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MBA –H4010 Organisational Development And Change ORGANISATIONAL DEVELOPMENT AND CHANGE UNIT – I LEARNING OBJECTIVES The student is expected to learn the following concepts after going through this unit. 1. Change 3. Planned Change 5. Unplanned Change 2. 4. 6. Stimulating Forces Change Agents Lewin’s Three Step Model The change means the alteration of status quo or making things different. It may refer to any alteration which occurs in the overall work environment of an organization. When an organizational system is disturbed by some internal or external force, the change may occur.

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The change is modification of the structure or process of a system, that may be good or even bad. It disturbs the existing equilibrium or status quo in an organization. The change in any part of the organization may affect the whole of the organization, or various other parts of organization in varying degrees of speed and significance. It may affect people, structure, technology, and other elements of an organization. It may be reactive or proactive in nature. When change takes place due to external forces, it is called reactive change.

However, proactive change is initiated by the management on its own to enhance the organizational effectiveness. The change is one of the most critical aspects of effective management. It is the coping process of moving from the present state to a desired state that individuals, 1 MBA –H4010 Organisational Development And Change groups and organizations undertake in response to various internal and external factors that alter current realities. Survival of even the most successful organizations cannot be taken for granted.

In some sectors of the economy, organizations must have the capability to adapt quickly in order to survive. When organizations fail to change, the cost of failure may be quite high. All organizations exist in a changing environment and are themselves constantly changing. Increasingly, the organizations that emphasize bureaucratic or mechanistic systems are ineffective. The organizations with rigid hierarchies, high degree of functional specialization, narrow and limited job descriptions, inflexible rules and procedures, and impersonal management can’t respond adequately to the demands for change.

The organizations need designs that are flexible and adaptive. They also need systems that require both, and allow greater commitment and use of talent on the part of employees and managers. The organizations that do not bring about timely change in appropriate ways are unlikely to survive. One reason that the rate of change is accelerating is that knowledge and technology feed on themselves, constantly making innovations at exponential rates. Organizational change is the process by which organizations move from their present state to some desired future state to increase their effectiveness.

The goal of planned organizational change is to find new or improved ways of using resources and capabilities in order to increase an organization’s ability to create value and improve returns to its stakeholders. An organization in decline may need to restructure its resources to improve its fit with the environment. IBM and General Motors, for example, experienced falling demand for their products in the 1990s and have been searching for new ways to use their resources to improve their performance and attract customers back. On the other 2 MBA –H4010

Organisational Development And Change hand, even a thriving organization may need to change the way it uses its resources so that it can develop new products or find new markets for its existing products. Wal-Mart, Target, Blockbuster Video, and Toys “ ” Us, for example, have been moving aggressively to expand their scale of operations and open new stores to take advantage of the popularity of their products. In the last decade, over half of all Fortune 500 companies have undergone major organizational changes to allow them to increase their ability to create value.

Change may be regarded as one of the few constants of recorded history. Often society’s “winners”, both historical and contemporary, can be characterized by the common ability to effectively manager and exploit change situations. Individuals, societies, nations and enterprises who have at some time been at the forefront of commercial and/or technological expansion have achieved domination, or at least ‘competitive’ advantage, by being innovative in thought and/or action. They have been both enterprising and entrepreneurial.

It is said that management and change are synonymous; it is impossible to undertake a journey, for in many respects that is what change is, without first addressing the purpose of the trip, the route you wish to travel and with whom. Managing change is about handling the complexities of travel. It is about evaluating, planning and implementing operational, tactical and strategic ‘journeys’ – about always ensuring that the journey is worthwhile and the destination is relevant. The Industrial Revolution, which developed in Europe between 1750 and 1880, accelerated the rate of change to an extent never previously thought possible.

Other economies followed and the rate of change has never declined; indeed, many would claim it has now accelerated out of control. The spear and sword gave way to the gun; the scribe to the printing press; manpower to the steam engine of James Watt; the horse and cart to the combustion engine; the typewriter to the word processor; and so the list goes on. 3 MBA –H4010 Organisational Development And Change The Importance of Change One can try to predict the future. However, predictions produce at best a blurred picture of what might be, not a blueprint of future events or circumstances.

The effective and progressive management of change can assist in shaping a future which may better serve the enterprise’s survival prospects. Change will not disappear or dissipate. Technology, civilizations and creative thought will maintain their ever accelerating drive onwards. Managers, and the enterprises they serve, be they public or private, service or manufacturing, will continue to be judged upon their ability to effectively and efficiently manage change. Unfortunately for the managers of the early twenty-first century, their ability to handle complex change situations will be judged over ever decreasing time scales.

The pace of change has increased dramatically; mankind wandered the planet on foot for centuries before the invention of the wheel and its subsequent “technological convergence” with the ox and horse. In one ‘short’ century a man has walked on the moon; satellites orbit the earth; the combustion engine has dominated transport and some would say society; robots are a reality and state of the art manufacturing facilities resemble scenes from science fiction; your neighbour or competitor, technologically speaking, could be on the other side of the planet; and bio-technology is the science of the future.

The world may not be spinning faster but mankind certainly is! Businesses and managers are now faced with highly dynamic and ever more complex operating environments. Technologies and products, alongwith the industries they support and serve, are converging. Is the media company in broadcasting, or telecommunications, or data processing, or indeed all of them? Is the supermarket chain in general retail, or is it a provider of financial services? Is the television merely a receiving device for broadcast 4 MBA –H4010 Organisational Development And Change essages or is it part of an integrated multi-media communications package? Is the airline a provider of transport or the seller of wines, spirits and fancy goods, or the agent for car hire and accommodation? As industries and products converge, along with the markets they serve, there is a growing realization that a holistic approach to the marketing of goods and services is required, thus simplifying the purchasing decision. Strategic alliances, designed to maximize the ‘added value’ throughout a supply chain, while seeking to minimize costs of supply, are fast becoming the competitive weapon of the future.

