keys to managing change in organizations

keys to managing change in organizations
A Sample Answer For the Assignment: keys to managing change in organizations
Title:  keys to managing change in organizations
In order to increase the chances of successful organization change and development, it is useful to consider seven keys to managing change in organizations. After reading Chapter 16 of the textbook, list and describe in your own words the seven keys. Companies that change appropriately can continue as viable businesses. Those that do not make the right changes, like Kodak, lose their ability to compete, cease to exist by going out of business, or get gobbled up by a more successful organiza-tion. This chapter is about how organizations need to face the prospect of change and develop processes to ensure their viability in a complex, ever-changing global environment. The chapter begins with a discussion of some of the forces that cre-ate pressures for change followed by a detailed explanation of the complex change process. Then we describe organization development and sources of resistance to change, finishing with a summary view of how to manage change in organizations. FORCES FOR CHANGE An organization is subject to pressures for change from far more sources than can be discussed here. Moreover, it is difficult to predict what types of pressures for change will be most significant in the next decade because the complexity of events and the rapidity of change are increasing. However, it is possible—and important—to discuss the broad categories of pressures that probably will have major effects on organizations. The four areas in which the pressures for change appear most powerful involve people, technology, information processing and com-munication, and competition. Table 16.1 gives examples of each of these categories. People Approximately 76 million people were born in the United States between 1946 and 1964. As we discussed in Chapter 2, these baby boomers differed significantly from previous generations with respect to education, expectations, and value systems. As this group has aged, the median age of the U.S. population has also gradually increased. The special characteristics of baby boomers show up in distinct purchasing patterns that affect product and service innovation, technological change, and marketing and promotional activities. Employment practices, compensation systems, promotion and managerial succession systems, and the entire con-cept of human resource management are also affected. Other population-related pressures for change involve the generations that sandwich the baby boomers: the increasing numbers of senior citizens and those born after 1960. The parents of the baby boomers are liv-ing longer, healthier lives than previous generations, and today they expect to live the “good life” that they missed when they were raising their children. The impact of the large number of senior citizens is already evident in part-time employment practices, in the marketing of everything from hamburgers to packaged tours of Asia, and in service areas such as health care, recreation, and financial services. The post-1960 generation of workers who entered the job market in the 1980s—often called generation X—was different from the baby boom generation. Sociologists and psychologists have identified another group, often called millennials, born from roughly between 1980 and 2000 (experts differ on start and end dates from as early as 1977 to as late as 2002), who seem to be experiencing a distinct and separate life stage in between adolescence and adulthood in which young people may jump from job to job and relationship to relationship, often living at home with few responsi-bilities and experimenting with life. Millennials are putting off marriage, childbear-ing, home purchases, and most adult responsibilities.2 However, they seem to be much more group oriented, to celebrate diversity, are optimistic, and they assimilate technology very fast.3 On the job, millennials seem to prefer positive reinforce-ment, like clarity in job assignments, want more flexibility in how to do their jobs, and want to be treated as different individuals rather than everyone being treated the same.4 These changes in demographics extend to the composition of the workforce, family lifestyles, and purchasing patterns worldwide. The increasing diversity of the workforce in coming years will mean signifi-cant changes for organizations. This increasing diversity was discussed in some detail in Chapter 2. In addition, employees are facing a different work environ-ment in the twenty-first century. The most descriptive word for this new work environment is “change.” Employees must be prepared for constant change. Change is occurring in organizations’ cultures, structures, work relationships, and customer relationships, as well as in the actual jobs that people do. People will have to be completely adaptable to new situations while maintaining pro-ductivity under the existing system.5 Our Understand Yourself feature will give you some insights into your own readiness for change. Technology Not only is technology changing, but the rate of technological change is also increasing. In 1970, for example, all engineering students owned computa-tional devices known as “slide rules” and used them in almost every class. By 1976, slide rules had given way to portable electronic