Class Agenda

1. Class Agenda • Review OD Assignment • Discuss criteria for effective interventions • Discuss issues, considerations, constraints, ingredients, and processes associated with intervention design • Southwest Case Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

2. Lesson from last week: You may not always have the info you need! The woman was taking the car ferry from Victoria to Vancouver. She sat on the deck. Beside her in an empty chair were her newspaper and her chocolate bar. A man sat next to the little pile. He picked up the chocolate bar, ate it, picked up the newspaper, read some of it, threw the candy bar wrapper away, tucked the newspaper under his arm and then walked away. The woman was too shocked to say anything. Having nothing to read, eat or much on, she decided to go to the cafeteria. There, at a table, sat the man, flipping the pages of the newspaper in one hand, holding a sub sandwich in the other. Still angry, the woman strode over him, grabbed the sandwich, took a bite and then put the sandwich back in his hand. She marched off to her car saying nothing and not looking back Who is the thief here and who is the victim? ….When she arrived to her car, there on the passenger seat were her newspaper and chocolate bar. She had never taken them out of her car! (A. Landers, 1997) Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

3. Experiencing Change Experiencing Change • Imagine that I came to class today and said that I would be rearranging your groups. Perhaps, I would cut one member from each team and ask that these individuals all work together. The remaining members of the teams would continue on their projects. • How would you feel? What could I do to reduce resistance to change? Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

4. Definition of Interventions An intervention is a set of sequenced and planned actions or events intended to help the organization increase its effectiveness. Interventions purposely designed to: Resolve specific problems & Improve areas of organizational functioning! Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

5. Characteristics of Effective Interventions • Is it relevant to the needs of the organization? • Valid information • Free and Informed Choice • Internal Commitment • Does it gain members internal commitment? • Members should take ownership over the intervention and be responsible for implementation Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

6. The Design of Effective Interventions • Assessing Change • Readiness for Change • Sensitivity to change; dissatisfaction with the status quo; crisis that creates urgency • Resistance to Change • Openness to change; potential losses from change? • Urgency of Change • How quickly is change needed? • Magnitude of Change • How major of change is required? Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

7. Change Readiness Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning • Cognitive (evaluative) & affective (emotional)components • Cognitive: Individual & collective • Discrepancy – change is needed • Belief that proposed change is appropriate • Efficacy –perceived capability to implement change initiative • Principal support – belief that their organization will provide support for change in the form of resources and information.

8. Change Readiness Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning • Affective: • Emotional inclination to accept, embrace and adopt a particular plan to purposefully alter the status quo. • What do we know about how the cognitive and affective components of change readiness affect change processes and outcomes? What do we not know?

9. Change Readiness Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning • Multi-level phenomenon • Change Readiness: “beliefs, attitudes, and intentions regarding the extent to which changes are needed and the organization’s capacity to successfully undertake those changes” • How are the levels related to one another?

10. Resistance to Change: Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning Lack of understanding Don’t believe that the direction of change makes sense for the organization Lack of trust in top management The feeling of urgency that change is necessary is not strong Low tolerance for change Desire to lose the “way things are now”

11. Dealing with Resistance to Change Education & Communication – when there is lack of accurate information Participation & Involvement – when initiators need more information and there is resistance Facilitation & Support – challenges with adjustment Negotiation & Agreement – when one group may lose out in the change and may resist Manipulation & Co-optation – when other options don’t work or cost to much Explicit and Implicit Coercion – when speed is needed and initiators have a lot of power

12. When to use what strategy? ???? ???? • Situational Factors (CANNOT BE IGNORED) • The position of the initiator vis a vis the resisters, especially with regards to power (stronger initiator’s position, more one can move to the left) • The amount and kind of resistance (greater resistance, move to right) • The person who has the relevant data for designing the change and the energy for implementing it (if info needed, more one moves to the right) • The stakes involved (greater urgency, the more one moves to the left).

