Chapter 4 Organisational Change

Organizational Theory,
Design, and Change
CHAPTER 4
ORGANIZATIONAL
CHANGE
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10- 1

Learning Objectives
1. What is Organizational Change?
2. Distinguish among the major forms or types of
evolutionary and revolutionary change organizations
must manage
3. Discuss the external and internal forces for change.
4. Recognize the problems inherent in managing
change and the obstacles that must be overcome
5. Explain Lewin’s three-step model of the change
process.
6. What is Organizational Development?
7. Describe the change process and understand the
techniques that can be used to help an organization
achieve its desired future state
Introduction
 This is an era of globalization and the
organizations need to cope up with the
dynamic and inevitable changes which take
place very often. Because of these changes,
the competition among firms is becoming
intense and every organization should be
flexible enough to implement the changes
whenever required for its survival.
 Change
Making things different.
 Managing change is an integral part
of every manager’s job.
What is Organizational Change?
 Organizational change: the process by which
organizations move from their present state to
some desired future state to increase their
effectiveness.
 Organizational change is about the process of
changing an organization’s structure, strategies,
processes, procedures, technologies and culture,
as well as the effect of such changes on the
organization.
 Any alterations in the people, structure, culture or
technology of an organization
 Goal is to find improved ways of using resources
and capabilities in order to increase an
organization’s ability to create value

Cont’d
 The change is always carried out in an
organization, whether it is intended or not.
 There can be both types of changes in an
organization, which is planned change and
unplanned change.
 When it comes to a planned change, the
organization may have been preparing for it
for many years. On the other hand, the
unplanned change may not be anticipated
by the organization.

Forms of Change
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© 2005 Prentice Hall Inc. All

rights reserved.
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10-18–6
Forms of Change (cont’d)
 There are two basic forms of change in
organizations. Planned change is change resulting
from a deliberate decision to alter the organization.
Companies that wish to move from a traditional
hierarchical structure to one that facilitates self-
managed teams must use a proactive, carefully
orchestrated approach .
 Unplanned change is imposed on the organization
and is often unforeseen. Changes in government
regulations and changes in the economy, for
example, are often unplanned. Responsiveness to
unplanned change requires tremendous flexibility
and adaptability on the part of the organizations.
 Managers must be prepared to handle both
planned and unplanned forms of change in
organizations.
Types of Change in Organizations
 Common types of changes in the organization:
1. Strategic Transformational Change----involves significant
alterations in the organization’s existing state of affairs.
Example: implementation of automation.
2. Reactive Change----changes are the ones that happen as a
reaction to specific events. For example, the recent outbreak
of Coronavirus , financial crisis, then cost-cutting is a
common reaction.
3. People-centric organizational change---It is recommended to use
a gradual and slow approach to incorporate this change
because emotional outbursts from the existing employees are
common. Example: hiring new members when an
organization is being restructured.
4. Incremental change--changes are made slowly and gradually to
incorporate large changes over time to create healthy and
better facilities.
5. Total Change---involves change on a large scale. When an
organization changes its vision and tries to balance vision and
other strategies and employees’ morale .
What Causes Change in an
Organization?
Change is constant, and change is inevitable, Knowing
the factors which cause change helps a manager to
take decisions accordingly, which helps the
organization grow and reduces the chances of loss.
1) Change in governmental policies
2) Change in market demand
3) Changed technology
4) Failure
5) Competitive innovation
6) Merger and acquisition
7) End-of-life of products
Targets Organizational Change
 Targets of change include improving
effectiveness at four different levels
 Human resources
 Functional resources
 Technological capabilities
 Organizational capabilities

