Types and forms of organizational change
Organizational change is an ongoing process with important implications for organizational effectiveness. An organization and its members must be constantly on the alert for changes from within the organization and from the outside environment, and they must learn how to adjust to change quickly and effectively. Organizational change is the movement of an organization away from its present state and toward some future state to increase its effectiveness.
Forces for organizational change include competitive forces; economic, political, and global forces; demographic and social forces; and ethical forces. Organizations are often reluctant to change because resistance to change at the organization, group, and individual levels has given rise to organizational inertia. Sources of organization-level resistance to change include power and conflict, differences in functional orientation, mechanistic structure, and organizational culture. Sources of group-level resistance to change include group norms, group cohesiveness, and groupthink and escalation of commitment.
Sources of individual-level resistance to change include uncertainty and insecurity, selective perception and retention, and habit.
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According to Lewin’s force-field theory of change, organizations are balanced between forces pushing for change and forces resistant to change. To get an organization to change, managers must find a way to increase the forces for change, reduce resistance to change, or do both simultaneously. Types of change fall into two broad categories: evolutionary and revolutionary.
The main instruments of evolutionary change are sociotechnical systems theory, total quality management, and the development of flexible workers and work teams. The main instruments of revolutionary change are reengineering, restructuring, and innovation. Often, the revolutionary types of change that result from restructuring and reengineering are necessary only because an organization and its managers ignored or were unaware of changes in the environment and did not make incremental changes as needed. Action research is a strategy that managers can use to plan the change process.
The main steps in action research are (a) diagnosis and analysis of the organization, (b) determining the desired future state, (c) implementing action, (d) evaluating the action, and (e) institutionalizing action research. Organizational development (OD) is a series of techniques and methods to increase the adaptability of organizations. OD techniques can be used to overcome resistance to change and to help the organization to change itself. OD techniques for dealing with resistance to change include education and communication, participation and empowerment, facilitation, bargaining and negotiation, manipulation, and coercion.
OD techniques for promoting change include, at the individual level, counseling, sensitivity training, and process consultation; at the group level, team building and intergroup training; and at the organizational level, organizational confrontation meetings. CHAPTER OUTLINE 10. 1 What Is Organizational Change? Organizational change is the process by which organizations move from their current or present state to some desired future state to increase their effectiveness. An organization in decline may need to restructure its competences and resources to improve its fit with a changing environment.
Even thriving, high-performing organizations such as Google, Apple, and Facebook need to continuously change the way they operate over time to meet ongoing challenges. Targets of Change Organizational change includes changes in four areas: 1. Human resources are an organization’s most important asset. 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.
Changes made in human resources include investment in training, socializing employees, changing norms to motivate a diverse workforce, monitoring promotion and reward systems, and changing top management. 2. Each organizational function needs to develop procedures that allow it to manage the particular environment it faces. Crucial functions grow in importance while those whose usefulness is declining shrink. Thus, key functions grow in importance. Organizations can change structure, culture, and technology to improve the value created by functions. 3.
Technological capabilities give an organization an enormous capacity to change itself to exploit market opportunities. Technological capabilities provide new products, change existing ones, and create a core competence. Improving the reliability and quality of goods and services is an important capability. Organizations may need to restructure to achieve the benefits of new technology. 4. Organizational capabilities are imbedded in operations. Organizations use human and functional resources to seize technological opportunities through structure and culture.
Organizational change often involves changing the relationships between people and functions to increase their ability to create value. 10. 2 Forces for and Resistance to Organizational Change Forces for Change If managers are slow to respond to the forces of change, the organization will lag behind its competitors and its effectiveness will be compromised. (Refer to Figure 10. 1) Competitive forces spur change, because unless an organization matches or surpasses its competitors it will not survive. Managing change is crucial when competing for customers.
To lead on the dimensions of efficiency or quality, an organization must constantly adopt the latest technology as it becomes available. To lead on the dimension of innovation and obtain a technological advantage over competitors, a company must possess skills in managing the process of innovation. Economic, political, and global forces, such as the North American Free Trade Agreement (NAFTA) or other economic unions, are significant forces of change. The European Union (EU) includes over 27 members eager to take advantage of a large protected market.
Global challenges facing organizations include the need to change an organizational structure to allow expansion into foreign markets, the need to adapt to a variety of national cultures, and the need to help expatriate managers adapt to the economic, political, and cultural values of the countries in which they are located. Demographic and social forces include an increasingly diverse workforce. Changes in the demographic characteristics of the workforce require managers to change their styles of managing all employees and to learn how to understand, supervise, and motivate diverse members effectively.
