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WHAT IS ORGANIZATIONAL CHANGE?

 Organizational change: the process by which organizations move from their present
state to some desired future state to increase their effectiveness.
 Goal is to find improved ways of using resources and capabilities in order to increase
an organization’s ability to create value.
 Targets of change include improving effectiveness at four different levels:
1.
2.
3.
4.

Human resources
Functional resources
Technological capabilities
Organizational capabilities

1. Human Resource changes include:
1. Investment in training and development
2. Socializing employees into the organizational culture
3. Changing organizational norms and values to motivate a multicultural and
diverse workforce
4. Promotion and reward systems
5. Changing the composition of the top- management team
2. Functional Resources changes Include:
I.
Transferring resources to the functions where the most value can be created in
response to environmental change
II.
An organization can improve the value that its functions create by changing its
structure, culture, and technology
3. Technological capabilities changes include:
i. Efforts intended to give an organization the capacity to change itself in
order
to exploit market opportunities
ii. Adoption and use of new technologies
iii. Development of new products/ technologies and the changing of existing one’s
Technological capabilities are a core competence
4. Organizational capabilities changes include:
 Changing organizational design
Culture and structure
 Changing strategy
 Changes that permeate entire organization

LEVIN’S FORCE-FIELD THEORY OF CHANGE .

managers must increase forces for change and/or decrease forces resisting change TYPES OF CHANGE IN ORGANIZATIONS  Evolutionary change:  change that is gradual. incremental. 1. When forces for and against change are equal. Forces for change and forces making organizations resistant to change 2.Argues that two sets of opposing forces within an organization determine how change will take place. drastic. To change an organization. the organization is in a state of inertia 3. and narrowly focused  Revolutionary change:  change that is sudden. and broadly focused .

DEVELOPMENTS IN REVOLUTIONARY CHANGE  Restructuring: changing task and authority relationships and redesigning organizational structure and culture to improve organizational effectiveness  Downsizing: the process of streamlining the organizational hierarchy and laying off managers and workers to reduce bureaucratic costs  Innovation: the process by which organizations use their skills and resources to:  Create new technologies  Develop new goods and services  Better respond to the needs of their customers  One of the most difficult instruments of change to manage LEVIN’S THREE-STEP CHANGE PROCESS .DEVELOPMENTS IN EVOLUTIONARY CHANGE  Sociotechnical systems theory: a theory that proposes the importance of changing role and task or technical relationships to increase organizational effectiveness  Total quality management (TQM): an ongoing and constant effort by all of an organization’s functions to find new ways to improve the quality of the organization’s goods and services  Flexible workers and Flexible work teams.

CHANGE MODELS: MCKINSEY’S 7S CHANGE MODELS: KOTTER .

CHANGE MODELS: ADKAR MANAGING CHANGE: ACTION RESEARCH .

change. Helps in the unfreezing.   Action research: a strategy for generating and acquiring knowledge that managers can use to define an organization’s desired future state. A  Team building. ORGANIZATIONAL DEVELOPMENT (OD) Organizational development (OD): a series of techniques and methods that managers can use in their action research program to increase the adaptability of their organization. ORGANIZATIONAL DEVELOPMENT (OD)  OD TECHNIQUES TO DEAL WITH RESISTANCE TO CHANGE  Education and communication: inform workers about change and how they will be affected  Participation and empowerment: involve workers in change  Facilitation: help employees with change  Bargaining and negotiation  Manipulation: change the situation to secure acceptance A  Coercion: force workers to accept change  OD TECHNIQUES TO PROMOTE CHANGE:  Counseling. Used to plan a change program that allows the organization to reach that state.  Can be used to unfreeze. Intergroup training. changing and refreezing process. Sensitivity training. A  Total organizational interventions. and Process consultation.  Organizational confrontation meeting. and refreeze attitudes and behaviors. and Organizational mirroring. .  Goal is to improve organizational effectiveness and to help people in organizations reach their potential and realize their goals and objectives.

5. Fear of the unknown Unaware of future dangers Complacent Unaware of benefits of change Unable to deal with uncertainty See change as a personal threat Afraid own “kingdom” will be toppled Cannot envisage future .CHANGE INITIATIVES & SUSTAINABILITY WHY PEOPLE RESIST CHANGE 1. 3. 6. 2. 4. 8. 7.

5.OVERCOMING RESISTANCE TO CHANGE 1. 2. Start-up phase where a business determines what its core strengths and capabilities are. . 3. It’s important to document what works and what doesn’t work during this stage. Mobilize commitment Develop a Shared Vision Foster consensus and competence Spread revitalization Institutionalize revitalization Monitor and adjust strategies ORGANIZATIONAL TRANSFORMATION It’s important for a business owner to know the different stages of organizational transformation. 2. 4. 6. 3. Introduction 1. The main challenge is to make sure the initial product or service is right. along with the unique opportunities and challenges that each stage entails.

