Chapter 18 Managing Change Identify the major external and internal forces for change in organizations. Describe how different types of change vary in scope. Discuss methods organizations can use to manage resistance to change. Explain Lewin’s organizational change model. Explain how companies determine the need to conduct an organizational development intervention. Discuss the major group-focused techniques for organization development intervention. Discuss the major individual-focused techniques for organization development intervention. Learning Outcomes © 2013 Cengage Learning

1 Learning Outcome Identify the major external and internal forces for change in organizations. © 2013 Cengage Learning

Organizational Changes Planned Change – change resulting from a deliberate decision to alter the organization Unplanned Change – change that is imposed on the organization and is often unforeseen © 2013 Cengage Learning

External Forces for Change Workforce Diversity Globalization Changing Technology Ethical Behavior © 2013 Cengage Learning 3

Globalization Organizations must rethink the most efficient ways to: Use resources Disseminate/gather information Develop people Globalization requires changes in structure and employee mindsets AND © 2013 Cengage Learning 4

Workforce Diversity Workforce will see: Increased gender diversity Increased cultural diversity Increased age diversity © 2013 Cengage Learning 4

Technological Change Organizations that fail to keep pace can quickly fall behind. Innovation promotes associated changes in work relationships and organizational structures. © 2013 Cengage Learning 5

Organizations must create a culture that encourages ethical behavior. Society expects organizations to maintain ethical behavior internally and externally. © 2013 Cengage Learning

Internal Forces for Change Declining Effectiveness Changes in Expectations Changes in Work Climate Crisis © 2013 Cengage Learning 3

2 Learning Outcome Describe how different types of change vary in scope. © 2013 Cengage Learning

Scope of Change Incremental Change – change of a relatively small scope, such as making small improvements Strategic Change – change of a larger scale, such as organizational restructuring Transformational Change – change in which the organization moves to a radically different, and sometimes unknown, future state © 2013 Cengage Learning 7

The Change Agent Individual or group that undertakes the task of introducing and managing a change in an organization. Internal or external © 2013 Cengage Learning 8

Internal Change Agents Advantages know past history, political system, and culture must live with results of change so will move carefully Disadvantages may be associated with factions, accused of favoritism may be too close to the situation to be objective © 2013 Cengage Learning 9

External Change Agents Advantages outsider’s objective view impartiality Disadvantages limited knowledge of organization’s history may be viewed with suspicion To succeed, they must be perceived as trustworthy, be experts with proven track records, be similar to those they are working with © 2013 Cengage Learning 10

3 Learning Outcome Discuss methods organizations can use to manage resistance to change. © 2013 Cengage Learning

Resistance to Change Fear of the unknown Fear of loss Fear of failure Disruption of interpersonal relationships Personality conflicts Politics Cultural assumptions and values © 2013 Cengage Learning 11

Dealing with Resistance to Change Communication details rationale Participation in the process ownership commitment Empathy and support © 2013 Cengage Learning 12

4 Learning Outcome Explain Lewin’s organizational change model. © 2013 Cengage Learning

Lewin’s Three-Step Change Model Unfreezing – involves encouraging individuals to discard old behaviors by shaking up the equilibrium state that maintains the status quo Moving – new attitudes, values, and behaviors are substituted for old ones Refreezing – new attitudes, values, and behaviors are established as the new status quo © 2013 Cengage Learning 14

Force Field Analysis of Decision to Engage in Exercise Forces for change Weight gain Minimally passing treadmill test Feel lethargic; have no energy Family history of cardiovascular disease New, physically demanding job Forces for status quo Lack of time No exercise facility at work Spouse/partner hates to exercise No interest in physical activity or sports Made a grade of D in physical education class Equilibrium © 2013 Cengage Learning 15

Applying Lewin’s Model Unfreezing Moving Refreezing Reducing forces For status quo Developing new attitudes, values, and behaviors Reinforcing new attitudes, values, and behaviors Unfreezing: the organization eliminates rewards for current behavior Moving: the organization initiates new options and explains their rationale Refreezing: organizational culture and formal reward systems encourage the new behaviors © 2013 Cengage Learning 16

Beyond the Book: Testing Your Tolerance for Ambiguity Read each of the following statements carefully. Then rate each of them in terms of the extent to which you either agree or disagree with the statement using the following scale: Completely Disagree Neither Agree nor Disagree Completely Agree 1 2 3 4 5 6 7 1. An expert who doesn’t come up with a definite answer probably doesn’t know much. 2. I would like to live in a foreign country for a while. 3. The sooner we all acquire similar values and ideals, the better. 4. A good teacher is one who makes you wonder about your way of looking at things. 5. I like parties where I know most of the people more than ones where all or most of the people are complete strangers. SOURCE: “Tolerance for Ambiguity” from D. Marcic, Organizational Behavior: Experiences and Cases (St. Paul, Minn.: West Publishing, 1992), 339–340. Adapted from Paul Nutt. Used with permission. © 2013 Cengage Learning

