Managing Change for Organizations

Managers as Leaders of Change

Leaders are in the unique role of not only designing change initiatives but also
enacting and communicating them.

LEARNING OBJECTIVES

Review the strategies leaders must use to lead change effectively

KEY TAKEAWAYS

Key Points

• Managing change requires more than simple planning; the significant

human element of change resistance needs to be addressed to
ensure success.
• Leaders must define change strategy and communicate it effectively
to shareholders, empower and support employees, and mitigate
resistance to the change initiative.
• Conner identifies six distinct leadership styles related to change:
anti-change, rational, panacea, bolt-on, integrated, and continuous.
Each leadership style represents a unique set of perceptions,
attitudes, and behaviors regarding how organizational disruption
should be addressed.
• Conner also posited that the six leadership styles are related to two
different types of organizational change: first-order change and
second-order change. Different leadership styles are more effective
in different situations.

Key Terms

• attribute: A characteristic or quality of a thing.

• leading: To conduct or direct with authority.

Managing change requires strong leadership and an understanding of how

organizational change occurs. Leaders are in the unique role of not only designing
change initiatives but enacting and communicating them to subordinates. Managing
change requires more than simple planning: the significant human element of
change resistance needs to be addressed to ensure success.
Leadership Strategies for Change

Successful change management is more likely if leaders:

• Create a definable strategy – Define measurable stakeholder aims,

create a business case for their achievement (and keep it continuously
updated), monitor assumptions, risks, dependencies, costs, return on
investment, and cultural issues affecting the progress of the associated
work.
• Communicate effectively – Explain to stakeholders why the change is
being undertaken, what the benefits of successful implementation will
be, and what how the change is being rolled out.
• Empower employees – Devise an effective education, training, or skills
upgrading scheme for the organization.
• Counter resistance – Identify employee issues and align them to the
overall strategic direction of the organization. Adapt the change initiative
when necessary to mitigate discontentment.
• Support employees – Provide personal counseling (if required) to
alleviate any change-related fears.
• Track progress – Monitor the implementation and fine-tuning as
required.

These six components of change are the responsibility of management to create and
implement.
The reengineering process: Change management is often termed a “re-engineering process.” This
flowchart shows the reciprocal relationships involved in each step: the mission defines and is accomplished
via work processes, which execute and are guided by decisions, which consider and are supported by
information, which employs and are processed via technology.

Six Leadership Styles for Change

Conner (1998) identified six distinct leadership styles related to change: anti-change,
rational, panacea, bolt-on, integrated, and continuous. Each leadership style
“represents a unique set of perceptions, attitudes, and behaviors regarding how
organizational disruption should be addressed.” Stopper (1999) characterizes each
of Conner’s leadership styles in this way:

• The anti-change leader – A leader embracing this style seeks to avoid

change as much as possible. The message is, “Stay the course. Keep
adjustments small. No need to change in any major way.”
• The rational leader – This leader focuses on how to constrain and
control change with logical planning and clearly defined steps.
• The panacea leader – The panacea leader believes that the way to
respond to pressure for change is to communicate and motivate. These
leaders understand the resilience to change they are likely to encounter
as well as the inevitability of change as organizations evolve. They tend
to focus on fostering enthusiasm for change.
• The bolt-on leader – This leader strives to regain control of a changing
situation by attaching (bolting on) change management techniques to
ad-hoc projects that are created in response to pressure for change.
This manager is more concerned about helping others change than
creating a strategy for the actual change itself.
• The integrated leader – The integrated leader searches for ways to use
the structure and discipline of what Harding and Rouse (2007) called
“human due diligence” (the leadership practice of understanding the
culture of an organization and the roles, capabilities, and attitudes of its
people) as individual change projects are created and implemented. The
concept is simply to combine, or integrate, human and cultural concerns
with the strategy itself.
• The continuous leader – The continuous leader works to create an agile
and quick-responding organization that can quickly anticipate threats
and seize opportunities as change initiatives are designed and
implemented. Continuous leaders believe that to disruption is
continuous, and adaptability a necessary organizational competency.

Conner says that these six leadership styles are related to two different types of
organizational change: first-order change and second-order change. First-order
change is incremental, piecemeal change. According to Conner, second-order
change is “nonlinear in nature and reflects movement that is fundamentally different
from anything seen before within the existing framework.”
Conner identifies the first four leadership styles as appropriate for managing first-
order change. When an organization is engaging in discontinuous, transformational
change, however, integrated and continuous leadership styles are more appropriate.

