Organizational Change and Development

1. 15 C H A P T E R Organizational Change and Development F I F T E E N

2. Continuous Change at Nokia Nokia has continually adapted to its changing environment. The Finnish company began as a pulp and paper mill in 1865, then moved Courtesy National Board of Antiquities, Finland into rubber, cable wiring, and computer monitors. In the 1980s, Nokia executives sensed an emerging market for wireless communication. Today, Nokia is a world leader in cellular telephones.

3. 0 10 20 30 40 50 60 70 80 Hungary Mexico S. Korea Germany United States Japan 0 10 20 30 40 50 60 70 80 Organizational Change: An International Phenomenon International expansion Reduction in employment Mergers, divestitures, acquisitions Major restructuring (Source: Kanten, R., 1991.) Percentage of Respondents by Country

4. Changing People: Some Basic Steps Incorporating the changes, creating and maintaining a new organizational system Step 3: Refreezing Attempting to create a new state of affairs Step 2: Changing Current State New State Recognizing the need for change Step 1: Unfreezing

5. Sensitivity groups Objective data Group members recognize problem Diagnose group’s strengths and weaknesses Team Building: Its Basic Steps Develop desired change goals Restart process Develop action plan to make changes Implement plan Evaluate plan if unsuccessful if successful Process completed

6. When Will It Occur? Change is made If benefits exceed costs Amount of dissatisfaction with current conditions Compared to Cost of making change Benefit of making change Availability of a desirable alternative Existence of a plan for achieving a desirable alternative Change is not made If costs exceed benefits

7. Some External Forces for Change Information Technology Globalization & Competition Courtesy National Board of Antiquities, Finland Demography

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

9. Resistance to Change at BP Norge Employees initially resisted self-directed teams BP Norge’s North Sea drilling rigs. • “SDWTs don’t work on drilling rigs!” • “We already have teams!” • “This creates more work — will we get higher pay?” • “I don’t know how to work in teams.” • “SDWTs will threaten my job as a supervisor!” AP Worldwide

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

11. Creating an Urgency for Change • Need to motivate employees to change • Most difficult when organisation is doing well • Must be real, not contrived • Customer-driven change • Adverse consequences for firm • Human element energizes employees

12. Minimizing Resistance to Change Communication Minimizing Resistance toChange Coercion Training Negotiation Employee Involvement Stress Management

13. Refreezing the Desired Conditions Creating organizational systems and team dynamics to reinforce desired changes • alter rewards to reinforce new behaviours • new information systems guide new behaviours • recalibrate and introduce feedback systems to focus on new priorities

14. Change Agents • Anyone who possesses enough knowledge and power to guide and facilitate the change effort • Change agents apply transformational leadership • Help develop a vision • Communicate the vision • Act consistently with the vision • Build commitment to the vision Courtesy of CHC Helicopter Corp.

15. Successfully Diffusing Change • Successful pilot study • Favourable publicity • Top management support • Labour union involvement • Diffusion strategy described well • Pilot program people moved around Courtesy of CHC Helicopter Corp.

16. Organization Development Defined A planned system wide effort, managed from the top with the assistance of a change agent, that uses behavioural science knowledge to improve organizational effectiveness.

17. Organizational Development: How Effective Is It? Organizational outcomes more often benefited from OD interventions than did individual outcomes (48.70) 50 40 30 (23.55) Percentage of Studies Showing Positive Changes 20 Individual outcomes (e.g., job satisfaction) Organizational outcomes (e.g., profit) (Source: Porras and Robertson, 1992.)

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

19. Parallel Structures Parallel Structure Organization

20. Delivering Developing objectives about “what will be” Discovery Dreaming Designing Discovering the best of “what is” Forming ideas about “what might be” Engaging in dialogue about “what should be” Appreciative Inquiry Process

21. Organization Development Concerns • Cross-Cultural Concerns • Linear and open conflict assumptions different from values in some cultures • Ethical Concerns • Management power • Employee privacy rights • Employee self-esteem • Consultant’s role

22. The Ethics of OD:Summary of the Debate • OD is • ethical • The imposition of values • is an inherent part of life, • especially on the job • Abuse comes from • individuals, not from • the technique itself, • which is neither good • nor evil • OD is • unethical • Imposes values of the • organization; coercive • and manipulative • Potential for abuse

23. Discussion of Activity 15.3Strategic Change Management

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

25. Bell Canada’s Change Strategy Relied on the MARS model to alter behaviour: 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 behaviour, eg. removed garbage bins Courtesy of Bell Canada

26. 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. Courtesy of Continental Airlines

27. 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 Courtesy of Continental Airlines