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Organizational Change and

Development
Unit 10

Concept of Organizational Change

 Change- shift from one situation to another
situation.
 Organizational Change- is a process by which
organizations move from their present state to
some desired state to increase their
effectiveness.
 Change can be at the individual, group and
organizational level
Individual level change: changes in job
assignment, physical move to a different
location.

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Group level change: Changes at group level

affect workflows, social organization and
communication patterns.
 Organizational level change: Affects both
individuals and groups. Examples of
organizational level changes- reorganization of
organization structure, shift in organizational
objective.
- Organizational level change is referred to as
‘organizational development’.

Forces of Change
 How do organizations know when they should
change?
- They get to know about the need to change by
monitoring the ‘forces of change’.
- The forces for change come from both internal
and external sources. Being aware about the
forces of change help managers determine when
they should consider implementing an
organizational change.
- External forces or causes arise from outside the
organization. Internal causes arise from within
the organization.

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Forces/Causes of Change

External Causes Internal Causes

-Globalization -Changes in Managerial
-Workforce Diversity Personnel
-Technological Change -Falling Effectiveness
- Managing Ethical -Crisis
Behavior - Changing employee
-Government Policies expectations
-Competition -Change in work climate

External Forces
i. Globalization:
- Globalization has increased the level of
competition
- Quality products and cheaper prices are being
introduced rapidly because of mass scale
production and extensive distribution by multi-
national companies across the globe.
- Globalizing an organization means rethinking
the most efficient ways to use resources, gather
and disseminate information and develop
people.
- It requires not only structural changes but also
changes in the minds of employees.

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ii. Workforce diversity:

- Related to globalization
- Organizations are hiring diversified
workforce in term of skills, gender, expertise
and socio-cultural background.
- With the increasing pace of globalization,
organizations must adjust to a multicultural
working environment.
- Diversity management programs, conflict
management programs and stress
management programs are being added to
HR management.

iii. Technological Change:

- Adopting advanced technology helps attain
higher level of productivity and profitability.
- Technological innovations result in flatter
structures, decentralized decision making and
more open communication across the
employees.
- For e.g. Using Computers for supervision is
resulting in wider spans of control for managers.
- Organizations must keep pace with the
technological changes to move along with the
competition.

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iv. Managing Ethical Behavior:

- Ethical behavior is expected in relationships
with customers, environment and society.
- Areas of ethical behaviors include such areas
as product safety, employee health, sexual
harassment, waste disposal, employee
privacy and the like.
- Employees face ethical dilemmas in their
daily work lives.
- Organizations must create a culture that
encourages ethical conduct.

v. Government Policies:
- Government regulates business
organizations.
- Government regulation is the force to
unplanned organizational change.
- For example, Monetary policy of NRB
compels Banks and Financial Institutions to
increase paid-up capital within certain time.
- Organizations must adapt change to abide by
government regulations.

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vi. Competition:
- In a competitive market, customers have a
excess of choices among cheaper products
and cheaper prices.
- Organizations must adapt changes for long
term survival and growth in a competitive
environment.
- For e.g. Nokia has greatly suffered with
global competition.
- Samsung frequently launches new product
with new features to cope with the
competition.

Internal Causes
i. Changes in Managerial personnel:
- One of the most frequent reasons for major
changes in an organization is the change of
executives at the top. No two managers have
the same styles, skills or managerial
philosophies.
- a newly appointed manager might favor
different organizational design, objectives
procedures and policies than the former one.

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ii. Falling effectiveness:

- When an organization’s effectiveness declines,
it feels pressure to change to regain its
efficiency.
- A company that experiences losses is
undoubtedly motivated to do something
about it.
- Some companies react by introducing layoffs
and massive cost cutting programs.

iii. Crisis:
- A crisis may also stimulate change in an
organization.
- For e.g. strikes may lead management to
change the wage structure.
- The resignation of a key decision maker is one
crisis that causes the company to rethink the
composition of its management team and its
role in the organization.

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iv. Changing employee expectations:

- Differing employee expectations can also
stimulate change in organizations.
- Employees may desire to take part in decision
making
- They may expect higher wages
- Expectations of young and newly hired
employees are different than those of old
employees.
- For example, Youngsters are more career
oriented.
- Retaining and motivating employees by meeting
their expectations is a challenge for any firm.

v. Changes in work climate:

- Changes in the work climate at an
organization can also stimulate change.
- A workforce that seems lethargic,
unmotivated, and dissatisfied is a symptom
that must be addressed.
- This symptom is common in organizations that
have experienced layoffs. Workers who have
escaped a layoff may find it hard to continue
to be productive. They may fear that they will
be laid off as well and may feel insecure in
their jobs.

