© 2006 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill Ryerson 17 C H A P T E R: S E V E N T E E N Organizational Change

2 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Continuous Change at Friesens Friesens Corporation has become one of North America’s best managed printing firms through an adaptive culture that supports continuous change Courtesy of Friesens

3 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Desired Conditions Current Conditions Before Change After Change Driving Forces Restraining Forces Force Field Analysis Model During Change Driving Forces Restraining Forces Driving Forces Restraining Forces

4 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Forces for Change Resistance to Change Direct Costs Saving Face Fear of the Unknown Breaking Routines Incongruent Systems Incongruent Team Dynamics

5 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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 anti-investigation mindset AP/ Wide World Photos

6 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Communication  Highest priority and first strategy for change  Improves urgency to change  Reduces uncertainty (fear of unknown)  Problems -- time consuming and costly Minimizing Resistance to Change

8 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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 Minimizing Resistance to Change Learning

9 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Communication  Increases ownership of change  Helps saving face and reducing fear of unknown  Includes task forces, future search events  Problems -- time-consuming, potential conflict Minimizing Resistance to Change Learning Employee Involvement

10 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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 Minimizing Resistance to Change Learning Employee Involvement Stress Management

11 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Communication  When people clearly lose something and won’t otherwise support change  Influence by exchange-- reduces direct costs  Problems Expensive Gains compliance, not commitment Minimizing Resistance to Change Learning Employee Involvement Stress Management Negotiation

12 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Communication  When all else fails  Assertive influence  Firing people -- radical form of “unlearning”  Problems Reduces trust May create more subtle resistance Minimizing Resistance to Change Learning Employee Involvement Stress Management Negotiation Coercion

13 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Refreezing the Desired Conditions Realigning organizational systems and team dynamics with the desired changes  Alter rewards to reinforce new behaviours  Feedback systems Help employees learn how they are doing Provide support for the new behaviour patterns

14 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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

15 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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 requires transactional leadership  Aligning employee behaviour through rewards, resources, feedback,etc.

16 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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

17 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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

18 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e EstablishClient-ConsultantRelations DisengageConsultant’sServices Action Research Process Diagnose Need for Change IntroduceInterventionEvaluate/StabilizeChange

19 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Appreciative Inquiry at Canadian Tire Canadian Tire CEO Wayne Sales (see photo) and his executive team relied on appreciative inquiry by asking staff to describe events that have made Canadian Tire 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. CP/Toronto Star-Andrew Stawicki

20 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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 CP/Toronto Star-Andrew Stawicki

21 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Appreciative Inquiry Process Discovery Discovering the best of “what is” Dreaming Forming ideas about “what might be” Designing Engaging in dialogue about “what should be” Delivering Developing objectives about “what will be”

22 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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

23 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Organization Parallel Structure Parallel Learning Structures

24 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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

25 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Rules for the Road Ahead Understand your needs and values Understand your competencies Set career goals Maintain networks Get a mentor

26 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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 ( )

© 2006 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill Ryerson 17 C H A P T E R: S E V E N T E E N Organizational Change

© 2006 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill Ryerson 17 C H A P T E R: S E V E N T E E N Discussion of Activity 17.2 Strategic Change Incidents

29 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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

30 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e Bell Canada’s Change Strategy Relied on the MARS model to alter behaviour: Motivation -- employee involvement, respected steering committee Ability -- taught paper reduction, , food disposal Role perc. -- communicated importance of reducing waste Situation -- Created barriers to wasteful behaviour, eg. removed garbage bins Courtesy of Bell Canada

31 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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.

32 © 2006 The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Canadian OB 6e 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