2. Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 CHAPTER 16 MANAGING ORGANIZATIONAL CHANGES AND INNOVATION

3. All Rights Reserved Ch. 16: 3 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 LEARNING OUTCOMES After studying this chapter, you should be able to:  Define change and innovation.  Explain the challenges, forces and process of organizational changes.  Discuss why individuals and organizations resist changes.  Describe an organizational innovation process, and the characteristics of an innovative organization.  Illustrate the barriers to organizational innovation.

4. All Rights Reserved Ch. 16: 4 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.1 INTRODUCTION Definition: Organizational change can be defined as any alteration in the operations of an organization, planned or unplanned, which is the result of either internal or external causes or influences

5. All Rights Reserved Ch. 16: 5 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.1 INTRODUCTION (cont.) Categories to characterize change:  A planned change attempts to explain the process that brings about change.  An unplanned change, on the other hand, is a change that happens at random or spontaneously, without the intervention of a change agent.

6. All Rights Reserved Ch. 16: 6 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.1 INTRODUCTION (cont.)  An emergent approach cites that a change should not be perceived as a series of linear events within a given period of time, but as a continuous, open- ended process of adaptation to changing circumstances and conditions.  An approach of contingency to change supports a ‘one best way for each’ organization approach.

7. All Rights Reserved Ch. 16: 7 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.2 CHALLENGES OF ORGANIZATIONAL CHANGES  Factors—internal and external  Nature of Organizational Changes –Environmental changes –Product- and/or service-related changes –Working method changes, how products are made or delivered and who makes them –Management and working relationship changes –Organizational structure, size or growth changes

8. All Rights Reserved Ch. 16: 8 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.3 FORCES OF ORGANIZATIONAL CHANGES  Internal forces or pressures of change refer to any factor that affects an organization in carrying out its activities, such as, employees’ attitudes, employees’ abilities and knowledge, and leadership styles.  External forces or pressures of change focus on factors in the external environment that interferes with an organization’s ability to attract human capital, obtain material resources, and produce and market its services

9. All Rights Reserved Ch. 16: 9 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.4 PROCESS OF ORGANIZATIONAL CHANGES  Unfreezing  Changing  Refreezing

10. All Rights Reserved Ch. 16: 10 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.5 INDIVIDUAL AND ORGANIZATIONAL RESISTANCE TO CHANGES Individual ResistanceOrganizational Resistance Habits Structural inertia Security Group influence Economic factors Threat to expertise and power relationships Selective information processing Threat to established resource allocations Failure to recognize the need for change

11. All Rights Reserved Ch. 16: 11 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.5.3 Overcoming Resistance and 16.5.4 Benefits of Resistance Overcoming ResistanceBenefits of Resistance Education and communication Encourage management to re-examine change proposals to ensure that changes are more suitable ParticipationHelp management to identify specific problem areas, so that the management can take corrective actions before problems become serious Facilitation and supportGives management information about the intensity of employees’ sentiments towards changes, providing employees an emotional release in the process Negotiation Manipulation Co-optation Coercion

12. All Rights Reserved Ch. 16: 12 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.6 STIMULATING ORGANIZATIONAL INNOVATION  Organizational Innovation Processes –Step 1: Idea generation –Step 2: Initial experimentation –Step 3: Feasibility determination –Step 4: Final application

13. All Rights Reserved Ch. 16: 13 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.6.2 Features of Organizational Innovation  Their organizational strategies and cultures support innovation processes  Their organizational structures support innovation processes.  Their employees support innovation processes  Their top level management supports innovation processes.

14. All Rights Reserved Ch. 16: 14 Principles of Management Second Edition © Oxford Fajar Sdn. Bhd. (008974-T) 2014 16.6.3 Fostering Organizational Innovation  Organizational structures  Organizational cultures  Human resource practices