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 Resistance to Change
- Change involves moving from the known to
the unknown. Because the future is uncertain
and may negatively affect people’s career,
salary and competencies, organizational
members generally do not support change.

- The Sources of resistance to change can be:

 Individual Resistance
 Organizational Resistance

 Individual sources of Resistance to Change

i. Habit:
- Employees like accustomed ways. They
prefer to follow familiar actions and
behaviors.
- People have a built-in tendency to return to
their original behavior.
ii. Economic Security:
- Employees fear loss of job security, reduction
in pay and increase in workloads. The cost of
change may be higher than the benefits of
change in the perception of employees.

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iii. Fear of unknown:

- Uncertainty about the outcome of change makes
people resistant to change. ‘Fear of unknown’ is a
strong obstacle to change.
iv. Poor communication:
- Employees resist change if it is not properly
communicated. It creates misunderstandings.
v. Lack of involvement:
- Lack of employee involvement in planning and
implementing change causes resistance.
- If they are not involved in change related planning,
they don’t have a sense of ownership and
responsibility towards change.

vi. Vested interests:

- Some employees may have vested interests in
maintaining status quo. Change threatens their
power and interests.
vii. Perception of inequity:
- Employees resist change when they do not see
personal gain in change. They perceive that
someone may gain the benefits of change. They
perceive inequity in change.

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 Organizational Level Resistance to Change

i. Organizational structure:
- Organizational structure creates a stable pattern of
task relationships. Changing organizational structure is
very difficult because people feel threat when their
established roles and responsibilities are subject to
change.
ii. Organizational culture:
- It refers to a system of shared norms, values and
beliefs held by the members of an organization. Values
and norms cause people to behave in predictable
ways.

- If organizational change disrupts their values

and force them to change what they do and
how they do it, an organization’s culture will
cause resistance to change.
iii. Organizational strategy:
- Managers are often biased by previous
commitments and they stick to a course of
action even if it is not working.
- An organization may pursue a strategy that
worked well in the past but has ceased to
create value.

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iv. Threat to resource allocation:

- If change threatens established practices of
resource allocation, it is resisted by
departments getting lesser resources.
v. Threats to power relationships:
- If change threatens long established power
relationships within organization, it may be
resisted. Participative decision making and
self-managed teams are often seen as threat
by supervisors.

v. Interdependency:
- Organization consists of interdependent
departments. Change in one department
affects other departments. Change in one
department may be resisted by other
departments.
vi. Reward system:
- The reward system of an organization may
favor existing behavior. Change may not be
rewarding.

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Approaches to Managing Organizational

Change
1. Lewin’s Three Step Model (Force Field Theory)
2. Kotter’s Eight-Step Plan
3. Action Research
4. Organizational Developement

1. Force Field Theory

- Developed by Kurt Lewin
- In any organization there are people who
want change and there are people who
desire status quo.
- Force Field Theory demonstrates how forces
for and against change are in balance, an
organization does not change.
- Managers must adopt a change strategy to
increase the forces for change and reduce
the resistance to change.

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- According to this model, effective change occurs by

unfreezing the current situation, moving to a
desired condition, and then refreezing the system
so that it remains in this desired state.

Unfreezing Change Refreezing

Reducing the Developing
Reinforcing
forces for new
new values,
status quo attitudes,
attitudes and
values and
behaviors
behaviors
-Successful change requires that old behaviors be discarded,
new behaviors be introduced and those new behaviors be
institutionalized and rewarded.

 Unfreezing: Unfreezing involves encouraging

individuals to discard old behaviors. This
involves presenting a problem or event to
make people recognize the need for change
and to search for new solutions.
 Changing: It implies developing new
behaviors, values and attitudes. The change
intervention is implemented. This step designs
and implements actual change.
 Refreezing: In this step, the change becomes
permanent. New attitude, values and
behaviors are reinforced. The change is
stabilized through practice.

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2. Kotter’s Eight-Step Plan for Implementing Change

A popular model for planning, implementing and
sustaining change is the Eight Step change Model
by John Kotter (1996). The Kotter model breaks
down the Organizational change process into eight
steps:
i. Establish a sense of urgency
ii. Create a guiding team
iii. Develop a vision and strategy for the specific
change
iv. Communicate the vision and strategy
v. Empower the employees for action

vi. Create short term wins

vii. strengthen gains and produce more change
viii. lock the new change into the culture

i. Increase urgency: Identify and highlight potential

threats that may come up in the future. Create a
compelling reason for why change is needed.
Convince people that change is necessary.
ii. Build the guiding team: Assemble a powerful group
of people who can work well together. This step
involves taking visible support from key people
within the organization. Sense of urgency helps to
bring the right people together.

