CH 22

Ch-22
Management of Change
Chapter
22 Management of Change
Copyright © 2009, V S P Rao
22– 1 Organisational Behaviour V S P Rao Excel Books

Ch-22
Introduction
Everything in this world is subject to change. Technologies change rapidly.
Competition springs up surprises almost every day. New products hit the
markets in quick succession turning even successful products into obsolete
ones. Economic shocks occur every now and then. Regulatory mechanisms may
hit companies from any corner. Workers and unions might come up with a new
charter of demands without giving any notice. Too much is changing too fast for
an organisation or its managers to be complacent. Today, as never before,
organisations are facing an environment that is undergoing rapid changes and
the primary job of managers is to help organisations respond and adjust to the
changes taking place. To be successful and to play a long innings, organisations
have to adapt and change continually in order to stay ahead of others in the
competitive race. (M.Beer)
Organisational change may be defined as ‘the adoption of a new idea or
behaviour by an organisation’ (Daft). It is a way of modifying an existing
organisation—any alteration of people, structure or technology.

Ch-22
The Dilemma of Change

Stability versus Change
Organisations desire change in order to remain competitive, in order to remain in
harmony with the ever-changing environment. Organisations also want to
achieve internal stability because of the predictability and certainty it provides. As
such, organisations sit on the horns of a dilemma with reference to change.
Organisations, thus, resolve the stability-change dilemma by structuring in an
organic way when the organisation needs new ideas and frequent changes, and
by structuring in a mechanistic way whenever possible, to obtain efficiency.
What Type of Change?
Changes can be seen in a variety of ways. This poses another major dilemma.
 Evolutionary changes
 Revolutionary changes
 Planned changes Copyright © 2009, V S P Rao

Ch-22
Learning Organisation
According to Peter Senge (The Fifth Discipline) instead of adapting to
environmental changes, organisations have to anticipate and learn from change.
Reacting to environmental changes with routine, standard responses often
produces only short-run solutions, (adaptive, single-loop learning).
Brian Dumaine summarised the five characteristics of a learning organisation,
thus:
 People tend to put aside their old ways of doing, thinking (mental model),
 Learn to be open with others (Personal mastery),
 Understand how their company really works (systems thinking),
 Formulate a plan everyone can agree on (Shared vision), and
 Then work together to achieve that vision (team learning). Cont….

Ch-22
Important features of learning organisations may be listed thus:
 Shared leadership
 Team-based structure
 Open information
 Employee empowerment
 Customer focused strategy
 Culture of innovation

Ch-22
Force Field Analysis Model

Driving and restraining forces
in equilibrium
RESTRAINING FORCES
–4
(Estimated strength)
Higher
–3
–2
–1 Kurt Lewin’s
PRESENT Force Field
Equilibrium Analysis
PRODUCTIVITY
+1
(Estimated strength)
DRIVING FORCES
+2
Lower
+3
+4 Copyright © 2009, V S P Rao

Ch-22
Forces for Change

Organisational changes do not occur spontaneously. (They occur when the
forces encouraging change become more powerful than those resisting change).
These forces to change can be either internal (emanating from within an
organisation) or external forces (coming from outside an organisation).
Internal Forces
1. Increased size
2. Performance gaps
3. Employee needs and values
4. Change in the Chief Executive

Cont….

Ch-22
External Forces
Technology: The pace of technological change is increasing and literally wiping
out businesses every day. Advancements in technology can dramatically affect
organisation’s products, services, markets, suppliers, distributors, competitors,
customers, manufacturing processes, marketing practices and competitive
position.
Organisations with outdated technology are either shown the door or decimated
quickly. Furthermore, technological change in recent times has become
increasingly diverse and complex.
Competition: Competition in virtually all industries is intense and sometimes cut-
throat. Most companies are fighting a do-or-die battle for survival. The rising oil
prices, stock market crash, internet bubbles, collapse of banks and financial
institutions, crashing real estate markets, rising unemployment, corporate crimes
and scandals have complicated matters further especially after 2007. Cash-
hungry companies are finding it difficult to experiment with new ideas. New
alliances are formed, sometimes even with rivals just to withstand economic
shocks and stay afloat. Cooperative agreements between competitors, not
surprisingly, are gaining popularity in recent times. Copyright © 2009, V S P Rao

Ch-22
Responses to Change
Psychological Factors
Acceptance
(Enthusiastic with full

cooperation and
Change Evaluation of support)
Attitudes Proposed Change
Proposed
Tolerance
(A stage where loss
of interest is about to
Social Factors creep in)
Personal Factors
Rejection
(Active resistance.
Committing errors.
Spoilage, deliberate
sabotage, etc.)