13. From a Worker’s Perspective From a Worker’s Perspective • Front line workers and workers in general tend to be cynical about change • Many believe that management is lying to them! • Don’t trust senior management is concerned about the interests o the employee • Many feel an affinity to their immediate supervisors

14. Pitfalls when communicating change • Mistakes made when communicating interventions: • Not communicating • Communicating values • Communicating using big meetings, videos, publications

15. How to get Employee Buy-In How to communicate change: • Change needs to be communicated: • Involve frontline supervisors • Communicate Facts • Communicate Face to face • Through front line supervisors in small groups

16. Intervention Targets • Human Process Interventions: what systems can make the organization go? • Technostructural Interventions: How to divide and coordinate work? • Human Resources Management Interventions: How to attract, select and retain talent? • Strategic Interventions: How will they compete and with who? Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

17. Human Process Interventions • Process Consultation and Team Building • Third-party Interventions (Conflict Resolution) • Organization Confrontation Meeting • Intergroup Relationships • Large-group Interventions Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

18. Technostructural Interventions • Structural Design • Downsizing • Reengineering • Parallel Structures • High Involvement Organizations • Total Quality Management • Work Design Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

19. Human Resources Management Interventions • Goal Setting • Performance Appraisal • Reward Systems • Coaching and Mentoring • Career Planning and Development • Management and Leadership • Managing Work Force Diversity • Employee Wellness Programs Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

20. Strategic Interventions • Transformational Change • Integrated Strategic Change • Organization Design • Culture Change • Continuous Change • Mergers and Acquisitions • Alliances and Networks Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

21. Strategic Interventions • Transorganizational Change • Self-designing Organizations • Organization Learning and Knowledge Management • Built to Change Organizations Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

22. Organization Design Model Organization Strategy Strategic Fit Organization Design Structure Management and Information Systems Design Fit Work Design Human Resource Practices Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

23. Organization Designs Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

24. Organization Design Application Stages • Clarifying the Design Focus • Create the overall framework, begins with examining strategy and objectives and determining organization capabilities needed • Designing the Organization • Results in an overall design for the organization, detailed designs for the components, and preliminary plans for how to implement • Implementing the Design • Puts the new structures, practices and systems into place, draws heavily leading and managing change methods Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

25. Transformational: Culture Change Application Stages • Establish a clear strategic vision • Get top-management commitment • Model culture change at the highest level • Modify the organization to support change • Select and socialize newcomers; downsize deviants • Develop ethical and legal sensitivity Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

26. Southwest Case • What is the secret to Southwest’s success? • 8th largest airline • 33,000 employees • Very profitable • Little debt • A great company to work for (Fortune Magazine) • After 9/11 able to keep their schedule Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

27. 7s Framework Structure Strategy Systems Shared Values Skills Style Staff 5

28. Strategy Star Model Work Processes/ Capabilities People Structure Rewards ManagementProcesses Behavior Performance Culture Adapted from: J. Galbraith

29. Southwest’s Mission The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride and Company Spirit.

30. Herb Kelleher Video • 9:30 (amazon) Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

31. SW’s Evolutionhttp://www.youtube.com/watch?v=TR7JApjgIGwhttp://www.youtube.com/watch?v=oHnqnyzegfchttp://www.youtube.com/watch?v=iVjdKpdzfakhttp://www.youtube.com/watch?v=hjUlrirW480 1972 1972 1988 2001

32. What is Southwest’s Strategy? • What business(es) are we in? • Where does sustainable competitive advantage come from? • How should we grow?

33. Cost-Reduction Strategy • Explicit job analysis, fixed & narrow job responsibilities • Minimal risk taking activity • Minimal recruitment & selection procedures • Narrow career paths (expertise & efficiency) • Minimal socialization, training, and development • High concern for outputs and results • Short-term, results-oriented, remedial appraisals • Pay based on market equity

34. Quality Strategy • Explicit job analysis, broad job responsibilities • Explicit job descriptions • Narrow career paths (expertise & quality) • Socialization, continuous & extensive training • High concern for process • Medium to long-term, appraisal of behavior and results • Mixed individual & group evaluation criteria, employee participation • Pay based on internal equity, emphasis on job security

35. Innovation Strategy • Less explicit job analysis, broad responsibilities • Less explicit job descriptions • Broad career paths • High creativity and high risk taking activity • Minimal socialization, training will vary • Developmental, long-term appraisals • Mixed individual & group evaluation criteria • Pay based on internal equity, but perks and incentives are given

36. 7s Framework • Strategy: How will they create unique value? What are sources of non-imitable competitive advantage? • Structure: How are tasks and people specialized and divided? Use of teams? • Systems: What formal processes are used to manage the organization? • Staffing: Who is hired, selected, retained? • Skills: What are the unique competencies of employees, systems, management, technology? • Style: What is the leadership style of top management? Does it breed trust? • Shared Values: What values are held in common and provide a sense of purpose? Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

