Organizational Change

1. OrganizationalChange

2. Organizational Change at Home Depot Home Depot CEO Robert Nardelli (left in photo) has dramatically changed the big box retailer’s culture by introducing systems that reinforce the new values.

3. Restraining Forces Driving Forces Restraining Forces Restraining Forces Driving Forces Driving Forces Force Field Analysis Model Desired Conditions Current Conditions BeforeChange AfterChange DuringChange

4. Resistance to Change Direct Costs Saving Face Fear of the Unknown Breaking Routines Incongruent Systems Incongruent Team Dynamics Forces for Change

5. Resisting Change at the FBI The FBI has been slow to shift from law enforcement to domestic intelligence due to: • Incongruent systems -- career paths, reward system, decentralized structure • Breaking routines -- unfamiliar with intelligence gathering roles • Saving face -- past turf wars with CIA created an anti-investigation mindset AP/ Wide World Photos

6. Creating an Urgency for Change • Inform employees about driving forces • Most difficult when organization is doing well • Must be real, not contrived • Customer-driven change • Adverse consequences for firm • Human element energizes employees

7. Minimizing Resistance at Nissan © Eriko Sugita/Reuters/Corbis Carlos Ghosn launched a turnaround at Nissan Motor Company that saved the Japanese automaker and relied on change management practices rarely seen in Japan. Employee involvement was a key strategy to minimize resistance to the turbulent changes that occurred.

8. Communication Minimizing Resistance to Change • Highest priority and first strategy for change • Improves urgency to change • Reduces uncertainty (fear of unknown) • Problems -- time consuming and costly

9. Learning Minimizing Resistance to Change Communication • Provides new knowledge and skills • Includes coaching and action learning • Helps break old routines and adopt new roles • Problems -- potentially time consuming and costly

10. Employee Involvement Minimizing Resistance to Change Communication • Increases ownership of change • Helps saving face and reducing fear of unknown • Includes task forces, future search events • Problems -- time-consuming, potential conflict Learning

11. Stress Management Minimizing Resistance to Change Communication • When communication, training, and involvement do not resolve stress • Potential benefits • More motivation to change • Less fear of unknown • Fewer direct costs • Problems -- time-consuming, expensive, doesn’t help everyone Learning Employee Involvement

12. Negotiation Minimizing Resistance to Change Communication • When people clearly lose something and won’t otherwise support change • Influence by exchange-- reduces direct costs • Problems • Expensive • Gains compliance, not commitment Learning Employee Involvement Stress Management

13. Coercion Minimizing Resistance to Change Communication • When all else fails • Assertive influence • Firing people -- radical form of “unlearning” • Problems • Reduces trust • May create more subtle resistance Learning Employee Involvement Stress Management Negotiation

14. Refreezing the Desired Conditions • Realigning organizational systems and team dynamics with the desired changes • Alter rewards to reinforce new behaviors • Feedback systems • Help employees learn how they are doing • Provide support for the new behavior patterns

15. Strategic Vision & Change • Need a vision of the desired future state • Identifies critical success factors for change • Minimizes employee fear of the unknown • Clarifies role perceptions

16. Change Agents • Change agents apply transformational leadership • Help develop a vision • Communicate the vision • Act consistently with the vision • Build commitment to the vision • Also apply transactional leadership • Aligning employee behavior through rewards, resources, feedback ,etc.

17. Diffusing Change with MARS Model • Motivation • Successful pilot project • Supervisor support and reinforcement • Ability • Competencies to adopt pilot project • Role modeling from people in pilot project • Role perceptions • Translating pilot project practices -- neither too specific nor too general • Situational factors • Resources and time to implement pilot project elsewhere

18. Action Research Approach • Change needs both action and research focus • Action orientation • Solve problems and change the organizational system • Research orientation • Concepts guide the change • Data needed to diagnose problem, identify intervention, evaluate change

19. Introduce Intervention Evaluate/ Stabilize Change Action Research Process Establish Client- Consultant Relations Diagnose Need for Change Disengage Consultant’s Services

20. Appreciative Inquiry at Canadian Tire Canadian Tire relied on appreciative inquiry by asking staff to describe events that have made the retailer successful. The company’s core values were then rebuilt around those positive experiences. Store employees were also involved in an appreciative inquiry exercise to reinforce these values.

21. Appreciative Inquiry Approach • Directs participants’ attention away from problems and towards the group’s potential and positive elements. • Reframes relationships around the positive rather than being problem oriented

22. Dreaming Designing Delivering Forming ideas about “what might be” Engaging in dialogue about “what should be” Developing objectives about “what will be” Four-D Model of Appreciative Inquiry Discovery Discovering the best of “what is

23. Parallel Learning Structure Approach • Highly participative social structures • Members representative across the formal hierarchy • Sufficiently free from firm’s constraints • Develop solutions for organizational change which are then applied back into the larger organization

24. Parallel Learning Structures Parallel Structure Organization

25. Cross-Cultural and Ethical Concerns • Cross-Cultural Concerns • Linear and open conflict assumptions different from values in some cultures • Ethical Concerns • Privacy rights of individuals • Management power • Individuals’ self-esteem • Consultant’s role

26. Rules for the Road Ahead • Understand your needs and values • Understand your competencies • Set career goals • Maintain networks • Get a mentor

27. Organizations are About People “Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.” Andrew Carnegie (1835-1919)

28. OrganizationalChange

29. Discussion of Activity 17.3 Strategic Change Incidents

30. Scenario #1: “Greener Telco” • Scenario #1 refers to Bell Canada’s Zero Waste program, which successfully changed wasteful employee behaviors by altering the causes of those behaviors. Courtesy of Bell Canada

31. Bell Canada’s Change Strategy Relied on the MARS model to alter behavior: Motivation -- employee involvement, respected steering committee Ability -- taught paper reduction, email, food disposal Role perc. -- communicated importance of reducing waste Situation -- Created barriers to wasteful behavior, eg. removed trash cans Courtesy of Bell Canada

32. Scenario #2: “Go Forward Airline” • Scenario #2 refers to Continental Airline’s “Go Forward” change strategy, which catapulted the company “from worst to first” within a couple of years.

33. Continental Airlines’ Change Strategy • Communicate, communicate, communicate • Introduced 15 performance measures • Established stretch goals (repainting planes in 6 months) • Replaced 50 of 61 executives • Rewarded new goals (on-time arrival, stock price) • Customers as drivers of change