Many workers want to balance work and leisure. Managers need to abandon stereotypes and accept the importance of equity in the recruitment and promotion of new hires. Ethical forces such as increasing government, political, and social demands for more responsible and honest corporate behavior are compelling organizations to promote ethical behavior. Many companies have created the position of ethics officer. If organizations operate in countries that pay little attention to human rights or to the well-being of organizational members, they have to learn how to change these standards and to protect their overseas employees.
Resistances to Change Resistance to change lowers an organization’s effectiveness and reduces its chances of survival. Resistances or impediments to change that cause inertia are found at the organization, group, and individual levels. (Refer to Figure 10. 1) Organization-Level Resistance to Change Power and conflict: When change causes power struggles and organizational conflict, an organization is likely to resist it. If change benefits one function at the expense of another, conflict impedes the change process.
In the old IBM, for example, managers of its mainframe computer division fought off attempts to redirect IBM’s resources to produce the PCs that customers wanted in order to preserve their own power. Differences in functional orientation: This means that different functions and divisions often see the source of a problem differently because they see an issue or problem primarily from their own viewpoint. This tunnel vision increases organizational inertia. Mechanistic structure: Mechanistic structures are more resistant to change.
People who work within a mechanistic structure are expected to act in certain ways and do not develop the capacity to adjust their behavior to changing conditions. A mechanistic structure typically develops as an organization grows and is a principal source of inertia, especially in large organizations. The extensive use of mutual adjustment and decentralized authority in an organic structure makes it less resistant to change. Organizational culture: Organizational culture, values, and norms cause resistance to change.
If organizational change disrupts taken-for-granted values and norms and forces people to change what they do and how they do it, an organization’s culture will cause resistance to change. Group-Level Resistance to Change Many groups develop strong informal norms that specify appropriate and inappropriate behaviors and govern the interactions between group members. Often, change alters task 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 new set of norms must be developed to meet the needs of the new situation. Group cohesiveness, the attractiveness of a group to its members, also affects group performance. A highly cohesive group may resist attempts by management to change what it does or even who is a member of the group. Groupthink and escalation of commitment also make changing a group’s behavior very difficult. Individual-Level Resistance to Change People tend to resist change because they feel uncertain and insecure about what its outcome will be.
Selective perception and retention suggest that people perceive information consistent with their views. If change doesn’t benefit them, they do not endorse it. People’s preference for familiar actions and events is a further impediment to change. Lewin’s Force-Field Theory of Change Force-field theory is a theory of organizational change that argues that two sets of opposing forces within an organization determine how change will take place. When the forces are evenly balanced, the organization is in a state of inertia and does not change.
To get an organization to change, 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. (Refer to Figure 10. 2) Managerial Implications Managers must continuously monitor the environment to identify the forces for change. They must analyze how the change will affect the organization and determine which type of change to pursue. 10. 3 Evolutionary and Revolutionary Change in Organizations Evolutionary change refers to change that is gradual, incremental, and specifically focused.
It adds small adjustments to strategy and structure to handle environmental changes. Sociotechnical systems theory, total quality management, and the creation of empowered, flexible work groups are three instruments of evolutionary change that organizations use in their attempt to make incremental improvements in the way work gets done. Revolutionary change refers to change that is sudden, drastic, and organization-wide. It has repercussions at all levels in the organization—corporate, divisional, functional, group, and individual.
Three ways to implement revolutionary change are reengineering, restructuring, and innovation. Developments in Evolutionary Change: Sociotechnical Systems Theory Sociotechnical systems theory is a theory that proposes the importance of changing role and task or technical relationships to increase organizational effectiveness. It emerged from a study of changing work practices in the British coal-mining industry. The socio-technical systems theory argues that managers need to fit or jointly optimize the workings of the technical and social systems.
