BUS 744 Organisational Change

Week 3
Week Topic Reference
Material
Week 3
LEARNING OUTCOME THREE Relevant
Students will investigate, evaluate and use appropriate library, topics in
Internet and other sources of information and concepts Ch. 4 & 5
relating to organisational change. & other
readings
Key elements:
a) Change tools
b) New forms of organising

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 LO 3 (b)

i) Change tools

Reading:
1. Graetz, F., Rimmer, M., Smith, A., & Lawrence Ann (2011), Managing Organisational
Change, 3rd Australian edition. Australia: John Willey & Sons Ltd Australia. (Chapter 4)
2. Other readings as assigned by your tutor

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Change tools

1. Lewin's classical model/ 3-step Change Process

2. socio-technical systems
3. the organisation development school
4. the learning organisation
5. lean production
6. TQM
7. business process re-engineering
8. best practice
9. the high-performance work organisation
10. More?

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PREPARED BY DR KAYLIE TAN (AUGUST 2014)

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PREPARED BY DR KAYLIE TAN (AUGUST 2014)

2) socio-technical systems
7 principles (Trist, 1981):
1. The work system, which comprised a set of activities that made up a
functioning whole, is the basic unit, rather than the single jobs into which it
was decomposable.
2. Correspondingly, the work group, rather than the individual job holder, is
central.
3. Internal regulation of the system by the group is rendered possible, rather
than the external regulation of individuals by supervisors.
4. A design principle based on the redundancy of functions, rather than the
redundancy of parts, introduced by Emery, characterises the underlying
organisational philosophy, which tends to develop multiple skills in the
individual and immensely increase the repertoire of the group.
5. The discretionary, rather than the prescribed, part of work roles is valued.
6. The individual is treated as complementary to the machine, rather than as
an extension of it.
7. Variety is increased for the individual, rather than decreased as in the
bureaucratic mode.
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3) the organisation development school

Five major backgrounds or stems:

1. the laboratory training of sensitivity training groups, or T-groups.

2. action research, which is discussed in a later chapter as a tool for
measuring and evaluating change.
3. participative management, which is associated with the ideas of
Douglas McGregor (Theory X) and Rensis Likert (System 4).
4. productivity and quality of work life
5. ‘strategic change’, which involves improving the alignment
among an organisation's environment, strategy and organisation
design

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4) the learning organisation
Three types of organisational learning:

1. Haphazard learning. The objectives of learning are unclear

and there is no process to reinforce positive lessons.
Consequently, organisational errors can be learned and
perpetuated
2. Goal-based (single-loop) learning. This introduces both
goal-setting and simple internal feedback to reinforce
lessons.
3. Double-loop learning. In a dynamic environment, the
messages conveyed by goal-based learning swiftly become
out of date.

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Learning Organisation (LO) refers to a performance-based
organisation that continuously and effectively learn and adapt to
changing business environment through the application of :
 organisational and system theories,
 organisational developmemt,
 organisational learning, and
 cognitive science.

LO principles and characteristics:

 The characteristics of LO (see the slides, below)
 The Fifth Discipline of LO (Peter Senge, 1990 – see the slides,
below)
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4) the learning organisation (continue)
Peter Senge’s Learning Organisation Model:

1. Personal mastery is the ‘discipline of continually clarifying and deepening

personal vision, of focusing energies, of developing patience, and of seeing
reality objectively’.
2. Shared vision ‘involves the skills of unearthing shared pictures of the future
that foster genuine commitment and enrolment rather than compliance …
leaders learn the counter-productiveness of trying to dictate a vision, no
matter how heartfelt’.
3. Team learning ‘is the process of aligning and developing the capacity of a
team to create the results its members truly desire. It builds on the disciplines
of personal mastery and shared vision (for talented teams are made up of
talented individuals) and involves mastering the practices of dialogue and
discussion’

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4) the learning organisation (continue)
Peter Senge’s Learning Organisation Model:

4. Mental models are ‘deeply ingrained assumptions, generalisations, or even

pictures or images that influence how we understand the world and how we
take action’

5. Systems thinking is a ‘conceptual framework, a body of knowledge and tools

that has been developed over the last fifty years, to make patterns clearer,
and to help us see how to change them effectively’

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To become a LO, an organisation is required to manage knowledge at 3 levels through
Knowledge Management (KM): 1) Individual, 2) collective, and 3) organisational levels.

KM refers to a range of strategies and practices used in an organisation to identify, create,

represent, distribute, and enable adoption of insights and experiences that:
 embodied in individuals or
 embedded in organisations as processes or practices.