Beyond the Book: Testing Your Tolerance for Ambiguity 6. Teachers or supervisors who hand out vague assignments give a chance for one to show initiative and originality. 7. A person who leads an even, regular life in which few surprises or unexpected happenings arise really has a lot to be grateful for. 8. Many of our most important decisions are based upon insufficient information. 9. There is really no such thing as a problem that can’t be solved. 10. People who fit their lives to a schedule probably miss most of the joy of living. 11. A good job is one where what is to be done and how it is to be done are always clear. 12. It is more fun to tackle a complicated problem than to solve a simple one. 13. In the long run, it is possible to get more done by tackling small, simple problems rather than large and complicated ones. 14. Often the most interesting and stimulating people are those who don’t mind being different and original. 15. What we are used to is always preferable to what is unfamiliar. SOURCE: “Tolerance for Ambiguity” from D. Marcic, Organizational Behavior: Experiences and Cases (St. Paul, Minn.: West Publishing, 1992), 339–340. Adapted from Paul Nutt. Used with permission. © 2013 Cengage Learning

Beyond the Book: Testing Your Tolerance for Ambiguity Scoring: For even-numbered questions, add the total points. For odd-numbered questions, use reverse scoring and add the total points. (1 becomes 7, 2 becomes 6, etc.) Interpreting Your Results: A score of 15 would indicate perfect ambiguity tolerance, while perfect intolerance would yield a score of 105. Typical scores between 20 and 80 are reported, with means of 45. Tested private-sector managers scored 44.6 ± 8.5, while public- and third-sector managers scored 43 ± 20. SOURCE: “Tolerance for Ambiguity” from D. Marcic, Organizational Behavior: Experiences and Cases (St. Paul, Minn.: West Publishing, 1992), 339–340. Adapted from Paul Nutt. Used with permission. © 2013 Cengage Learning

5 Learning Outcome Explain how companies determine the need to conduct an organizational development intervention. © 2013 Cengage Learning

Organizational Development (OD) a systematic approach to organizational improvement that applies behavioral science theory and research in order to increase individual and organizational well-being and effectiveness © 2013 Cengage Learning © 2013 Cengage Learning 17

Diagnosis and Needs Analysis Intervention Follow-up Questions to ask: What are the forces for change? What are the forces preserving the status quo? What are the most likely sources of resistance? What are the goals to be accomplished by change? © 2013 Cengage Learning 18

6 Learning Outcome Discuss the major group-focused techniques for organization development intervention. © 2013 Cengage Learning

Group-Focused Techniques 5 Group-Focused Techniques Survey feedback Management by objectives (MBO) Product and service quality programs Team building Process consultation © 2013 Cengage Learning

Survey Feedback A widely used method of intervention whereby employee attitudes are solicited by questionnaire Anonymous Group reporting format No repercussions Clear purpose Follow-up © 2013 Cengage Learning 19

Management by Objectives An organization-wide intervention technique of joint goal setting between employees and managers Initial objectives Periodic progress reviews Problem solving to remove obstacles to goal achievement © 2013 Cengage Learning 19

Quality Program A program that embeds product and service quality excellence into the organizational culture Raise aspirations about product/service quality Embed product/service quality excellence in the organizational culture © 2013 Cengage Learning 20

Team Building An intervention designed to improve the effectiveness of a work group Seek feedback Discuss errors Reflect on successes and failures Experiment with new ways of performing Climate of psychological safety © 2013 Cengage Learning 20

Process Consultation An OD method that helps managers and employers improve the processes that are used in organizations Outside consultant: Enters organization Defines the relationship Chooses an approach Gathers data Diagnoses problem Intervenes Leaves organization © 2013 Cengage Learning 21

7 Learning Outcome Discuss the major individual-focused techniques for organization development intervention. © 2013 Cengage Learning

Individual-Focused Techniques Skills training Leadership training & development Executive coaching Role negotiation Job redesign Health promotion programs Career planning © 2013 Cengage Learning

Skills Training increasing the job knowledge, skills, and abilities that are necessary to do a job effectively © 2013 Cengage Learning

Leadership Training & Development A variety of techniques that are designed to enhance individual’s leadership skills Action learning Simulation Business games Role-playing Case studies © 2013 Cengage Learning 22

Executive Coaching A host of techniques for enhancing managers’ skills in an organization Verbal information Intellectual skills Attitudes Development © 2013 Cengage Learning 23

Role Negotiation A technique whereby individuals meet and clarify their psychological contract Better understanding of what each can be expected to give and receive Less ambiguity © 2013 Cengage Learning 23

Job Redesign An OD intervention method that alters jobs to improve the fit between individual skills and the demands of the job Realign task demands and individual capabilities Redesign jobs to fit new techniques or organization structures © 2013 Cengage Learning 24