A poor fit between an organization’s technology and social system leads to failure, but a close fit leads to success. When managers change task and role relationships, they must recognize the need to adjust the technical and social systems gradually so group norms and cohesiveness are not disrupted. By taking this gradual approach, an organization can avoid the group-level resistance to change. Researchers suggest that a team-oriented system promotes values that enhance efficiency and product quality. Total quality management uses sociotechnical systems theory. Total Quality Management
Total quality management (TQM) is a technique developed by W. Edwards Deming to continuously improve the effectiveness of flexible work teams. It was embraced by Japanese companies after World War II. Changes frequently inspired by TQM include altering the design or type of machines used to assemble products and reorganizing the sequence of activities—either within or between functions—necessary to provide a service to a customer. Changing cross-functional relationships to help improve quality is important in TQM. The changes associated with TQM are changes in task, role, and group relationships.
Implementing a TQM program is not always easy because it requires workers and managers to adopt new ways of viewing their roles in an organization. Managers must be willing to decentralize control of decision making, empower workers, and assume the role of facilitator rather than supervisor. The “command and control” model gives way to an “advise and support” model. Flexible Workers and Flexible Work Teams In implementing socio-technical systems theory and TQM, many organizations are finding it easier to achieve their goals by using flexible workers and teams.
Flexible workers can be transferred between departments and functions as demand changes. The advantages of flexible workers include quick response to environmental changes; reduced boredom and increased incentives for quality; better understanding by learning one another’s tasks; and combining tasks to increase efficiency and reduce costs. A flexible work team is a group of workers who assume responsibility for performing all the operations necessary for completing a specified stage in the manufacturing process. A flexible work team is self-managed; members jointly assign tasks and transfer from one task to another.
In a flexible work team, separate teams assemble different components and turn those components over to the final-product work team, which assembles the final product. Each team’s activities are driven by demands that have their origins in customer demands for the final product. (Refer to Figure 10. 3) Developments in Revolutionary Change: Reengineering The term “reengineering” has been used to refer to the process by which managers redesign how tasks are bundled into roles and functions to improve organizational effectiveness. It involves rethinking business processes, activities that cross functional boundaries.
Instead of focusing on an organization’s functions in isolation from one another, managers make business processes the focus of attention. A business process is an activity that cuts across functional boundaries and is vital to the quick delivery of goods and services or that promotes high quality or low costs. Because reengineering focuses on business processes and not functions, an organization must rethink the way it approaches organizing its activities. A good example of how to use reengineering to increase functional integration comes from attempts to redesign the materials management function to improve its effectiveness.
In the traditional functional design the three main components of materials management—purchasing, production control, and distribution—were typically in separate functions and had little to do with one another. Thus coordinating their activities is difficult. Each function has its own hierarchy, and there are problems in both vertical and horizontal communication. Today, most organizations put all three of the functional activities involved in the materials management process inside one function. Three guidelines for performing reengineering successfully are as follows:
Organize around outcomes, not tasks. 2. Have those who use the output of the process perform the process. 3. Decentralize decision making to the point where the decision is made. Reengineering and TQM are highly interrelated and complementary. E-Engineering This is a term used to refer to companies’ attempts to use all kinds of information systems to improve performance. The importance of e-engineering is increasing as it changes the way a company organizes its value-creation functions and links them to improve its performance. Restructuring
Restructuring is a process by which managers change task and authority relationships and redesign organizational structure and culture to improve organizational effectiveness. Downsizing is the process by which managers streamline the organizational hierarchy and lay off managers and workers to reduce bureaucratic costs. The drive to decrease bureaucratic costs results from competitive pressures. Mergers and acquisitions in many industries, such as banking, have led to downsizing because fewer managers are needed. Other companies have reduced staff to match competitors.
The negative effects of downsizing include overworked managers and lost opportunities. Companies that fail to control growth must downsize to remain competitive. The terms anorexic or hollow are used to refer to organizations that downsized too much and have too few managers to help them grow when conditions change. Restructuring, like other change strategies, generates resistance to change. Often, the decision to downsize requires the establishment of new task and role relationships. Because this change may threaten the jobs of some workers, they resist the changes taking place.
Innovation Innovation refers to the process by which organizations use their skills and resources to develop new goods and services or to develop new production and operating systems so they can better respond to the needs of their customers. 10. 4 Managing Change: Action Research In Lewin’s view, implementing change is a three-step process: (1) unfreezing the organization from its present state, (2) making the change, and (3) refreezing the organization in the new, desired state so its members do not revert to their previous work attitudes and role behavior.
Action research is a strategy for generating and acquiring knowledge that managers can use to define an organization’s desired future state and to plan a change program that allows the organization to reach that state. Figure 10. 6 highlights the steps in action research. Diagnosis of the Organization The first step in action research requires managers to recognize the existence of a problem that needs to be solved and acknowledge that some type of change is needed to solve it.