Types of Organizational Change

There are three main categories of change: business process re-engineering,

technological change, and incremental change.

LEARNING OBJECTIVES

Differentiate between business process re-engineering, technological change, and

incremental change as the three main categories of organizational development

KEY TAKEAWAYS

Key Points

• Business process re-engineering focuses on the analysis and design

of workflows and processes within an organization.
• Technological change refers to the process of invention, innovation,
and diffusion of technology or processes.
• Incremental change means introducing many small, gradual changes
to a project instead of a few large, rapid changes.

Key Terms

• incremental: Occurring over a series of gradual increments, or small

steps.
• devise: To use one’s intellect to plan or design something.
• incremental model: A method of product development where the
model is designed, implemented, and tested incrementally (a little
more is added each time) until the product is finished.

Change management is an approach to shifting or transitioning individuals, teams,

and organizations from their current state to a desired future state. It is an
organizational process aimed at helping stakeholders accept and embrace change in
their business environment. In some project management contexts, change
management refers to a project management process wherein changes to a project
are formally introduced and approved.

Kotter defines change management as the utilization of basic structures and tools to
control any organizational change effort. Change management’s goal is to maximize
organizational benefit, minimize impacts on workers, and avoid distractions. There
are different types of change an can organization face.

Business Process Re-Engineering

Business process re-engineering (BPR) is a business management strategy first
pioneered in the early 1990s that focuses on the analysis and design of workflows
and processes within an organization. BPR aims to help organizations fundamentally
rethink how they do their work in order to dramatically improve customer service, cut
operational costs, and become world-class competitors. In the mid-1990s, as many
as 60% of the Fortune 500 companies claimed to have either initiated re-engineering
efforts or begun planning for it.

BPR helps companies radically restructure their organizations by focusing on their

business processes from the ground up. A business process is a set of logically
related tasks performed to achieve a defined business outcome. Re-engineering
emphasizes a holistic focus on business objectives and how processes relate to
them, encouraging full-scale recreation of processes rather than iterative
optimization of sub-processes.

Business process re-engineering is also known as business process redesign,

business transformation, and business process change management.

Incremental Change

Incremental change is a method of introducing many small, gradual (and often

unplanned) changes to a project instead of a few large, rapid (and extensively
planned) changes. Wikipedia illustrates the concept by building an encyclopedia bit
by bit. Another good example of incremental change is a manufacturing company
making hundreds of small components that go into a larger product, like a car.
Improving the manufacturing process of each of these integral components one at a
time to cut costs and improve process efficiency overall is incremental change.

Technological Change

Technological change (TC) describes the overall process of invention, innovation,

and diffusion of technology or processes. The term is synonymous with technological
development, technological achievement, and technological progress. In essence,
TC is the invention of a technology (or a process), the continuous process of
improving a technology (which often makes it cheaper), and its diffusion throughout
industry or society. In short, technological change is based on both better and more
technology integrated into the framework of existing operational processes.

Inside and Outside Forces for Organizational Change

Inside forces include strategic and human resource changes, while outside forces
include macroeconomic and technological change.

LEARNING OBJECTIVES

Identify the internal and external pressures for change, which drive organizations to adapt
and evolve
 KEY TAKEAWAYS

Key Points

• Change management is an approach to shifting individuals, teams,

and organizations to a desired future state. Examples of
organizational change can include strategic, operational, and
technological change that can come from inside or outside the
organization.
• Outside forces for change include macroeconomics, technological
evolution, globalization, new legislation, and competitive dynamics.
• Inside forces for change include intrapreneurship, new management
and restructuring.
• The first step in effective change management is being prepared, in
a timely and knowledgeable fashion, for internal and external
potentialities that may force organizational adaptation.

Key Terms

• macroeconomic: Relating to the entire economy, including the

growth rate, money and credit, exchange rates, the total amount of
goods and services produced, etc.

Change management is an approach to shifting or transitioning individuals, teams,

and organizations from their existing state to a desired future state. Examples of
organizational change can include strategic, operational, and technological changes
coming from inside or outside the organization. Understanding key internal and
external change catalysts is critical to successful change management for
organizational leaders.