Level 1 Level 2 Level 3

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 Type 1 Type 2 Type 3
Argyris & Single-loop Double-loop Deutero-
Schon (1978) learning

Klimecki et al Improve Change Learning to

(1991) learning learning learn

Probst & Betina Adaptive Recontruction Process

(1997)

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5) lean production (or Toyota system)
Triple targets:
1. zero defects
2. zero inventory
3. zero waste

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5) lean production (or Toyota system) (continue)
Six core functions of Manufacturing Resource Planning (MRP II):

1. business planning, sales and operations planning (where monthly sales

data drive production planning)
2. master production scheduling (where broad monthly production plans
become weekly individual end item needs)
3. materials requirement planning (where the master production schedule is
linked to an analysis of materials needs, inventory and orders)
4. capacity requirements planning (where the master production schedule is
linked to the available capacity of equipment and labour)
5. shop floor control (where shop floor operatives interact with MRP II
through outputs and inputs)
6. financial integration (where MRP II data are translated from volumes to
dollars to manage cash flow and financial forecasting).

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6) Total Quality Management (TQM)
TQC possesses the following elements:
1. statistical quality control (SQC) — a set of techniques to measure and
control variation and ensure consistency in a process. Random and
predictable elements of variation are separated so the random
(problematic) part can be eliminated.
2. quality assurance (QA) — formal management structures for controlling
quality. International (ISO9000 series) and Australian (AS3900) series of
quality assurance standards exist. These prescribe formal structures, the
allocation of responsibilities, standard tasks, measurement, feedback and
recalibration processes. QA standards have a systemic or holistic character.
3. quality circles (QC) — teams in which employees are trained in the use of
SQC techniques, which they then apply to problem solving and productivity
improvement. Often called ‘employee involvement teams’, quality circles
require flexible, decentralised, collective decision making, or a participative
management approach.
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6) Total Quality Management (TQM) (continue)
Six features of TQM:
1. total management approach, affecting task performance by every
employee. It is not compartmentalised into a quality assurance department.
2. continuous improvement, or incremental change. This element, known by
the Japanese as kaizen, is shared with lean production systems.
3. appropriate quality control techniques. While these may include SQC
techniques, they are subordinated to the social process of continuous
improvement.

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6) Total Quality Management (TQM) (continue)
Six features of TQM:
4. group problem-solving techniques to improve processes. Among these
tools is ‘brainstorming’, where teams interrogate quality data to find ways of
improving processes.
5. internal and external customer and supplier relations, or the value chain.
Communication and teamwork along the chain are deemed essential to
clarify and meet customer requirements.
6. high-trust relationships and eliminates adversarial industrial relations.
Open and participative management is necessary to engage the cooperation
of teams in the process of continuous improvement. The divided loyalties
characteristic of confrontational industrial relations may prove problematic.

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7) business process re-engineering
Hammer and Champy express the key elements of re-engineering as follows:

1. fundamental — question every aspect of why you do what you do, and how
you do it, making no assumptions

2. radical — get to the root of things and do not make superficial changes or
simply modify existing structures

3. dramatic — aim for quantum leaps in performance, not incremental

changes, because re-engineering is the tool for ‘heavy blasting’, not chipping
away at the coal face

4. process oriented — focus re-engineering on business processes, not on

tasks, people or structures. Re-engineering does not work on fragments of a
business process; rather, the process must be attacked as a whole.

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7) business process re-engineering (continue)

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8) Best practice
Best practices focus on simultaneous improvement in
cost, quality and delivery:

1. closer links to customers

2. closer relationships with suppliers
3. the effective use of technology for strategic advantage
4. less hierarchical and less compartmentalised
organisations for greater flexibility
5. human resource policies that promote continuous
learning, teamwork, participation and flexibility

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8) Best practice (continue)
Best practice as a holistic system:

Source: M. Rimmer, J. Macneil, R.

Chenall, K. Langfield-Smith & L.
Watts 1996, Reinventing
Competitiveness: Achieving Best
Practice in Australia, Pitman
Publishing, Melbourne, ©
Commonwealth of Australia.
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9) the high-performance work organisation
1. the human resource approach —a specific approach to the
conventional range of human resource activities (including job analysis,
selection, recruitment, training, remuneration and performance
appraisal). The HPWO approach to these activities emphasises an
investment in human resources designed to motivate employees to
offer maximum commitment and discretionary effort
2. the industrial relations approach —This approach is exemplified by
some as the ‘mutual gains’ trade-off, where the high commitment
needed to deliver productivity gains is underpinned by employee
benefits, including job security and gain sharing. More traditional
industrial relations scholars attack ‘mutual gains’ scholars for devoting
too much attention to firm performance and too little to conventional
negotiation and conflict.

