CHAPTER 13

ORGANISATIONAL CHANGE AND

ORGANISATIONAL DEVELOPMENT

Organizational Change
Change is inevitable in modern organizations. Nothing is permanent except change. It is the
duty of management to manage change properly. An organization must develop adaptability to change
otherwise it will either be left behind or be swept away by the forces of change. There are many
forces which are acting on the organization which make the change not only desirable but also
inevitable. These forces include technology, market forces and general socio-economic environments.
These are the external forces which necessitate change in internal organizational variables like
machinery, experiment and process, policies and procedures, structural relationships, etc.

The Concept Of Change

The term change refers to any alteration which occurs in the overall work environment of an
organization. It applies alterations of structural relationships and role of people in an organization.

Characteristics of Change
1. Change results from the pressure of forces which are both outside and inside the organization.
It disturbs the existing equilibrium in the organization.
2. The whole organization tends to be affected by a change in any part of it.
3. Change takes place in all parts of the organization, but at varying rates of speed and degrees
of significance.
4. Change may affect people, structure, technology and other elements of the organization.
5. Change may be reactive or proactive. When change is brought about due to pressure of
external forces, it is called reactive change. Proactive change is initiated by the management
on its own to increase organizational effectiveness.

Nature of Organizational Change

An organization is an open system which implies that it is in a constant interactional and
interdependent relationship with its environment. Any change in its environment, such as changes in
consumer tastes and preferences, competition, economic policies of the government, etc., make it
imperative for the organization to make changes in its internal system.

Forces of Change
Organizations are constantly responding to their external environment by making necessary
changes in the internal environment. Sometimes, pressure for change arises from internal forces also.

Forces of Change

External forces Internal changes

 Technology  Changes in managerial personnel
 Marketing conditions  Changes in operative personnel
 Social changes  Deficiencies in existing structure
 Political forces

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External forces
1. Technology: it is a major external force which calls for change. The rate of technological
change is greater today than any time in past and technological changes are responsible for
changing the nature of jobs performed at all levels in organizations.
2. Marketing conditions: marketing conditions are no more static. They are in the process of
rapid change as the needs, desires and expectations of the customers change frequently. All
these factors put great pressure on the modern organizations to change their technologies and
marketing strategies.
3. Social changes: because of spread of education, knowledge explosion and government’s
efforts, social changes are taking place at a fast speed. The drive for social equality has posed
new challenges for the management. The management has to follow social norms in shaping
its employment, marketing and other policies.
4. Political forces: political forces within and outside the country have an important influence
on large business houses, particularly the transitional corporations. Many lawa have been
passed to regulate the activities of the corporate sector, the organizations have no control over
the political and legal forces, but they have to adapt to meet the pressures of these forces.

Internal forces
1. Changes in managerial personnel: old managers are replaced by new managers which is
necessitated because of retirement, promotion, transfer, etc. Each manager brings his own
ideas and ways of working in the organization. The result is that an organization has to
change accordingly.
2. Changes in operative personnel: the profile of the workforce is changing fast. The new
generation of workers has better educational qualifications, place greater emphasis on human
values and question authority of managers. Their behavior is very complex and leading them
for organizational goals is really a challenge.
3. Deficiencies in existing structure: changes may be needed to make up deficiencies in the
present organizational setup. These deficiencies may be in the form of unmanageable span of
management, larger number of managerial levels, lack of coordination among various
departments, obstacles in communication, multiplicities in committees, lack of uniformity in
policy decisions, lack of cooperation between line and staff, and so on. However, the need for
change in such cases goes unorganized until some major crisis occurs.