calculators. Now, most of those functions are handled by apps on smartphones. In 1993, the Scholastic Aptitude Test (SAT), which many college-bound students take to get into college, allowed calculators to be used during the test. Today students cannot make it through the university without owning or at least having ready access to a digital device of some sort—a laptop or notebook computer or iPad, for instance. Entire campuses at most universi-ties are wired for direct computer access for email and class assignments and for connection to the Internet. Many schools, from kindergarten to graduate schools, are now BYOT—“bring your own technology”—and utilize online educational tools throughout the cur-riculum.6 With 3G and 4G technology, people have Internet access from just about anywhere. Technological development is increasing so rapidly in almost every field that it is quite difficult to predict which products will dominate ten years from now. DuPont is an example of a company that is making major changes due to new technological developments. Although its business had been based on pet-rochemicals since the end of the nineteenth century, DuPont changed its basic business strategy as new technology developed in the life sciences. It reorga-nized its eighty-one business units into only three and invested heavily in agri- chemicals and the life sciences. Realizing that a biotechnology-based business changes much more rapidly than a petrochemical-based business, DuPont has had to make cultural changes in addition to the structural ones to make the strategy work.7 Interestingly, organization change is self-perpetuating. With the advances in information technology, organizations generate more information, and it circulates faster. Consequently, employees can respond more quickly to problems, so the organization can respond more quickly to demands from other organizations, customers, and competitors. Toyota, long known as a leader in developing and using new technologies in its plants, has introduced advanced robots, “kokino robotto,” in its efforts to improve efficiency in its plants and reduce its costs to the level of China’s.8 New technology will affect organizations in ways we cannot yet predict. Gesture technology may eliminate all controls in your home, from your AV system remote to your thermostat, and replace them with your own gestures with your hands and fingers. HP’s TouchSmart technology allows people to touch things without actually touching them and could drive innovations inmedicine and education within a decade. Sensawaft technology will allow peo-ple to control devices such as smartphones and ATMs using exhaled breath—which could dramatically increase mobility and control for people with limited mobility.9 Several companies are developing systems to manufacture chemicals and exotic electronic components in space. The Internet, the World Wide Web, and cloud computing are changing the way companies and individuals communicate, market, buy, store, and distribute faster than organizations can respond. Thus, as organizations react more quickly to change, change occurs more rapidly, which in turn necessitates more rapid responses. Information Processing and Communication Advances in information processing and communication have paralleled each other. A new generation of computers, which will mark another major increase in processing power, is being designed. Satellite systems for data transmission are already in use. Today many people carry a single device in their pocket that serves as their portable computer, e-reader, pocket-size television, camera, video recorder, music player, and personal communication device (telephone). And they work all over the world. Social networking may be the most radical and fastest growing aspect of the advances in information processing and communication so far. Through such platforms as Facebook, Twitter, LinkedIn, Ning, Yammer, Bebo, Viadeo, Skype, FaceTime, and many others, people are networking with others exploring common interests. People are spending hours reading about others and updating their own sites. Business uses of this phenomenon include adver-tising, marketing, market research and test marketing, recruiting, and more. And everyone looking for a job starts with Monster.com, Jobing.com, and sim-ilar sites.10 Employees do not need offices because they work with computers and com-municate through new data transmission devices. Increasingly, people are working from home or other locations instead of going to the office every day. Depending on the company and the type of work, some employees actually go into the office only a few days a month. Taking advantage of this trend, some companies are reconfiguring traditional space by minimizing offices dedicated to one individual and creating communal spaces, unassigned cubicles, and shared spaces. In addition to saving on office space costs, these types of shared spaces seem to be creating new ways for employees to collaborate and get work done. American Express estimates that 20 percent of their 5,000-person workforce are in the office at their headquarters in New York more than a few days a week. GlaxoSmithKline estimates it is saving almost $10 million a year in real-estate costs by using unassigned seating that is made possible by having more and more employees who work somewhere other than the traditional office.11 Flexible work stations, both