In general, recognition of the need for change arises because somebody in the organization perceives a gap between desired performance and actual performance. Determining the Desired Future State This step also involves a difficult planning process as managers work out various alternative courses of action that could move the organization to where they would like it to be and determine what type of change to implement. Implementing Action 1. First, managers identify possible impediments to change at all levels. 2.
The second step is deciding who will be responsible for actually making the changes and controlling the change process. The choices are to employ either external change agents or internal change agents or use some combination of both. 3. The third step is deciding which specific change strategy will most effectively unfreeze, change, and refreeze the organization. The types of change that these techniques give rise to fall into two categories: Top-down change is implemented by managers at a high level in the organization, knowing that the change will reverberate at all organizational levels.
Bottom-up change is implemented by employees at low levels in the organization that gradually rises until it is felt throughout the organization. Evaluating the Action The fourth step in action research is evaluating the action that has been taken and assessing the degree to which the changes have accomplished the desired objectives. The best way to evaluate the change process is to develop measures or criteria that allow managers to assess whether the organization has reached its desired objectives. Institutionalizing Action Research
Organizations need to institutionalize action research—that is, make it a required habit or a norm adopted by every member of an organization. The institutionalization of action research is as necessary at the top of the organization as it is on the shop floor. Managerial Implications Managers must develop criteria to evaluate whether a change is necessary, and carefully design a plan that minimizes resistance. 10. 5 Organizational Development Organizational development (OD) is a series of techniques and methods that managers can use in their action research program to increase the adaptability of their organization.
The goal of OD is to improve organizational effectiveness and to help people in organizations reach their potential and realize their goals and objectives. OD Techniques to Deal with Resistance to Change Education and Communication: One impediment to change is that participants are uncertain about what is going to happen. Through education and communication, internal and external agents of change can provide organizational members with information about the change and how it will affect them.
Participation and Empowerment: Inviting workers to participate in the change process is a popular method of reducing resistance to change. Participation complements empowerment, increases workers’ involvement in decision making, and gives them greater autonomy to change work procedures to improve organizational performance. These are key elements of most TQM programs. People that are involved in the change and decision-making process are more likely to embrace rather than resist. Facilitation: Both managers and workers find change stressful.
There are several ways in which organizations can help their members to manage stress: providing them with training to help them learn how to perform new tasks, providing them with time off from work to recuperate from the stressful effects of change, or even giving senior members sabbaticals. Bargaining and Negotiation: Bargaining and negotiation are important tools that help managers manage conflict. Because change causes conflict, bargaining is an important tool in overcoming resistance to change. Manipulation: Sometimes senior managers need to intervene, as politics shows that powerful managers have considerable ability to resist change.
Coercion: The ultimate way to eliminate resistance to change is to coerce the key players into accepting change and threaten dire consequences if they choose to resist. The disadvantage is that it can leave people angry and disenchanted and can make the refreezing process difficult. OD Techniques to Promote Change Counseling, Sensitivity Training, and Process Consultation: Recognizing that each individual is different also requires them to be treated or managed differently. Sometimes, counseling will help individuals understand that their own perceptions of a situation may be incorrect.
Sensitivity training is an OD technique that consists of intense counseling in which group members, aided by a facilitator, learn how others perceive them and may learn how to deal more sensitively with others. Process consultation is an OD technique in which a facilitator works closely with a manager on the job to help the manager improve his or her interactions with other group members. Team building is an OD technique in which a facilitator first observes the interactions of group members and then helps them become aware of ways to improve their work interactions.
The goal of team building is to improve group processes to achieve process gains and reduce process losses that are occurring because of shirking and freeriding. Intergroup training is an OD technique that uses team building to improve the work interactions of different functions or divisions. Its goal is to improve organizational performance by focusing on a function’s or division’s joint activities and output. Organizational mirroring is an OD technique in which a facilitator helps two interdependent groups explore their perceptions and relations in order to improve their work interactions.
This technique is designed to get both interdependent groups to see the perspective of the other side. Appreciating others’ perspectives allows the groups to work together more effectively. Total Organizational Interventions: A variety of OD techniques can be used at the organization level to promote organization-wide change. Organizational confrontation meeting is an OD technique that brings together all of the managers of an organization at a meeting to confront the issue of whether the organization is meeting its goals effectively.