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9) the high-performance work organisation
(continue)
3. the quality management approach — the emphasis here is on TQM and
its associated operational characteristics. Group problem solving is
linked to supply chain management and the elimination of random
quality variation. Approaches to the human factor in HPWO can be
crude, however. The creation of a ‘quality first’ culture, for example, may
be left to management insistence and owe little to the sophisticated
practices espoused in both the human resource management and
industrial relations approaches.

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ACTIVITIES
1. In your allocated groups, work together to answer the following questions.
2. Your group will need to do some additional research in order to answer the
questions.
3. Your group must answer the following questions and to report back in the
form of a power-point presentation to the rest of the class.

Questions:
Task 1 (question)

Compare and contrast any FOUR change tools discussed above.

Include in each tool:
• Its characteristics
• Any 2 strengths
• Any 2 weaknesses
• An example of company that implement the tool

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ACTIVITIES
Task 2 (case study)

Tutor to assign a case in Chapter 4 and the relevant questions for each group of
students to answer.

Reading:
1. Graetz, F., Rimmer, M., Smith, A., & Lawrence Ann (2011), Managing Organisational
Change, 3rd Australian edition. Australia: John Willey & Sons Ltd Australia. (Chapter 4)
2. Other readings as assigned by your tutor

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 LO 3 (b)

ii) New forms of organising

Reading:
1. Graetz, F., Rimmer, M., Smith, A., & Lawrence Ann (2011), Managing Organisational
Change, 3rd Australian edition. Australia: John Willey & Sons Ltd Australia. (Chapter 5)
2. Other readings as assigned by your tutor

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Functional, divisional and matrix structures

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Functional, divisional and matrix structures

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Post-entrepreneurial organisation
Kanter identifies three key strategies for the post-entrepreneurial
organisation: the development of synergies, alliances and new streams.

1. Synergies. Developing synergies is about adding value by recognising,

capturing, sharing and extending the full gamut of skills and resources
that are available to the organisation.

This approach recognises that only organisations that are flatter, less
hierarchical, more interested in involving employees in their work, more
open and more concerned about integration across functional
departments can be responsive to a changing environment. These
factors are clearly critical if an organisation is to tap into the synergistic
opportunities of generational diversity (see ‘Opening case’, p. 117)..

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Post-entrepreneurial organisation (continue)
2. Alliances. The network organisation, emphasising the importance of
developing partnerships and ‘close working relationships’ with other
organisations, represents the core theme of Kanter's second post-
entrepreneurial strategy.

By developing strategic alliances, organisations are able to pool resources

and achieve synergies that otherwise would have proved impossible or too
costly to undertake independently.

In an environment that demands a ‘focused, fast, friendly and flexible’

response, the post-entrepreneurial organisation is outsourcing non-core
services and building close, cooperative relationships with suppliers.

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Post-entrepreneurial organisation (continue)
3. New streams. To provide the conditions and climate that encourage
innovative thinking and allow the freedom to pursue new opportunities, the
post-entrepreneurial organisation sets up official channels to ensure new
ideas are not hijacked or ignored by its mainstream businesses.

New streams, which work autonomously from the mainstream and pull
together skills and resources from different areas of the organisation, allow
organisations to run ‘experiments in the margin’, where new ventures can
be trialled without risking existing mainstream projects.

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Changing structures, processes and boundaries

These nine indicators of change were clustered under three organisational

design dimensions:
1. changing structures
2. changing processes, and
3. changing boundaries.

Key indicators of change within each dimension were:

1. delayering, decentralising and project-based organising (indicating change
in structure)
2. investment in information technology, horizontal and vertical
communications, and new human resource practices (indicating change in
process)
3. downscoping, outsourcing and strategic alliances (indicating change in
boundaries).

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Organising for success: the centrality of processes in aligning and
coordinating structures and boundaries

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ACTIVITIES
1. In your allocated groups, work together to answer the following questions.
2. Your group will need to do some additional research in order to answer the
questions.
3. Your group must answer the following questions and to report back in the
form of a power-point presentation to the rest of the class.

Questions:
Task 1 (question):

Compare and contrast the following organisational structure in terms of their

characteristics, strengths and weaknesses:
• Functional,
• Divisional,
• matrix structures

Support your answer for each structure with a company that applies the
structure.
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ACTIVITIES
Task 2 (case study)

Tutor to assign a case in Chapter 5 and the relevant questions for each group of
students to answer.

Reading:
1. Graetz, F., Rimmer, M., Smith, A., & Lawrence Ann (2011), Managing Organisational
Change, 3rd Australian edition. Australia: John Willey & Sons Ltd Australia. (Chapter 5)
2. Other readings as assigned by your tutor

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