inside and outside of offices, are more elec-tronic than paper and pencil. For years, the capability has existed to gener-ate, manipulate, store, and transmit more data than managers could use, but the benefits were not fully realized. Now the time has come to utilize all of that information-processing potential, and companies are making the most of it. Typically, companies received orders by mail in the 1970s, by tollfree telephone numbers in the 1980s, by fax machine in the late 1980s and early 1990s, and by electronic data exchange in the mid-1990s. Orders used to take a week; now they are placed instantaneously, and companies can and must be able to respond immediately, all because of changes in information processing and communication.12 Zappos.com can ship a pair of shoes in as little as eight minutes from receiving an order.13 Suppliers and end users in some industries now have the parts systems integrated so closely that new parts shipments sometimes are not even ordered; they just show up at the receiving dock when they are needed. Competition Although competition is not a new force for change, competition today has some significant new twists. First, most markets are global because of decreas-ing transportation and communication costs and the increasing export ori-entation of business.14 The adoption of trade agreements such as the North American Free Trade Agreement (NAFTA) and the presence of the World Trade Organization (WTO) have changed the way business operates. In the future, competition from industrialized countries such as Japan and Germany may take a back seat to competition from the booming industries of develop-ing nations such as China and India. The Internet is creating new competitors overnight in ways that could not have been imagined five years ago. Companies in developing nations may soon offer different, newer, cheaper, or higher-qual-ity products while enjoying the benefits of low labor costs, abundant supplies of raw materials, expertise in certain areas of production, and financial protection from their own governments that may not be available to firms in older indus-trialized states. Consider, for example, the market for cell phones or smartphones. Once consumers simply compared calling plans and phone costs and chose a phone available from a provider with the best deal and coverage in their primary area of usage. But now the choices are far more complex in terms platforms, manu-facturers, carriers, and service providers. For consumers the choices are seem-ingly endless and can be extremely confusing. Manufacturers have to develop new equipment and software combinations to work on various platforms for a variety of carriers. Carriers must decide which instruments and platform combinations to offer to subscribers. And platform developers must show that their platform can do more things, simpler and with fewer errors, with maximum flexibility. And every month there are new combinations of all three to further con-fuse consumers and industry experts. The global environment of business also compounds these challenges for managers. Our Global Issues fea-ture provides more detail about change in interna-tional organizations. PROCESSES FOR PLANNED ORGANIZATION CHANGE External forces may impose change on an organization. Ideally, however, the orga-nization will not only respond to change but will also anticipate it, prepare for it through planning, and incorporate it in the organization strategy. Organization change can be viewed from a static point of view, such as that of Lewin (see next section), or from a dynamic perspective. Lewin’s Process Mode Planned organization change requires a systematic process of movement from one condition to another. Kurt Lewin suggested that efforts to bring about planned change in organizations should approach change as a multistage pro-cess.15 His model of planned change is made up of three steps—unfreezing, change, and refreezing—as shown in Figure 16.1. Unfreezing is the process by which people become aware of the need for change. If people are satisfied with current practices and procedures, they may have little or no interest in making changes. The key factor in unfreezing is mak-ing employees understand the importance of a change and how their jobs will be affected by it. The employees who will be most affected by the change must be made aware of why it is needed, which in effect makes them dissatisfied enough with current operations to be motivated to change. Creating in employees the awareness of the need for change is the responsibility of the leadership of the organization.16 Following the 2009 recession with the high number of downsizings, layoffs,restructurings, and takeovers, employees may be weary of the constant pressure and uncertainties of their position and/or organization. Top managers and change agents are urged to make the effort to empathize with employees, acknowledge the difficulties of the past and uncertainties of the present, and provide forums for employees to vent a little, followed up with workshops for information shar-ing and training. After making the emotional connection with employees, top management can make the intellectual connection and make the business case by sharing economic and marketing data and the short-and long-term visions for the organization and by involving employees at all levels in translating organizational goals into