Chapter 4

What
Changes in
Organizations

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 Scale of Change
Scale of
Change:
-1st order • First-order change:
-2nd order
– Incremental
Between 1st &
2nd Order – Maintains and develops the organization
Change – E.g. continuous and smaller changes to
Implications for the structure of an organisation
Change
Managers • Second-order change:
Types of – Transformational
Change:
-Downsizing – Fundamentally changes the way an
-Technological organization functions
-Mergers
-Key Change – E.g. downsizing
Challenges

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 Between 1st & 2nd Order Change
Scale of
Change:
-1st order • Mid-range changes
-2nd order – Overcomes inertia but is not revolutionary
Between 1st & – Avoids the alarming implications of large
2nd Order scale change
Change
• Punctuated equilibrium
Implications for
Change – Long periods of stability followed by short
Managers bursts of change and instability
Types of • Robust transformation
Change:
-Downsizing – Considers environmental conditions as
-Technological being temporary and requiring robust
-Mergers responses including the enactment of new
-Key Change
Challenges
capabilities.

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 Implications for Change Managers

Scale of
Change: Implication for Change Image of Managing Change
-1st order Manager
-2nd order Care needs to be taken in assuming that types Interpreter: The change manager as interpreter image
of organizational changes can be neatly reminds us that whether a change is adaptive, reactive,
categorized as small, adaptive, and incremental or transforming will depend upon the perspective of the
Between 1st & compared to those that are large and person doing the considering
transformational.
2nd Order
Change Multiple types of changes simultaneously Navigator: when implementing multiple changes, there
should also be considered. In addition, some is likely to be contact with different groups that will
changes require other changes nested under require negotiation and navigation through a range of
Implications for them in order for another change to proceed. issues—not all of which they will be able to control.
Change From chaos theory we know that small Nurturer: Change managers can nurture and shape
Managers changes, at an individual level, may have people’s perceptions and reactions to change but not
larger, unanticipated consequences throughout control them.
the organization
Types of
Change: There are a number of inertial forces that act as Coach: the managers of change are likely to assume
a drag on individuals and organizations in that, as long as people have been well “coached” in a
-Downsizing adopting adaptive, first-order change. variety of organizational skills, then, when
-Technological organizational “problems” are triggered, they will take
the initiative and make appropriate adaptive changes to
-Mergers alter organizational practices and routines.
-Key Change
Change managers need to remember what Director: Change managers who adopt a directing
Challenges might appear at first sight to be a paradox, that image of change also need to remember that they will
often change is needed in order to remain need to provide directions about stability: telling people
stable. what will not be changing, or what will remain the same.
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 Implications for Change Managers

Scale of
Change:
-1st order
-2nd order
Implication for Change Image of Managing Change
Between 1st & Manager
2nd Order
Change Change may mean adding on What this reminds the managers of
to, and integrating, rather than change is that they need to assess
Implications for removing and replacing how carrying out a change will
Change current practices. impact upon current practices
Managers There is often an implicit For the manager of change, this
assumption that incremental, requires both assessing the scale
Types of adaptive changes are less of change (incremental/radical)
Change: risky than large, second-order from the perspective of the affected
-Downsizing transformational changes. parties as well as assessing the
-Technological risk involved (of changing rather
-Mergers than staying the same) and the
-Key Change different ways in which risk can be
Challenges ameliorated.

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 Types of Change
Scale of
Change:
-1st order DOWNSIZING
-2nd order
• Approaches to downsizing:
Between 1 & st

2nd Order – Retrenchment

Change
– Downscaling
Implications for
Change – Downscoping
Managers

Types of
• Does not necessarily lead to
Change:
-Downsizing
increased productivity
-Technological
-Mergers • Can be an excessively costly
-Key Change
Challenges
exercise
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 Types of Change
Scale of
Change:
-1st order TECHNOLOGICAL CHANGE
-2nd order
• There are a variety of new
Between 1st &
2nd Order technologies being used, for example:
Change
– Customer relationship management
Implications for (CRM) systems
Change
Managers – Enterprise resource planning (ERP)
Types of – Wireless technology
Change:
-Downsizing – Business process reengineering (BPR)
-Technological
-Mergers
– Six Sigma
-Key Change
Challenges

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 Types of Change
Scale of
Change: MERGERS AND ACQUISITIONS
-1st order
-2nd order • Enable organizational growth at an
Between 1st &
2nd Order
accelerated rate
Change
• Types of mergers and acquisitions:
Implications for
Change
– Excessive capacity
Managers
– Neighboring market expansion
Types of
Change:
– New product or market investment
-Downsizing
-Technological – Research and development
-Mergers
-Key Change – Leveraging to create industries
Challenges

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 Key Change Challenges
Scale of
Change:
This table outlines the key change challenges
-1st order for the three types of change. These issues
-2nd order
need to be addressed when managing change
Between 1st &
2nd Order Downsizing New Technologies Mergers &
Change Acquisitions
Employee retention. Goal synthesis. Cost savings.
Implications for Avoiding “hard Choice of technology Cultural adjustment.
Change landings”.
Managers
Minimizing political Identifying political Balancing change and
behavior and loss of barriers. continuity.
Types of teamwork.
Change:
Survivor syndrome The IT team. Due diligence.
-Downsizing
-Technological Communication Communication Employee retention
-Mergers Due diligence Time frame. Contingency planning.
-Key Change Cultural adjustment. Contingency planning Power structure.
Challenges
Choice of restructuring Communication
technique
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