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iii. Get the right vision: A clear vision can help everyone
understand why you're asking them to do something.
When people see for themselves what you're trying to
achieve, then the directives they're given tend to make
more sense.
iv. Communicate the vision and strategy: The vision and
strategy for change are communicated throughout the
organization.
- Talk often about your change vision. Address people’s
concerns and anxieties openly and honestly
v. Empower the employees for action: This step includes
getting rid of obstacles to change such as unhelpful
structures or systems. Removing obstacles can
empower the people you need to execute your vision,
and it can help the change move forward.

vi. Create short term wins: Look for short-term visible

improvements.
- Reward people publicly for improvements
- By creating short term wins early in the change
process, you can give a feel of victory in the early
stages of change
- Create many short term targets instead of one long-
term goal, which are achievable and less expensive
and have lesser possibilities of failure.
vii. Consolidating/strengthening Gains
- Energize the process of change with new projects
and resources.
- Each success provides an opportunity to build on
what went right and identify what you can improve.

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viii. Anchor the changes in corporate culture: Finally,

to make any change stick, it should become part of
the organization culture.
- Ensure that the change becomes an integral part in
your organizational culture and is visible in every
organizational aspect.
- Ensure that the support of the existing company
leaders as well as the new leaders continue to
extend their support towards the change.

3. Action Research Approach

- Action Research take the view that meaningful
change is a combination of action orientation
(changing attitudes and behaviors) and research
orientation (testing theory)
- Action research is used as a means of implementing
organizational change especially in complex social
situations where the people whose lives or
circumstances are being changed need to be involved
in designing and implementing the change that
affects them
- An action orientation involves diagnosing current
problems and applying interventions that resolve
those problems.

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- Thus, Action research refers to change process based

on:
 Systematic collection of data
 Analysis of collected data to diagnose need for
change
 Selection of change action based on data analysis
The steps followed in action research are:
i. Diagnosis: Information about problems, concerns and
needed changes is gathered from the members of
the organization. The change agent reviews records,
interviews employees, asks questions and listens to
employee concerns.

ii. Analysis: The collected information is analyzed and

combined into
 Primary concerns
 Problem areas
 Possible actions
iii. Feedback: The findings of diagnosis and analysis are
shared with the change targets (employees). Change
targets are people who will be involved in the change
program. They participate in developing and selecting
action plans for change.
iv. Action implementation: Specific actions are
implemented to correct the problems that have been
identified.

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v. Evaluation: The effectiveness of the action plan is

evaluated. The data gathered in diagnosis stage is
used as benchmark to compare subsequent changes.
If the change is found having desired effects, it is
stabilized.

Concept of Organizational Development

• “Organizational Development is a collection of
change methods that try to improve organizational
effectiveness and employee well-being.”- Robbins,
Judge and Vohra.
• Organizational Development (OD) is a planned,
systematic process of organizational change based on
behavior science research and theory.
• It is a system-wide approach to manage planned
change.
• OD is an intentional and goal-oriented change.
• Thus, OD is a systematic method of introducing
change in individuals, groups and overall organization

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Characteristics of Organizational Development

i. Planned Change: In OD concept, changes are
intentional. It’s a deliberate effort of organization to
improve its vision and problem solving approaches.
ii. System-wide: OD effort generally involves the total
system. The change covers the entire organization.
It covers all systems and subsystems so that its
positive effects spread throughout the
organization.
iii. Initiated by top management: Top management
lead the OD movement with support from the
employees.

iii. Long-range change: OD is a continuous and long-

term effort as it’s objectives cannot be attained in
the short run. It may take months or years to
implement OD and achieve its goals.
iv. Participation of a change agent: Services of an
outside expert are generally obtained to implement
OD process. Change agents are the persons who act
as catalysts and assume the responsibility for
managing change activities.
v. Employees empowerment: The competencies of
employees are utilized in the change process.
Employees are empowered by involving them in
decision making and recognizing their valuable
decisions in change process.

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vi. Collaborative culture: OD uses a collaborative approach

that involves those affected by the change in the
change process. It follows a bottom-up approach where
employees are encouraged and motivated to take part
in the OD process.
vii. Development with learning process: OD requires a
learning organization. Employees need to learn new
knowledge, skills and procedures. They have to change
attitude and accept continuous improvement in
knowledge.
viii. Organizational culture: Organizational culture includes
accepted patterns of behavior, norms,, value systems
and the like. OD recognizes that each organization is
different from all others and that problem-solving
process varies across organizations.

OD Values
• OD is based on certain morals or principles. It
cares about ‘what is desirable and what is not’
in OD process. OD values provides guidelines
for OD implementation. The basic OD values
are:
i. Respect for people: OD creates harmonious
human relations in the organization so that
there will be mutual respect and honor.
Employees are allowed to function as human
beings, perceived as responsible and caring.
They should be treated with dignity and
respect, not just as resources.