division, department, and work unit goals.17 Change itself is the movement from the old way of doing things to a new way. Change may entail installing new equipment, restructuring the organization, or implementing a new perfor-mance appraisal system—anything that alters existing relationships or activities. Refreezing makes new behaviors relatively permanent and resistant to further change. Examples of refreezing techniques include repeating newly learned skills in a training ses-sion and then role playing to teach how the new skill can be used in a real-life work situation. Refreezing is necessary because without it, the old ways of doing things might soon reassert themselves while the new ways are forgotten. For example, many employees who attend special training sessions apply themselves diligently and resolve to change things in their organizations. But when they return to the workplace, they find it easier to conform to the old ways than to make waves. There usually are few, if any, rewards for trying to change the organizational status quo. In fact, the per-sonal sanctions against doing so may be difficult to tolerate. Learning theory and reinforcement theory (see Chapter 3) can play important roles in the freez-ing phase. The Continuous Change Process Model Perhaps because Lewin’s model is very simple and straightforward, virtually all models of organization change start with his approach. However, it does not deal with several important issues. A more complex, and more helpful, approach is illustrated in Figure 16.2. This approach treats planned change from the per-spective of top management and indicates that change is continuous. Although we discuss each step as if it were separate and distinct from the others, it is important to note that as change becomes continuous in organizations, different steps are probably occurring simultaneously throughout the organization. The model incorporates Lewin’s concept into the implementation phase. In this approach, top management perceives that certain forces or trends call change agent A person responsible for managing a change effort for change, and the issue is subjected to the organization’s usual problem-solv-ing and decision-making processes. Usually, top management defines its goals in terms of what the organization or certain processes or outputs will be like after the change. Alternatives for change are generated and evaluated, and an accept-able one is selected. Early in the process, the organization may seek the assistance of a change agent—a person who will be responsible for managing the change effort. Thechange agent may also help management recognize and define the problem or the need for the change and may be involved in generating and evaluating potential plans of action. The change agent may be a member of the organization, an out-sider such as a consultant, or even someone from headquarters whom employees view as an outsider. An internal change agent is likely to know the organiza-tion’s people, tasks, and political situations, which may be helpful in interpret-ing data and understanding the system, but an insider may also be too close to the situation to view it objectively. (In addition, a regular employee would have to be removed from his or her regular duties to concentrate on the transition.) An outsider, then, is often received better by all parties because of his or her assumed impartiality. Under the direction and management of the change agent, the organization implements the change through Lewin’s unfreeze, change, and refreeze process. The final step is measurement, evaluation, and control. The change agent and the top management group assess the degree to which the change is hav-ing the desired effect; that is, they measure progress toward the goals of the change and make appropriate changes if necessary. The more closely the change agent is involved in the change process, the less distinct the steps become. The change agent becomes a “collaborator” or “helper” to the organization as he or she is immersed in defining and solving the problem with members of the orga-nization. When this happens, the change agent may be working with many indi-viduals, groups, and departments within the organization on different phases of the change process. When the change process is moving along from one stage to another, it may not be readily available because of the total involvement of the change agent in every phase of the project. Throughout the process, however, the change agent brings in new ideas and viewpoints that help members look at old problems in new ways. Change often arises from the conflict that results when the change agent challenges the organization’s assumptions and generally accepted patterns of operation. Through the measurement, evaluation, and control phase, top management determines the effectiveness of the change process by evaluating various indi-cators of organizational productivity and effectiveness or employee morale. It is expected the organization will be better after the change than before. However, the uncertainties and rapid changes in all sectors of the environment make con-stant organization change a given for most organizations. Transition management is the process of systematically planning, orga-nizing, and implementing change, from the disassembly of the current state to the realization of a fully functional future state within an organization.18 No matter