1 Organizational Change OS 386 Dec.3, 2002 Fisher

2 Agenda Review org change concepts Discuss purpose and goals of organizational development Course evaluation

3 Why do organizations change? External forces – Competition – Information technology – Demographics (customers, communities) Internal forces – Poor financial performance – New leadership – Employee demographics

4 What kind of change are we talking about? Processes and procedures Organizational structure – Individual to team-based – Hierarchical to matrix Over time, these changes can produce culture change

5 Types of change Framebreaking – Major change – Intentional – Top-down Incremental – Evolutionary (small steps) – Can be less directed – Could be bottom-up

6 Process of change Unfreezing – preparing the organization for change Change Refreezing – integrating the changes into the processes, procedures, and culture of the organization

7 Force Field Analysis Driving forces vs. restraining forces Driving Forces Restraining Forces

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

9 Cynicism about Org Change Significant barrier to change – “ nothing ’ s really going to happen ” – “ we can wait this out – it will go away ” Study examined levels, causes of cynicism (Reichers, Wanous & Austin, 1997) – 23% of managers were cynical about change – 43% of hourly employees cynical about change Causes of cynicism – People felt uninformed – Perceived lack of communication and respect – Not allowed to participate in planning and decision making

10 How to minimize cynicism? Employee involvement in decision making and planning – Don ’ t surprise people Communication! – Make sure messages are coming from a credible source – Repeat messages, be consistent Acknowledge failed efforts of the past

11 Creating urgency for change Need to motivate employees to change Most difficult when organization is doing well Explanations must be real, not contrived Customer-driven change can be effective – Adverse consequences for firm – Human element energizes employees

12 How can organizations facilitate change? Think about – Learning theories – Motivation theories – Power – Politics – Conflict Requires good leadership – Transformational

13 Organizational Development Practice of managing and directing organizational change Managed from the top Involves external (hopefully neutral) change agent – Advising internal change agent – Process consulting Uses behavioral science principles

14 Ethical concerns with OD Data collection – What is done with the data? – Are individuals identified? Increasing management power Undermine self-esteem Failure to maintain neutral perspective

15 Key learning points Consider driving forces and restraining forces when considering change Communication is key to overcoming resistance Use motivation theories, concepts related to power, conflict resolution to understand resistance

16 For next class Wrap-up and Integration Read web article “ 3M + GE = ? ” – Will be basis for integrative writing exercise on Thursday – Bring a copy of the article and your textbook with you to class – Writing exercise will be open-book