Chapter 19 : Organization Change and Development University of Bahrain College of Business Administration MGT 233: Organizational Behavior Managing People and Organization Chapter 19 : Organization Change and Development Dr.Mahmod Asad MGT233

Chapter Learning Objectives After studying this chapter you should be able to: Summarize the dominant forces for change in organizations. Describe the process of planned organization change. Discuss several approaches to organization development. Explain resistance to change. Identify the keys to managing successful organization change and development. Dr.Mahmod Asad MGT233

Forces for Change. The common denominator in today’s business environment is change. The areas in which pressures for change are most powerful are people MGT233 Dr.Mahmod Asad

Information Processing and Communication Areas of Pressure for Change Forces for Change People Competition Technology Information Processing and Communication Areas of Pressure for Change MGT233 Dr.Mahmod Asad

People : The baby boomers—those born between 1945 and 1960—differ significantly from previous generations in their education, expectations, and value systems. The distinct purchasing patterns of this group have affected product and service innovation, technological change, and marketing and promotional activities Other population-related pressures for change include the increasing numbers of senior citizens and people born after 1960. The large number of senior citizens is affecting part-time employment practices, the marketing of everything from hamburgers to packaged tours of Asia, and service areas such as healthcare, recreation, and finance. The post-1960 generation of workers, often called Generation X, who entered the job market in the 1980s were different from the baby-boomers. Sociologists and psychologists have identified a new group, often called Millennials, born from roughly between 1980 and 2000, who seem to be experiencing a distinct and separate life stage in between adolescence and adulthood in which young people may jump from job to job and relationship to relationship, often living at home with few responsibilities and experimenting with life. Dr.Mahmod Asad MGT233

Technology: The rate of technological change is increasing Technology: The rate of technological change is increasing. Advances in information technology mean that more information is generated within organizations and that it circulates more quickly. Consequently, employees are able to respond more quickly to problems, which enables the organization to respond promptly to demands from other organizations, customers, and competitors. New technological developments certainly will be evident in competition among companies and among countries and in the changing demands for workforce skills . Information Processing and Communication: Advances in information processing and in communication have paralleled each other. Social networking may be the most radical and fastest-growing aspect of the advances in information processing and communication. Employees do not need offices because they work with computers and communicate through new data transmission devices. Lower costs in the future may make many types of communication systems attractive, thus transforming organizational communication Competition: Most markets soon will be international due to decreasing transportation costs and organizations’ increasing orientation toward exporting .Competition will be evident from the booming industries of developing nations such as Mexico. Dr.Mahmod Asad MGT233

Pressures for Organization Change Table 19.1 Pressures for Organization Change CATEGORY EXAMPLES TYPE OF PRESSURE FOR CHANGE People Generation X, Y, Millennials Global Labor Supplies Senior citizens Workforce diversity Demands for different training, benefits, workplace arrangements, and compensation systems Technology Manufacturing in space Internet Global design teams More education and training for workers at all levels, more new products, products move faster to market Information Processing and Communication Computer, satellite communications Global Sourcing Videoconferencing Social Networking Faster reaction times, immediate responses to questions, new products, different office arrangements, telecommuting, marketing, advertising, recruiting on social networking sites Competition Global markets International trade agreements Emerging nations Global competition, more competing products with more features and options, lower costs, higher quality Dr.Mahmod Asad MGT233

Processes for Planned Organization Change : External elements may force change on an organization. Ideally, however, the organization will not only respond to change but will anticipate it, prepare for it by planning, and incorporate change into its organization strategy MGT233 Dr.Mahmod Asad

Processes for Planned Organization Change Lewin’s Process Model Planned organization change requires a systematic process of movement from one condition to another Unfreezing Process by which people become aware of the need for change Change Movement from the old way of doing things to a new way Refreezing Process of making new behaviors relatively permanent and resistant to further change Dr.Mahmod Asad MGT233

Lewin’s Process of Organizational Change FIGURE 19.1 Lewin’s Process of Organizational Change Dr.Mahmod Asad MGT233