Targets of Change: Human Resources
 Typical kinds of change efforts
directed at human resources
include:
1. Investment in training and development
2. Socializing employees into the
organizational culture
3. Changing organizational norms and
values to motivate a multicultural and
diverse workforce
4. Promotion and reward systems
5. Changing the composition of the top-
management team 10- 11
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Targets of Change: Functional Resources
 Change efforts directed at functional
resources by transferring resources to
the functions where the most value
can be created in response to
environmental change
 An organization can improve the value
that its functions(Production,
marketing, R&D and HR) create by
changing its structure, culture, and
technology
Targets of Change: Technological
Capabilities
 Change efforts directed at

technological capabilities are
intended to give an organization the
capacity to change itself in order to
exploit market opportunities
1. Development of new products
2. Modifications of existing ones
3. Increasing quality
 Technological capabilities are a core
competence
Targets of Change: Organizational
Capabilities
 Change efforts directed at
organizational
capabilities/abilities are intended
to changing the relationships
between people by altering
organizational culture and structure,
thereby permitting the organization to
harness its human and functional
resources to exploit technological
opportunities
Forces for and Resistances to
Change

Forces for Change
 Forces for change can come from many sources.
Some of these are external, arising from outside the
company, whereas others are internal, arising from
sources within the organization.
 External Forces  Internal Forces
 Technological Change Changes in managerial
 Globalisation personnel
 Social and Political  Declining Effectiveness
changes  Changes in work climate
 Workforce Diversity  Deficiencies in the
Existing System
 Change in employee
expectations
Cont….
1. Competitive forces: organization
must make changes to attempt to match
or exceed its competitors on at least one
of the following dimensions:
 Efficiency
 Quality
 Innovation

Forces for Change (cont.)
2. Economic, political, and global
forces: affect organizations by forcing
them to change how and where they
produce goods and services
 Need to change organizational structure
to:
1. Allow expansion in foreign market
2. Adapt in a variety of national cultures
3. Help expatriates adapt to the cultural values
of where they are located

Forces for Change (cont.)
3. Demographic and social forces:
changes in the composition of the
workforce and the increasing diversity of
employees has presented many
challenges for organizations
 Increased need to manage diversity
4. Ethical forces: government, political,
and social demands for more responsible
corporate behavior
 Creation of ethics officer position
 Encourage employees to report unethical
behaviors
Resistance to Change
 Resistance to change is the action taken by
individuals and groups when they perceive that a
change that is occurring as a threat to them.
 One of the main reasons for some organizations’
inability to change is organizational inertia that
maintains the status quo.
 Resistance to change lowers an organization’s
effectiveness and reduces its chances of survival.

Resistances to Change (cont.)
 Organization-level resistance to
change stems from:
 Power and conflict
 When change causes power struggle and
conflicts, there is resistance
 Differences in functional orientation
 Mechanistic structure
 Organizational culture

Resistances to Change (cont.)
 Group-level resistance to change stems
from:
 Group norms
 Group cohesiveness
 Groupthink
 Individual-level resistance to change
stems from:
 Uncertainty and insecurity
 Selective perception and retention
 Habit
Levin's Force-Field Theory of
Change
 This theory of change argues that two sets
of opposing forces within an organization
determine how change will take place
 Forces for change and forces making
organizations resistant to change
 When forces for and against change are equal,
the organization is in a state of inertia/inaction
 To change an organization, managers must
increase forces for change and/or decrease
forces resisting change

Levin's Force-Field Theory of
Change

Three Stage Model
 One of the cornerstone
models for understanding
organizational change was
developed by Lewin back in
the 1940s, and is still Creating a sense a change is needed
effective in the modern era
• His model, known as
Unfreeze – Change –
Refreeze,
Refreeze refers to the
three-stage process of
change he describes.
Moving towards a new and desired
• He explained organizational behavior
change using the analogy
of changing the shape of a
block of ice.
Setting this behavior as the new normal

