15-1

Chapter 10

ORGANIZATIONAL

CHANGE AND

DEVELOPMENT

Organizational

Change

McGraw-Hill/Irwin

McShane/Von Glinow OB

5eCopyright © 2010 by The McGraw-Hill Companies, Inc. All rights

reserved.

15-3

Umpqua

Bank’s

Umpqua Bank has

become the largest

regional community

bank in the Pacific

Northwest by

applying effective

organizational

change practices

Organizational

Change

15-4

Lewin’s Force Field Analysis Model

Developed by Kurt Lewin

Driving forces

• Push organizations toward change

• External forces or leader’s vision

Restraining forces

• Resistance to change -- employee

behaviors that block the change

process

DrivingForces

RestrainingForces

15-5

Desired

Conditions

Current

Conditions

Before

Change

After

Change

Force Field Analysis Model

During

Change

DrivingForces

RestrainingForces Driving

Forces

RestrainingForces

DrivingForces

RestrainingForces

15-6

Not Hoppy About Change

Mina Ishiwatari(front) wanted to

improve Hoppy drink’s brand image,

but most staff didn’t want to change.

“I tried to take a new marketing

approach to change the image of

Hoppy . . . but no one would listen to

me.” She improved Hoppy’s

popularity with limited support or

budget. Most employees who

opposed Ishiwatari’s changes have

since left the company.

15-7

Restraining Forces (Resistance to Change)

Many forms of resistance

• e.g., complaints, absenteeism,

passive noncompliance

View resistance as a resource

1. Symptoms of deeper problems in

the change process

2. A form of constructive conflict --

may improve decisions in the

change process

3. A form of voice – helps procedural

justice

15-8

Why People Resist Change

1. Direct costs

• Losing something of value due to change

2. Saving face

• Accepting change acknowledges own imperfection,

past wrongdoing

3. Fear of the unknown

• Risk of personal loss

• Concern about being unable to adjust

15-9

Why People Resist Change(con’t)

4. Breaking routines

• Organizational unlearning is part of change

process

• But past practices/habits are valued by employees

due to comfort, low cognitive effort

5. Incongruent organizational systems

• Systems/structures reinforce status quo

• Career, reward, power, communication systems

6. Incongruent team dynamics

• Norms contrary to desired change

15-10

Creating an Urgency for Change

Inform employees about driving forces

Most difficult when organization is doing well

Customer-driven change

• Adverse consequences for firm

• Human element energizes employees

Sometimes need to create urgency to change

without external drivers

• Requires persuasive influence

• Use positive vision rather than threats

15-11

Minimizing Resistance to Change

Highest priority and first strategy

for change

Improves urgency to change

Reduces uncertainty (fear of

unknown)

Problems -- time consuming and

costly

Communication

Learning

Involvement

Stress Mgt

Coercion

Negotiation

15-12

Minimizing Resistance to Change

Provides new knowledge/skills

Includes coaching and other

forms of learning

Helps break old routines and

adopt new roles

Problems -- potentially time

consuming and costly

Communication

Involvement

Stress Mgt

Coercion

Negotiation

Learning

15-13

Minimizing Resistance to Change

Employees participate in change

process

Helps saving face and reducing

fear of unknown

Includes task forces, future search

events

Problems -- time-consuming,

potential conflict

Learning

Involvement

Stress Mgt

Coercion

Negotiation

Involvement

Communication

15-14

Minimizing Resistance to Change

When communication, learning,

and involvement are not enough

to minimize stress

Potential benefits

• More motivation to change

• Less fear of unknown

• Fewer direct costs

Problems -- time-consuming,

expensive, doesn’t help everyone

Learning

Involvement

Coercion

Negotiation

Stress Mgt

Communication

15-15

Minimizing Resistance to Change

Influence by exchange -- reduces

direct costs

May be necessary when people

clearly lose something and won’t

otherwise support change

Problems

• Expensive

• Gains compliance, not commitment

Learning

Involvement

Stress Mgt

Coercion

Communication

Negotiation

15-16

Minimizing Resistance to Change

When all else fails

Assertive influence

Radical form of “unlearning”

Problems

• Reduces trust

• May create more subtle resistance

• Encourage politics to protect jobCoercion

Learning

Involvement

Communication

Stress Mgt

Negotiation

15-17

Refreezing the Desired Conditions

“When you are leading for

growth, you know you are

going to disrupt comfortable

routines and ask for new

behavior, new priorities, new

skills… Even when we want

to change, and do change,

we tend to relax and the

rubber band snaps us back

into our comfort zones.”