37. Lessons from using the 7s Framework Change agents make choices focused on these 7 key aspects of organizations Each is linked to one another and neglecting one can reduce the successfulness of the change strategy Imitation is often a challenge because not all of the 7s’ can be imitated to get the “right” combination! Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

38. Hoffer-Gittel’s Study of Relational Coordination at Southwest -The Southwest Airlines Way Collected data through interviews and surveys Grounded theory approach to develop concept of relational coordination Tested relational coordination’s effect on turnaround performance

39. Flight Departure Process Operations Agents Ramp Agents Baggage Agents Gate Agents Ticket Agents Cabin Cleaners Caterers Freight Agents Fuelers Mechanics Flight Attendants Pilots

40. Dimensions of Relational Coordination • Frequent and timely communication • Problem-solving • Helping • Shared goals • Shared knowledge • Mutual respect

41. Frequent and Timely Communication Site 2 “Here there’s constant communication between customer service and the ramp. When planes have to be switched and bags must be moved, customer service will advise the ramp directly or through operation… Operations keeps everyone informed. It happens smoothly.” Site 1 “Here you don’t communicate. And sometimes you end up not knowing things…On the gates I can’t tell you the number of times you get the wrong information from operations…The hardest thing at the gate when flights are delayed is to get information.”

42. Problem-Solving Site 2 “We figure out the cause of the delay. We don’t necessarily chastise, though sometimes that comes into play. It’s a matter of working together. Figuring out what we can learn. Not finger-pointing.” Site 1 “If you ask anyone here, what’s the last thing you think of when there’s a problem, I bet your bottom dollar it’s the customer. And these are guys who work hard everyday. But they’re thinking, how do I stay out of trouble?”

43. Helping Site 2 “Each person has a specific job to do, but part of the job is to help the other person. Then it’s easier to work in a more efficient manner… Once the operations agent gets into trouble, a rush of people will come up and help. It happens from time to time. In bad weather it can get real crazy. People have to take a role until the problems clear.” Site 1 “So often the one or two minutes that leads to a failure would be solved if more than one person took it upon themselves to help…A ramp person could go, close the aircraft door and move the jet bridge. But they don’t.”

44. Shared Goals Site 2 “I’ve never seen so many people work so hard to do one thing. You see people checking their watches to get the on-time departure. People work real hard. Then it’s over and you’re back on time.” Site 1 “Ninety percent of the ramp employees don’t care what happens, even if the walls fall down, as long as they get their check.”

45. Shared Knowledge Site 2 Employees had relatively clear mental models of the overall process -- an understanding of the links between their own jobs and the jobs of their counterparts in other functions. Rather than just knowing what to do, they knew why, based on shared knowledge of how the process worked. Site 1 Employees revealed little awareness of the overall process. They typically explained their own set of tasks without reference to the overall process of flight departures.

46. Mutual Respect Site 2 “No one takes the job of another person for granted. The skycap is just as critical as the pilot. You can always count on the next guy standing there. No one department is any more important than another.” Site 1 “There are employees working here who think they’re better than other employees. Gate and ticket agents think they’re better than the ramp. The ramp think they’re better than cabin cleaners -- think it’s a sissy, woman’s job. Then the cabin cleaners look down on the building cleaners. The mechanics think the ramp are a bunch of luggage handlers.”

47. Flight departure outcomes • Efficiency • Gate time per departure • Staff time per passenger • Quality • Complaints • Late arrivals • Lost bags

48. Coordination and efficiency of flight departures Controlling for flights/month, flight length, pass/flight, cargo/flight and % connections. Standardized regression coeffs. *** p<0.001 **p<0.01 *p<0.05

49. Coordination and quality of flight departures Controlling for flights/month, flight length, pass/flight, cargo/flight and % connections. Standardized regression coeffs. *** p<.001 **p<.01 *p<.05 + p<.10

50. Southwest Update • Key problems • On time performance has fallen relative to other carriers • Growth has slowed • Questions • What should SWA do about falling on-time performance? • Should SWA try to regain its 10% growth rate? How? • LET’S USE THE 7S FRAMEWORK IN GROUPS TO DECIDE!