing a trout to leap out of a stream to experience the adventure of getting deboned

Signs of Resistance to Change

Active signs of resistance• Being critical• Finding fault• Ridiculing• Appealing to fear• Using facts selectively• Blaming or accusing• Sabotaging• Intimidating or threatening• Manipulating• Distorting facts• Blocking• Undermining.• Starting rumors• Arguing

Passive signs of resistance• Agreeing verbally but not

following through (“malicious compliance”)

• Failing to implement change• Procrastinating or dragging

one’s feet• Feigning ignorance• Withholding information,

suggestions, help, or support• Standing by and allowing

change to fail

• Which of the various ways of resisting change are the most common?

• Which are the most difficult to deal with?

Why Do People Resist Change?

• Dislike of change• People don’t resist change, they resist pain!• Boredom can be pain, too.

• Discomfort with uncertainty• Low tolerance for ambiguity

• Perceived negative effects of interests• Authority, status, rewards, salary, social ties

• Attachment to the established culture/ways of doing things

• Perceived breach of psychological contract

Why Do People Resist Change?

• Lack of conviction that change is needed• Lack of clarity as to what is needed• Belief that the specific change being proposed is

inappropriate• Belief that the timing is wrong• Excessive change• Cumulative effects of other changes in one’s life • Perceived clash with ethics• Reaction to the experience of previous changes• Disagreement with the way the change is being

managed

Why do people support change?

• Security• Money• Authority• Status/prestige• Responsibility• Better working conditions• Self-satisfaction• Better personal contacts• Less time and effort

Managing Resistance

• The classic steps:• Education and communication• Participation and involvement• Facilitation and support

• Gray areas• Negotiation and agreement• Manipulation and cooptation• Explicit and implicit coercion

• My IT change management story• Does a successful change manager needs skills in

all six areas? • Where do you need development?

The Resistance Cycle

• Resistance is a natural (even necessary) psychological stage in any change:• Denial / Shock• Resistance / Anger• Exploration / Mourning• Commitment / Acceptance

• Do we just ‘let nature take its course’ then?• Can people get stuck in a stage?

The “Power of Resistance”(Maurer)

• Use the power of resistance to build support• Showing respect towards resistors creates stronger

relationships and thereby improves the prospects of success

• Fundamental touchstones• Maintain clear focus• Embrace resistance• Respect those who resist (assume good faith)• Relax• Join with the resistance

• Look for points of commonality

Maurer’s Default Options

• Use power• Manipulate those who oppose• Apply force of reason• Ignore resistance• Play off relationships• Make deals• Kill the messenger• Give in

Question

• Which approach to the management of resistance attracts you? Why?

Contingency Approach

• Contingency approaches challenge the view that there is “one best way” • The style of change will vary, depending upon the

scale of the change and the receptivity of organizational members for engaging in the change.

• Kotter and Schlesinger recommend changing tactics according to the:• Amount and kind of resistance anticipated• The position and power of the change agent• The personality of the person designing and implementing the

change• The time available and the consequences of failure

Processual Approach• Views change as a continuous process which unfolds

differently depending upon the time and the context• It sees the outcome of change as occurring through a

complex interplay of different interest groups, goals, and politics. Only some outcomes will be able to be achieved given the “messiness” of change

• This approach does not provide a list of “what to do” steps as in the change management approaches. • Rather it alerts the change manager to the range of influences

which they will confront and the way in which these will lead to only certain change outcomes being achieved

Rules of thumb for change agentsShepard (1975)

• Stay alive• Learn to greet absurdity with laughter• Use your skills, emotions, labels, and positions don’t be used by them• Don’t get trapped in other people’s games

• Start where the system is• Understand how others see themselves (empathy)

• Never work uphill• Work in the most promising arenas • Don’t build hills as you go • Build resources• Don’t over organize• Don’t argue if you can’t win • Don’t drift – remain focused on your purpose

More rules of thumb

• Light many fires • Load experiments for success

• Innovation requires a good idea, initiative, and a few friends• Find the people who are ready and able to work,

introduce them to one another, and work with them• Those who need to rebel or submit are not reliable

partners• Keep an optimistic bias• Capture the moment

• timing is everything

Quinn’s logical incrementalism

• Key propositions• Proceed experimentally and flexibly• Conceal true goals and intentions• Build awareness and credibility to legitimize new

viewpoints• Tactical shifts, partial solutions

• Use serendipity to promote supporters, replace opponents, fund pet projects

• Broaden political support and overcome opposition• Encourage others to trial new ideas and create

pockets of commitment (but don’t be associated with failure).

