Organizational Change

1. Organizational Change Steven E. Phelan, November 2008

2. Why change? • Change is a risky activity • Many organizational changes fail or do not realize their intended outcomes (50-70%). • This raises the question of why change is so prevalent? • Pressure to change comes from: • External, environmental pressures • Internal, organizational pressures

3. External, environmental pressures

4. External, environmental pressures

5. Internal organizational pressures

6. Internal organizational pressures

7. Interpretations of Change • Take five minutes to personally answer these questions: • Have you (or someone you know) ever experienced organizational change? • What was your view of the change? • What did others think of the change? • Who were the change champions? How did they behave?

8. Group Exercise • Perform the following activities in your group: • Share your stories with members of your group • What are the common issues? • What are the differences? • Are there “lessons” embedded in these stories? • What three conclusions do you draw from these stories about managing change?

9. IMAGES OF CHANGE

10. Controlling… Top-down view of management Fayol’s theory of management: planning, organizing, commanding, coordinating and controlling. Shaping… Participative style of management Improving the capabilities of people within the organization Images of Managing Change

11. Intended Change: Change is a result of planned action Partially Intended Change: Change may need to be re-modified after it is initially implemented Unintended Change: Forces beyond the control of the change manager Image of Change Outcomes

12. Images of Change Managers

13. Director Based on an image of management as control and of change outcomes as being achievable. Supported by the n-step models and contingency theory. Coach Relies upon building in the right set of values, skills and “drills” that are deemed to be the best ones that organizational members will be able to draw on in order to achieve desired organizational outcomes. Related to organizational development approaches. Images of Change Managers

14. Navigator Control is still seen to be at the heart of management action, although a variety of factors external to managers mean that while they may achieve some intended change outcomes, others will occur over which they have little control. Supported by the contextualist and processual theories of change. Interpreter The manager creates meaning for other organizational members, helping them to make sense of various organizational events and actions. Supported by the sense-making theory of organizational change and concept of ‘enactment’ Images of Change Managers

15. Caretaker The change manager’s ability to control is severely impeded by a variety of internal and external forces beyond the scope of the manager. The caretaker is seen as shepherding their organizations along as best they can. Supported by life-cycle, population-ecology and institutional theories. Nurturer Even small changes may have a large impact on organizations and managers are not able to control the outcome of these changes. However, they may nurture their organizations, facilitating organizational qualities that enable positive self-organizing to occur. Related to chaos and Confucian/Taoist theories. Images of Change Managers

16. Questions • To what extent are you more comfortable with one or other of the six images? • Why is this the case? • What are the strengths and limitations of the images that you have identified as most relevant to you? • What skills do you think are associated with each image? • Are there areas of personal skill development that are needed for you to feel more comfortable in using other images? • Have you ever been in an organization that was dominated by particular images? • What barriers to alternative images existed in this organization? What strategies could overcome these barriers?

17. Key Uses of Multiple Images • Surfacing our assumptions about change • Images simplify & illuminate but also obscure • Assessing dominant images of change • To what degree are some images seen as natural and not open to negotiation in certain organizations • Using multiple images in change • Image-in-use might depend on the type of change • Image-in-use might depend on the context • Image-in-use might depend on the phase of change • Multiple change images can also co-exist • Skilled change managers are able to swap images or even manage multiple images simultaneously

18. Success • Typical questions about change: • Was it managed well? • What went right? • What went wrong? • Did we get the outcome we were after? • Do these questions assume a certain image of change? • How does each image assess success? • Which images have “non-traditional” success measures? • “Judgments of success are conditional on who is doing the assessment and when the judgments are made” Is this true?

19. Group Exercise • Take your group’s stories from earlier in the day • Which images of change did you come across? • How did these images affect the way the various actors approached change? • Do the images used vary by the type, context, or phase of change? • What broad conclusions can you form?

