FORCES FOR CHANGE NATURE OF THE WORKFORCE TECHNOLOGY ECONOMIC SHOCKS More cultural diversity Aging population and many new entrants with limited skills TECHNOLOGY Faster, cheaper, more mobile computers Understanding and manipulating the genetic code ECONOMIC SHOCKS Stock market fluctuations Record low interest rates COMPETITION Global competitors Mergers, consolidations, and growth of e-commerce SOCIAL TRENDS Internet chat rooms Retirement of Baby Boomers and more “Singles” WORLD POLITICS War on terrorism Opening of markets in China PERFORMANCE GAPS Disappointing results Stockholder expectations

WHY CHANGE IS RESISTED VESTED INTERESTS THREATENED LACK OF TRUST ECONOMIC LOSS --- LOSS OF WAGES, LAYOFFS SOCIAL LOSS --- STATUS AND POWER ERODED INCONVENIENCE --- HABITS MUST CHANGE INTERPERSONAL DISRUPTIONS --- IT WILL BREAK UP THE GROUP LACK OF TRUST WHAT ARE MANAGEMENT’S TRUE INTENTIONS? PAST INCIDENTS WHERE THE COMPANY TOOK UNFAIR ADVANTAGE UNCERTAINTY & AMBIGUITY MISUNDERSTANDING OF THE PURPOSE FOR CHANGE A FEAR OF THE UNKNOWN PEOPLE WITH LOW TOLERANCE FOR CHANGE OR RISK PREVIOUS COMMITMENT TO THE STATUS QUO INFORMAL AGREEMENTS AMONG WORKERS CONTRACTS PROMISES WERE MADE

ORGANIZATIONAL SOURCES OF RESISTANCE TO CHANGE GROUP NORMS UNIONS POWER STRUCTURE AND DEPARTMENTATION ORGANIZATIONAL CULTURE REWARD & EVALUATION SYSTEM

DEALING WITH RESISTANCE TO CHANGE KOTTER (79) EDUCATE & COMMUNICATE DISCUSSION, DEMONSTRATION & PERSUASION PARTICIPATION & INVOLVEMENT INPUT & ADVICE FROM AFFECTED PARTIES NEGOTIATION & AGREEMENT OFFERING INCENTIVES FOR COOPERATION FACILITATION & SUPPORT PROVIDING TRAINING, HELP & ENCOURAGEMENT WHEN NEEDED MANIPULATION & COOPTATION COVERT ATTEMPTS TO INFLUENCE (LITTLE LIES & POWER GAMES) EXPLICIT & IMPLICIT COERCION USE OF FORCE, THREATS & PUNISHMENT

LEWIN’S CHANGE MODEL PRESSURE FOR CHANGE RESISTANCE TO CHANGE -------------------------------------- ----------------------------------------- NORMALLY THESE FORCES BALANCE EACH OTHER OUT, MAINTAINING THE STATUS QUO SUCCESSFUL CHANGE INVOLVES THREE STEPS: Unfreezing TENSION IS RAISED, NEED FOR CHANGE IS RECOGNIZED & ACCEPTED Movement THE CHANGE IS IMPLEMENTED Refreezing INTERNALIZING (LOCKING-IN) THE NEW PATTERNS OF BEHAVIOR

KOTTER’S EIGHT-STEP PLAN FOR IMPLEMENTING CHANGE KOTTER (96) UNFREEZING Create a sense of urgency – offer a compelling reason why change is needed Form a coalition with enough power to lead the change Create a new vision to direct the change, and strategies for its achievement Communicate the vision throughout the organization MOVEMENT Empower others to act by encouraging risk-taking and creative problem-solving Plan for, create, and reward short-term “wins” that move toward the new vision Consolidate improvements, reassess changes, and make adjustments REFREEZING Reinforce the changes, show relationships between new behaviors and success

A PLANNED ORGANIZATIONAL CHANGE MODEL ASSESS CHANGES & SHIFTS ENVIRONMENT, ORGANIZATION, DEPARTMENT FIND PERFORMANCE GAPS SIGNIFICANT? MOTIVATED TO ACT? DIAGNOSE ORGANIZATIONAL PROBLEMS WHAT ARE THE PROBLEMS? WHAT ARE THE CAUSES? WHAT MUST BE CHANGED? IDENTIFY SOURCES OF RESISTANCE WHO IS LIKELY TO RESIST AND WHY? SET OBJECTIVES FOR THE CHANGE EFFORT TARGETS CLARIFIED? WILL THE RESULTS BE ASSESSED? SEARCH FOR CHANGE APPROACHES THAT “FIT” BEST METHODS & TECHNIQUES? COMPREHENSIVE & COMPLETE? IMPLEMENT THE CHANGE PREPARE THE ORGANIZATION FOR CHANGE MAKE THE CHANGES FOLLOW UP --- MEASURE THE RESULTS