Many American businesses have long histories and have adapted and survived over time. The founder must start working “on the business” rather “in the business. Two important things must happen for a business to be successful in this stage. It is not inevitable that a business enter the decline stage. The toughest decisions take place in this stage. 2. 2. 4. A business’s ability to avoid decline hinges on the strength of its leadership and its ability to adapt over time. 4. • Although each company's program is unique. 3. ORGANIZATIONAL TRANSFORMATION Integrated Transformation Approach • Many senior managers today are aggressively trying to transform their companies. and the business has to start developing policies and procedures. The need for structure and formalization increases. If new growth cannot be achieved through a firm’s existing product mix. Maturity 1. most leadership groups lack a proven way of thinking about the challenge. 2. At this point. 3. 4.Early Growth 1. 3. the successful programs have developed . A business enters the maturity stage when its growth stalls. Generally characterized by increasing sales and heightened complexity. 2. 3.” Increased formalization must take place. a firm is typically more intently focused on managing efficiently than developing new products. seeking radically to improve performance by changing behavior and capabilities throughout the organization. Decline 1. Unfortunately. the “next generation” of products should be developed. Often the business will start developing related products and services. One tough decision is whether the owner of the business and the current management team has the experience and the ability to take the business further. Well-managed firms often look for partnering opportunities or opportunities for acquisitions or licensing deals to breath new life into the firm. Continuous Growth 1.

quality.  Each axis is necessary.  Real transformations in performance come only whenefforts along all three axes are coordinated and engaged. motivation will falter. 3. bottom-up performance improvement to get people at all levels to take a fresh approach to solving problems and improving performance. and the new skills and behavior will not be built. integrated framework for combining separate initiatives into a coherent overall program. momentum will flag.  If bottom-up involvement is absent. 2. . function-specific efforts will never add up to the critical mass of change required. and information in new ways to achieve breakthrough improvements in cost. functions. Broad-based. Cross-functional core process redesign to link activities. and timeliness.  If horizontal core processes are ignored. Core process redesign ORGANIZATIONAL TRANSFORMATION 1. Top-down direction setting 2. managers will be left to guess where to aim new skills or activities. opportunities for improvement will be overlooked.  Together. If top-down initiatives are lacking or faulty. these three axes (see Exhibit 1) make up what we think of as a "transformation triangle"—a balanced.points of view on three types of initiatives 1. Bottom-up performance improvement 3. Top-down direction setting  to create focus throughout an organization and develop the conditions for performance improvement.

 This approach may lead to valuable information and ideas being missed and there . the disadvantage of this approach is that it does not take into consideration the views or feelings of those involved in.  The advantage of the directive approach is that change can be undertaken quickly.STRATEGIES FOR CHANGES STRATEGIES FOR CHANGE Directive Strategy:  This strategy highlights the manager's right to manage change and the use of authority to impose change with little or no involvement of other people. or affected by. the imposed change. However.

Educative Strategy:  This approach involves changing people's values and beliefs . the outcomes cannot be predicted and the changes made may not fulfill the total expectations of the managers affecting the change.  It is also appropriate that introducing technical changes does not easily lend itself to wider consultation as knowledge of the technical nuances may reside only with a limited number of individuals.  Again. and as such is better suited to smaller technical or operational change than a wider cultural . Participative Strategy:  This strategy stresses the full involvement of all of those involved in. the disadvantage of this approach is that it takes longer to implement.change requirement. education. such as the introduction of a new IT system. and affected . and able to support.  The disadvantage to this approach is that it takes more time to effect change.  A mixture of activities will be used: persuasion.  The advantage is that individuals will feel involved in the change and be more supportive of the changes made. how they are implemented and the expected outcomes.house experts. The advantage is that individuals within the organization will have positive commitment to the changes being made. in order for them to fully support the changes being made and move toward the development of a shared set of organizational values which individuals are willing. Expert Strategy:  This approach is usually applied when a “ technical ” problem requires solving. led by consultants. training and selection.is usually strong resentment from staff when changes are imposed rather than discussed and agreed.'winning hearts and minds'. Senior managers must also accept that adjustments and concessions may need to be made in order to implement change. Negotiation Strategy:  This approach highlights the willingness on the part of senior managers to negotiate and bargain in order to effect change. specialists and in.  This approach acknowledges that those affected by change have the right to have a say in what changes are made.

the benefits of this approach are that any changes made are more likely to be supported due to the involvement of all those affected. the anticipated changes. the payment of consultants/ experts over a longer time period and the outcomes cannot be predicted.  The main disadvantages of this process are the length of time taken before any changes are made. the process will be less management-dominated and driven more by groups or individuals within the organization.  However. It can be more costly due to the number of meetings that take place. the commitment of individuals and groups within the organization will increase as those individuals and groups feel ownership over the changes being implemented. Although driven by senior managers.by. .