Ch-22
Types of Planned Change

The next question is what can a change agent or manager change? The
options fall into four categories:
 Structural change
 Redesigning Tasks
 Changing Technology
 Culture/People Change

Ch-22
Corporate Restructuring in India

Corporate Restructuring, thus, involves destroying old paradigms, old
technology, old ways of doing things and starting all over afresh. It demands a
strong cultural willingness to make a clear beginning - taking a realistic look at
one’s company and deciding to reshape the whole place to remain continuously
competitive.
The Process of Restructuring
The process of corporate restructuring, generally speaking, covers the

following steps:
 Customer Focus
 Structural Changes through Re-engineering Cont….

Ch-22
Re-engineering: Key Elements
According to Michael Hammer and James Champy, re-engineering involves a

significant reassessment of what a particular organisation is all about. They urge
managers to ask a very fundamental question about what they do: “If I were
recreating this company today, given what I know and given current technology,
what would it look like?” In other words, managers should imagine that they are
starting with a “clean piece of paper!”
 Identify Distinctive Competencies
 Assess Core Processes
 Reorganise around Horizontal Processes
 Closer Ties with Customers and Suppliers

Ch-22
Cultural Changes
A strategic change often requires changing the culture of an organisation. A
culture change refers to a change in employees’ values, norms, attitudes, beliefs
and behaviour. The Future corporation Key Elements of Restructuring
 Network, network and network Customer

Technology
 Focus on the customer
Core processes  Buy smart Customer focus
Internal
External
Growth Process Quality

Goal
Market share Product Quality
Profitability Service Quality

Environment
Environment
Structure  Team up for success Culture

 Share the wealth
Structural Cultural Changes Cont….
 That personal touch!
changes Copyright © 2009, V S P Rao

Ch-22
The Strategies
Corporate restructuring, generally speaking, aims at enhancing the wealth of
shareholders by satisfying the needs of various stakeholders. To this end,
various strategies are generally adopted and executed through different routes.
These include mergers, acquisitions and takeovers, joint ventures, sell offs,
strategic alliances, etc.
Methods of Restructuring (Mehta)
The methods of corporate restructuring may broadly be classified into two
categories:
1. External Restructuring: This can be carried out through asset restructuring
or capital restructuring.
2. Internal Restructuring: This may involve portfolio restructuring or
organisational restructuring. Portfolio changes are effected after the SWOT
analysis of a company. Organisation wide changes are adopted to ensure
better service to customers. Copyright © 2009, V S P Rao

Ch-22
Resistance to Change
Resistance to change may be individual or organisational. People resist change
for a variety of reasons: fear of losing job, obsolescence of skills, disturbs the
status quo and social relationships, etc. Organisations, too, resist changes
because of resource constraints, difficulty in bringing about structural,
technological changes, etc.
Economic Reasons
1. Fear of economic loss
2. Obsolescence of skills
Personal Reasons
1. Fear of unknown
2. Status quo
3. Self interest and Ego-defensiveness Cont….

Ch-22
Social Reasons
1. Social displacement
2. Peer pressure
Organisational Issues
1. Threat to Power and Influence
2. Organisation Structure
3. Resource Constraints
4. Sunk Costs

Ch-22
Overcoming Resistance to Change

Some of the approaches, at the individual as well as group level, designed
to reduce resistance to change, may be listed thus:
1. Education and Communication
2. Participation and Involvement
3. Facilitation and Support
4. Negotiation and Agreement
5. Manipulation and Co-optation
6. Coercion
7. Group Dynamics

Ch-22
In large scale organisations, changes seldom occur without a bit of chaos.
Usually change agents try to minimise it by imposing some order on the change
process. Change becomes orderly when it is planned and implemented in a
systematic way. The process of planned change comprises the following steps.
1. Identify the need for Change
2. Diagnose the Problem
3. Plan the Change
4. Implement the change
5. Follow-up and Feedback