Control and exploitation of the supply chain make good commercial sense in fiercely competitive global markets. The packaging of what were once discrete products (or services) into what are effectively ‘consumer solutions’ will continue for the foreseeable future. Car producers no longer simply manufacture vehicles, they now distribute them through sophisticated dealer networks offering attractive servicing arrangements, and provide a range of financing options, many of which are linked to a variety of insurance packages. Utility enterprises now offer far more than their original core service.

Scottish power have acquired utilities in other countries and have recently moved into water, gas and telecommunications, to become a ‘unified’ utilities company offering ‘one-stop shopping’ to domestic and commercial customers. How can we manage change in such a fast moving environment without losing control of the organization and existing core competencies? There are no easy answers and certainly no blueprints detailing best practice. Designing, evaluating and implementing successful change strategies largely depend upon the quality of the management team, in particular the team’s ability to design 5

MBA –H4010 Organisational Development And Change organizations in such a way as to facilitate the change process in a responsive and progressive manner. The Imperative of Change Any organization that ignores change does so at its own peril. One might suggest that for many the peril would come sooner rather than later. To survive and prosper, the organizations must adopt strategies that realistically reflect their ability to manage multiple future scenarios. Drucker, for example, argued that : Increasingly, a winning strategy will require information about events and conditions outside the institution.

Only with this information can a business prepare for new changes and challenges arising from sudden shifts in the world economy and in the nature and content of knowledge itself. If we take an external perspective for a moment, the average modern organization has to come to terms with a number of issues, which will create a need for internal change. Six major external changes that organizations are currently addressing or will have to come to terms with in the new millennium are : 1. A large global marketplace made smaller by enhanced technologies and competition from abroad.

The liberalization of Eastern European states, the creation of a simple European currency, e-trading, the establishment of new trading blocs such as the ‘tiger’ economies of the Far East, and reductions in transportation, information and communication costs, mean that the world is a different place from what it was. How does an organization plan to respond to such competitive pressures? 2. A Worldwide recognition of the environment as an influencing variable and government attempts to draw back from environmental 6 MBA –H4010 Organisational Development And Change calamity.

There are legal, cultural and socio-economic implications in realizing that resource use and allocation have finite limits and that global solutions to ozone depletion, toxic waste dumping, raw material depletion, and other environmental concerns will force change on organizations, sooner rather than later. How does an individual organization respond to the bigger picture? 3. Health consciousness as a permanent trend amongst all age groups throughout the world. The growing awareness and concern with the content of food and beverage products has created a movement away from synthetic towards natural products.

Concerns have been expressed about salmonella in eggs and poultry, listeria in chilled foods, BSE or ‘mad cow disease’ and CJD in humans, genetically engineered foodstuffs, and the cloning of animals. How does an individual organization deal with the demands of a more healthconscious population? 4. Changes in lifestyle trends are affecting the way in which people view work, purchases, leisure time and society. A more morally questioning, affluent, educated and involved population is challenging the way in which we will do business and socialize. How will people and their organization live their lives? . The changing workplace creates a need for non-traditional employees. Many organizations have downsized too far and created management and labour skill shortages as a result. In order to make up the shortfall, organizations are currently resorting to a core/periphery workforce, teleworking, multi-skilled workers and 7 MBA –H4010 Organisational Development And Change outsourcing. A greater proportion of the population who have not been traditional employees (e. g. , women with school aged children) will need to be attracted into the labour force.

Equal opportunity in pay and non-pecuniary rewards will be issues in the future. How will an individual organization cope with these pressures? 6. The knowledge asset of the company, its people, is becoming increasingly crucial to its competitive wellbeing. Technolgical and communication advances are leading to reduced entry costs across world markets. This enables organizations to become multinational without leaving their own borders. However, marketing via the internet, communication viae-mail and other technology applications are all still reliant on the way you organize your human resources.

Your only sustainable competitive weapon is your people. How do you intend managing them in the next millennium? The same way as you did in the last? What is important, however, is recognition that change occurs continuously, has numerous causes, and needs to be addressed all the time. The planned change is not impossible, but it is often difficult. The key point is that change is an ongoing process, and it is incorrect to think that a visionary end state can be reached in a highly programmed way. Stimulating Forces What makes an organization to think about change?

There are a number of specific, even obvious factors which will necessitate movement from the status quo. The most obvious of these relate to changes in the external environment which trigger reaction. An example of this in the last couple of 8 MBA –H4010 Organisational Development And Change years is the move by car manufacturers and petroleum organizations towards the provision of more environmentally friendly forms of ‘produce’. However, to attribute change entirely to the environment would be a denial of extreme magnitude.

This would imply that organizations were merely ‘bobbing about’ on a turbulent sea of change, unable to influence or exercise direction. The changes within an organization take place in response both to business and economic events and to processes of management perception, choice and action. Managers in this sense see events taking place that, to them, signal the need for change. They also perceive the internal context of change as it relates to structure, culture, systems of power and control, which gives them further clues about whether it is worth trying to introduce change.

But what causes change? What factors need to be considered when we look for the causal effects which run from A to B in an organization? The change may occur in response to the : • • • • • Changes in technology used Changes in customer expectations or tastes Changes as a result of competition Changes as a result of government legislation Changes as a result of alterations in the economy at home or abroad • • • • Changes in communication media Changes in society’s value systems Changes in the supply chain Changes in the distribution chain 9

MBA –H4010 Organisational Development And Change Internal changes can be seen as responses or reactions to the outside world which are regarded as external triggers. There are also a large number of factors which lead to what are termed internal triggers for change. Organization redesigns to fit a new product line or new marketing strategy are typical examples, as are changes in job responsibilities to fit new organizational structures.