how much planning precedes the change and how well it is implemented, because people are involved there will always be unanticipated and unpredict-able things that happen along the way.19 One key role of transition management is to deal with these unintended consequences. Once change begins, the organization is in neither the old state nor the new state, yet business must go on. Transition management also ensures that business continues while the change is occurring; therefore, it must begin before the change occurs. The members of the regular management team must take on the role of transition managers and coordinate organizational activities with the change agent. An interim manage-ment structure or interim positions may be created to ensure continuity and con-trol of the business during the transition. Communication about the changes to all involved, from employees to customers and suppliers, plays a key role in tran-sition management.20 This chapter’s Case Study details a very effective change that was implemented using the continuous change model. ORGANIZATION DEVELOPMENT On one level, organization development is simply the way organizations change and evolve. Organization change can involve personnel, technology, competition, and other areas. Employee learning and formal training, transfers, promotions, terminations, and retirements are all examples of personnel-related changes. Thus, in the broadest sense, organization development means organization change.21 The term as used here, however, means something more specific. Over the past forty years, organization development has emerged as a distinct field of study and practice. Experts now substantially agree as to what constitutes orga-nization development in general, although arguments about details continue.22 Our definition of organization development is an attempt to describe a very com-plex process in a simple manner. It is also an attempt to capture the best points of several definitions offered by writers in the field. Organization Development Defined “Organization development (OD) is a system-wide application of behavioral science knowledge to the planned development and reinforcement of organi-zational strategies, structures, and processes for improving an organization’s ffectiveness.”23 Three points in this definition make it simple to remember and use. First, organization development involves attempts to plan organization changes, which excludes spontaneous, haphazard initiatives. Second, the specific intention of organization development is to improve organization effectiveness. This point excludes changes that merely imitate those of another organization, are forced on the organization by external pressures, or are undertaken merely for the sake of changing. Third, the planned improvement must be based on knowledge of the behavioral sciences such as organizational behavior, psychol-ogy, sociology, cultural anthropology, and related fields of study rather than on financial or technological considerations. Under this definition, the replacement of manual personnel records with a computerized system would not be considered an instance of organization devel-opment. Although such a change has behavioral effects, it is a technology-driven reform rather than a behavioral one. Likewise, alterations in record keeping nec-essary to support new government mandated reporting requirements are not a part of organization development because the change is obligatory and the result of an external force. The three most basic types of techniques for implementing organization development are system-wide, task and technological, and group and individual. Organization development was initially treated as a field of study and prac-ticed by specially trained OD professionals. However, as organization change became the order of the day in progressive organizations around the world, it became clear that all organizational leaders needed to become leaders and teach-ers of change throughout their organizations if their organizations were going to survive. Excellent examples of organizations that have embraced OD are the U.S. Army, General Electric, and Royal Dutch Shell.24 System-Wide Organization Development The most comprehensive type of organization change involves a major reori-entation or reorganization—usually referred to as a structural change or a system-wide rearrangement of task division and authority and reporting rela-tionships. A structural change affects performance appraisal and rewards, decision making, and communication and information-processing systems. Reengineering and rethinking the organization are two contemporary approaches to system-wide structural change. Reengineering can be a difficult process, but it has great potential for orga-nizational improvement. It requires that managers challenge long-held assump-tions about everything they do and set out-rageous goals and expect that they will be . met. An organization may change the way it divides tasks into jobs, combines jobs into departments and divisions, and arranges authority and reporting relation-ships among positions. It may move from functional departmentalization to a sys-tem based on products or geography, for example, or from a conventional linear design to a matrix or a team-based design. Other changes may include dividing large groups into smaller ones or merging small groups into larger ones. In addi-tion, the degree