1. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Sixteen Managing Change and Organizational Learning

2. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Sixteen Outline Forces of Change External Forces Internal Forces Models of Planned Change Lewin’s Change Model A Systems Model of Change Kotter’s Eight Steps for Leading Organizational Change Organizational Development 16-1a

3. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Sixteen Outline (continued) Understanding and Managing Resistance to Change Why People Resist Change in the Workplace Alternative Strategies for Overcoming Resistance to Change Creating a Learning Organization Defining Organizational Learning and a Learning Organization Building an Organization’s Learning Capability Leadership is the Foundation of a Learning Organization Unlearning the Organization 16-1b

4. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Forces of Change Demographic Characteristics Demographic Characteristics - the workforce is more diverse - there is a business imperative to effectively manage diversity Technological Advancements Technological Advancements - organizations are increasingly using technology as a means to improve productivity and market competitiveness Market Changes Market Changes - the emergence of a global economy is forcing companies to be more competitive and to do business differently - organizations are forging new partnerships and alliances aimed at creating new products and services Social and Political Pressures Social and Political Pressures - society and its legislative bodies can put pressure on organizations to change the way they do business – the tobacco industry is a good example 16-2a External Forces External Forces: originate outside the organization.

5. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Forces of Change (continued) Human Resource Problems/Prospects Human Resource Problems/Prospects - employees’ needs, job satisfaction, organizational commitment, behavior, and performance are forces of change - dissatisfied employees and high levels of absenteeism and turnover are signs that change is needed Managerial Behavior/Decisions Managerial Behavior/Decisions - the level of conflict between managers and their direct reports is a force for change - inappropriate leader behavior may result in employee problems requiring change - inequitable reward systems are an additional force for change 16-2b Internal Forces Internal Forces: originate inside the organization.

6. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Lewin’s Change Model 16-3 UnfreezingUnfreezing - Creates the motivation to change - Encourages the replacement of old behaviors and attitudes with those desired by management - Entails devising ways to reduce barriers to change - Creates psychological safety Changing Changing - Provides new information, new behavioral models, or new ways of looking at things - Helps employees learn new concepts or points of view - Role models, mentors, experts, benchmarking results, and training are useful mechanisms to facilitate change RefreezingRefreezing - Helps employees integrate the changed behavior or attitude into their normal way of doing things - Positive reinforcement is used to reinforce the desired change - Coaching and modeling help reinforce the stability of change

7. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. A Systems Model of Change 16-4 Figure 16-1 Target Elements of Change Organizing Arrangements Goals Social Factors Methods People Internal * Strengths * Weaknesses External * Opportunities * Threats * Organizational Level * Department/ group level * Individual level Inputs Inputs Outputs Outputs Strategy

8. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Kotter’s Steps for Leading Organizational Change StepDescription  Establish a sense of urgency  Establish a senseUnfreeze the organization by creating a of urgencycompelling reason for why change is needed.  Create the guiding coalition  Create the guidingCreate a cross-functional, cross-level group of coalitionpeople with enough power to lead the change.  Develop a vision and strategy  Develop a visionCreate a vision and strategic plan to guide the and strategychange process.  Communicate the change vision  Communicate theCreate and implement a communication strategy change visionthat consistently communicates the new vision and strategic plan.  Empower broad- based action  Empower broad-Eliminate barriers to change, and use target based actionelements of change to transform the organization. Encourage risk taking and creative problem-solving. 16-5a Table 16-1a

9. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Kotter’s Steps for Leading Organizational Change (continued) StepDescription  Generate short- term wins  Generate short-Plan for and create short-term “wins” or term winsimprovements. Recognize and reward people who contribute to the wins.  Consolidate gains and produce more change  Consolidate gainsThe guiding coalition uses credibility from and produce moreshort-term wins to create more change. changeAdditional people are brought into the change process as change cascades throughout the organization. Attempts are made to reinvigorate the change process.  Anchor new approaches in the culture  Anchor newReinforce the changes by highlighting approaches in theconnections between new behaviors and cultureprocesses and organizational success. Develop methods to ensure leadership development and successes. 16-5b Table 16-1b

10. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Characteristics of Organization Development (OD) OD involves profound change OD involves profound change OD is value loaded OD is value loaded OD is a diagnosis/prescription cycle OD is a diagnosis/prescription cycle OD is process-oriented OD is process-oriented 16-6

11. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Resistance To Change The leading reasons why people resist change are: An individual’s predisposition toward change Surprise and fear of the unknown Climate of mistrust Fear of failure Loss of status and/or job security 16-7a Resistance to Change: Resistance to Change: an emotional/behavioral response to real or imagined work change.

12. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Resistance to Change (cont) Leading Reasons Why People Resist Change (cont): Peer pressure Disruption of cultural traditions and/or group relationships Personality conflicts Lack of tact and/or poor timing Nonreinforcing reward systems 16-7b For Class Discussion: For Class Discussion: What do you think are the top three reasons people resist change?

13. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Assessing an Organization’s Readiness for Change 16-8 Hands on Exercise Why is readiness for change an important consideration? What survey questions resulted in the lowest readiness for change? Why did this occur? What can managers do to prepare an organization for change?

14. 16-9a Table 16-2a McGraw-Hill/Irwin ©2002, The McGraw-Hill Companies, Inc. All Rights Reserved Strategies for Overcoming Resistance to Change Drawbacks Advantages Commonly Used in Situations Can be very time consuming if participators design an inappropriate change People who participate will be committed to implementing change, and any relevant information they have will be integrated into the change plan Where the initiators do not have all the information they need to design the change and where others have considerable power to resist Participation + Involvement Can be very time consuming if lots of people are involved Once persuaded, people will often help with the implementation of the change Where there is a lack of information or inaccurate information and analysis Education + Communication Approach

15. 16-9b Table 16-2b McGraw-Hill/Irwin ©2002, The McGraw-Hill Companies, Inc. All Rights Reserved Strategies for Overcoming Resistance to Change (continued) Drawbacks Advantages Commonly Used in Situations Can be too expensive in many cases if alerts others to negotiate for compliance Sometimes it is a relatively easy way to avoid major resistance Where someone or some group will clearly lose out in a change and where that group has considerable power to resist Negotiation + Agreement Can be time consuming, expensive, and still fail No other approach works as well with adjustment problems Where people are resisting because of adjustment problems Facilitation + Support Approach

16. 16-9c Table 16-2c McGraw-Hill/Irwin ©2002, The McGraw-Hill Companies, Inc. All Rights Reserved Strategies for Overcoming Resistance to Change (continued) Drawbacks Advantages Commonly Used in Situations Can be risky if it leaves people mad at the initiators It is speedy and can overcome any kind of resistance Where speed is essential and where the change initiators possess considerable power Explicit + Implicit Coercion Can lead to future problems if people feel manipulated It can be a relatively quick and inexpensive solution to resistance problems Where other tactics will not work or are too expensive Manipulation + Co-optation Approach

17. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Building an Organization’s Learning Capability 16-10 Figure 16-2 Facilitating factors Learning mode Culture and experience Internal structure and processes An organization’s learning capability Customersatisfaction Organizationalperformance Salesgrowth Profitability

18. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Factors That Facilitate Organizational Learning  Scanning imperative  Performance gap  Concern for measurement  Experimental mindset  Climate of openness  Continuous education  Operational variety  Multiple advocates  Involved leadership  Systems perspective 16-11 Table 16-3

19. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Skills and Best Practices: Becoming a Teacher-Learner 16-12 1.Become actively involved in teaching and learning. 2.Demonstrate that you care about your coworkers’ well-being. 3.Develop relationships with as many people from different backgrounds, experience, and organizational positions as possible. 4.Reflect on what you have learned from a given situation. 5.Listen to others and try to learn something from social interactions with others.