The final cause of change in organizations is where the organization tries to be ahead of change by being proactive. For example, where the organization tries to anticipate problems in the marketplace or negate the impact of worldwide recession on its own business, proactive change is taking place. Planned Change Planned organizational change is normally targeted at improving effectiveness at one or more of four different levels : human resources, functional resources, technological capabilities, and organizational capabilities.

Human Resources : Human resources are an organization’s most important asset. Ultimately, an organization’s distinctive competencies lie in the skills and abilities of its employees. Because these skills and abilities give an organization a competitive advantage, organizations must continually monitor their structures to find the most effective way of motivating and organizing human resources to acquire and use their skills.

Typical kinds of change efforts directed at human resources include : (i) new investment in training and development activities so that employees acquire new skills and abilities; (ii) socializing employees into the organizational culture so that they learn the new routines on which organizational performance depends; (iii) changing organizational norms and values to motivate a multi-cultural and diverse work force; (iv) ongoing examination of the way in which promotion and reward systems operate in a 10 MBA –H4010 Organisational Development And Change iverse work force; and (v) changing the composition of the top-management team to improve organizational learning and decision making. Functional Resources : Each organizational function needs to develop procedures that allow it to manage the particular environment it faces. As the environment changes, organizations often transfer resources to the functions where the most value can be created. Critical functions grow in importance, while those whose usefulness is declining shrink. An organization can improve the value that its functions create by changing its structure, culture, and technology.

The change from a functional to a product team structure, for example, may speed the new product development process. Alterations in functional structure can help provide a setting in which people are motivated to perform. The change from traditional mass production to a manufacturing operation based on self-managed work teams often allows companies to increase product quality and productivity if employees can share in the gains from the new work system. Technological Capabilities : Technological capabilities give an organization an enormous capacity to change itself in order to exploit market opportunities.

The ability to develop a constant stream of new products or to modify existing products so that they continue to attract customers is one of an organization’s core competencies. Similarly, the ability to improve the way goods and services are produced in order to increase their quality and reliability is a crucial organizational capability. At the organizational level, an organization has to provide the context that allows it to translate its technological competencies into value for its stakeholders. This task often involves the redesign of organizational activities.

IBM, for example, has recently moved to change its organizational structure to better capitalize on its strengths in providing IT consulting. 11 MBA –H4010 Organisational Development And Change Previously, it was unable to translate its technical capabilities into commercial opportunities because its structure was not focused on consulting, but on making and selling computer hardware and software rather than providing advice. Organizational Capabilities : Through the design of organizational structure and culture an organization can harness its human and functional resources to take advantage of technological opportunities.

Organizational change often involves changing the relationship between people and functions to increase their ability to create value. Changes in structure and culture take place at all levels of the organization and include changing the routines an individual uses to greet customers, changing work group relationships, improving integration between divisions, and changing corporate culture by changing the topmanagement team. These four levels at which change can take place are obviously interdependent, it is often impossible to change one without changing another.

Suppose an organization invests resources and recruits a team of scientists who are experts in a new technology – for example, biotechnology. If successful, this human resource change will lead to the emergence of a new functional resource and a new technological capability. Top management will be forced to reevaluate its organizational structure and the way it integrates and coordinates its other functions, to ensure that they support its new functional resources. Effectively utilizing the new resources may require a move to a product team structure.

It may even require downsizing and the elimination of functions that are no longer central to the organization’s mission. 12 MBA –H4010 Organisational Development And Change Change Agents Organizations and their managers must recognize that change, in itself, is not necessarily a problem. The problem often lies in an inability to effectively manage change : not only can the adopted process be wrong, but also the conceptual framework may lack vision and understanding. Why is this the case?

Possibly, and many practicing managers would concur, the problem may be traced to the managers’ growing inability to approximately develop and reinforce their role and purpose within complex, dynamic and challenging organizations. Change is now a way of life; organizations, and more importantly their managers, must recognize the need to adopt strategic approaches when facing transformation situations. Throughout the 1980s and 1990s organizations, both national and international, strived to develop sustainable advantage in both volatile and competitive operating environments.

Those that have survived, and/or developed, have often found that the creative and market driven management of their human resources can produce the much needed competitive ‘cushion’. This is not surprising : people manage change, and well-managed people manage change more effectively. Managing change is a multi-disciplinary activity. Those responsible, whatever their designation, must possess or have access to a wide range of skills, resources, support and knowledge. For example • Communication skills are essential and must be applied for managing teams. Maintaining motivation and providing leadership to all concerned is necessary. 13 MBA –H4010 Organisational Development And Change • The ability to facilitate and orchestrate group and individual activities is crucial. • • • Negotiation and influencing skills are invaluable. It is essential that both planning and control procedures are employed. The ability to manage on all planes, upward, downword and within the peer group, must be acquired. • Knowledge of, and the facility to influence, the rationale for change is essential.

There are many terms that have been used to denote those responsible for the effective implementation of change : for example, change agents, problem owners, facilitators, project managers or masters of change. The focal point of a change needs not to be an individual; a work group could quite easily be designated as a special task force responsible for managing the change. However, generally within, or above, any work group there is still someone who ultimately is accountable and responsible. What are the essential attributes of a change agent/master and are there any guidelines for them?

The need to encourage participation and involvement in the management of the change by those who are to be affected has been suggested. The aim is to stimulate interest and commitment and minimize fears, thus reducing opposition. It may also be necessary to provide facilitating and support services. These could assist in promoting an individual’s awareness for the need for change, while counseling and therapy could be offered to help overcome fears. Management must engage in a process of negotiation, striving towards agreement.