PLANNED CHANGE
Thomas and Bennis have defined planned change as follows:
“Planned change is the deliberate design and implementation of a structural innovation, a new
policy or goal, or a change in operating philosophy, climate, or style.”
Planned change attempts at all aspects of the organization which are closely interrelated: technology,
task, structure, and people.
1. Technology-related Changes: technology refers to sum total of knowledge providing ways
to do things. It may include inventions and techniques which affect the way of doing things,
that is designing, producing, and distributing products.
A change in technology affects nature of task, organization structure, process, and people’s behavior
in the organization. Thus any change in technology necessitates change in all these factors.
2. Task related changes: technology related changes determine the types of task that may be
required to complete an operation. A job consisting or several tasks may be designed in a
number of ways ranging from job simplification to job enrichment.
Task related changes must focus on:
 High internal work motivation, and
 High quality work performance

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 3. Structure related changes: structural changes redefine nature of relationships among various
organizational positions and may include:
 Changing the number of hierarchical levels,
 Changing one form of organization to another form
 Changing span of management and
 Changing line staff and functional authority
4. People related changes: these changes may be of two types-skills and behavior. The
magnitude of these changes may depend on the type of change. For example, if there is a
change in technology, say from manual to automated, it requires different type of skills in the
operators as compared to the previously used skills. Similarly changes in behavior and the
socio-psychological factors determining behavior are required.

PROCESS OF PLANNED CHANGE

A major organizational change requires considerable planning. The change is successful if it is taken
in a planned way which proceeds in a sequential form.
The various steps involved in a planned change:
 Identifying need for change
 Elements to be changed
 Planning for change
 Assessing change forces
 Actions for change
 Feedback
1. Identifying need for change: identification of need for change depends on gap analysis that
is the gap between desired state of affairs and actual state of affairs; the difference what the
organization is achieving and what it should achieve. However, this gap analysis should be
seen on progression basis because desired state of affairs is not a fixed concept. The
organization may go on changing its objectives over the period of time. Moreover, gap
analysis can be made on the basis of likely gap because any change in any factor affects the
operation of the organization.
2. Elements to be changed: what elements of the organization should be changed will largely
be decided by need and objectives of change. While the process of identification of change
will provide clue why change should take place, this stage takes the analysis further by
diagnosing the problems caused because of which the change is necessary.
Change is required in three major elements of the organization: organization structure, technology and
people. The nature and extent of change in these elements will depend on the type of problem being
faced by organization. Structural changes may include job design, job definitions, basis of
departmentation, span of control, organizational policies and procedures, co-ordinations, mechanism,
power structure, flow of task, etc. technological changes include changed in the plant and equipment,
techniques of doing work, production methods, engineering processes, etc. changes in people include
changes in their behavior, interaction pattern, informal grouping, skills, attitude, etc.
3. Planning for change: planning for change includes who will bring change, when to bring
change, and how to bring change. The first question who will bring change relates to the
persons who will work as change agents. The second question when to bring change is related
with time dimension of change. While deciding time element of change, many factors have to
be considered, such as nature of forces which are likely to resist the change and the time taken
to bring them to accept change, time taken in training and development of people to make
them more suitable for the changed situation, time required to make resources available for
the change, etc.
4. Assessing change forces: the management has to create an environment in which change will
be accepted by the people.
In a group process, there are some forces favoring and some opposing change to maintain
equilibrium. This has been referred to as ‘field of forces’ by Kurt Lewin. He assumes that in any
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 situation, there are both driving and restraining forces which influence any change that may occur.
Driving forces are those which affect a situation by pushing it in a particular direction; they tend
to initiate a change and keep t going. Restraining forces act to restrain change or decrease the
driving forces. Equilibrium is reached when the sum of driving forces equals the sum of
restraining forces.
The management has to push driving forces and/or converting or immobilizing restraining forces
so that people accept change. If the driving forces exist or management’s efforts have brought the
equilibrium of driving and restraining forces at a desired level, it can go for the change; it can take
necessary actions for change.
5. Actions for change: actions for change comprises three stages-unfreezing, changing and
refreezing.

Unfreezing: it is the process in which a person casts aside hid old behavior which might be
inappropriate, irrelevant, or inadequate to the changing demands of the situation.

Changing: this is the stage at which the individuals being changed learn new behavior-methods of
working, new thinking, perception of new roles. Etc. there are a variety of ways through which all
these can be inculcated.

