1. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16 CHAPTERCHAPTERCHAPTERCHAPTER Managing Organizational Change and Innovation DEFINE what is meant by organizational change management. IDENTIFY the major steps in undertaking organizational change effort. DESCRIBE the two major types of change forces. DISCUSS the role of problem diagnosis in the organizational change management. IDENTIFY a number of change methods and the relative depth of intervention each represents. RECOGNIZE the impediments and conditions that may limit change management effectiveness. DISCUSS the ethical implications of change management. UNDERSTAND how adopting innovation is a natural outcome in organizations that effectively manage change.

3. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-3 Managing Organizational Change Change is an inevitable, pervasive, persistent, and permanent condition for all organizations. Organizations’ futures depend on their ability to master change. Effective managers must view managing planned change as an integral responsibility. Contemporary managers will have to develop approaches for adopting and implementing innovation.

4. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-4 Organizational Change Approaches Managing Change through Reason Managing Change through Power Managing Change through Reeducation

5. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-5 Learning Principles in Change Management Unfreezing old learning Requires people who want to learn new ways to think and act. Deals directly with resistance to change. Movement to new learning Requires training, demonstration, and empowerment. Empower employees to take on new behaviors. Refreezing the learned behavior Occurs through the application of reinforcement and feedback. Strategies designed to minimize the loss of new knowledge, skills.

6. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-6 Change Agents External Change Agents Temporary employees of the organization engaged only for the duration of the change process. Internal Change Agents An individuals working for the organization who knows something about its problems External-Internal Change Agents Designating an individual or small group within the organization to serve with the external change agent. Interveners bring a different perspective to the situation and challenge the status quo for the purpose of improving effectiveness.

7. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-7 Individual Resistance to Change Threat of a loss of position, power, and authority Economic insecurity Possible alteration of social friendships and interactivity Fear of the unknown Failure to recognize or be informed about the need to change Cognitive dissonance or discomfort created by what is new or different Reasons for Resistance Include:

8. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-8 Organizational Resistance to Change Barriers to Change Include: The professional and functional orientation of the department, unit, or team. Structural inertia Possible threat to the organizational power balance Failures at previous change

9. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-9 Strategies for Overcoming Resistance to Change Key Considerations Individuals and organizations must have a reason to change Involvement of people at all levels of the hierarchy Ongoing communication Creation of a learning organization: Open discussion and accessibility to information Clear vision expressed at all levels Strong emphasis on independence, worth and importance of people Clear goals and performance expectations Commitment to learning Concern for measurable results Curiosity to try new methods

10. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-10 A Model For Managing Organizational Change Sorting out the information that reflects the magnitude of change forces Information is the basis for determining when change is or is not needed Diagnosing the problem Identifying relevant alternative techniques Implementing the change Monitoring the change process and change results See Exhibit 16.1 Key Management Responsibilities:

11. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-11 Forces For Change Economic Forces Technology Social and Political Change External Forces Internal Forces Process Behavioral

12. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-12 Diagnosis of a Problem Diagnostic Questions What is the problem as distinct from the symptoms of the problem? What must be changed to resolve the problem? What outcomes (objectives) are expected from the change, and how will those outcomes be measured?

13. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-13 Diagnosis of a Problem Data Collection Methods Questionnaires Direct observation Key interviews Workshops Document and record examination

14. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-14 Selection of Appropriate Methods Structural Approaches Managerial actions that attempt to improve effectiveness by introducing change through formal policies and procedures. Structural Reorganization Creating flatter, more organic organizations Reengineering Streamlining Integrating Transforming Management by Objective (MBO) Superiors and subordinates meet and discuss goals. Superiors and subordinates jointly set attainable goals. Superiors and subordinates meet and evaluate progress.

15. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-15 Technological Approaches Task Approaches Selection of Appropriate Methods Emphasize job design changes Job enlargement Number of tasks performed Job enrichment Amount of discretion and responsibility Emphasize changes in the flow of work New physical plant layouts Changes in office design Improved work methods

16. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-16 Human Asset Approaches Team Building Approaches Selection of Appropriate Methods Emphasis on helping individuals learn and grow: Professionally Personally Team building Managerial grid Emphasis on enabling work groups to get work done more effectively Setting goals and priorities Analyzing the ways the group does its work Examining group processes Examining interpersonal relationships

17. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-17 Mentorship Programs Ethics Training Selection of Appropriate Methods Emphasis on: Developing employee awareness of business ethics Focusing on specific ethical issues with which the employees may come into contact. Emphasis on linking employees with knowledgeable individuals committed to providing support to others Provide specific job instructions Socialization Career development and guidance

18. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-18 Multifaceted Approaches Introspective Development Selection of Appropriate Methods Emphasis on a close examination of one’s own thoughts and feelings through: Specific training courses Periodic sabbatical leaves Emphasis on combining techniques from different categories Organizational Development (OD) methods Total Quality Management (TQM)

19. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-19 Impediments and Limiting Conditions Leadership Climate Formal Organization Organizational Culture

20. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-20 Timing Scope Implementing the Method Implementing Change

21. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 16-21 Evaluating Program Effectiveness An Evaluation Model Determining the objectives of the program Describing the activities undertaken to achieve the objectives Measuring the effects of the program Establishing baseline points against which changes can be compared Controlling extraneous factors Detecting unanticipated consequences