This is essential where those opposing have the power, and influence, to resist and ultimately block the change. If consensus fails then one 14 MBA –H4010 Organisational Development And Change has little alternative but to move on to explicit and implicit coercion. Somewhere in between the two extremes, the management may attempt to manipulate events in an effort to sidestep sources of resistance. For example, they may play interested parties off against each other or create galvanizing crisis to divert attention. The techniques need not be employed in isolation.

They may be most effective when utilized in combination. The core tasks facing a change agent or project manager are to reduce the uncertainty associated with the change situation and then encourage positive action. Some of the steps to assist are : 1. Identify and manage stakeholders 2. Work on objectives 3. Set a full agenda (Gainsvisible commitment). (Clear, concise and understandable) (Take a hostile view and highlight potential difficulties) 4. Build appropriate control systems (Communication is a two-way process, feedback is required). . Plan the process of change (Pay attention to : establishing roles – clarity of purpose; build a team – do not leave it to choice; nurture coalitions of support – fight apathy and resistance; communicate relentlessly – manage the process; recognize power – make the best use of supporting power bases; handing over – ensure that the change is maintained). 15 MBA –H4010 Organisational Development And Change The change agents exist throughout the organization (but are crucial at the top) and constitute in effect a latent force.

They have ability to : • • question the past and challenge old assumptions and beliefs leap from operational and process issues to the strategic picture • think creativity and avoid becoming bogged down in the ‘how-to’ • manipulate and exploit triggers for change Further, some of the traits of change agents as business athletes are : 1. able to work independently without the power and sanction of the management hierarchy. 2. effective collaborators, able to compete in the ways that enhance rather than destroy cooperation. 3. 4. 5. 6. ble to develop high trust relations with high ethical standards. possess self-confidence tempered with humility. respectful of the process of change as well as the substance. able to work across business functions and units – ‘multi-faceted and multi-dextrous’. 7. willing to take rewards on results and gain satisfaction from success. To summarize, an effective change agent must be capable of orchestrating events; socializing within the network of stakeholders; and managing the communication process. There is a need for competent internal 16 MBA –H4010

Organisational Development And Change change agents to be assigned to the project so as to ensure cooperation, effective implementation and successful handover upon completion. The role envisaged for the external change agent includes : to assist in fully defining the problem; to help in determining the cause and suggesting potential solutions; to stimulate debate and broaden the horizons; and to encourage the client to learn from the experience and be ready to handle future situations internally; is complementary to that of the internal problem owner.

It is the responsibility of the potential clients to establish the need for an objective outsider, by considering their own internal competencies and awareness of the external opportunities. The principal problem with using internal change agents is that other members of the organization may perceive them as being politically involved in the changes and biased toward certain groups. External change agents, in contrast, are likely to be perceived as less influenced by internal polities.

Another reason for employing external change agents is that as outsiders they have a detached view of the organization’s problems and can distinguish between the “forest and the trees”. Insiders can be so involved in what is going on that they cannot see the true source of the problems. Management consultants for Mckinsey and Co. are frequently brought in by large organizations to help the top-management team diagnose an organization’s problems and suggest solutions. Many consultants specialize in certain types of organizational change, such as restructuring, re-engineering or implementing total quality management.

Unplanned Change Not all the forces for change are the results of strategic planning. Indeed organizations often are responsive to changes that are unplanned – especially those derived from the factors internal to the organization. Two such forces are 17 MBA –H4010 Organisational Development And Change the changes in the demographic composition of the workforce and performance gaps. • Changing Employee Demographics : It is easy to see, even within our own lifetimes, how the composition of the workforce has changed.

The percentage of women in the workforce is greater than ever before. More and more women with professional qualifications are joining the organization at the junior and the middle management levels. In addition to these, the workforce is getting older. Many of the old retired employees from government and public sector are joining the private sector, thereby changing the employee demographics. With the opening up of the economy and globalization, the workforce is also continually becoming more diverse.

To people concerned with the long-term operation of organizations, these are not simply curious sociological trends, but shifting conditions will force organizations to change. Questions regarding the number of people who will be working, what skills and attitudes they will bring to the job, and what new influences they will bring to the workplace are of key interest to human resource managers. • Performance Gaps : If you have ever head the phrase, “It is isn’t broken, don’t fix it,” you already have a good idea of one of the potent sources of nplanned internal changes in organizations – performance gaps. A product line that isn’t moving, a vanishing profit margin, a level of sales that is not up to corporate expectations – these are examples of gaps between real and expected levels of organizational performance. Few things force change more than sudden unexpected information 18 MBA –H4010 Organisational Development And Change about poor performance. Organizations usually stay with a winning course of action and change in response to failure; in other words, they follow a win-stay/lose-change rule.

Indeed several studies have shown that a performance gap is one of the key factors providing an impetus for organizational innovations. Those organizations that are best prepared to mobilize change in response to expected downturns are expected to be the ones that succeed. Further, one of the greatest challenges faced by an organization is its ability to respond to changes from outside, something over which it has little or no control. As the environment changes, organizations must follow the suit.

Research has shown that organizations that can best adapt to changing conditions tend to survive. Two of the most important unplanned external factors are governmental regulation and economic competition. • Government Regulation : One of the most commonly witnessed unplanned organizational changes results from government regulation. With the opening up of the economy and various laws passed by the government about delicensing, full or partial convertibility of the currency, etc. , the ways in which the organizations need to operate change swiftly.

These activities greatly influence the way business is to be conducted in organizations. With more foreign players in the competitive market, Indian industries have to find ways and mechanisms to safely and profitably run their business. • Economic Competition in the Global Arena : It happens every day : someone builds a better mousetrap – or at least a chapter one. As a result, companies must often fight to maintain their share of market, 19 MBA –H4010 Organisational Development And Change advertise more effectively, and produce products more inexpensively.