Refreezing: it means that what has been learned is integrated into actual practice. At this stage, the
individuals internalize the new beliefs, feeling and behaviors learned during the changing phase. They
adopt these elements as a permanent part of their behavior repertoire.

6. Feedback: management of change requires feedback and follow-up actions to ensure thet
change programme is progressing in right direction without producing any dysfunctional
effect. Since a change programme is likely to solve some problems and produce other
problems, though of minor magnitude, it is desirable that management has constant watch as
the change programme progresses. Problems created by the change should be tackled
immediately so that is gives better results to the organization.

Individual factors for resistance of change

There are many factors responsible for resistance to change at the individual level. Degree of
force or resistance depends on how people feel about the change. This feeling may be based on actual
factors or may be governed by emotional factors. Some of the economic, psychological and social
factors are as follows:

1. Economic factors: these factors relate to the basic economic needs of the workers like
necessaries of life, job security and safety. Such factors include the following:
(i) Workers apprehend technological unemployment. Generally, new technology is
expected to reduce the proportion of labor input and, therefore, people resist a change
that will affect the security of their jobs.
(ii) Workers fear that they will be idle for much of their time due to increased efficiency
of new technology.
(iii) Workers may fear that they will be demoted if they do not acquire the skills required
for the new jobs.
(iv) Workers resist the change leading to setting job standards which may reduce
opportunity for bonus of incentive pay.

2. Psychological factors: the workers may perceive that factors relating to their psychological
needs will be affected adversely by the proposed changes. These changes are sense of pride,
of achievement, of self-fulfillment, etc. Thus, psychological reasons for the resistance to
change are
(i) Workers may not like criticism implied in a change that the present method is
inadequate and unsuitable.

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 (ii) Workers may fear that there may be fewer opportunities for developing their skills
because new work changes will do away with the need of much mental work. This
will lead to reduction of their personal pride.
(iii) Workers may apprehend boredom and monotony in the new jobs as a result od
specialization brought by the new technology.
(iv) They may fear that harder work will be required to learn and adapt to new ideas.
(v) Workers may resist a change because they do not want to take trouble in learning the
new things.
(vi) Workers may not have the knowledge of entire change or they may be incapable of
understanding the implications of new ideas and methods.

3. Social factors: individuals so have certain social needs like friendship, belongingness, etc. for
the fulfillment of which they develop informal relationships in the organization. They become
members of certain informal groups and act as members of the group to resist change. The
social reasons for resistance to change are:
(i) New organizational set up requires new social adjustments which are not liked by
people because these involve stresses and strains. This also means discarding old
social ties which is not tolerable to the workers.
(ii) Workers are carried by the fear that the new social set-up arising out of change will
be less satisfying than the present set up.
(iii) Workers oppose the people who sponsor and implement the change as they are
strangers to them.
(iv) Workers may feel that changes being introduces will benefit the organization or the
employers rather than themselves or the general public.

Organizational factors for resistance of change

Some of the organizations are so designed that they resist innovation and change. They create
strong defense against change. This is the reason why many organizations fail to change over a period
of time, though this phenomenon may be disastrous to them.
(i) Division of work along functional lines.
(ii) Emphasis on role prescriptions rather than on organizational goals.
(iii) Emphasis on hierarchical for coordinating diverse jobs and relating them to
organizational goals.
(iv) Precise and rigid definitions of roles with little flexibility.
(v) Considerable centralization of decision making and vertical communication.
(vi) Acceptance of existing status designations.
(vii) Close ties with the company and its values rather than with outside reference groups
such as a professional body.

Group resistance to change

Most organizational changes have some impact on informal networks in the organization.
Breaking up a closely knit work-group or changing social relationships can provoke a great deal of
resistance. Managers often overlook this source of resistance because the informal network is not the
focal point of organizational change.
Informal groups offer resistance to change when they fear that their cohesiveness or existence itself is
threatened by it. This is particularly true when group members feel a strong sense of belongingness to
the group and perceive that their group is superior to others.

