ORGANIZATIONAL DEVELOPMENT Managing Change

Roadmap The context What is organizational change? Processes for managing change People and change Organizational Development Conflict resolution Fostering innovation

Ghoshal & Bartlett Old values: compliance, control, contract and constraint New values: discipline, support, trust and stretch Successful change involves simplification, integration, and regeneration Phased approach essential, along with focus on people’s attitudes, assumptions and behaviors Brings both organizational design and human resources lessons to bear Ghoshal and Bartlett provide a high-level model for change, let’s look at some of the details and lessons learned at a more granular level

What is Organizational Change? An alteration of an organization’s environment, structure, culture, technology, or people A constant force An organizational reality An opportunity or a threat Change agent A person who initiates and assumes the responsibility for managing a change in an organization

Basic Questions for Change Agents What are the forces acting upon me? What are the pressures I should take into consideration as I decide what to change and how I should change it? What should we change? Should the changes be strategic and companywide or relatively limited? How should we change it? How should we actually implement the change?

Forces for Change External Forces Internal Forces Competition Laws and regulations Strategy modifications New technologies New equipment Labor market shifts New processes Business cycles Workforce composition Social change Job restructuring Compensation and benefits Labor surpluses and shortages Employee attitude

Three Categories of Change Organizational Culture

Model for Planned Organizational Change Source: Adapted from Larry Short, “Planned Organizational Change,” MSU Business Topics, Autumn 1973, pp. 53–61 ed. Theodore Herbert, Organizational Behavior: Readings and Cases (New York: McMillan, 1976), p. 351. FIGURE 8–1

Two Views of the Change Process “Calm waters” metaphor A description of traditional practices in and theories about organizations that likens the organization to a large ship making a predictable trip across a calm sea and experiencing an occasional storm “White-water rapids” metaphor A description of the organization as a small raft navigating a raging river

Change in “Calm Waters” Kurt Lewin’s Three-Step Process Unfreezing The driving forces, which direct behavior away from the status quo, can be increased The restraining forces, which hinder movement from the existing equilibrium, can be decreased The two approaches can be combined Implementation of change Refreezing

Change in “White-water Rapids” Change is constant in a dynamic environment The only certainty is continuing uncertainty Competitive advantages do not last Managers must quickly and properly react to unexpected events Be alert to problems and opportunities Become change agents in stimulating, implementing and supporting change in the organization

Is a New Structure Really Required? When you identify a problem with your design, first look for ways to fix it without substantially altering it. If that doesn’t work, you’ll have to make fundamental changes or even reject the design. Here’s a step-by-step process for resolving problems. Source: Adapted from Michael Goold and Andrew Campbell, “Do You Have a Well-Designed Organization?” Harvard Business Review, March 2002, p. 124. FIGURE 8–2

Is a New Structure Really Required? (cont’d) Source: Adapted from Michael Goold and Andrew Campbell, “Do You Have a Well-Designed Organization?” Harvard Business Review, March 2002, p. 124. FIGURE 8–2b

A Nine-step Process For Leading Organizational Change Create a Sense of Urgency Decide What to Change Create a Guiding Coalition and Mobilize Commitment Develop and Communicate a Shared Vision Empower Employees to Make the Change Generate Short-Term Wins Consolidate Gains and Produce More Change Anchor the New Ways of Doing Things in the Company Culture Monitor Progress and Adjust the Vision as Required

Why People Resist Change

How Immune Is the Person to Change? Source: Robert Kegan and Lisa Lahey, “The Real Reason People Won’t Change,” Harvard Business Review, November 2001, p. 89. FIGURE 8–3

Dealing with Change

Barriers to Empowerment Source: Reprinted by permission of Harvard Business School Press. From Leading Change by John P. Kotter. Boston, MA. 1996, p. 102. Copyright © 1996 by the President and Fellows of Harvard College, all rights reserved. FIGURE 8–5

Organizational Development Organizational Development (OD) An approach to organizational change in which the employees themselves formulate the change that’s required and implement it, usually with the aid of a trained consultant.

OD Interventions Human Process Interventions Aimed at enabling employees to develop a better understanding of their own and others’ behaviors for the purpose of improving that behavior such that the organization benefits. Sensitivity Training (Laboratory or T-groups) Purpose is to increase participants’ insight into their own behavior and that of others by encouraging an open expression of feelings in a trainer-guided group.

OD Interventions (cont’d) Team Building The process of improving the effectiveness of a team through action research or other techniques. Survey Research The process of collecting data from attitude surveys filled out by employees of an organization, then feeding the data back to workgroups to provide a basis for problem analysis and action planning.

Technostructural Applications of OD Formal Structure Change Program An intervention technique in which employees collect information on existing formal organizational structures and analyze it for the purpose of redesigning and implementing new organizational structures.

Strategic Applications of OD Strategic Intervention An OD application aimed at effecting a suitable fit among a firm’s strategy, structure, culture, and external environments. Integrated Strategic Management An OD program to create or change a company’s strategy by: Analyzing the current strategy Choosing a desired strategy Designing a strategic change plan Implementing the new plan.

Organizational Stressors: Role Demands Role conflicts Work expectations that are hard to satisfy Role overload Having more work to accomplish than time permits Role ambiguity When role expectations are not clearly understood

Conflict Handling Styles Source: Source: Kenneth W. Thomas, “Organizational Conflict,” ed., Steven Kerr, Organizational Behavior (Columbus, OH: Grid Publishing, 1979), in Andrew DuBrin, Applying Psychology (Upper Saddle River, NJ: Prentice Hall, 2000), p. 223. FIGURE 8–7

Conflict Resolution Modes

Stimulating Innovation Creativity The ability to combine ideas in a unique way or to make unusual connections Innovation The process of taking a creative idea and turning it into a useful product, service, or method of operation Perception Incubation Inspiration

Structural Variables Affecting Innovation Organic structures Positively influence innovation through less work specialization, fewer rules and decentralization Easy availability of plentiful resources Allow management to purchase innovations, bear the cost of instituting innovations, and absorb failures Frequent inter-unit communication Helps to break down barriers to innovation by facilitating interaction across departmental lines

Next Week Leading– Monday’s topic is “motivation” Read Chapters 10 and 11 and the assigned articles Discussion group-- think about the following questions: Does NASA have clear and consistent leadership? What are some of the problems with the leadership structure? How do you think this affects the motivation of the engineers and managers? Does this have impact on safety & performance? What could be done to improve the situation?