This kind of economic competition not only forces organizations to change, but also demands that they change effectively if they are to survive. On some occasions, competition can become so fierce that the parties involved would actually be more effective if they buried the hatchet and joined forces. It was this ‘If you can’t beat them, join them’ reasoning that was responsible for the announced alliance dubbed “the deal of the decade” by one financial analyst. Although competition has always been crucial to organizational success, today competition comes from around the globe.

As it has become increasingly less expensive to transport materials throughout the world, the industrialized nations have found themselves competing with each other for shares of the international marketplace. Extensive globalization presents a formidable challenge to all organizations wishing to compete in the world economy. The primary challenge is to meet the ever-present need for change i. e. , to be innovative. It can be stated that organizations change in many ways and for many reasons. The norm of pervasive change brings problems, challenges and opportunities.

Those individual managers and organizations that recognize the inevitability of change and learn to innovate or adapt to and manage it while focused on creating world class best value will be most successful. But people and organizations frequently resist change, even if it is in their best interest, especially in large and established organizations. Lewin’s Force-Field Theory of Change A wide variety of forces make organizations resistant to change, and a wide variety of forces push organizations toward change. Researcher Kurt 20 MBA –H4010 Organisational Development And Change

Lewin developed a theory about organizational change. According to his forcefield theory, these two sets of forces are always in opposition in an organization. When the forces are evenly balanced, the organization is in a state of inertia and does not change. To get an organization to change, the managers must find a way to increase the forces for change, reduce resistance to change, or do both simultaneously. Any of these strategies will overcome inertia and cause an organization to change. Resistance to change Resistance to change Level of Performance Ch ge an o m ve t en Y X M

Force for change Time Force for change Figure 1 : Lewin’s Force-Field Theory of Change An organization at performance level X is in balance (Figure 1). Forces for change and resistance to change are equal. Management, however, decides 21 MBA –H4010 Organisational Development And Change that the organization should strive to achieve performance level Y. To get to level Y, the managers must increase the forces for change (the increase is represented by the lengthening of the up arrows), reduce resistance to change (the reduction is represented by the shortening of the down arrows), or do both.

If they pursue any of the three strategies successfully, the organization will change and reach performance level Y. Kurt Lewin, whose Force-Field theory argues that organizations are balanced between forces for change and resistance to change, has a related perspective on how managers can bring change to their organization (Figure 2). In Lewin’s view, implementing change is a three-step process : (1) unfreezing the organization from its present state, (2) making the change, or movement, and (3) refreezing the organization in the new, desired state so that its members do not revert to their previous work attitudes and role behaviours. . Unfreeze the organization from its present state 2. Make the desired type of change (Movement) 3. R e f r e e z e t h e organization in a new, desired state. Figure 2 : Lewin’s Three-Step Change Process Lewin warns that resistance to change will quickly cause an organization and its members to revert to their old ways of doing things unless the organization actively takes steps to refreeze the organization with the changes in place. It is not enough to make some changes in task and role relationships and expect the changes to be successful and to endure.

To get an organization to remain in its new state, managers must actively manage the change process. 22 MBA –H4010 Organisational Development And Change Source 1. 2. Gareth R. Jones (2004). Organizational Theory, Design, and Change : Text and Cases. Fourth Edition. Pearson Education, New Delhi. Robert A. Paton and James McCalman (2000). Change Management : A Guide to Effective Implementation. Second Edition. Response Books, New Delhi. Kavita Singh (2005). Organisation Change and Development. Excel Books, New Delhi. 3. Questions 1. 2. 3. 4. 5. What is change?

Discuss various stimulating forces of change. What is planned change? Discuss various targets of planned change. What are the traits of change agents? How do external and internal change agents differ in their roles? Discuss unplanned change with appropriate examples. Describe Lewin’s Force-Field Theory of Change. Why is it known as Three Step Model of Change? 23 MBA –H4010 Organisational Development And Change 24 MBA –H4010 Organisational Development And Change UNIT – II RESISTANCE TO CHANGE OBJECTIVES The student will have an under standing of 1. . 3. 4. 5. What is resistance to change ? What are the source of resistance to change ? Why is it necessary to overcome the resistance to change ? How to overcome the resistance to change. How to minimize resistance to change. The goal of planned organizational change is to find new or improved ways of using resources and capabilities in order to increase an organization’s ability to create value and improve returns to its stakeholders. An organization in decline may need to restructure its resources to improve its fit with the environment.

At the same time even a thriving organization may need to change the way it uses its resources so that it can develop new products or find new markets for its existing products. In the last decade, over half of all Fortune 500 companies have undergone major organizational changes to allow them to increase their ability to create value. One of the most well-documented findings from studies have revealed that organizations and their members often resist change. In a sense, this is positive. It provides a degree of stability and predictability to behaviour.

If there weren’t some resistance, organizational behaviour would take on characteristics of chaotic randomness. Resistance to change can also be a source of functional conflict. For example, resistance to a reorganization plan or a change in a product line can stimulate a healthy debate over the merits of the idea and result in a better 25 MBA –H4010 Organisational Development And Change decision. But there is a definite downside to resistance to change. It hinders adaptation and progress. Resistance to change doesn’t necessarily surface in standardized ways.

Resistance can be overt, implicit, immediate or deferred. It is easiest for management to deal with resistance when it is overt and immediate : For instance a change is proposed and employees quickly respond by voicing complaints, engaging in a work slowdown, threatening to go on strike, or the like. The greater challenge is managing resistance that is implicit or deferred. Implicit resistance efforts are more subtle – loss of loyalty to the organization, loss of motivation to work, increased errors or mistakes, increased absenteeism due to sickness and hence, more difficult to recognize.