Processes for Planned Organization Change (cont’d) The Continuous Change Process Model The expanded process model deals with planned change from the perspective of top management (refer to Figure 19.2). In this approach, top management perceives that certain forces or trends necessitate change. The issue then becomes subject to the organization’s usual problem-solving and decision-making processes. Typically, top management defines its goals in terms of what the organization, its processes, or its outputs will be like after the change. Alternatives for change are generated and evaluated, and an acceptable solution is selected. MGT233 Dr.Mahmod Asad

Continuous Change Process Model of Organization Change FIGURE 19.2 Continuous Change Process Model of Organization Change Dr.Mahmod Asad MGT233

Processes for Planned Organization Change (cont’d) The Continuous Change Process Model (cont’d) Change agent: a person responsible for managing a change effort Assists management with problem recognition/definition Can be involved in generating/evaluating potential action plans Can be from inside or outside of the organization Implements the change Measures, evaluates, controls the desired results Transition management Process of systematically planning, organizing, and implementing change Dr.Mahmod Asad MGT233

Organization Development Traditionally, organization development was viewed simply as the way organizations change and evolve. Over the past twenty-five years, however, organization development has emerged as a distinct field of study and practice. There is now substantial agreement as to what OD is in general, but arguments about details continue Organization Development (OD) : The process of planned change/improvement of the organization through the application of knowledge of the behavioral sciences Dr.Mahmod Asad MGT233 Done by Dr.MAHMOOD ALI

Organization Development Three points in this definition make it simple to remember and use. a)First, organization development involves attempts to plan organization change, which excludes spontaneous, haphazard initiatives. b)Second, the specific intention of organizational development is to improve organizations. c)Third, the planned improvement must be based on knowledge of the behavioral sciences, such as organizational behavior, psychology, sociology, cultural anthropology, and related fields of study, rather than on financial or technological considerations. Dr.Mahmod Asad MGT233

Systemwide Organization Development : Systemwide OD approaches are categorized into four basic types: reorganization-structural change, management by objectives, quality-of-work-life-programs, and collateral organizations. The most comprehensive change involves a major reorganization, usually referred to as a structural change: a systemwide rearrangement of task division and authority and reporting relationships . An organization may change the way it divides tasks into jobs, groups jobs into departments or divisions, and arranges authority and reporting relationships among positions. Such changes are complicated and must be carefully managed. Quality-of-work-life (QWL) programs are another type of systemwide change. J. Lloyd Suttle defines quality of work life as the “degree to which members of a work organization are able to satisfy important personal needs through their experiences in the organization.” QWL programs focus heavily on providing a work environment conducive to the satisfaction of individual needs. However, because individual needs are diverse, it is difficult to develop organizationally-based programs that will contribute to the satisfaction of important needs of a large workforce Several diverse programs have had the stated goal of humanizing the workplace. Richard Walton has divided QWL programs into eight categories (refer to Figure 19.3). MGT233 Dr.Mahmod Asad

Organization Development (cont’d) Contemporary Approaches to System-Wide OD Reengineering Rethinking Quality of Work Life MGT233 Dr.Mahmod Asad

Walton’s Categorization of Quality-of-Work-Life Programs FIGURE 19.3 Dr.Mahmod Asad MGT233

Several pitfalls should be avoided in the creation of QWL programs The benefits from QWL programs differ substantially, but generally are of three types: (1) increased job satisfaction, (2) increased productivity , and (3) increased effectiveness of the organization. Several pitfalls should be avoided in the creation of QWL programs There must be cooperation between management and labor in the program’s design and implementation. The action plans developed must be followed through to completion. The focus on the joint objectives of increasing the quality of work life and increasing organizational efficiency must be maintained. MGT233 Dr.Mahmod Asad

Organization Development (cont’d) Task and Technological Change Task redesign Changing tasks involved in doing the work, the technology, or both Technological change Changing how inputs are transformed into outputs Griffin’s integrated framework for introducing job changes Nine steps that reflect the complexities of the interfaces between individual jobs and the total organization MGT233 Dr.Mahmod Asad