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ii. Trust and Support: Trust, openness and

support among organizational members are
the characteristics of an effective and healthy
organizations. OD creates mutual trust and
supportive environment in the organization so
that each individual gets and provides
suggestion.
iii. Power equalization: Effective organizations
discourage hierarchical authority and control.
OD empowers employees to make them able
to participate in decision making. Instead of
control and coercion, democratic values are
practiced.

iv. Confrontation: It provides an environment of

open communication of the problems. Instead
of skipping or overlooking problems, they are
openly confronted and decided.
v. Participation: It follows collaborative
approach. It provides opportunities for
individuals to develop their full potential.
When people affected by change are involved
in change-related decisions, they will be
committed to implement the change.

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OD Interventions
- OD interventions are the OD techniques. They
are the approaches to implement change in
organizations. There can be large number of
interventions but change agents can choose
the type of intervention on the basis of
purpose of intervention.
- They can be of the following types:
1. Individual Level Interventions
2. Group Level Interventions
3. Organizational Level Interventions

Individual Level Interventions

- At this level, interventions are designed at the
individual level to improve ability and
motivation of the individual. The forms of
individual level interventions are:
i. Counseling and coaching:
- It is a discussion of problems with an
employee. It aims at resolving emotional
difficulties of individual employee in working
environment. Counseling and coaching are
done by the external consultant to provide
support and direction to individuals to adjust
to change effectively.

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ii. Sensitivity training

- In sensitivity training, ten to fifteen employees are
brought together in a free and open environment,
away from workplaces, in which participants
discuss themselves freely, supported by a facilitator.
- Individual personalities, group interaction and
relationships become the focus of discussion. The
facilitator creates an opportunity for participants to
express their ideas, beliefs and attitudes.
- Results of sensitivity training: increased ability to
understand others, improved listening skills,
greater openness, increased tolerance of individual
differences and improved conflict resolution skills.

iii. Survey feedback

- It involves the use of questionnaires to identify
differences in member perceptions.
- Employees are given feedback on the data they
generated. They discuss the results of survey in
groups to diagnose problems.
- Training and development activities are initiated to
solve the key problems identified.

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 Group Level Interventions

- Group Level Interventions are aimed at improving
group relationships and performance. Conflict
resolution between groups in an example of group level
intervention. Group level interventions are:
i. Team Building:
- Team building is a process of diagnosing and improving
the effectiveness of a workgroup by focusing on work
procedures and interpersonal relationships within the
group.
- It studies both the group’s task procedures and its
human interactions.
- The basic assumption of team building is that
increasing the effectiveness of teams will improve the
organization’s overall effectiveness.

ii. Process Consultation:

- An outside consultant assists a client to understand
process events. Here the client is a person or unit in
an organization that needs consultation.
- The consultant and the client jointly diagnose the
processes that need improvement. They can be
work flow, formal communication and informal
relationships.
- The consultant gives the client insights into what is
going on around the client, within the client and
between client and other people.
- The consultant gives proper information and advice
to the client for improving work processes.

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iii. Intergroup Development:

- It consists of efforts to change the attitudes,
stereotypes and perceptions that groups have of
each other.
- The popular technique for Intergroup development
is problem solving approach. The steps involved in
this approach are:
- Separate meetings of each group are organized in
which member prepares the list of their perception
towards self, towards other group and how it
believes the other group perceives it.
- Groups share their lists. Similarities and differences
are discussed.
- They look for the causes of differences.
- They develop solutions that will improve relations
between groups.

 Organizational Level Interventions:

- They are made for at the organizational level
covering whole organization. The types are:
i. Organizational restructuring:
- It refers to the process of changing or altering the
authority-responsibility relationships, channel of
communication and coordination mechanism.
- In this type of intervention, work hours are and
flexible, jobs are redesigned and reward systems
are changed.
- Organizational restructuring is done to meet the
needs brought forward by dynamic environment.

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ii. Quality of work life programs

- They aim at creating a favorable work
environment for employee to satisfy their
needs. They can be:
- Safe and healthy environment
- Proper physical settings in the workplace,
including space and layout.
- Development of human potential and
capabilities.
- Equitable rewards.
- Social relevance and integration.

iii. Technological changes

- Technological changes brings modification in
ways of doing things. In this approach, new
equipment, tools or techniques are used to
intervene the task processes.
- Information Technology (IT) are widely used in
jobs and jobs are redesigned according to the
nature of technology.
- Going from manual to computerization is an
example of intervention through technological
change.

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iv. Goal Setting (MBO)

- Management by objectives (MBO) involves joint
goal setting between employees and management.
- Managers and subordinates arrive at mutually
acceptable goals which are used for evaluating
performance.
- MBO as an OD intervention results in improved
performance, meaningful communication and
increased participation in decision making.

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