Chapter 14 Organizational Change

1. Chapter 14Organizational Change Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

2. Why do organization’s change? • To improve the ability of the organization to adapt to new factors in its environment • It may seek to modify employee behaviour, corporate culture, attitudes or assumptions • Types of change • First order: a linear, gentle change to nudge toward efficiency • Second order: a multi-dimensional, multi-level, discontinuous, radical change • So why? • Organizations need to respond to changes in their environment • Changes can come in the form of new competitors, new laws, changing economy, changing supply chain, new demands by customers Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

3. What do organizations change? • Structure • Structure is defined by how tasks are formally divided, grouped and coordinated • Removing vertical layers, combining tasks • Shifting from a simple structure to teams • Sometimes middle management is removed to gain communication and financial efficiency or to facilitate a culture change Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

4. What do organizations change? • Technology • Unusually involves the introduction of new equipment, tools, methods, automation or computerization • Machines and plants specialize in certain products (like job specialization, but at the plant level) • Automation involves the introduction of machines to replace people • The most obvious form of technology change has been the introduction of ERP (Enterprise Resource Planning) systems, which are used to plan every aspect of a firm: • Financial/accounting • HR, sales, CRM, inventory management Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

5. What do organizations change? • Physical Setting • Changing layouts of the floor, cubicles, offices can have a significant dynamic on the interpersonal relationships at work • People • Changing attitudes, behaviours of people through communication or training • Culture • Very difficult to change culture, as we have seen, it represents inherently stable, long standing values Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

6. 3 ways to redesign an organization • TQM (Total Quality Management) • A philosophy of management that’s driven by the constant attainment of customer satisfaction through continuous improvement • Characterized by • Intense focus on customers • Concern for continuous improvement • Improvement in the quality of everything the organization does • Accurate measurement • Empowerment of employees • Places responsibility for and source of improvement into the hands of the employees • Seeks incremental improvement from the bottom up Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

7. 3 ways to redesign an organization • Re-engineering Work Processes • A fundamental rethinking and redesign of processes to create dramatic improvement in products and services • It involves • Identifying and organization’s distinct core competencies • Assessing core processes through process value analysis • Reorganizing horizontally by process (development of cross-functional or self-managed teams) • A value is reduction in mid-management size as management adds no value to the product or customer experience • Generally seeks to change radically and is usually top management driven Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

8. 3 ways to redesign an organization • Flexible Manufacturing Systems • Integrating computer-aided design, engineering and manufacturing allows manufacturer’s to produce low volume products at a comparably low cost • Involves the reducing in the costs of setup and tear down Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

9. Tips for managing through change • The CEO must be committed to communication • Managers must follow actions with words • Communication must be 2-way • Emphasis is on face-to-face communication • Shared responsibility for communication throughout the hierarchy • Confront bad news (instead of sweeping it under the rug) • Shape the message for the target audience • Treat communication as an on-going process • Communication makes the difference: allows employees to get facts and make up their own minds Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

10. Peter Spelliscy’s ABCs of Change • Achieve awareness of the need for change, convincing people the need is real/ This requires significant communication and trust on both sides • Build belief among employees that they are part of the change, to get buy-in • Develop commitment to change requiring everyone’s involvement • Exercise: Working with Others (p. 564) Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

11. Resisting Change • Individual Resistance • Habit – a programmed response to a minor change • Security – feelings for safety may cause resistance to change • Economic Factors – loss of pay due to change • Fear of unknown – changes cause ambiguity • Selective Information Processing – selectively processing info to keep perceptions of the established world intact • Cynicism – no opportunity to participate indecision making, combined with no commitment Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

12. Resisting change • Organizational Resistance • Organizations resist change • Structural Inertia – training, socialization and selection processes reinforce role requirements and fit expectations • Limited Focus of Change – you can’t change one area of a company without all (or most) of the others • Group Inertia – group norms may act to constrain change • Threat of Expertise – change may take power away from a group • Threat to Established Resource Allocation – if the size of resources change, status and performance may change Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

13. Resisting change • Overcoming resistance to change • Education and communication - to promote understanding • Participation - to promote buy-in • Facilitation and support - people through changes • Negotiation or exchange something to lessen resistance • Manipulation is used to force acceptance • Coercion – direct threats to force resisters to accept change (would that really work???) Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

14. Who moved my cheese? • Book written by Spencer Johnson to help illustrate how we can accept change • About 2 mice and 2 littlepeople who eat cheese • One day the cheese is removed • The two mice (mindless) immediately move off to fin new cheese • The two littlepeople (Hem and Haw) hem and haw over the past, hoping the cheese returns, but it does not • Haw decides to eventually move off and discovers these concepts about change: Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP

15. Who moved my cheese? • Change Happens – the world is a grand scale with many factors, and stuff just happens • Anticipate Change – watch your situation objectively to know how it is progressing. Noticing small changes helps you anticipate bigger ones • Adapt to the change – the quicker you let go of the old cheese, the sooner you can enjoy new cheese • Change – move with the cheese • Recognize fears for what they are, but don’t be caged by them. Sometimes action is the best medicine • Its often safer to look for new cheese than to remain in a cheeseless situation • Embrace the change Organizational Behaviour Dave Ludwick, P.Eng, MBA, PMP