Ch-22
Organisation Development
Organisation Development (OD) refers to a collection of planned-change efforts
based on democratic values that aim at improving employee well-being and
organisational effectiveness. Let’s examine the features of OD based on these
definitions.
1. Long-range effort
2. Broad-based
3. Dynamic process
4. Planned and proactive
5. Systems view
6. Research-based
7. Goal setting and planning
8. Educative Strategy
9. Interventions
Cont….
10. Change Agent Copyright © 2009, V S P Rao

Ch-22
Objectives
According to W. French, the typical OD program tries to achieve the
following objectives:
 Deepen the sense of organisational purpose (or vision) and align individuals
with that purpose.
 Strengthen interpersonal trust, communication, cooperation, and support.
 Encourage a problem-solving rather than problem-avoiding approach to
organisational problems.
 Develop a satisfying work experience capable of building enthusiasm.
 Supplement formal authority with authority based on personal knowledge
and skill.
 Increase personal responsibility for planning and implementing.
 Encourage personal willingness to change. Cont….

Ch-22
OD Values
The emphasis of OD on human dimensions of organisation is reflected in
the following cardinal list of humanistic values. (Robbins)
a) Respect for people
b) Trust and support
c) Power equalisation
d) Confrontation
e) Participation
The OD Process
The OD process involves the following steps:
• Problem identification
• Collection of data
• Diagnosis
• Planning and implementation
• Evaluation and Feedback Copyright © 2009, V S P Rao

Ch-22
OD Interventions
An intervention, in OD terms, is a systematic attempt to correct an organisational
deficiency uncovered through diagnosis. Some of the important OD interventions
may be stated thus:
Sensitivity or T Group Training
The T-group (T stands for Training) is a small group of ten to twelve people
assisted by a leader who acts as a catalyst and trainee for the group. These
small groups may meet for two hours or more daily for a period of a week or
longer, usually off the job site. There is no specified agenda. The leader merely
creates an opportunity for group members to come out openly and express their
ideas freely.
Cont….

Ch-22
Features of T-group Training

T-group consists of 10 to 12 persons
A leader acts as a catalyst and provides a free and open environment for discussion
There is no specified agenda
Members express ideas freely and openly

The focus is on behaviour rather than on duties
The aim is to achieve behaviour effectiveness in transactions with one’s environment
Cont….

Ch-22
Survey Feedback
Survey feedback consists of (1) collecting information (usually through an
anonymous questionnaire) from members of an organisation or work group; (2)
organising the data into an understandable and useful form; and (3) feeding it
back to the employees who generated the data. The basic purpose of survey
feedback is to assist the organisation in diagnosing problems and developing
action plans for problem solving. It also assists the group members to improve
the relationships through discussion of common problem.
Collecting Relevant Data
Survey Giving Feedback

Feedback
Developing Action Plan
Ensuring Follow -up

Cont….
Survey Feedback: Essential Steps Copyright © 2009, V S P Rao

Ch-22
Process Consultation
According to Schein, process consultation includes a set of activities on the part
of the consultant which help the client to perceive, understand, and act upon the
process events which occur in the client’s environment. Process consultation
concentrates on certain specified process events such as communication,
functional roles of members, group problem-solving and decision-making, group
norms and growth, leadership and authority and intergroup cooperation and
competition.
Steps in Process Consultation
1. Initial contact
2. Define the relationship
3. Select the method of work
4. Collection of data and diagnosis
5. Intervention
Cont….
6. Reducing involvement and termination Copyright © 2009, V S P Rao

Ch-22
Management by Objectives (MBO)

In the words of Odiorne, MBO is a “process whereby superior and subordinate
managers of an organisation jointly identify its common goals, define each
individual’s major areas of responsibility in terms of results expected of him, and
use these measures as guides for operating the unit and assessing the
contribution of each of its members.”
Features
1. MBO emphasises participatively set goals that are tangible, verifiable and
measurable.
2. MBO focuses attention on what must be accomplished (goals) rather than
how it is to be accomplished (methods).
Steps
1. Establishing goals
2. Action plan
Cont….
3. Appraising performance (Final Review)

Ch-22
Grid Training and Development Managerial Concern for Production Grid

Blake and Mouton developed a
1.9 9.9
conceptual framework for studying 9 Country Team
leadership, called the Managerial Club
8
Grid emphasising the importance
Concern for People