to which rules and procedures are written down and enforced, as well as the focus of decision-making authority, may be altered. Supervisors may become “coaches” or “facilitators” in a team-based organization. The organization will have transformed both the configurational and the operational aspects of its structure if all of these changes are made. No system-wide structural change is simple.25 A company president can-not just issue a memo notifying company personnel that on a certain date they will report to a different supervisor and be responsible for new tasks and expect everything to change overnight. Employees have months, years, and sometimes decades of experience in dealing with people and tasks in certain ways. When these patterns are disrupted, employees need time to learn the new tasks and to settle into the new relationships. Moreover, they may resist the change for a num-ber of reasons; we discuss resistance to change later in this chapter. Therefore, organizations must manage the change process. Ford Motor Company is pretty typical of organizations that have had to make major organization-wide and worldwide changes. Over the years, Ford had developed several regional fiefdoms, such as Ford of Europe, Ford United States, and Ford Australia, which all operated relatively independently. When Jacques Nasser was named CEO, he set out to tear down those regionally based organiza-tions and to create a truly globally integrated car manufacturer. As his plan was unfolding, however, Ford continued to lose market share, so Nasser was replaced as CEO by Ford family member William Clay (Bill) Ford Jr. Ford eventually turned over the reins to Alan Mulally, who oversaw Ford and made a stunning turnaround, in part by making several major organizational changes.26 Mulally then stepped aside and former COO Mark Fields assumed control and initiated a series of changes himself. But in 2017 Fields was forced out and replaced by Jim Hackett. The logic behind this move was that Fields was too much of an indus-try insider and was focusing too much on traditional competitors like General Motors and Toyota. Hackett was charged with focusing more on future competi-tors like Tesla, Uber, and Google. Another system-wide change is the introduction of quality-of-work-life pro-quality of work life grams, defined as the degree to which members of a work organization are able to satisfy important personal needs through their experiences in the organiza-tion.27 Quality-of-work-life programs focus strongly on providing a work envi-ronment conducive to satisfying individual needs. The emphasis on improving life at work developed during the 1970s, a period of increasing inflation and deep-ening recession. The development was rather surprising because an expanding economy and substantially increased resources are the conditions that usually induce top management to begin people-oriented programs. However, top man-agement viewed improving life at work as a means of improving productivity. Any movement with broad and ambiguous goals tends to spawn diverse pro-grams, each claiming to be based on the movement’s goals, and the quality-of-work-life movement is no exception. These programs vary substantially, although most espouse a goal of “humanizing the workplace.” Richard Walton divided them into the eight categories shown in Figure 16.3.28 Obviously, many types of programs can be accommodated by the categories, from changing the pay system to establishing an employee bill of rights that guarantees workers the rights to resource exchange. The third gain follows directly from the first two: if employees have more posi-tive attitudes about the organization and their productivity increases, everything else being equal, the organization should be more effective. Task and Technological Change Another way to bring about system-wide organiza-tion development is through changes in the tasks involved in doing the work, the technology, or both. The direct alteration of jobs usually is called “task rede-sign.” Changing how inputs are transformed into outputs is called “technologi-cal change” and also usually results in task changes. Strictly speaking, changing the technology is typically not part of organization development whereas task redesign usually is. However, even with a typical technology-based change, OD techniques are often used to facilitate the technological changes. At the “New Chrysler,” for example, Fiat intends to enhance the product line by introduc-ing a number of new technologies, many of them essential to the development of smaller, more fuel-efficient cars. This long-range plan entails changes not only in the product line but also in the organization’s perception of consumer preferences.31 The structural changes discussed in the preceding section are explicitly sys-tem-wide in scope. Those we examine in this section are more narrowly focused and may not seem to have the same far-reaching consequences. It is important to remember, however, that their impact is felt throughout the organization. The discussion of job design in Chapter 6 focused on job definition and motivation and gave little attention to implementing changes in jobs. Here we discuss task redesign as a mode of organization change. Several approaches to introducing job changes in organizations have been proposed. One approach is an integrative framework of nine steps that reflect the complexities of