Outside Forces

While there are seemingly endless external considerations that can motivate an
organization to change, a few common considerations should be constantly
monitored. These include economic factors, competitive dynamics, new technology,
globalization, and legislative changes:

• Economics – The 2008 economic collapse is a strong example of why

adaptability is important. As consumers tightened their belts,
organizations had to either do the same and lower supply to match
lowered demand, or come up with new goods to entice them. Migrating
from one volume to another can financially challenging, and change
strategies such as creating new affordable product lines or more
efficient operational paradigms are key to changing for success.
• Competition – Changes in the competitive landscape, such as new
incumbents, mergers and acquisitions, new product offerings, and
 bankruptcies, can substantially impact a company’s strategy and
operations. For example, if a competitor releases a new product that
threatens to steal market share, an organization must be ready to
change and adapt to retain their customer base.
• Technology – Technological changes are a constant threat, and
embracing new technologies ahead of the competition requires
adaptability. When media went digital, adaptable companies found ways
to evolve their operations to stay competitive. Many companies that
could not evolve quickly failed.
• Globalization – Capturing new global markets requires product, cultural,
and communicative adaptability. Catering to new demographics and
identifying opportunities and threats as they appear in the global market
is integral to adapting for optimal value.
• Legislation – New laws and legislation can dramatically change
operations. Companies in industries that impact the environment must
constantly strive to adapt to cleaner and more socially responsible
operating methodologies. Failing to keep pace can result in substantial
fines and financial detriments, not to mention negative branding.

Inside Forces

There are many inside forces to keep in mind as well, ranging from employee
changes to cultural reform to operational challenges.Understanding where this
change is coming from is the first step to timely and appropriate change
management.

• Management Change – New CEOs or other executive players can

significantly impact strategy and corporate culture. Understanding the
risks associated with hiring (or promoting for) new upper management is
key to making a good decision on best fit.
• Organizational Restructuring – Organizations may be required to
significantly alter their existing structure to adapt to the development of
new strategic business units, new product lines, or global expansion.
Changing structure means disrupting hierarchies and communications,
which must then be reintegrated. Employees must be trained on the
change and the implications it will have for their everyday operations.
• Intrapreneurship – New ideas come from inside the organization as well
as outside the organization, and capitalizing on a great new idea will
likely require some internal reconsideration. Integrating a new idea may
require reallocation of resources, new hires and talent management,
and new branding.

Common Targets of Organizational Change

Change management can be implemented to change an organization’s mission,

strategy, structure, technology, or culture.
 LEARNING OBJECTIVES

Recognize and discuss the various components of an organization which may undergo
change through the evolution and adaptation of organizational strategy and/or objectives

KEY TAKEAWAYS

Key Points

• Organizational change management should begin with a systematic

diagnosis of the current situation in order to determine the
organization ‘s need for and ability to change.
• Prior to a cultural change initiative, a needs assessment should
examine the current organizational culture and operations. The goal
is a careful and objective consideration of what is working and what
is not.
• Areas of change include mission, strategy, operations, technology,
culture, branding, employees, and work flows.
• Change management should also make use of performance metrics,
such as financial results, operational efficiency, leadership
commitment, communication effectiveness, and the perceived need
for change.

Key Terms

• change management: The controlled implementation of required

changes to some system; includes version control and planned
fallback.
• organization: A group of people or other legal entities with an
explicit purpose and written rules.

When an organization requires changes to address counterproductive aspects of

organizational culture, the process can be daunting. Cultural change is usually
necessary to reduce employee turnover, influence employee behavior, make
improvements to the company, refocus the company objectives, rescale the
organization, provide better customer service, or achieve specific company goals
and results. Cultural change can be impacted by a number of elements, including the
external environment and industry competitors, changes in industry standards,
technology changes, the size and nature of the workforce, and the organization’s
history and management.

Assessing Change Needs

Prior to launching a cultural change initiative, a company should carry out a needs
assessment to examine the existing organizational culture and operations. Careful
and objective consideration of what is working and what is not, as well as what is
parallel with the broader organizational objectives and what is not, are critical to
success here.

Areas that need to change can be identified through interviews, focus groups,
observation, and other methods of internal and external research. A company must
clearly identify the existing culture and then design a change process to implement
the desired culture.

Common Areas of Change

Common areas of organizational change include:

• Mission
• Strategy
• Operational changes, including structure and hierarchies
• Technology
• Culture
• Employees and/or management
• Work flows (particularly relevant in manufacturing)
• Branding

Organizational change management should begin with a systematic diagnosis of the

existing situation in order to determine the organization’s need for and ability to
change. The objectives, content, and process of change should be specified as part
of the change management plan.

