1. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-1

2. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-2 Chapter Managing Change and Innovation 17

3. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-3 Introduction Effective managers must view managing change as an integral responsibility Organizations that fail to plan for, anticipate, and accurately adapt to changes are likely to not be able to survive

4. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-4 Alternative Change Management Approaches: 1. Managing change through power implies the use of coercion 2. Managing change through reason based on the dissemination of information prior to the intended change 3. Managing change through reeducation Recognizes that neither power nor reason can bring about desirable change

5. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-5 Learning Principles in Change Management (1 of 2) 1. Unfreezing old learning Requires people who want to learn new ways to think and act Deals directly with resistance to change It is management’s responsibility to show employees why they should want to change 2. Instill new learning Requires training, demonstration, and empowerment New behaviors must be carefully and sensitively taught

6. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-6 Learning Principles in Change Management (2 of 2) 3. Refreezing the learned behaviors Occurs through application of reinforcement and feedback Suggests that when people receive positive rewards, information, or feelings for doing something, they will more likely do the same thing in a similar situation Punishment will decrease the probability of doing the same thing at another time Implies that it would be easier to achieve successful change through the use of positive rewards

7. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-7 Change Agents Managers tend to seek answers in traditional solutions Makes the intervention of a change agent necessary brings a different perspective challenges the status quo

8. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-8 Change Agents: Forms of Intervention To intervene is to enter into an ongoing organization or relationship among persons or departments The purpose is to help it improve its effectiveness To intervene is to enter into an ongoing organization or relationship among persons or departments The purpose is to help it improve its effectiveness External Change Agents Internal Change Agents External-Internal Change Agents

9. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-9 Resistance to Change (1 of 2) The prospect of change can bring about fear, anxiety, and resistance The more significant the change in structure, task, technology, and human assets the more intense the fear, anxiety, and resistance

10. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-10 Resistance to Change (2 of 2) Individual Resistance Individuals resist change because they fear what will happen to them Individual Resistance Individuals resist change because they fear what will happen to them Organizational Resistance A range of forces within an organization pose barriers to the implementation of changes in: structure tasks technology behavior Organizational Resistance A range of forces within an organization pose barriers to the implementation of changes in: structure tasks technology behavior

11. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-11 Reasons for Individual Resistance to Change: (1 of 2) 1.The threat of loss of position, power, status, quality of life, and authority 2.Economic insecurity regarding the retaining of the job or level of compensation 3.The possible alteration of social friendships and interactivity 4.The natural human fear of the unknown brought about by the change

12. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-12 Reasons for Individual Resistance to Change: (2 of 2) 5.Failure to recognize or be informed about the need for change 6.Cognitive dissonance created because one is confronted with new people, processes, systems, technology, or expectation 7.Employees fear they lack the competence to change 8.Employees genuinely believe that what is going to change is wrong or a bad idea

13. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-13 Organizational Barriers to Change 1.The professional and functional orientation of a department, unit, or team 2.Structural inertia creates a natural barrier 3.If change is considered a threat to the power balance in an organization it will be resisted 4.A failure at previous change creates an aura and folklore about the dangers associated with change

14. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-14 Strategies for Overcoming Resistance to Change: (1 of 2) 1.Individuals and organizations must have a reason to change 2.The more involved people at all levels in the hierarchy are involved in the change planning, implementation, and monitoring the likelihood of success 3.Communication is an ongoing and not a one- time factor in successful change programs

15. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-15 Strategies for Overcoming Resistance to Change: (2 of 2) 4.Identify and help guide champions or supporters of change 5.The creation of a learning organization or one that has the capacity, resilience, and flexibility to change is ideal

16. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-16 Characteristics of Learning Organizations (1 of 2) Open discussion and accessibility to information and data Clear vision expressed at all levels Strong emphasis on interdependence, worth, and importance of each person and unit Clear goals and concept of performance expectations

17. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-17 Characteristics of Learning Organizations (2 of 2) Commitment to learning, improving, and personal growth Concern for measurable results whenever possible A curiosity to try new methods, experiment, and acceptance of failure

18. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-18 Forces for change External Markets Technology Social change Political change Internal Behavior ProcessesPerformanceoutcomes Organizational Group Individual Diagnosis of the problem Information Participation Change agent Selection of appropriatemethod Structural Task Technological Human asset Impediments and limiting conditions Resistance to change Leadership climate Formal organization Organization culture Implementation of the method Timing Scope Experimentation Program evaluation Feedback Adjustment Revision Reinforcement Affect Focus of Leadsto Followedby Provisionfor Feedback Feedback A Model for Managing Organizational Change As constrained by

19. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-19 Forces for Change External Forces Forces beyond management’s control economic forces technological forces social forces political forces External Forces Forces beyond management’s control economic forces technological forces social forces political forces Internal Forces Operate inside the firm Generally within the control of management process problems behavioral problems Internal Forces Operate inside the firm Generally within the control of management process problems behavioral problems

20. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-20 Questions for Problem Diagnosis 1.What is the problem as distinct from the symptoms of the problem? 2.What must be changed to resolve the problem? 3.What outcomes (objectives) are expected from the change, and how will those outcomes be measured? 1.What is the problem as distinct from the symptoms of the problem? 2.What must be changed to resolve the problem? 3.What outcomes (objectives) are expected from the change, and how will those outcomes be measured?

21. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-21 Data Collection Approaches for Problem Diagnosis: (1 of 2) 1.Questionnaire data can be collected from large numbers of people 2.Direct observations can be taken of actual workplace behavior 3.Selected individuals in key positions can be interviewed

22. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-22 Data Collection Approaches for Problem Diagnosis: (2 of 2) 4.Workshops can be arranged with groups to explore different perceptions of problems 5.Documents and records of the organization can be examined for archival and current information

23. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-23 Selection of Appropriate Change and Development Methods: (1 of 2) Structural Approaches Management by objectives (MBO) Reengineering Task and Technological Approaches Task focus emphasizes job design changes Technological approaches emphasize changes in workflow

24. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-24 Selection of Appropriate Change and Development Methods: (2 of 2) Human Asset Approaches Team building Ethics training Mentorship programs Introspection development Multifaceted Approaches Total quality management (TQM) Appreciative Inquiry

25. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-25 Successful Introspection Development Has a Number of Goals: 1.Developing objectivity 2.Learning 3.Improving self- confidence 4.Increased sense of personal responsibility 5.Increased tolerance for ambiguity and paradox 6.Action taking 7.Achieving a balance in life 8.Creativity and intuition 9.Egolessness

26. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-26 4-D Framework for Appreciative Inquiry 1 Discovery Phase 2 Dreaming Phase 3 Designing Phase 4 Delivery Phase Identifying everything that is considered the best of “what is”. Thinking about what the “possibilities” are. Discussing and analyzing what “should” be. Creating clear objectives of “what is going to be”.

27. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-27 Impediments and Limiting Conditions The choice of a change method is tempered by certain conditions that exist at the time Leadership Climate Formal Organization Organizational Climate

28. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-28 Implementing the Method Implementation of the method has two dimensions: Timing – the selection of the appropriate time at which to initiate the intervention Scope – the appropriate of the appropriate scale

29. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-29 Evaluating Program Effectiveness: The Six Steps of Evaluative Research 1.Determining the objectives of the program 2.Describing the activities undertaken to achieve the objectives 3.Measuring the effects of the program 4.Establishing baseline points against which changes can be compared 5.Controlling extraneous factors 6.Detecting unanticipated consequences 1.Determining the objectives of the program 2.Describing the activities undertaken to achieve the objectives 3.Measuring the effects of the program 4.Establishing baseline points against which changes can be compared 5.Controlling extraneous factors 6.Detecting unanticipated consequences

30. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-30 How Effective Are Change Interventions? The critical test of alternative change interventions is whether they help to improve organizational effectiveness Research concludes that multi-method approaches have better success than single-method ones

31. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-31 Significant changes occur under the following conditions: 1.All employees participate in goal setting, decision making, and job redesign 2.Employee collaboration is developed through team building 3.The organizational structure is reorganized to accommodate the new levels of participation and collaboration

32. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-32 Steps to Take When Managing Change (1 of 3) 1.Management and all those involved must have high and visible commitment to the effort 2.People who are involved need to have advance information that enables them to know what is to happen and why they are to do what they are to do 3.The effort must be connected to other parts of the organization

33. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-33 Steps to Take When Managing Change (2 of 3) 4.The effort needs to be directed by line managers and assisted by a change agent if necessary 5.The effort must be based on good diagnosis and must be consistent with the conditions in the organization 6.Management must remain committed to the effort throughout all its steps

34. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-34 Steps to Take When Managing Change (3 of 3) 7.Evaluation is essential and must consist of more than asking people how they felt about the effort 8.People must see clearly the relationship between the effort and the organization’s mission and goals 9.The change agent, if used, must be clearly competent

35. McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved. 17-35 Organizational change is a significant undertaking that managers should go about in a systematic way.