Table 19.2 Integrated Framework for Implementation of Task Redesign in Organizations Dr.Mahmod Asad MGT233

OD: Group and Individual Change People-Oriented Change Techniques Training Management Development Team Building Survey Feedback MGT233 Dr.Mahmod Asad

OD: Group and Individual Change (cont’d) Training : Training generally is designed to improve employees’ job skills. Training may also be used in conjunction with more comprehensive organization changes. The most common methods of training are lecture, discussion, a lecture-discussion combination, experiential methods, case studies, and films or videotapes. In on-the-job training, the trainee works with an experienced worker. Most training programs use a combination of methods determined by the topic, the trainees, the trainer, and the organization. A major problem of training programs is transferring employee learning to the workplace MGT233 Dr.Mahmod Asad

OD: Group and Individual Change (cont’d) Management Development Programs . Management development programs attempt to foster certain skills, abilities, and perspectives. Typically, such programs use some lecture-discussion but rely heavily on participative methods such as case studies and role playing. MGT233 Dr.Mahmod Asad

OD: Group and Individual Change (cont’d) To set team goals and priorities To examine relationships among those doing the work To analyze and allocate the way work is performed To examine how a group is working Team Building Goals MGT233 Dr.Mahmod Asad

OD: Group and Individual Change (cont’d) SuSurvey feedback : A) SuSurvey feedback differs from traditional attitude surveys. In a survey feedback process, data are returned to the employees and used as the basis for problem identification and solution. b) In the data-gathering stage, the change agent interviews selected personnel to determine the key issues to be examined. In large organizations, a survey questionnaire is then distributed to a sample of employees. The questionnaire data are analyzed and aggregated by group or department to ensure anonymity. The change agent then prepares a summary of results for group feedback sessions. c) Feedback meetings generally involve only two or three levels of management and usually are led by the group manager. The feedback consists primarily of average scores on attitude scales and profiles of the group’s attitudes toward the organization, the work, the leadership, and other topics on the questionnaire. During the feedback sessions, members discuss reasons for the scores and the problems the data reveal. d) Process analysis is the group’s examination of its processes for making decisions, communicating, and accomplishing its work, usually with the help of the change agent. The purpose of the analysis stage is to develop action plans for making improvements. The follow-up generally concerns whether the communication and decision-making processes have actually been improved. e) Survey feedback is one of the most widely used organization change and development interventions. If any of its stages are compromised or omitted, the technique becomes less useful. MGT233 Dr.Mahmod Asad

The Survey Feedback Process FIGURE 19.4 The Survey Feedback Process Dr.Mahmod Asad MGT233

Resistance to Change Th Paradoxically, organizations both promote and resist change. As an agent of change, the organization asks its customers to change their current purchasing habits by switching to the company’s product or service or increasing their outlays for the product or service. At the same time, it resists change, in that its structure and control systems serve to protect its transformation processes from environmental uncertainty. Organizational resistance to change need not be eliminated entirely; it can be used and controlled for the benefit of the organization. Resistance to change may indicate a legitimate concern that the change is not good for the organization and thus signal the need to investigate and reexamine the change. Resistance may come from the organization, the individual, or both (refer to Table 19.3). It often is difficult to determine the actual source, however, because organizations are composed of individuals. e Resistance to Change Paradox MGT233 Dr.Mahmod Asad

Resistance to Change: Sources of Resistance to Change (Katz and Kahn) Individual Sources Habit Security Economic factors Fear of the unknown Lack of awareness Social factors Organizational Sources Overdetermination Narrow focus of change Group inertia Threatened expertise Threatened power Resource allocation changes MGT233 Dr.Mahmod Asad

Table 19.3 Organizational and Individual Sources of Resistance Dr.Mahmod Asad MGT233