7
of two basic leader behaviours
5.5
(concern for people and concern 6
Middle Road
for production) originally identified 5
in the Ohio State and Michigan 4
studies. They assumed that these 3
two concerns are independent, i.e.,
2
increased and decreased concerns 1.1 9.1
1 Impoverished Task
for production and people can
occur simultaneously. They plotted
leadership style on a two- ‘Cardless, seekless in reviewing diagram’
dimensional grid and identified five Cont….
basic styles of leadership. Copyright © 2009, V S P Rao

Ch-22
Other Techniques
Changes in Organisational Structure
Various models of organisational structure, particularly matrix organisation,
improves inter group interaction and relations. Further, changes may be
introduced in organisational structure to provide the scope for team work, group
interaction and increased interpersonal relations.
Work Redesign
Work redesign may be defined as altering jobs to increase both the quality of
employees’ work experience and their productivity. This can be achieved by
diagnosing jobs and improving them along five core dimensions:
a) Skill variety
b) Task identity
c) Task significance
d) Autonomy
Cont….
e) Feedback Copyright © 2009, V S P Rao

Ch-22
 Life and Career Planning

Life and Career planning helps employees formulate their personal goals
and evaluate strategies for integrating their goals with organisational
objectives. These activities might include identification of training needs and
plotting a career development plan.
 Participative Management and Quality Circles
Participative management and quality circles are an extension to team work.
They provide for voluntary formation of group/teams, association,
interaction, etc. They encourage open discussion on various problems and
arriving at a commonly agreed solutions and execution of the agreements
by the members themselves.

CH 22

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Ch-22

Copyright © 2009, V S P Rao

22– 1 Organisational Behaviour V S P Rao Excel Books

22– 2 Organisational Behaviour V S P Rao Excel Books

The Dilemma of Change

22– 3 Organisational Behaviour V S P Rao Excel Books

Copyright © 2009, V S P Rao

22– 4 Organisational Behaviour V S P Rao Excel Books

Important features of learning organisations may be listed thus:

 Customer focused strategy

Copyright © 2009, V S P Rao

22– 5 Organisational Behaviour V S P Rao Excel Books

Force Field Analysis Model

+4 Copyright © 2009, V S P Rao

22– 6 Organisational Behaviour V S P Rao Excel Books

Forces for Change

3. Employee needs and values

4. Change in the Chief Executive

Copyright © 2009, V S P Rao

22– 7 Organisational Behaviour V S P Rao Excel Books

22– 8 Organisational Behaviour V S P Rao Excel Books

(Enthusiastic with full

Copyright © 2009, V S P Rao

22– 9 Organisational Behaviour V S P Rao Excel Books

Types of Planned Change

Copyright © 2009, V S P Rao

22– 10 Organisational Behaviour V S P Rao Excel Books

Corporate Restructuring in India

The Process of Restructuring

The process of corporate restructuring, generally speaking, covers the

 Structural Changes through Re-engineering Cont….

Copyright © 2009, V S P Rao

22– 11 Organisational Behaviour V S P Rao Excel Books

Re-engineering: Key Elements

According to Michael Hammer and James Champy, re-engineering involves a

 Identify Distinctive Competencies

 Assess Core Processes

 Reorganise around Horizontal Processes

 Closer Ties with Customers and Suppliers

Copyright © 2009, V S P Rao

22– 12 Organisational Behaviour V S P Rao Excel Books

 Network, network and network Customer

Growth Process Quality

Profitability Service Quality

Structure  Team up for success Culture

22– 13 Organisational Behaviour V S P Rao Excel Books

22– 14 Organisational Behaviour V S P Rao Excel Books

Copyright © 2009, V S P Rao

22– 15 Organisational Behaviour V S P Rao Excel Books

1. Threat to Power and Influence

Copyright © 2009, V S P Rao

22– 16 Organisational Behaviour V S P Rao Excel Books

Overcoming Resistance to Change

1. Education and Communication

2. Participation and Involvement

3. Facilitation and Support

4. Negotiation and Agreement

5. Manipulation and Co-optation

22– 17 Organisational Behaviour V S P Rao Excel Books

1. Identify the need for Change

2. Diagnose the Problem

3. Plan the Change

4. Implement the change