Similarly, deferred actions cloud the link between the source of the resistance and the reaction to it. A change may produce what appears to be only a minimal reaction at the time it is initiated, but then resistance surfaces weeks, months or even year later. Or a single change that in and of itself might have little impact becomes the straw that breaks the company’s back. Reactions to change can build up and then explode in some response that seems to tally out of proportion to the change action it follows.

The resistance, of course, has merely been deferred and stockpiled what surfaces is a response to an accumulation of previous changes. SOURCES OF RESISTANCE Sources of resistance could be at the individual level or at the organizational level. Some times the sources can overlap. Individual Factors Individual sources of resistance to change reside in basic human characteristics such as perceptions, personalities and needs. There are basically four reasons why individuals resist change. 26 MBA –H4010 Organisational Development And Change • Habit : Human beings are creatures of habit.

Life is complex enough; we do not need to consider the full range of options for the hundreds of decisions we have to make every day. To cope with this complexity, we all rely on habits of programmed responses. But when confronted with change, this tendency to respond in our accustomed ways become a source of resistance. So when your office is moved to a new location, it means you’re likely to have to change many habits, taking a new set of streets to work, finding a new parking place, adjusting to a new office layout, developing a new lunch time routine and so on.

Habit are hard to break. People have a built in tendency to their original behaviour, a tendency to stymies change. • Security : People with a high need for security are likely to resist change because it threatens their feeling of safety. They feel uncertain and insecure about what its outcome will be. Worker might be given new tasks. Role relationships may be reorganized. Some workers might lose their jobs. Some people might benefit at the expense of others. Worker’s resistance to the uncertainty and insecurity surrounding change can cause organizational inertia.

Absenteeism and turnover may increase as change takes place and workers may become uncooperative, attempt to delay or slow the change process and otherwise passively resist the change in an attempt to quash it. • Selective Information Processing : Individuals shape their world through their perceptions. They selectively process information in order to keep their perceptions intact. They hear what they want to hear. They ignore information that challenges the world they have created. Therefore, there is a general tendency for people to selectively perceive information that is consistent with their existing views of their 27

MBA –H4010 Organisational Development And Change organizations. Thus, when change takes place workers tend to focus only on how it will affect them on their function or division personally. If they perceive few benefits they may reject the purpose behind the change. Not surprisingly it can be difficult for an organization to develop a common platform to promote change across the organization and get people to see the need for change in the same way. • Economic Factors : Another source of individual resistance is concern that change will lower one’s income.

Changes in job tasks or established work routines also can arouse economic fears if people are concerned they won’t be able to perform the new tasks or routines to their previous standards, especially when pay is closely tied to productivity. For example, the introduction of TQM means production workers will have to learn statistical process control techniques, some may fear they’ll be unable to do so. They may, therefore, develop a negative attitude towards TQM or behave dysfunctionally if required to use statistical techniques.

Group Level Factors Much of an organization’s work is performed by groups and several group characteristics can produce resistance to change : • Group Inertia : Many groups develop strong informal norms that specify appropriate and inappropriate behaviours and govern the interactions between group members. Often change alters tasks and role relationships in a group; when it does, it disrupts group norms and the informal expectations that group members have of one another. As a result, members of a group may resist change because a whole new set of norms may have to be developed to meet the needs of the new situation. 8 MBA –H4010 Organisational Development And Change • Structural Inertia : Group cohesiveness, the attractiveness of a group to its members, also affects group performance. Although, some level of cohesiveness promotes group performance, too much cohesiveness may actually reduce performance because it stifles opportunities for the group to change and adapt. A highly cohesive group may resist attempts by management to change what it does or even who is a member of the group. Group members may unite to preserve the status quo and to protect their interests at the expense of other groups.

Organizations have built-in mechanism to produce stability. For example, the selection process systematically selects certain people in and certain people out. Training and other socialization techniques reinforce specific role requirements and skills. Formalization provides job descriptions, rules and procedures for employees to follow. The people who are hired into an organization are chosen for fit; they are then shaped and directed to behave in certain ways. When an organization is confronted with change, this structural inertia acts as a counter balance to sustain stability.

Group think is a pattern of faulty decision making that occurs in cohensive groups when members discount negative information in order to arrive at a unanimous agreement. Escalation of commitment worsens this situation because even when group members realize that their decision is wrong, they continue to pursue it because they are committed to it. These group processes make changing a group’s behaviour very difficult. And the more important the group’s activities are to the organization, the greater the impact of these processes are on organizational performance. 9 MBA –H4010 Organisational Development And Change • Power Maintenance : Change in decision-making authority and control to resource allocation threatens the balance of power in organizations. Units benefiting from the change will endorse it, but those losing power will resist it, which can often slow or prevent the change process. Managers, for example, often resist the establishment of self-managed work teams. Or, manufacturing departments often resist letting purchasing department control input quality.

There are even occasions when a CEO will resist change, denying that it is his responsibility to promote socially responsible behaviour through out a global network. • Functional Sub-optimisation : Differences in functional orientation, goals and resources dependencies can cause changes that are seen as beneficial to one functional unit to be perceived as threatening to other. Functional units usually think of themselves first when evaluating potential changes. They support those that enhance their own welfare, but resist the ones that reduce it or even seem inequitable. Organizational Culture : Organizational culture, that is, established values, norms and expectations, act to promote predictable ways of thinking and behaving. Organisational members will resist changes that force them to abandon established assumptions and approved ways of doing things. Managers sometimes mistakenly assume that subordinates will perceive the desired changes as they do; thus, they have difficulty in understanding the resistance. A key task is to determine and understand the reasons behind people’s resistance when it occurs.