Ray Davis, CEO, Umpqua Bank

15-18

Refreezing the Desired Conditions

Realigning organizational systems and team

dynamics with the desired changes

• Alter rewards to reinforce new behaviors

• Change career paths

• Revise information systems

15-19

Change Agents

Change agent -- anyone who possesses

enough knowledge and power to guide and

facilitate the change effort

Engage in transformational leadership

• Develop the change vision

• Communicate the vision

• Act consistently with the vision

• Build commitment to the vision

15-20

Strategic Vision & Change

Need a vision of the desired future state

Identifies critical success factors for change

Minimizes employee fear of the unknown

Clarifies role perceptions

15-21

Diffusion of Change

Begin change as pilot projects

Effective diffusion considers MARS model

• Motivation – pilot project is successful, reward diffusion of pilot project

• Ability – Train employees to adopt pilot project

• Role perceptions –Translate pilot project to new situations

• Situational factors – Provide resources to implement pilot project elsewhere

15-22

Action Research Approach

Action orientation and research orientation

• Action – to achieve the goal of change

• Research – testing application of concepts

Action research principles

1. Open systems perspective

2. Highly participative process

3. Data-driven, problem-oriented process

15-23

Formclient-

consultantrelations

Disengageconsultant’s

services

Action Research Process

Diagnose

need for

change

Introduce

intervention

Evaluate/

stabilize

change

15-24

BBC Takes the Appreciative Journey

To become a more creative

organization, the British

Broadcasting Company

sponsored an appreciative

inquiry process of employee

consultation, called Just

Imagine. “It gave me a

powerful mandate for

change,” said BBC’s chief

executive at the time.

15-25

Appreciative Inquiry Approach

Frames change around

positive and possible

future, rather than

traditional problem focus.

Application of positive

organizational behavior

15-26

Four-D Model of Appreciative Inquiry

Designing

Engaging in

dialogue

about “what

should be”

Dreaming

Forming

ideas about

“what might

be”

Discovery

Discovering

the best of

“what is

Delivering

Developing

objectives

about “what

will be”

15-27

Large Group Interventions

Future search, open space, and other

interventions that involve “the whole system”

• Large group sessions

• May last a few days

• High involvement with minimal structure

Limitations of large group interventions

• Limited opportunity to contribute

• Risk that a few people will dominate

• Focus on common ground may hide differences

• Generates high expectations about ideal future

15-28

Parallel Learning Structure Approach

Highly participative social structures

Members representative across the formal

hierarchy

Sufficiently free from firm’s constraints

Develop solutions for organizational change

which are then applied back into the larger

organization

15-29

OrganizationParallel

Structure

Parallel Learning Structures

15-30

Cross-Cultural and Ethical Concerns

Cross-Cultural Concerns

• Linear and open conflict assumptions different from

values in some cultures

Ethical Concerns

• Privacy rights of individuals

• Management power

• Individuals’ self-esteem

15-31

Organizations are About People

“Take away my people, but leave

my factories, and soon grass will

grow on the factory floors. Take

away my factories, but leave my

people, and soon we will have a

new and better factory.”

Andrew Carnegie (1835-1919)

Source: Library of Congress

Discussion of

Activity 15.3

Strategic Change

Incidents

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Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights

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15-33

Scenario #1: “Greener Telco”

Scenario #1 refers to Bell

Canada’s Zero Waste

program, which successfully

changed employee

behaviorby altering the

causes of thosebehaviors.

Pilot project in Toronto – 12

floor building of 1000 staff

reduced waste from 1800 lb

per day to just 75 lb per day

within 3 years.

Courtesy of Bell Canada

15-34

Bell Canada’s Change Strategy

Relied on the MARS model to

alter behavior:

Motivation -- employee

involvement, respected

steering committee (photo)

Ability -- taught paper

reduction, email, food disposal

Role perceptions – learned

importance of reducing waste

Situation -- created barriers to

wasteful behavior, eg. removed

garbage bins

Courtesy of Bell Canada

15-35

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.

15-36

Continental Airlines’ Change 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

Organizational

Change

McGraw-Hill/Irwin

McShane/Von Glinow OB

5e

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights

reserved.