Chapter 6: ORGANIZATIONAL CHANGE Business Leadership: Management Fundamentals John R. Schermerhorn, Jr., Barry Wright, and Lorie Guest © John Wiley & Sons Canada, Ltd.

Planning Ahead — Chapter 6 Learning Goals Describe the nature of organizational change Explain how planned organizational change be managed

Organizational Change Change leader: A change agent who takes leadership responsibility for changing the existing pattern of behaviour of another person or social system Change leadership: Forward-looking Proactive Embraces new ideas © John Wiley & Sons Canada Ltd.

Figure 6.1 Change leaders versus status quo managers © John Wiley & Sons Canada Ltd.

Models of Change: Leadership Top-down change: Strategic and comprehensive change that is initiated with the goals of comprehensive impact on the organization and its performance capabilities Driven by the organization’s top leadership Success depends on support of middle-level and lower-level workers © John Wiley & Sons Canada Ltd.

Models of Change: Leadership (cont’d) Bottom-up change: The initiatives for change come from any and all parts of the organization, not just top management Crucial for organizational innovation Made possible by: Employee empowerment Employee involvement Employee participation © John Wiley & Sons Canada Ltd.

Models of Change: Leadership (cont’d) Integrated change leadership: Successful and enduring change combines advantages of top-down and bottom-up approaches Top-down: Breaks up traditional patterns Implements difficult economic adjustments Bottom-up: Builds capability for sustainable change Builds capability for organizational learning © John Wiley & Sons Canada Ltd.

Incremental and Transformational Change Unplanned change Response to unanticipated events Good leaders act on opportunities for reactive change Planned change Aligning the organization with anticipated future challenges Activated by proactive leaders who are sensitive to performance gaps Transformational change: major and comprehensive redirection Incremental change: adjusting existing systems and practices © John Wiley & Sons Canada Ltd.

Incremental Change Bends and adjusts existing ways to improve performance Intent isn’t to break and remake the system but move it forward through continuous improvements © John Wiley & Sons Canada Ltd.

Transformational Change Results in a major and comprehensive redirection of the organization © John Wiley & Sons Canada Ltd.

How to lead transformational change Establish a sense of urgency for change Form a powerful coalition to lead the change Create and communicate a change vision Empower others to move change forward Celebrate short-term “wins” and recognize those who help Build on success; align people and systems with new ways Stay with it; keep the message consistent; champion the vision © John Wiley & Sons Canada Ltd.

Forces and Targets for Change External forces for change: Globalization Market competition Local economic conditions Government laws and regulations Technological developments Market trends Social forces and values Internal forces for change: Arise when change in one part of the system creates the need for change in another part of the system May be in response to one or more external forces © John Wiley & Sons Canada Ltd.

Internal Organizational Targets for change Tasks People Culture Technology Structure © John Wiley & Sons Canada Ltd.

Managing Planned Change Phases of planned change: Unfreezing The phase in which a situation is prepared for change and felt needs for change are developed. Changing The phase in which something new takes place in the system, and change is actually implemented. Refreezing The phase of stabilizing the change and creating the conditions for its long-term continuity. © John Wiley & Sons Canada Ltd.

Figure 6.4 Lewin’s three phases of planned organizational change

Change Strategies Force-coercion strategy of change: Uses power bases of legitimacy, rewards and punishments to induce change Relies on belief that people are motivated by self-interest. Direct forcing and political maneuvering Produces limited and temporary results Most useful in the unfreezing phase © John Wiley & Sons Canada Ltd.

Change Strategies (cont’d) Rational persuasion strategy of change: Bringing about change through persuasion backed by special knowledge, empirical data, and rational argument Relies on expert power Relies on belief that reason guides people’s decisions and actions Useful in the unfreezing and refreezing phases Produces longer-lasting and internalized change © John Wiley & Sons Canada Ltd.

Change Strategies (cont’d) Shared power strategy of change Engages people in a collaborative process of identifying values, assumptions, and goals from which support for change will naturally emerge Time consuming but likely to yield high commitment. Involves others in examining sociocultural factors related to the issue at hand Relies on referent power and strong interpersonal skills in team situations Relies on belief that people respond to sociocultural norms and expectations of others © John Wiley & Sons Canada Ltd.

Figure 6.5 Alternative change strategies and their leadership implications © John Wiley & Sons Canada Ltd.

Resistance to Change Reasons for people resisting change: Fear of the unknown Disrupted habits Loss of confidence Loss of control Poor timing Work overload Loss of face Lack of purpose © John Wiley & Sons Canada Ltd.

Resistance to Change (cont’d) Checklist for dealing with resistance to change: Check the benefits – those involved see a clear advantage Check the compatibility – keep change similar to existing values/processes Check the simplicity – make it as easy as possible to understand Check the triability – allow people to slowly try the change adjusting as progression is made © John Wiley & Sons Canada Ltd.

Challenges of Technological Change Improvisational change Makes continual adjustments as changes are implemented © John Wiley & Sons Canada Ltd.

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