I. Approaches to Managing Organizational Change :

A. Lewin’s Three-Step Model
1. Kurt Lewin argued that successful change in organizations should follow three steps:
a. Unfreezing the status quo
b. Movement to a new state
c. Refreezing the new change to make it permanent
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 2. The status quo can be considered to be an equilibrium state.
a. To move from this equilibrium—to overcome the pressures of both individual
resistance and group conformity—unfreezing is necessary.
i. The driving forces, which direct behavior away from the status quo, can be
increased.
ii. The restraining forces, which hinder movement from the existing equilibrium,
can be decreased.
iii. A third alternative is to combine the first two approaches.
b. Once the change has been implemented, the new situation needs to be refrozen so that
it can be sustained over time.
i. Unless this last step is taken, there is a very high chance that the change will be
short-lived and that employees will attempt to revert to the previous equilibrium
state.
ii. The objective of refreezing is to stabilize the new situation by balancing the
driving and restraining forces.

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

1. Kotter’s plan began by listing common failures that managers make when trying to
initiate change. His plan included the following:
a. Establish a sense of urgency by creating a compelling reason for why change is
needed.
b. Form a coalition with enough power to lead the change.
c. Create a new vision to direct the change and strategies for achieving the vision.
d. Communicate the vision throughout the organization.
e. Empower others to act on the vision by removing barriers to change and encouraging
risk taking and creative problem solving.
f. Plan for, create, and reward short-term “wins” that move the organization toward the
new vision.
g. Consolidate improvements, reassess changes, and make necessary adjustments in the
new programs.
h. Reinforce the changes by demonstrating the relationship between new behaviors and
organizational success.

C. Action Research
1. Action research is “a change process based on the systematic collection of data and then
selection of a change action based on what the analyzed data indicate.”
2. The process consists of five steps: diagnosis, analysis, feedback, action, and evaluation.
These steps closely parallel the scientific method.
a. Diagnosis begins by gathering information about problems, concerns, and needed
changes from members of the organization.
b. Analysis of information is synthesized into primary concerns, problem areas, and
possible actions. Action research includes extensive involvement of the people who
will be involved in the change program.
c. Feedback requires sharing with employees what has been found from steps one and
two and the development of a plan for the change.
d. Action is the step where the change agent and employees set into motion the specific
actions to correct the problems that were identified.
e. Evaluation is the final step to assess the action plan’s effectiveness. Using the initial
data gathered as a benchmark, any subsequent changes can be compared and
evaluated.
3. Action research provides at least two specific benefits for an organization.
a. First, it is problem-focused. The change agent objectively looks for problems and the
type of problem determines the type of change of action.

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 b. Second, resistance to change is reduced. Once employees have actively participated
in the feedback stage, the change process typically takes on a momentum of its own.

Organizational Development
Introduction
Organizational development (OD) is a term used to encompass a collection of planned-change
interventions built on humanistic-democratic values that seek to improve organizational effectiveness
and employee well-being.

The OD paradigm values human and organizational growth, collaborative and participative
processes, and a spirit of inquiry.
c. The underlying values in most OD efforts:
i. Respect for people
ii. Trust and support
iii. Power equalization
iv. Confrontation
v. Participation
There are six interventions that change agents might consider using. They are: sensitivity training,
survey feedback, process consultation, team building, intergroup development, and appreciative
inquiry.

Sensitivity Training /’T’ group Training / Laboratory Training given by Kurt Lewin:
i. It can go by a variety of names—laboratory training, groups, or T-groups (training groups)—
but all refer to a thorough unstructured group interaction.
ii. Participants discuss themselves and their interactive processes, loosely directed by a
professional behavioral scientist.
iii. Many participants found these unstructured groups intimidating, chaotic, and damaging to
work relationships.
iv. Organizational interventions such as diversity training, executive coaching, and team-building
exercises are descendants of this early OD intervention technique.

