Managing Organizational Change & Development: Sources, Stages, and Skills

1. Chapter 15 Managing Organizational Change and Development

2. Sources of Change • Change is inevitable • Most common forces for change include: New competitors, innovations in technology, new company leadership, evolving attitudes toward work • Two sources of change: • External • Internal

3. External Source of Change • Originate in environment • Examples: • Customers • Prevailing economic climate • Labor force • Legal environment • Legislation

4. Internal Sources of Change • Exist within the organization itself • Examples: • Shifts in workers’ attitudes towards their supervisor or benefits packages • Decline in productivity • Changes in key personnel (whose goals and values influence large populations of the organization)

5. Organizational Growth and Decline • Organizational change often follows an evolutionary pattern of gradual growth and decline • Larry Greiner contends that every organization has an ideal structure that corresponds to its stage in the growth process

6. Stages of Growth Crisis • Each new stage is preceded by a period of transition called a growth crisis • These stages include: • Growth through creativity • Growth through direction • Growth through delegation • Growth through coordination • Continued growth through collaboration

7. Growth through Creativity • First stage • At birth, organizations are loose in structure and informal • Creative energies will help to carry organization through its birth process • With growth, nature of problems changes

8. Growth through Direction • Second stage • Formalization is introduced by professional managers • Bureaucratization occurs in departments to manage organization • Specialized divisions are created

9. Growth through Delegation • Third stage • The crisis of autonomy is overcome by delegating greater decision-making power to middle- and lower-level managers, with top level managers focusing on long-range, strategic planning • A crisis of control

10. Growth through Coordination • Fourth stage • The crisis is resolved via greater coordination between departments • Consultants may be hired to assess the extent of coordination needed and to suggest ways of improving efficiency and reducing redundancy • The crisis of red tape

11. Continued Growth through Collaboration • Fifth stage • Simplification of programs, and reliance on self-control and social norms eventually solve crisis of red tape • Goal is to teach managers how to cope with the organization’s structure without giving in to impulse to create additional structure, to collaborate

12. Managing Organizational Decline • Sixth stage • A cutback in the size of an organization’s work force, profits, budget, or clients. • Factors that can lead to decline: • Atrophy, loss of efficient processes, loss of competitive drive • Self complacency

13. Managing Organizational Decline (cont.) • Changes in societal values and consumer tastes • Insufficient external resources • Vulnerable state caused by inexperienced managers, cash flow problems, economic downturns, etc

14. Skills to Manage Decline • Similar to those necessary to manage growth • Skills include: • Ability to seek creative solutions • Willingness to innovate • Tactful management of conflict

15. Factors that Lead to Organizational Success • Focus on customers and their needs • Adapt the structure to the needs of their missions • Managers are oriented to problem solving, with avoidance of “paralysis through analysis” mentally

16. Factors that Lead to Organizational Success (cont.) • Commitment to organization’s original area of expertise, “sticking to one’s knitting” • Stress a single value, e.g, delivering good service, etc. • Improve performance by achieving agreement or consensus of employees

17. Factors that Lead to Failure • Environmental factors may catch organizations off guard • Too dependent on suppliers and/or single customer • Inadequate control mechanisms

18. Factors that Lead to Failure (cont.) • Management factors, e.g., tendency to overanalyze, or wait too long in making decisions, outdated expertise • Intergroup conflicts

19. Organizational Development (OD) • A distinct area of organizational science that focuses on planned and controlled change of organizations in desired directions • Seeks to challenge organizations by changing structure, technology, people, and tasks

20. Organizational Development (OD) (cont.) • Organizational development is a long-range effort

21. Phases of OD • Unfreezing: occurs when a situation is recognized as being deficient or inadequate in some way • Changing: occurs when a new plan or system is implemented in the organization

22. Phases of OD (cont.) • Refreezing: occurs as the newly created patterns of behavior and techniques become part of ongoing organizational processes

23. Resistance to Change • People tend to fear change out of desire for security and contentment with status quo • Ways to overcome resistance to change: • Education • Participation • Negotiation

24. OD Techniques • Survey Feedback • Team Building • Sensitivity Training • Confrontation Meetings • Quality of work life programs

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

26. Survey Feedback (cont.) • More likely to achieve productive change than traditional surveys due to completion of communication loop

27. Team Building • Involves either the formation of “family groups,” composed of people that currently work together, or “special groups” of employees brought together for a purpose • Goal is to solve problems, and improve productivity

28. Team Building (cont.) • Group examines both hard data (facts and figures) and soft data (impressions and opinions) concerning production problems to encourage unfreezing

29. Sensitivity Training • Known as “T-groups” • 8-12 people are brought together for 2 to 3 hours • Trainer does not take active role, but does act as a guide • Members are expected to focus on behavior and on giving feedback about their perceptions of one another

30. Sensitivity Training (cont.) • Member’s reactions may get out of hand • Stranger groups may be formed of people who do not have prior knowledge of one another to encourage freer discussions • Lost a lot of its popularity in recent years

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

32. Confrontation Meetings (cont.) • Groups meet and present comments, reconvene in private, and meet again in large groups to discuss differences • At end of discussion, plans for resolution of problems are drawn up with feedback from both groups

33. Quality of Work Life Programs • Seek to enhance the total work climate in an organization or its subsystems • Focuses on such issues as conflict resolution, employee satisfaction, worker participation

34. Quality of Life Programs (cont.) • Techniques may include: job redesign, employee involvement in decision making, redesign of pay systems, creation of quality circles

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

36. Successful Adoption of OD (cont.) • Respect for managerial talents of those whose domain of responsibility is being improved • Cooperation and involvement from human resources department • Effective coordination and control of the OD program • Measurement of outcomes

37. How does OD work? • Results of 35 studies into outcome variables and process variables • Outcome variables: measures of productivity, efficiency, absenteeism, profits, etc. that are quantifiable (hard measures)

38. How does OD work? (cont.) • Process variables: measures of trust, perceptions of leadership, motivation, decision making (soft measures) • These studies were further categorized to whether they were directed at groups, organizations, individuals, or leaders

39. How Does OD Work? (cont.) • Found that group outcome variables were most likely to be affected by OD intervention • Individual process variables also showed relatively positive improvement

40. OD in Perspective • It is not a “cure all” for every difficulty an organization may face • Resistance to change is a significant obstacle to OD efforts • The chief values espoused by OD specialists - trust, openness, power sharing- are not appropriate for some organizations