Then the challenge is to find ways to reduce it or overcome that resistance. 30 MBA –H4010 Organisational Development And Change Overcoming Resistance to Change : Kotter and Schelsinger (1979) has identified six general strategies for overcoming resistance to change. • Education and Communication : Resistance can be reduced through communicating with employees to help them see the logic of a change. This tactic basically assumes that the source of resistance lies in misinformation or poor communication. If employees receive the full facts and get any misunderstanding cleared up, resistance will subside.

Communication can be achieved through one-to-one discussions, memos, group presentations, or reports. Does it work? It does, provided the source of resistance is inadequate communication and that management-employee relations are characterized by mutual trust and credibility. If these conditions don’t exist, the change is unlikely to succeed. • Participation and Involvement : It is difficult for individuals to resist a change decision in which they would have participated. Prior to making a change, those opposed can be brought into the decision process.

People can be encouraged to help design and implement the change in order to draw out their ideas and to foster commitment. Participation increases understanding, enhance feelings of control, reduces uncertainty and promotes a feeling of ownership when change directly affects people. • Facilitation and Support : If employees are provided with encouragement, support, training, counseling and resources adapt to new requirements easily. By accepting people’s anxiety as legitimate and helping them cope with change, managers have a better change of gaining respect and the commitment to make it work. 1 MBA –H4010 Organisational Development And Change • Negotiation and Agreement : Management can bargain to offer incentives in return for agreement to change. This tactic is often necessary while dealing with powerful resistance, like bargaining units. Sometimes specific things can be exchanged in return for help in bringing about a change. Other times, general perks can be widely distributed and facilitate to implement the change. • Manipulation and Cooptation : Manipulation is framing and selectively using information and implied incentives to maximise the likelihood of acceptance.

An example would be if the management tells employees that accepting a pay cut is necessary to avoid a plant shut down, when plant closure would not really have to occur. Cooptation is influencing resistant parties to endorse the change effort by providing them with benefits they desire and non-influential role in the process. • Explicit and Implicit Coercion : Some times management might use authority and the threat of negative incentives to force acceptance of the proposed change. Management might decide that if employees donot accept proposed changes, then it has to shut the plant down, decrease salaries or layoff people.

Examples of coercion can be also transfer, loss of promotion, negative performance evaluations and poor letter of recommendation. The advantages and drawbacks of coercion are approximately the same as that of manipulation and cooptation. 32 MBA –H4010 Organisational Development And Change Approach Commonly used Advantages When there is lack Once persuaded, Education and Communication of information or people will often inaccurate help with the information and implementation of analyses. the change.

Participation and involvement Where the initiators do not have all the information they need to design the change, and where others have considerable power to resist. When people are resisting because of adjustment problems. When someone or some group will clearly lose out in a change and when that group has considerable power to resist. Where other tactics will not work or are too expensive. METHODS FOR DEALING WITH RESISTANCE TO CHANGE Disadvantage Can be time consuming if lots of people are involved. Can be time consuming it participants design in inappropriate change.

People who participate will be committed to implementing change, and nay relevant information they have will be integrated into the change plan. No other approach works as well with adjustment problems. Sometimes it’s a relatively easy way to avoid major resistance. Facilitation and Support Can be time consuming, expensive and still fail. Can be too expensive in many cases if it alerts others of negotiate for competence. Negotiation and Agreement Manipulation and Co-optation It can be a relatively Can lead to future quick and problems if people inexpensive solution feel manipulated. o resistance problems. Explicit and implicit coercion Where speed is It is speedy and can Can be risky if it essential, and the overcome any kind leaves people mad changes initiations of resistance. at the initiator. possess considerable power. 33 MBA –H4010 Organisational Development And Change MINIMISING RESISTANCE TO CHANGE Resistance to change be those affected is often the single most formidable obstacle to its successful realization. It is to be understood at the outset that resistance to change is not, the fundamental problem to be solved.

Rather, any resistance is usually a symptom of more basic problems underlying the particular situation. To focus the attention of symptom alone will achieve at best only limited results. The effective solution is that one must look beyond the symptom that is resistance to its more basic causes. It is quite appropriate and practicable for a manager to focus on situational and environmental factors that cause resistance. Many of these are directly within management’s control. Probably, efforts to minimize any resistance should be undertaken while it is still potential rather than real.

There are different methods that the managers can use to minimize resistance. • Compulsion Threats and Bribery : Fundamentally, there are only two strategic options available for minimizing resistance. One is to increase the pressure that can overcome resistant behavior. The other is to reduce the very force that cause resistance. In the first strategy, the act of resistance itself is attacked directly. The causes or reasons for resistance are ignored. Thus, only the symptoms are addressed. For example, managers using their authority can threaten subordinate with disciplinary actions.

But such compulsions could create counter measures that would prevent or delay the change from taking place. The change could even be sabotaged to such an extent that no benefits would be realised. Sometimes, in discriminate offers of pay increase to lure subordinates into accepting change can also fail to produce lasting benefits. This can happen when the reasons for resistance are primarily non-economic. Such actions attack the resistance rather than its causes. New problems 34 MBA –H4010 Organisational Development And Change are created and nullify any potential benefit from change.

Therefore, the strategic option that aims directly at overcoming resistance itself, whether by threat or bribery, is both unwise and undersirable. The consequences of such approach will be to reduce rather than increase the possibilities for successful implementation of a change. Therefore, management should reject outright the use of either threats or bribery as methods for reducing resistance. • Persuation, Rewards and Bargaining : The second strategic option of reducing the forces that cause resistance is more promising. The offers of appropriate rewards, can reduce the resistance.