Survey Feedback
i. Everyone can participate in survey feedback.
ii. A questionnaire is usually completed by a manager and all his/her subordinates.
iii. Surveys generally probe perceptions held by employees.
iv. Data from the survey are calculated for an individual’s “family” (work group).
v. Feedback and discussions should lead to implications.

Process Consultation
i. An outside consultant works with clients to understand the process events managers must
deal with.
ii. This is similar to sensitivity training in its assumption that interpersonal involvement is
important to highlight.
iii. The consultant coaches his/her client through the problem.

Team Building
i. Builds trust in groups through the use of high-interaction activities.
ii. Activities may include: goal setting, role analysis, and team process analysis.
iii. Problems often are highlighted when the group’s goals are not the same as the
individual’s.
iv. Individual ambiguities concerning team roles can be clarified.

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Intergroup Development
i. Focuses on changing attitudes, stereotypes, and perceptions between groups.
ii. Often problem solving is used to illuminate the differences between groups.
iii. Conflict can be addressed by subgroups.

Appreciative Inquiry
i. This type of OD brings to light the positive, rather than the conflict.
ii. Appreciative Inquiry (AI) asks participants to look forward and project the future
based on the positive components of an organization.
iii. AI is done in 4 steps
(a) Discovery
(i) Discovery sets out to identify what people think are the organization’s strengths.
(ii) Employees recount times they felt the organization worked best or when they
specifically felt most satisfied with their jobs.
(iii)
(b) Dreaming
(i) Employees use information from the discovery phase to speculate on possible
futures, such as what the organization will be like in 5 years.
(ii)
(c) Design
(i) Participants find a common vision of how the organization will look in the future
and agree on its unique qualities.
(ii)
(d) Destiny
(i) Participants seek to define the organization’s destiny or how to fulfill their dream,
and they typically write action plans and develop implementation strategies.
(e) AI has proven an effective change strategy in organizations such as GTE, Roadway
Express, and the U.S. Navy.
(f) The end result of AI was a renewed culture focused on winning attitudes and
behaviors.

II. Creating a Culture for Change:

Simulating a Culture of Innovation:
1. Introduction
a. There is no guaranteed formula, certain characteristics surface repeatedly when
researchers study innovative organizations.
b. We’ve grouped the characteristics into structural, cultural, and human resource
categories.
c.
2. Definition of Innovation:
a. Innovation, a more specialized kind of change, is a new idea applied to initiating or
improving a product, process, or services.
b. So all innovations imply change, but not all changes necessarily introduce new ideas
or lead to significant improvements
c.
3. Sources of Innovation:
a. Structural variables are the most studied potential source of innovation.
i. First, organic structures positively influence innovation because they facilitate flexibility,
adaptation, and cross-fertilization.
ii. Second, long tenure in management is associated with innovation. Managerial tenure
apparently provides legitimacy and knowledge of how to accomplish tasks and obtain desired
outcomes.
iii. Third, innovation is nurtured where there are slack resources.

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 iv. Finally, inter-unit communication is high in innovative organizations. There is a high use of
committee, task forces, cross-functional teams, and other mechanisms that facilitate
interaction.

Innovative organizations tend to have similar cultures:

a. They encourage experimentation.
b. They reward both successes and failures.
c. They celebrate mistakes.
d. Managers in innovative organizations recognize that failures are a natural by-product
of venturing into the unknown.
Within the human resources category, innovative organizations actively promote the training and
development of their members so they keep current, offer high job security so employees don’t fear
getting fired for making mistakes, and encourage individuals to become champions of change.
i. Once a new idea is developed, idea champions actively and enthusiastically promote it, build
support, overcome resistance, and ensure it’s implemented.
ii. Champions have common personality characteristics: extremely high self-confidence,
persistence, energy, and a tendency to take risks.
iii. They also display characteristics associated with transformational leadership—they inspire
and energize others with their vision of an innovation’s potential and their strong personal
conviction about their mission. They are also good at gaining the commitment of others.
iv. Idea champions have jobs that provide considerable decision-making discretion; this
autonomy helps them introduce and implement innovations.

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