Change management processes can benefit from creative marketing to facilitate

communication between change audiences and a deep social understanding of
leadership styles and group dynamics. To track transformation projects,
organizational change management should align group expectations, communicate,
integrate teams, and manage and train people. Change management should also
make use of performance metrics including financial results, operational efficiency,
leadership commitment, communication effectiveness, and the perceived need for
change in order to design appropriate strategies that make the change in
organizational culture as smooth and as efficient as possible.

Organizational Development

Organizational development is a deliberately planned effort to increase an

organization’s relevance and viability.

LEARNING OBJECTIVES

Explain the role of organizational development in leadership and organizational change

 KEY TAKEAWAYS

Key Points

• Organizational development (OD) is an ongoing, systematic process

of implementing effective organizational change.
• The purpose of organizational development is to address the
evolving needs of successful organizations.
• Organizational development is often facilitated with the assistance of
a ” catalyst ” or “change agent” such as an effective or influential
leader.
• An important role of a leader is to analyze and assess the
effectiveness of this developmental process and motivate the
organization to achieve developmental targets.

Key Terms

• viability: The ability to live or to succeed.

• catalyst: Someone or something that encourages progress or
change.

Organization development (OD) is a deliberately planned effort to increase an

organization’s relevance and viability. Vasudevan has referred to OD as a systemic
learning and development strategy intended to change the basics of beliefs,
attitudes, and relevance of an organization’s values and structure. This process
helps the organization to better absorb disruptive technologies, market opportunities,
and ensuing challenges and chaos. Essentially, organizational development is the
framework for a change process that is designed to produce desirable and positive
results for all stakeholders and the environment.

The Nature of Organizational Development

Organizational development is a lifelong, built-in mechanism to improve an

organization internally. This is often done with the assistance of a “change agent” or
“catalyst” who enables appropriate theories and techniques from applied behavioral
sciences, anthropology, sociology, and phenomenology. The terms “change agent”
and “catalyst” suggest a leader who is engaged in transformation leadership as
opposed to management (management being a more incremental or efficiency-
based change methodology).

A manager providing advice to a team: Organizational development is often facilitated with the assistance
of a “catalyst” or “change agent” such as an influential manager.

Although behavioral science provided the basic foundation for the study and practice
of OD, new and emerging fields of study have made their presence felt. Experts in
systems thinking and organizational learning have also emerged as OD catalysts.
These emergent perspectives view the organization as the holistic interplay of a
number of systems, all of which impact the processes and outputs of the entire
organization.

Applications of Organizational Development

The purpose of OD is to address the evolving needs of successful organizations. It

represents a concerted collaboration of internal and external experts in the field to
discover the processes an organization can use to become more effective.

Organizational development aims to improve an organization’s capacity to handle its

internal and external functioning and relationships. This includes improving
interpersonal and group processes; communication; the organization’s ability to cope
with problems; decision-making processes; leadership styles; conflict and trust; and
cooperation among organizational members.

Weisbord

Weisbord presents a six-box model for understanding—and thereby changing and

improving—an organization:

1. Purposes: Are employees clear about the organization’s mission,

purpose, and goals? Do they support the organization’s purpose?
2. Structure: How is the organization’s work divided? Is there an adequate
fit between the purpose and the internal structure?
3. Relationships: What are the relationships between individuals, units, or
departments that perform different tasks? What are the relationships
between the people and the requirements of their jobs?
4. Rewards: For what actions does the organization formally reward or
punish its members?
5. Leadership: Does leadership watch for “blips” among the other areas
and maintain balance among them?
6. Helpful mechanisms: Do planning, control, budgeting, and other
information systems help organization members accomplish their goal?

Lewin

Lewin’s description of the process of change involves three steps:

1. Unfreezing: Faced with a dilemma or issue, the individual or group

becomes aware of a need to change.
2. Changing: The situation is diagnosed and new models of behavior are
explored and tested.
3. Refreezing: Application of new behavior is evaluated, and if it proves to
be reinforcing, the behavior is adopted.

Effectiveness of Organizational Development

The efficacy of organizational development is predicated on the adaptability of the
organization and the overall successful integration of new ideas and strategies within
an existing framework. Resistance to change is a fundamental organizational
problem as all organizations have a degree of general inertia. This is further
complicated by the difficulty in quantitatively measuring changes in areas that are
generally intangible (i.e., culture).

To remedy this, organizations pursuing OD must set clear and measurable

objectives prior to committing to a change initiative. An important role of the leader is
to analyze and assess the effectiveness of this developmental process and motivate
the organization to achieve developmental targets.