20. Green Mountain Case • Questions: • Which of the six change images were held by: • Gunter? • The hospitality literature? • The consultant? • How did these assumptions influence prescriptions for dealing with “the turnover problem” • What does it mean to say the problem was ‘dis-solved’? • Choose another change image and apply it to “the turnover problem” What new insights arise? • Does considering different images of change help us (I hesitate to add ‘solve the problem’)?

21. MANAGING RESISTANCE

22. Dilbert • The goal of change management is to dupe slow-witted employees into thinking change is good for them by appealing to their sense of adventure and love of challenge • This is like convincing a trout to leap out of a stream to experience the adventure of getting deboned

23. Signs of Resistance to Change Active signs of resistance • Being critical • Finding fault • Ridiculing • Appealing to fear • Using facts selectively • Blaming or accusing • Sabotaging • Intimidating or threatening • Manipulating • Distorting facts • Blocking • Undermining. • Starting rumors • Arguing Passive signs of resistance • Agreeing verbally but not following through (“malicious compliance”) • Failing to implement change • Procrastinating or dragging one’s feet • Feigning ignorance • Withholding information, suggestions, help, or support • Standing by and allowing change to fail • Which of the various ways of resisting change are the most common? • Which are the most difficult to deal with?

24. Why Do People Resist Change? • Dislike of change • People don’t resist change, they resist pain! • Boredom can be pain, too. • Discomfort with uncertainty • Low tolerance for ambiguity • Perceived negative effects of interests • Authority, status, rewards, salary, social ties • Attachment to the established culture/ways of doing things • Perceived breach of psychological contract

25. Why Do People Resist Change? • Lack of conviction that change is needed • Lack of clarity as to what is needed • Belief that the specific change being proposed is inappropriate • Belief that the timing is wrong • Excessive change • Cumulative effects of other changes in one’s life • Perceived clash with ethics • Reaction to the experience of previous changes • Disagreement with the way the change is being managed

26. Why do people support change? • Security • Money • Authority • Status/prestige • Responsibility • Better working conditions • Self-satisfaction • Better personal contacts • Less time and effort

27. Managing Resistance • The classic steps: • Education and communication • Participation and involvement • Facilitation and support • Beyond the classic steps: • Negotiation and agreement • Manipulation and cooptation • Explicit and implicit coercion • The Paula Story • Does a successful change manager needs skills in all six areas? • Where do you need development?

28. The Resistance Cycle • Resistance is a natural (even necessary) psychological stage in any change: • Denial / Shock • Resistance / Anger • Exploration / Mourning • Commitment / Acceptance • Do we just ‘let nature take its course’ then? • Can people get stuck in a stage?

29. The “Power of Resistance”(Maurer) • Use the power of resistance to build support • Showing respect towards resistors creates stronger relationships and thereby improves the prospects of success • Fundamental touchstones • Maintain clear focus • Embrace resistance • Respect those who resist (assume good faith) • Relax • Join with the resistance • Look for points of commonality

30. Maurer’s Default Options • Use power • Manipulate those who oppose • Apply force of reason • Ignore resistance • Play off relationships • Make deals • Kill the messenger • Give in

31. Contingency Approach • Contingency approaches challenge the view that there is “one best way” • The style of change will vary, depending upon the scale of the change and the receptivity of organizational members for engaging in the change. • Kotter and Schlesinger recommend changing tactics according to the: • Amount and kind of resistance anticipated • The position and power of the change agent • The personality of the person designing and implementing the change • The time available and the consequences of failure

32. Question • Which approach to the management of resistance attracts you? Why?

33. The Merger Plan Simulation • Task • Develop a formal integration plan (with decisions on branch closures, systems conversion, product alignment, layoffs, and communication strategy) that will maximize shareholder value while keeping as much support as possible from the stakeholders at the two banks and external organizations. • 10 minutes = 1 news cycle = 1 day

34. Merger Plan

35. Merger Plan

36. Merger Plan • Other Roles • Change Manager: Tod • Journalist: Lorri • Union Organizer: Anita • State Regulator: Keith • Admin Assistant: Scott • EastWest Bank: Brian • Largest Customer: Kris • Branch Employee: Jocylene

37. Donna Dubinsky @ APPLE