By attracting the root causes rather than symptoms, managers can improve the probabilities for bringing about change successfully. Offering a reward that is relevant to a specific reason for resistances can be a powerful lever in providing employees with an incentive to accept a change. Rewards can either monetary or non-monetary. Monetary rewards result in greater annual total compensation. Often when a change alters the content of individual job interms of increased responsibilities, mental and physical effort required, education and experience needed, an increase in the rate of payment can be justified.

Increased compensation may be justified if the change cause an individual or group to enhance contributions to company profits. The monetary reward can be in the form of fringe benefits such as improved pension scheme, a better holiday or sickness protection plan, or an enhanced medical insurance programme. When the people affected believe that an unintended change will somehow increase the value of what they are being asked to do, they are more vulnerable to feeling of unfair treatment. 35 MBA –H4010 Organisational Development And Change

A broad variety of non-monetary rewards can be offered because the needs they might satisfy range widely. For example, concern about threat and status might be met with an offer of a more impressive job title, better perks, changing the pattern of personal interactions and education and training. When the work is reorganized or the relationships within a group are restructured, the relevant reward might be more satisfying social relationships in the work situations and the opportunity to gain greater satisfaction from the work itself.

Opportunity for education and training might be perceived as a way to enhance one’s opportunities for personal development within the organization. The technique of bargaining is a variation of the use of persuation through rewards. The bargaining is a process based on discussion between management and those affected by a change and their union representatives. In this process, management’s objective is to gain acceptance of their proposals. Management is in no way committed in advance to accept any proposal made by the group with whom discussions are held.

There is, however, an implicit understanding that management might accept some of the proposals put forward by the group in exchange for the group’s acceptance of what management wants. In a sense, then, any concessions or compromises made by management in bargaining can be considered similar to the offer of rewards. The essence of bargaining is compromise. To maximize the achievement of their goals and the satisfaction of their needs, both the management and those affected by a change must give way to some of the points on which they would have to secure agreement.

It is crucial that the management give careful and openminded consideration to every complaint and grievance. In doing so, they must recognize that the employees and the union’s perception of the change are often distinctly different from their own. Typically such differences are based on the fact that management, the union and the employees have 36 MBA –H4010 Organisational Development And Change different priorities, values and concerns. Persuading employees to accept a change depends on the offer of rewards as a lever. This can be done either unilaterally or within the framework of bargaining.

The success of the approach depends on how effectively management • Matches rewards offered (both monetary and non-monetary) to their employee’s needs and goals, • • Gives serious consideration to all complaints and suggestions and gives some concession in order to achieve the major portion of their objectives. Security and Guarantees : The most effective means for management to minimise feelings of insecurity, and in particular fears of redundancy, is to guarantee that such fears are groundless. Management can use as a lever, a pledge that there will be no redundancy as a consequence of a specific change.

This can often make possible its acceptance. Implementing such a pledge can be a challenging task for the management. Essentially there are six ways in which a pledge of no redundancy in a changing situation can be redeemed. • Not replacing by engagement from outside the company anyone who leaves the organization in a natural course of events (e. g. , people who retire, are sacked, die or resign voluntarily). • Reabsorbing work being done by subcontractors and reassigning any surplus employees to that work. • Retraining redundant employees and transforming or upgrading them to their work. 7 MBA –H4010 Organisational Development And Change • • Reducing or eliminating any overtime work. Absorbing additional work resulting from business growth with no new additions to the workforce until all those who are surplus have been productively re-employed. • Investing and implementing new areas of business activity. Another way is to assure the employee of a guarantee of a continued income until he is working in another comfortable job, either within or outside the company. In this approach, the management undertakes to help each surplus individual find another suitable job.

If this cannot be accomplished within the company, assistance with outplacement can be provided. Until this occurs, the employee’s income would continue to be maintained by the company as a supplement to any unemployment benefits. Somehow, maintaining income cannot guarantee no redundancy. Although employee might feel secure about the continuity of income they would nevertheless feel uneasy about the impending change in their personal lives. They would undoubtedly have many unanswered questions and apprehensions about new jobs and new environments.

Because of these apprehensions they may still resist the change, although perhaps less intensely than if they were to be made redundant with no guarantees of any kind. A person’s feeling of insecurity can also be heightened if there is fear about inability to perform adequately in the new situation. Management can do much to reduce this fear by use of training. A carefully designed program of training can often help to make the change successful. This means matching the training provided to the true needs of the people involved. It also means providing training in a way that engages and motivates.

Training programs can 38 MBA –H4010 Organisational Development And Change yield another benefit as well. The very act of establishing one provides evidence that management is doing everything possible to help those involved cope with the change. Such a reassuring demonstration of management’s support should reduce the feeling of insecurity so often associated with feeling of inadequacy. To lessen any feeling of insecurity from factors other than fear of redundancy or inadequacy, management can engage their employees in discussion.

Those involved in the discussions can develop a realistic understanding of the change and its probable consequences. Such understanding can do much to dispel any fear resulting from misunderstanding or lack of information. Understanding and Discussions When as many as possible of those people involved in a change understand as much as possible about it and its consequences, resistance is likely to be reduced. It is management’s job to develop this understanding. Resistance will be prevented to the degree that the change agent help the change affected people to evelop their own understanding of the need for change, and an explicit awareness of how they feel about it and what can be done about their feelings. Such an understanding will occur only when the information provided is sufficient, factual and accurate. Management can transmit information about a proposed change and its probable consequences to those affected or concerned in a variety of ways. Fundamentally, there are only three practical media for communication; written material, audio-visual and oral, No single means, however, should be relied on exclusively.

The more complex the change, the greater will be the possibility. That everyone involved is being reached with maximum of information. Several conditions must be met for understanding to be developed in a changing situation. 39 MBA –H4010 Organisational Development And Change • • Information must be readily accessible, factual and accurate. Information must be communicated in such language or in such a form that is readily understandable. • Information must answer the questions that are being

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