• Why is this a processual view of change?

Merger Plan AssignmentsN o rthe rn B a nk

C h a ng e M a na g erJ oe

A d m in A ssis ta n tE ric E .

C F OD o ug

C IOP e rry

V P -H RIre ne

B ra n ch R epR od

V P -R eta il B a n k ingM u rra y

C E ON ic k

Southern AssignmentsS o uth ern B a nk

A d m in A ssis ta n tD an

C F OP e ter

C IOJa red

V P -H RH u sam

B ra n ch R epA to ya

V P -R eta il B a n k ingS teve

C E OJo hn

Stakeholders

• Stakeholders– State Governor – Dr. Phelan– State Regulator – Allen– Union Organizer – Caroline– Journalist –Sidney– Largest Southern Customer – Eric B.– East/West Bank – Eric P.

@ DISNEYDenis Hightower

@ WHITECAPPeter Browning

Shaping Approaches to

Change

Organization Development

• Values• Humanistic

• Openness, honesty, integrity• Democratic

• Social justice, freedom of choice, involvement• Developmental

• Authenticity, growth, self-realization

History of OD

• T-groups (Lewin, 1946)• Training groups – a form of group therapy

• Socio-technical systems• Tavistock Institute• Focus on social teams and industrial democracy

• Surveys with Likert scales from 1946• Often used for diagnosis of organizational climate

and post-intervention• Participative Action research

• A Plan-Do-Check-Act cycle that involves those who are affected by the changes

Role of OD practitioner

• Steps• Problem identification• Consultation/collaboration with OD

consultant• Data gathering and problem diagnosis• Feedback• Joint problem diagnosis (with group)• Joint action planning (with group)• Change actions• Further data gathering

Change Management vs. OD

• Critics of change management depict it as being “faddish” and the product of management consultancy firms

• There is a debate between proponents of OD and proponents of change management:• OD is criticized for being less relevant to modern

organizations which require strategic, often large scale change rather than slower, incremental change often associated with a traditional OD

• Change management is criticized for lacking a humanistic set of values and for having a focus on the concerns of management rather than on those of the organization as a whole

Second generation OD

• Focus on transformational change, culture, and learning organizations• Argyris undiscussables, double loop learning, and

triple loop learning• Senge’s system dynamics for learning

• New interest in teams• High performance work organizations• Self managed teams

• TQM• Visioning, diversity, large meetings• Large-scale OD

New Problems for OD• Loss of community

• People pretend to care more about one another than they really do

• Loss of employer-employee social contract• I must take care of myself

• Employability• Is my employer giving me the skills to find another job if I have to?

• Trust• Widening gap between have and have nots• Difference between what managers say and do• Lack of openness

• Culture Clash• Need for negotiation and conflict resolution skills

Appreciative Inquiry

• Participation by large-scale intervention • Shows a shift from problem solving to

joint envisioning of the future• Involves a four-step technique:

• Discovering current best practices• Building on existing knowledge• Designing changes• Sustaining the organization’s future

AI Exercise• Goal: Quality executive education

• Step 1: Describe your peak experience in quality education

• Step 2: Generate some ‘provocative propositions’ for the UNLV EMBA program based on step 1.

• Step 3: Describe times when the UNLV program approached peak experience

• Step 3: Develop a vision of what could be• Step 4: What needs to change in skills, structure,

processes and systems, management style, and staffing to enhance this vision

The Merger Plan Simulation

• Task• Develop a formal integration plan (with

decisions on branch closures, systems conversion, product alignment, layoffs, and communication strategy) that will maximize shareholder value while keeping as much support as possible from the stakeholders at the two banks and external organizations.

• 10 minutes = 1 news cycle = 1 day

Merger Plan N o rthe rn B a nk

C h a ng e M a na g erJ oe

A d m in A ssis ta n tE ric E .

C F OD o ug

C IOP e rry

V P -H RIre ne

B ra n ch R epR od

V P -R eta il B a n k ingM u rra y

C E ON ic k