Module 2

Organizational Change

Manjunath VS
Assistant Professor
Acharya Institute of Technology
Learning Objectives
 Understand the meaning of organizational
change
 Describe the nature and types of
organizational change.
 Describe the forces for organizational
change.
 Describe the models for organizational
change.
Learning Objectives
 Understand the change process.
 Understand the concept of leading a
change process.
What is Change?
 Change is defined as “To make or become
different, give or begin to have a different form”.
 Change means dissatisfaction with the old and
belief in the new.
 Dissatisfaction may arise due out of perceived
deficiency in the existing system, which may be
inherent deficiency gone unnoticed or one
perceived in comparative evaluation with a better
system.
Organizational Change
 Organizational change may be defined as the
adoption of a new idea or a behavior by an
organization-Daft.
 Organizational change is the process by which
organizations move from their present state to
some desired state to increase their
effectiveness.
 An organization in decline may need to
restructure its resources to improve its fit with
the environment.
Organizational Change
 It is the way of altering an existing
organization to increase organizational
effectiveness for achieving its
objectives.
 Organizational change is primarily the
change in organizational structure,
methods or processes.
Nature of Organizational Change
 1.Change can be continuous and intrinsic to
an organization.
 2.Change can be extrinsic and discontinuous.
 3.Change can be patterned and predictable or
complex and unpredictable.
 4.Change can exhibit bipolarity or duality.
 5.Changes can be micro or macro
Forces of Change
 1.External Forces: These are the
changes which are forced by the
environment in which an organization
operates.
 1.Internal forces: These are the forces
within the organization due to
deficiencies in the existing system.
External Forces of Change
 Political forces
 Economic forces
 Technological forces
 Government forces
 Global competition
 Changing customer needs
Political forces
 Political forces within and outside country
have an important influence on large business
houses.
 Organizations have no control over political
forces but they have to adapt to meet
pressures of these forces.
 Last decade has seen unforeseen changes in
world politics which has a tremendous impact
on business.
Political forces
 Collapse of Soviet Union
 Opening up of economy in many Asian
countries including India.
 Gulf war
 Current crisis in Iraq
 Formation of European union
Political forces
 North American Free Trade Agreement
(NAFTA) paving way for free trade
among Canada, United States and
Mexico.
 Emergence of India and China as major
political and economic forces.
 Changing political ideologies.
Economic Forces
 The uncertainty about future trends in
the economy is a major cause of
change.
 Time and again, economic shocks have
continued to impose changes on
organizations.
 If organizations have to survive they
have adapt to these economic changes.
Economic Forces
 Maturation and slowdown of domestic
markets, leading to greater emphasis
on exports and deregulation.
 Fall out of social economies and their
reorientation toward capitalist
economies.
 Fluctuating interest rates.
 Uncertainties arising out of inflation.
Economic Forces
 Low capital investments
 Fluctuating oil prices
 Recession and lowering of consumer
confidence.
 Interrelatedness of financial systems of
different countries.
 Changing economic policies.
Technological Forces
 The rate of technological change is greater
today than any time in the past and
technological changes are responsible for
changes in the nature of the job performed at
all levels in the organizations.
 The technological advancements particularly
in IT and communications, have
revolutionized the work place.
Technological Forces
 Creation of more and more new products and
services.
 Newer methods of work.
 Automation of routine and traditional works.
 Reduced supervision
 Redesign of jobs.
 Need of newer skills among the employees.
 Downsizing.
Technological Forces
 Virtual organizations
 Networked Society
 Knowledge based organizations
 Advances in technology leads to
development of new economies
(Singapore).
Government Forces
 Governmental interventions in the form
of regulations can also lead to change.
 Changes in the industrial policies,
business and labour law will have an
impact on business organizations.
 Liberalization, privatization and
globalization paved way for unforeseen
changes in Indian organizations.
Government Forces
 Deregulation has reduced government
intervention.
 Government sector services and
industries are handed over to private
sectors. (Telecom, Airlines etc)
 Changes in foreign exchange rates have
an influence in international trade.
Government Forces
 Government also influences business
activities through many acts on trade
practices.
 Anti dumping duties
 Suspension agreements
 Protectionism
Global competition
 Competition is a force for change because
unless an organization matches or surpasses
its competitors in efficiency, quality, or its
capability to innovate new or improved
products or services it will not survive.
 In global economy competitors are likely to
come from across the ocean as from across
the town.
 In order to survive and grow, companies
increasingly making their presence felt
globally.
Global competition
 Multinational companies have are increasing
every day.
 Successful organizations will be the one that
can change in response to the competition.
 They will be fast on their feet, capable of
developing new products quickly, and
marketing them quickly.
 Short production cycles are order of the day.
 Organizations need to be highly flexible.
Changing customer needs
 Customer needs and preferences are
always changing.
 Organizations are forced to adapt and
constantly innovate their products and
services to meet such demands.
Internal forces of change
 System dynamics
 Inadequacy of administrative processes
 Individual/ group expectations
 Structural changes
 Technological changes
 Person-focused changes
 Profitability issues
 Resource constraints
Types of changes
 1.Happened change
 Globalization in India
 Privatization
 2.Reactive change
 Technological changes
 Changes in product design
 Changes in organizational policies
Types of changes
 3.Anticipatory change
 Product diversification
 Mergers
 4.Planned changes
 Introduction of new products
 Organizational restructuring
 Training programs to bring in new
competencies
Types of changes
 5.Incremental changes
 Kaizen
 Expansions
 6.Operational changes
 Re-engineering
 New technology
 Work methods
Types of changes
 7.Strategic change
 BPRE
 New products/services
 Expansion
 8.Directional change
 Changes due to government regulations
 Changes due to competetion
Types of changes
 9.Fundamental change
 Change in mission
 New leadership
 Take over
 10.Total change
 New vision
 Privatization of a public sector
 Organizational turnaround
Types of changes
 11.Transformationmal change
 Product driven to technology driven
 Centralization to Decentralization
 Automation
 Cultural transformation
 12.Revolutionary change
 Envisioning-New vision
 Policies, Work systems
Types of changes
 13.Recreation
 Drastic changes
 Becoming different in terms product
quality-from poor to best
 Reorientation in terms core competencies
of organization
Who Likes Change?