Health and Career Health Promotion Programs Career Planning Ex. Stress reduction education, employee assistance Career Planning Match individual’s career aspirations with organizational opportunities © 2013 Cengage Learning 24

Beyond the Book: When the Perks Are Gone Because of the global recession, many organizations are removing organizational perks and benefits in order to save money. No more free lunches, no co-pay health insurance, subsidized child care, etc. In light of these changes, what can be done to make sure employees stay content and motivated? Remember that perks are not essential to the job; i.e., lose the sense of entitlement Be fair in cutbacks. Continue gathering with co-workers, even at your own expense. You are part of the solution – ask yourself “What does my work offer that I can be happy about?” Facing increasing global competition, and struggling through a worldwide recession, many organizations are eliminating perks that once made them quite attractive. Gone are the catered lunches, computer upgrades and no co-pay health insurance plans. Though psychologists agree that perks are not effective long-term motivators of job performance, seeing such cutbacks can be quite harrowing. As workers see various cuts being made, there is an increasing fear that their job, or the entire company, may soon be gone. And it is this fear that can kill any motivation to do a job well. So, how should organizations and employees handle approach measures of austerity? First, it is important for employees to remember that certain perks, such as free lunch, are not essential to the job. In other words, they need to check their sense of entitlement. Second, organizations need to approach the issue with equality – if benefits are eliminated only for certain employees and not others, it is sure to destroy any sense of motivation and organizational unity. Third, even if you have to spend your own money, continue gathering with others in the office. Staff gatherings allow people to share their feelings and help them realize that, even in hard times, they are working with others. Finally, you are part of the solution – the employee needs to find his or her motivation in things other than an expense account. SOURCE: K. Schaefer, “Staying Motivated When the Perks Disappear”, The Wall Street Journal. 3 June 2009. http://online.wsj.com/article/SB124407568123583463.html# (accessed 10/27/2009). © 2013 Cengage Learning

Who is the target of change in this scene? 2. What are the forces for change? Are the forces for change internal or external to the change target? 3. Does the scene show the role of leadership in organizational change? If it does, who is the leader? Field of Dreams Field of Dreams Ray Kinsella (Kevin Costner) hears a voice while working in his Iowa cornfield that says, “If you build it, he will come.” Ray concludes that “he” is legendary “Shoeless Joe” Jackson (Ray Liotta), a 1919 Chicago White Sox player suspended for rigging the 1919 World Series. With the support of his wife Annie (Amy Madigan), Ray jeopardizes his farm by replacing some corn fields with a modern baseball diamond. “Shoeless Joe” soon arrives, followed by the rest of the suspended players. This charming fantasy film, based on W. P. Kinsellas’s novel Shoeless Joe, shows the rewards of pursuing a dream. The scene is part of the “People Will Come” sequence toward the end of Field of Dreams. By this time in the story, Ray has met Terrence Mann (James Earl Jones). They have traveled together from Boston to Minnesota to find A. W. “Moonlight” Graham (Burt Lancaster). At this point, the three are at Ray’s Iowa farm. This scene follows Mark’s (Timothy Busfield) arrival to discuss the foreclosure of Ray and Annie’s mortgage. Mark, who is Annie’s brother, cannot see the players on the field. Ray and Annie’s daughter Karin (Gaby Hoffman) has proposed that people will come to Iowa City and buy tickets to watch a baseball game. Mark does not understand her proposal. The film continues to its end. © 2013 Cengage Learning

Describe the type of change that Holden’s leaders are managing. What resistance is Holden encountering, especially as the company seeks to design and manufacture highly innovative outerwear garments? Using Kurt Lewin’s change model, give a force field analysis for Holden’s challenges in delivering innovative products. Suggest how the company might overcome resistance and foster permanent change. Holden Outerwear When it comes to trends, Holden has always been a leader, never a follower. Soon after the company launched, it was heralded in the press as the new and improved outerwear. Holden’s snow pants and jackets possess unique features like leather covered snaps, leather shoulders, and urban-style stitching. Unlike brands that make garments using faux materials, Holden works with true cotton denim twill, which is cut for style and then laminated with waterproofing. By far Holden’s greatest innovation has been the creation of a new eco-friendly fabric. In 2005, Mikey LeBlanc and his business partner hatched an idea to make a natural-fiber waterproof breathable fabric, which didn’t exist anywhere in the market. In addition to being technically durable, the designers’ new eco-material was hailed as an environmental breakthrough. Ask your students: Describe the type of change that Holden’s leaders are managing. What resistance is Holden encountering, especially as the company seeks to design and manufacture highly innovative outerwear garments? Using Kurt Lewin’s change model, give a force field analysis for Holden’s challenges in delivering innovative products. Suggest how the company might overcome resistance and foster permanent change. © 2013 Cengage Learning 45