Chapter 15

Managing Organizational Change

and Developmen

t

Sources of Change

• Change is inevitable

• Most common forces for change include: New competitors, innovations in technology, new company leadership, evolving attitudes toward work

• Two sources of change:– External – Internal

External Source of Change

• Originate in environment

• Examples:– Customers– Prevailing economic climate– Labor force– Legal environment– Legislation

Internal Sources of Change

• Exist within the organization itself

• Examples:– Shifts in workers’ attitudes towards their

supervisor or benefits packages– Decline in productivity– Changes in key personnel (whose goals and

values influence large populations of the organization)

Organizational Growth and Decline

• Organizational change often follows an evolutionary pattern of gradual growth and decline

• Larry Greiner contends that every organization has an ideal structure that corresponds to its stage in the growth process

Stages of Growth Crisis

• Each new stage is preceded by a period of transition called a growth crisis

• These stages include:– Growth through creativity– Growth through direction– Growth through delegation– Growth through coordination– Continued growth through collaboration

Growth through Creativity

• First stage

• At birth, organizations are loose in structure and informal

• Creative energies will help to carry organization through its birth process

• With growth, nature of problems changes

Growth through Direction

• Second stage

• Formalization is introduced by professional managers

• Bureaucratization occurs in departments to manage organization

• Specialized divisions are created

Growth through Delegation

• Third stage

• The crisis of autonomy is overcome by delegating greater decision-making power to middle- and lower-level managers, with top level managers focusing on long-range, strategic planning

• A crisis of control

Growth through Coordination

• Fourth stage

• The crisis is resolved via greater coordination between departments

• Consultants may be hired to assess the extent of coordination needed and to suggest ways of improving efficiency and reducing redundancy

• The crisis of red tape

Continued Growth through Collaboration

• Fifth stage

• Simplification of programs, and reliance on self-control and social norms eventually solve crisis of red tape

• Goal is to teach managers how to cope with the organization’s structure without giving in to impulse to create additional structure, to collaborate

Managing Organizational Decline• Sixth stage

• A cutback in the size of an organization’s work force, profits, budget, or clients.

• Factors that can lead to decline:– Atrophy, loss of efficient processes, loss of

competitive drive– Self complacency

Managing Organizational Decline

(cont.)– Changes in societal values and consumer

tastes– Insufficient external resources– Vulnerable state caused by inexperienced

managers, cash flow problems, economic downturns, etc

Skills to Manage Decline

• Similar to those necessary to manage growth

• Skills include:– Ability to seek creative solutions– Willingness to innovate– Tactful management of conflict

Factors that Lead to Organizational Success• Focus on customers and their needs

• Adapt the structure to the needs of their missions

• Managers are oriented to problem solving, with avoidance of “paralysis through analysis” mentally

Factors that Lead to Organizational Success

(cont.)• Commitment to organization’s original

area of expertise, “sticking to one’s knitting”

• Stress a single value, e.g, delivering good service, etc.

• Improve performance by achieving agreement or consensus of employees

Factors that Lead to Failure

• Environmental factors may catch organizations off guard

• Too dependent on suppliers and/or single customer

• Inadequate control mechanisms

Factors that Lead to Failure (cont.)

• Management factors, e.g., tendency to overanalyze, or wait too long in making decisions, outdated expertise

• Intergroup conflicts

Organizational Development (OD)

• A distinct area of organizational science that focuses on planned and controlled change of organizations in desired directions

• Seeks to challenge organizations by changing structure, technology, people, and tasks

Organizational Development (OD)

(cont.)• Organizational development is a long-

range effort

Phases of OD

• Unfreezing: occurs when a situation is recognized as being deficient or inadequate in some way

• Changing: occurs when a new plan or system is implemented in the organization

Phases of OD (cont.)

• Refreezing: occurs as the newly created patterns of behavior and techniques become part of ongoing organizational processes

Resistance to Change

• People tend to fear change out of desire for security and contentment with status quo

• Ways to overcome resistance to change:– Education– Participation– Negotiation

OD Techniques

• Survey Feedback

• Team Building

• Sensitivity Training

• Confrontation Meetings

• Quality of work life programs

Survey Feedback

• Involves administering a survey, or interviewing employees; it differs from the traditional survey method in that employees receive the analyzed results of the survey back for consideration and interpretation

Survey Feedback (cont.)

–More likely to achieve productive change than traditional surveys due to completion of communication loop

Team Building

• Involves either the formation of “family groups,” composed of people that currently work together, or “special groups” of employees brought together for a purpose

• Goal is to solve problems, and improve productivity

Team Building (cont.)

–Group examines both hard data (facts and figures) and soft data (impressions and opinions) concerning production problems to encourage unfreezing

Sensitivity Training

• Known as “T-groups”

• 8-12 people are brought together for 2 to 3 hours

• Trainer does not take active role, but does act as a guide

• Members are expected to focus on behavior and on giving feedback about their perceptions of one another

Sensitivity Training (cont.)

• Member’s reactions may get out of hand

• Stranger groups may be formed of people who do not have prior knowledge of one another to encourage freer discussions

• Lost a lot of its popularity in recent years

Confrontation Meetings

• Involves bringing conflicting groups together in a structured situation that is designed to enhance cooperation– Most follow a predictable sequence– Discuss need for change first– Plan for inter-group meetings is disclosed

Confrontation Meetings (cont.)

– Groups meet and present comments, reconvene in private, and meet again in large groups to discuss differences

– At end of discussion, plans for resolution of problems are drawn up with feedback from both groups

Quality of Work Life Programs

• Seek to enhance the total work climate in an organization or its subsystems

• Focuses on such issues as conflict resolution, employee satisfaction, worker participation

Quality of Life Programs (cont.)

• Techniques may include: job redesign, employee involvement in decision making, redesign of pay systems, creation of quality circles

Successful Adoption of OD

• Conditions that help ensure that an OD effort will succeed include:– Recognition of problems by top management– Acquire support from top-level management– Successes early in program that provide

further impetus

Successful Adoption of OD (cont.)

– Respect for managerial talents of those whose domain of responsibility is being improved

– Cooperation and involvement from human resources department

– Effective coordination and control of the OD program

– Measurement of outcomes

How does OD work?

• Results of 35 studies into outcome variables and process variables

• Outcome variables: measures of productivity, efficiency, absenteeism, profits, etc. that are quantifiable (hard measures)

How does OD work? (cont.)

• Process variables: measures of trust, perceptions of leadership, motivation, decision making (soft measures)

• These studies were further categorized to whether they were directed at groups, organizations, individuals, or leaders

How Does OD Work? (cont.)

– Found that group outcome variables were most likely to be affected by OD intervention

– Individual process variables also showed relatively positive improvement

OD in Perspective

• It is not a “cure all” for every difficulty an organization may face

• Resistance to change is a significant obstacle to OD efforts

• The chief values espoused by OD specialists - trust, openness, power sharing- are not appropriate for some organizations