Nobody!!!
Why don’t people like
change?

What do you expect?

 Project
Organizational Future J Shock
Project
Project
Project F
B
A
Project Project
H I
Project
Project Project E
D C Project
G
Models for organizational
change
 Change can happen naturally in an
organization or it can be due to planned
intervention to enhance organizational
effectiveness.
 A change model is one which can be
used to implement the planned changes
in organization smoothly and
effectively.
Kurt Lewin’s Change model
 It is one of the earliest model of
planned change proposed by KURT
LEWIN in 1975.
 According to Lewin change is
modification of those factors which
keeps a system’s behavior stable.
 Lewin proposes Three step model for
planned change.
Kurt Lewin’s Change model
 Changes can be at three levels
 Individual level-changes is behavior,
attitude, skills, knowledge
 Structure and system level-changes in
work design, recruitment system,
information systems etc.
 Organizational climate-changes in
leadership, culture, etc.
 Lewin’s Three-Step Process

Unfreezing Changing Refreezing

The “Calm Waters” Simile

39
Kurt Lewin’s Change model
 Unfreezing-Reducing the forces
marinating the organization’s behavior
at present level or status-quo.
 Changing-Moving from present behavior
to new desired behavior
 Refreezing-Stabilizing the new state of
equilibrium
 Force Field Analysis

Forces Supporting Change Forces Resisting Change

New organization structure Threats to power and influence

Reward systems Habits

Change of leadership Organization culture

Communication channels Perceptions

Kurt Lewin’s Change model
 Moving from the status quo (equilibrium) can
be achieved in three ways:
 1. The driving forces, which direct behavior
away from the status quo,
can be increased.
 2. The restraining forces, which hinder
movement away from the status quo, can be
increased.
 3.The two approaches can be combined.
Kurt Lewin’s Change model
 Once unfreezing has been accomplished, the
change can be implemented. But merely
introducing change does not ensure that it
will take hold. The new situation must be
refrozen so it can be sustained over time.
Unless this is done, employees will revert to
the previous state of equilibrium. The
objective, then, of refreezing is to stabilize
the new situation by balancing the driving
and restraining forces.
 Commitment Model
VIII. Internalization

ommitment VIII. Institutionalization

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cceptance V. Installation

IV. Positive Perception

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Project / Work Plan
Transition / People Plan
 Steps in Human Due Diligence
7. Evaluate final results

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3. Conduct diagnosis
aration 2. Communicate about the change
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Planning phase- Lippit
Scouting

Entry

Diagnosis

Planning

Action

Stabilization and evaluation

Termination
Action Research Model
Problem Identification

Consultation with a behavioral expert

Data gathering and preliminary diagnosis

Feedback

Joint diagnosis

Action

Data gathering after action

Re diagnosis
Integrated model of planned
change
 Bullock and Batten developed this
model in 1985.
 It consists of four phases.
 Exploration phase
 Planning phase
 Action phase
 Integration phase
Integrated model of planned
change
 Exploration phase

Need
Awareness

Search Contracting
Integrated model of planned
change
 Planning phase

Diagnosis

Design Decision
Integrated model of planned
change
 Action phase

Implementation

Evaluation
Integrated model of planned
change
 Integration phase

Stabilization

Diffusion Renewal
 Leading change

Motivating change

Creating a Vision
Effective Change
Developing Political Support
Management
Managing the Transition

Sustaining Momentum
Mega trends
 In his world famous book Mega trends,
written in 1982, John Naisbitt had
identified 10 major trends the world
economy will witness. Most of these
projections have become the major
changes in organizations.
Mega trends
 The 10 trends are
 Industrial society to Information society
 Forced technology to High tech/high
touch technology
 National economy to world economy
 Short term to long term
 Centralization to Decentralization
Mega trends
 Institutional help to self-help
 Representative democracy to
participative democracy
 Hierarchies to Networking
 North to South (with respect to US
economy)
 Either/or to multiple options