TARGETS FOR ORGANIZATIONAL CHANGE MISSION & OBJECTIVES PURPOSE, GOALS STRATEGIES NEW PRODUCTS, NEW MARKETS POLICIES, PROCEDURES TECHNOLOGY TOOLS, EQUIPMENT, FACILITIES AND PROCESSES STRUCTURE SYSTEMS OF AUTHORITY, RESPONSIBILITY, AND COMMUNICATION REWARD SYSTEMS TASKS JOB DESIGN, GROUP INTERDEPENDENCE PEOPLE ATTITUDES, SKILLS, MOTIVATION, KNOWLEDGE

ORGANIZATIONAL DEVELOPMENT TECHNIQUES SURVEY FEEDBACK TEAM BUILDING INTERGROUP DEVELOPMENT TRANSACTIONAL ANALYSIS SENSITIVITY TRAINING SYMBOLIC LEADERSHIP JOB ENRICHMENT MANAGEMENT BY OBJECTIVES QUALITY CIRCLES (CONTINUOUS IMPROVEMENT) PROCESS CONSULTANTS APPRECIATIVE INQUIRY PROCESS REENGINEERING INNOVATION STIMULATION IDEA CHAMPIONING

ASSESSMENT OF CHANGE EFFECTIVENESS ATTITUDES & OPINIONS How do those affected “feel” about it? KNOWLEDGE GAINED What was really learned? Do we have proof? BEHAVIORAL CHANGES Are people behaving and acting differently now? RESULTS ACHIEVED Have outcomes improved? Have performance gaps narrowed?

ROLE OF A CHANGE CONSULTANT ARGYRIS GENERATE VALID, USEFUL INFORMATION Investigate…have the clients help with this process HELP CLIENTS DEVELOP INTERNAL COMMITMENT TO THEIR CHOICE Help clients make a free, informed choice…it’s their decision MAINTAIN SYSTEM AUTONOMY The clients must assume ownership…they must feel responsible IMPLICATIONS CHANGE IS NOT THE PRIMARY OBJECTIVE…YOU’RE JUST THERE TO HELP THEM FREE CHOICES MUST BE MADE AT ALL LEVELS MUST HAVE A TRUSTING ORGANIZATIONAL SYSTEM IF CHANGE IS TO BE EFFECTIVE LEAVE CLIENTS WHO CAN MAINTAIN THE SYSTEM WITHOUT OUTSIDE HELP…MAKE YOURSELF DISPENSIBLE!

SCHWAB’S 12 SUGGESTIONS FOR DEALING WITH CHANGE 1. THINK ABOUT WHO MIGHT RESIST AND WHY 2. PREPARE THOSE AFFECTED BY PROVIDING INFORMATION IN ADVANCE (Inform) 3. ENCOURAGE PARTICIPATION AND INPUT FROM THOSE AFFECTED BY THE CHANGE (Involve) 4. MAKE THE ADVANTAGES OF THE CHANGE CLEAR TO THOSE AFFECTED (How will workers be benefited?) 5. GUARANTEE AGAINST LOSS OF WAGES OR JOB, IF POSSIBLE 6. MAKE ONLY NECESSARY CHANGES (If it’s not broken, don’t try to “fix” it) MAINTAIN USEFUL CUSTOMS & INFORMAL RELATIONSHIPS (Don’t disrupt productive work groups and cultures) 8. BE WILLING TO TRY CHANGES ON AN EXPERIMENTAL OR TRIAL BASIS (Don’t rush! Consider a “pilot-test”) 9. PROVIDE EXTRA COACHING, TRAINING & SUPPORT FOR THOSE AFFECTED 10. MAKE SURE GRIEVANCES ARE SETTLED QUICKLY AND EQUITABLY 11. CAREFULLY EVALUATE & MONITOR THE EFFECTS OF YOUR CHANGES (Collect assessment measures) 12. PREPARE CONTINGENCY PLANS IN CASE OF UNFORSEEN PROBLEMS