Organisational Change

1. Chapter 15 Organisational Change

2. Learning Objectives 15.1 Describe the elements of Lewin’s force field analysis model 15.2 Discuss the reasons why people resist organisational change and how change agents should view this resistance 15.3 Outline six strategies for minimising resistance to change and debate ways to effectively create an urgency for change 15.4 Discuss how leadership, coalitions, social networks and pilot projects influence organisational change 15.5 Describe and compare action research, appreciative inquiry, large group interventions and parallel learning structures as formal approaches to organisational change 15.5 Discuss two cross-cultural and three ethical issues in organisational change

3. Organisational Change at LG Group LG Group chairman Koo Bon-moo (centre) is creating an urgency to change Korea’s second largest conglomerate into a more proactive marketplace leader rather than follower

4. Lewin’s Force Field Analysis Model Developed by Kurt Lewin • Driving forces • Push organisations toward change • External forces or leader’s vision • Restraining forces • Resistance to change • Employee behaviours that blockthe change process

5. Force Field Analysis Model

6. Not Hoppy About Change Mina Ishiwatari (front left) wanted to improve Hoppy drink’s brand image, but most staff resisted these changes. ‘I tried to take a new marketing approach to change the image of Hoppy... but no one would listen to me.’ Ishiwatari’s persistence improved Hoppy’s popularity in Tokyo with limited support or budget

7. Restraining Forces(Resistance to Change) • Many forms of resistance • E.g. complaints, absenteeism, passive non-compliance • View resistance as a resource • Symptoms of deeper problems in the change process • A form of constructive conflict—may improve decisions in the change process • A form of voice —helps procedural justice

8. Why People Resist Change • Direct costs • Losing something of value due to change • Saving face • ‘Not invented here’ syndrome • Fear of the unknown • Risk of personal loss • Concern about being unable to adjust

9. Why People Resist Change continued • Breaking routines • Cost of moving away from our ‘comfort zones’ • Requires time/effort to learn new routines • Incongruent team dynamics • Norms contrary to the desired change • Incongruent organisational systems • Systems/structures reinforce status quo • Career, reward, power, communication systems

10. Creating an Urgency for Change • Inform employees about driving forces • Most difficult when organisation is doing well • Customer-driven change • Adverse consequences for firm • Human element energises employees • Sometimes need to create urgency to change without external drivers • Requires persuasive influence • Use positive vision rather than threats

11. Minimising Resistance to Change • Highest priority and first strategy for change • Generates urgency to change • Reduces uncertainty (fear of unknown) • Problems—time-consuming and costly Communication Learning Involvement Stress Mgt Negotiation Coercion

12. Minimising Resistance to Change continued • Provides new knowledge/skills • Includes coaching and other forms of learning • Helps break old routines and adopt new roles • Problems—potentially time- consuming and costly Communication Learning Involvement Stress Mgt Negotiation Coercion

13. Minimising Resistance to Change continued • Employees participate in change process • Helps saving face and reducing fear of unknown • Includes task forces, future search events • Problems—time-consuming, potential conflict Communication Learning Involvement Involvement Stress Mgt Negotiation Coercion

14. Minimising Resistance to Change continued • When communication, learning and involvement are not enough to minimise stress • Potential benefits • More motivation to change • Less fear of unknown • Fewer direct costs • Problems—time-consuming, expensive, doesn’t help everyone Communication Learning Involvement Stress Mgt Negotiation Coercion

15. Minimising Resistance to Change continued • Influence by exchange— reduces direct costs • May be necessary when people clearly lose something and won’t otherwise support change • Problems • Expensive • Gains compliance, not commitment Communication Learning Involvement Stress Mgt Negotiation Coercion

16. Minimising Resistance to Change continued • When all else fails • Assertive influence • Radical form of ‘unlearning’ • Problems • Reduces trust • May create more subtle resistance • Encourage politics to protect job Communication Learning Involvement Stress Mgt Negotiation Coercion

17. Refreezing the Desired Conditions • Refreezing realigns organisational systems and team dynamics so they support the desired change • Alter rewards to reinforce new behaviours • Change career paths • Revise information systems

18. Change Agents • Change agent—anyone who possesses enough knowledge and power to guide and facilitate the change effort • Involves transformational leadership • Develop the change vision • Communicate the vision • Model the vision • Build commitment to the vision

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

20. Social Networks and Viral Change • Change agents need a guiding coalition • Representative across firm • Influence leaders—respected • Viral change • Information seeded to a few people is transmitted to others based on patterns of friendship • Relies on social networks, high trust, referent power • Change also occurs through behaviour observation

21. Diffusion of Change • Begin change as pilot projects • Effective diffusion considers MARS model • Motivation: pilot project employees rewarded; motivate others to adopt pilot project • Ability: train employees to adopt pilot project • Role perceptions: translate pilot project to new situations • Situational factors: provide resources to implement pilot project elsewhere

22. Action Research Approach • Action orientation and research orientation • Action: to achieve the goal of change • Research: testing application of concepts • Action research principles • Open systems perspective • Highly participative process • Data-driven, problem-oriented process

23. Action Research Process

24. Appreciative Inquiry Approach • Frames change around positive and possible future, rather than traditional problem focus • Positive principle: focus on opportunities, not problems • Constructionist principle: conversations shape reality • Simultaneity principle: inquiry and change are simultaneous • Poetic principle: we can choose how to perceive events and situations • Anticipatory principle: people are motivated by desirable visions of the future

25. Four-D Model of Appreciative Inquiry

26. Large Group Interventions • Future search, open space and other interventions that involve ‘the whole system’ • Large group sessions • May last a few days • High involvement with minimal structure • Limitations of large group interventions • Limited opportunity to contribute • Risk that a few people will dominate • Focus on common ground may hide differences • Generates high expectations about ideal future

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

28. Cross-Cultural and Ethical Concerns with Managing Change • 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

29. Organisations 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)

30. Discussion ofTeam Exercise 15.1Strategic Change Incidents

31. Scenario 1: ‘Latté Troubles’ • Refers to Starbucks, which suffered from the financial downturn and competition, resulting in closing 900 stores and laying off staff • Chairman Howard Schultz lamented that aggressive growth had led to ‘a watering down of the Starbucks experience’. • Shultz stepped back into the CEO role with an agenda for change.

32. Starbucks’ Change Strategy • Schultz publicly apologised to employees for ‘letting our people down’; stated his commitment to transform the company • Sought customer feedback. Specially trained employees (‘idea partners’) hosted conversations and acted as advocates for customers’ suggestions • Introduced new products and quality control processes • Empowered employees to design better Starbucks experience

33. Scenario 2: ‘Greener Telco’ • Scenario 2 refers to Bell Canada’s Zero Waste program, which successfully changed employee behaviour by altering the causes of those behaviours • Pilot project in Toronto—12 floor building of 1000 staff reduced waste from 1800 lb per day to just 75 lb per day within three years Courtesy of Bell Canada

34. Bell Canada’s Change Strategy Relied on the MARS model to alter behaviour: • Motivation—employee involvement, respected steering committee (photo) • Ability—taught paper reduction, email, food disposal • Role perceptions—made waste reduction salient (everyone’s job) through banners, training • Situation—created barriers to wasteful behaviour (e.g. coffee mugs, removed garbage bins) Courtesy of Bell Canada

35. Scenario 3: ‘Go Forward Airline’ • Scenario 3 refers to Continental Airline’s ‘Go Forward’ change strategy, which catapulted the company ‘from worst to first’ within a couple of years

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

37. Chapter 15 Organisational Change