Organizational Sources of Resistance Organizational Sources of Resistance. Daniel Katz and Robert Kahn have noted six major sources of organizational resistance to change. 1. Overdetermination or Structural Inertia. Organizations have several systems designed to maintain stability. To effect significant changes in a particular system, all the component systems must be changed. The structure of the organization provides resistance to change because it was designed to maintain stability. 2. Narrow Focus of Change. Many efforts to create change in organizations adopt too narrow a focus. In effect, they ignore interdependencies among organizational elements. 3. Group Inertia. When an individual attempts to change her or his work behavior, the group may resist by refusing to change other behaviors that are necessary complements to the individual’s changed behavior. 4. Threatened Expertise. A change in the organization may threaten the specialized expertise that individuals and groups have developed over the years. 5. Threatened Power. Any redistribution of decision-making authority may threaten an individual’s power relationships with others. 6. Resource Allocation. Groups or individuals that are satisfied with current resource allocation methods may resist any change they believe may threaten their future allocations. MGT233 Dr.Mahmod Asad

Individual Sources of Resistance Individual Sources of Resistance. Individual sources of resistance to change are rooted in basic human characteristics such as needs and perceptions (refer again to Table 19.3). 1. Habit. It is easy to do a job the same way every day. A change in the way the job is done makes the job more difficult. Most people prefer to do easier rather than harder work for the same amount of return (pay). 2. Security. Some employees like the comfort and security of doing things the same old way. They acquire a feeling of constancy and safety in knowing that some things stay the same despite all the change going on around them. 3. Economic Factors. Change many threaten employees’ steady paychecks. Employees may fear that change will make their jobs obsolete or unnecessary. 4. Fear of the Unknown. Changes in reporting relationships and job duties create anxiety for people who fear anything unfamiliar. 5. Lack of Awareness. Because of perceptual limitations, a person may not recognize a change in surroundings and thus may fail to alter behavior. People may pay attention only to those things that support their points of view. 6. Social Factors. People may resist change for fear of what others may think. Employees may believe change will hurt their images, result in ostracism from the group, or simply make them “different.” MGT233 Dr.Mahmod Asad

Managing Successful Organization Change and Development Managing Successful Organization Change and Development. Managing organization change and development is one of the most difficult tasks for today’s manager. Overcoming resistance to change is one universal problem. The textbook offers seven keys for successfully managing OD (refer to Table 19.4). A. Consider International Issues. International factors affect organization change and development processes in two ways. First, factors around the globe now impact organizations and may create pressures for change not experienced before. Second, the acceptance of change varies widely around the globe. Where change is normal and accepted in some cultures, it causes many more problems that may be more difficult to solve. B. Take a Holistic View. Managers must take a holistic view of the organization and of the OD project. C. Start Small. Peter Senge claims that every truly successful, systemwide change in large organizations starts small. D. Secure Top Management Support. The support of top management is essential to the success of any OD effort. E. Encourage Participation. Problems related to resistance, control, and power can be overcome by involving as many people as possible in planning for OD. F. Foster Open Communication. Open communication is essential to managing resistance and overcoming information and control problems during the transition. G. Reward Contributors. All employees who contribute to the change in any way should be rewarded. Dr.Mahmod Asad MGT233

Keys to Managing Successful Organization Change and Development Table 19.4 Keys to Managing Successful Organization Change and Development KEY IMPACT Consider global issues. Keeps in touch with the latest global developments and how change is handled in different cultures Take a holistic view of the organization. Helps anticipate the effects of change on the social system and culture Start small. Works out details and shows the benefits of the change to those who might resist Secure top management support. Gets dominant coalition on the side of change: safeguards structural change, heads off problems of power and control Encourage participation by those affected by the change. Minimizes transition problems of control, resistance, and task redefinition Foster open communication. Minimizes transition problems of resistance and information and control systems Reward those who contribute to change. Minimizes transition problems of resistance and control systems MGT233 Dr.Mahmod Asad

Organizational Behavior in Action After reading the chapter: Which pressures for organizational change are likely to increase when economic conditions decline? When they improve? Which individual source of resistance to change likely causes students to perform poorly in school? How could the resistance be overcome? MGT233 Dr.Mahmod Asad