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10-
Levin's Force-Field Theory of Change
 A well known psychologist, Kurt Lewin (1952), developed a three-
stage process to be followed when introducing planned Change.
Unfreezing Moving Refreezing
• Unfreezing
 Change efforts to overcome the pressures of both individual
resistance and group conformity.
• Moving
 Efforts to get employees involved in the change process.
• Refreezing
 Stabilizing a change intervention by balancing driving and
restraining forces.
Levin's Force-Field Theory of Change
 Unfreezing…The first step in the change process is unfreezing, or
preparing the situation for change by creating a felt-need for it. In
order to do this, the manager must establish good relationships with
all the people who will be involved with the change.
 Moving--During the changing phase, the actual change is
implemented. In the process, it is critical for management to carefully
identify the new, more effective behaviours to be followed as well as
the associated changes in tasks, people, culture, technology, and
structure.
 Refreezing--Refreezing is the final stage of the change process by
which the change is stabilized by rewarding appropriate new
behaviours. Management’s task is to create an acceptance and
continuity for the new behaviour. It is also necessary that
management provide the required resource support for the change.
Performance-contingent rewards and positive reinforcement can be
used to refreeze the new behaviour so that it is not easily forgotten
or abandoned.
.
Change Management – The 4 Stages of
Change
 Change is inevitable in life, and it is simply the
process of transformation. It is characterized by
four stages of change management, which
everyone confronts when changes arrive. The
phases include:
1) Denial stage – Stage 1 of Change management
2) Resistance stage – The second stage of change
management
3) Exploration stage
4) Acceptance/ commitment stage

Denial stage – Stage 1 of Change management
 Denial is the first stage of the four stages of change

management and it is observed as soon as an change is
implemented. In this stage, you will first deny that change has
arrived, even if you can read the signs boldly. Due to the fear
of losing belonging, safety and psychological needs, you
usually feel bad and deny the importance of change.
(hostile takeover of the company or affects the comfort zone)

Resistance stage – The second stage of change
management
Resistance stage is the second and very critical, as it is the stage

where the productivity, morale, and competency of the employees
decline. Following the resistance, the employees will do the
following:
• See anything that is wrong.
• Result in complaints instead of making the change work.
• Get into criticism and blame discussions, or responses
with anger.

Cont’d
 Some tips to deal with resistance include:
1. Listening to the employee’s concerns and feelings
without stopping them.
2. Encouraging them to share their skepticism/doubt
and concerns regarding the change.
3. Motivating the employees to help in making the
change work instead of using the energy in taking
activities with negative impacts or complaining.
4. Recognizing the loss they fear, such as loss of
competence and control, and coming up with ways
like communication and training to address the
issues.
Exploration stage
 At this stage, the employees look into the future by
searching for new responsibilities. The exploration
of alternatives might make the employees be
distracted, lose focus, be indecisive and feel like
they are doing too much from the many ideas they
explore. However, during the exploration,
employees are hopeful of making it in a new
organization but ready to receive ideas of solving
the problem.

Cont’d
 Manager in addressing exploration include:
1. Conducting a survey of the change.
2. Initiating temporary and non-binding pilot projects to
understand the impacts resulting from the change.
3. Accepting the change of attitude by the employees
and providing positive feedback.
4. Helping the employees in re-evaluating their careers.
5. Providing more training and networking the
employees to gain competence and knowledge.
6. Addressing the lack of focus, fear and indecisiveness
of the employees.
7. Supporting and encouraging strategy and
brainstorming sessions.

Acceptance/ commitment stage
 The commitment is brought about by accepting the

change, rather than fighting and ignoring it. After
the acceptance, the change is integrated into the
processes, thinking, and values of the organization.
The acceptance stage is where both the managers
and the employees embrace the change. The
employees get committed with a feeling that their
contribution will lead to a successful implementation.

Implications /suggestions for practising
managers
1. Define clear vision and goals
2. Involve employees in change process
3. Interview employees regarding their feelings
4. Effective delegation
5. Raise levels of expectations
6. Ensure commitment of employees
7. Expand communication channels
8. Be firm, committed and flexible
9. Keep a positive attitude
10. Rewarding employees

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Chapter 4 Organisational Change

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Organizational Theory,

Design, and Change

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10- 1

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10- 4

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10- 5

© 2005 Prentice Hall Inc. All

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10- 10

 Change efforts directed at

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Setting this behavior as the new normal

Unfreezing Moving Refreezing

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 Denial is the first stage of the four stages of change

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Resistance stage is the second and very critical, as it is the stage

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 The commitment is brought about by accepting the

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