- - Organizational Change - -

Introduction : Today's business environment requires companies to undergo changes

almost constantly if they are to remain competitive. Factors such as globalization of
markets, Mergers, Acquisitions, Restructuring, Downsizing and rapidly evolving new
Technologies force businesses to respond in order to survive. Such changes may be
relatively minor as in the case of just installing a new software program or quite major
as in the case of refocusing an overall marketing strategy.

Organizational change occurs when a company makes a transition from its current state
to some desired future state.

Factors forcing towards organizational change are classified into two main classes :

 Inside Pressure - Inside pressures come from top managers and lower level
employees who push for change.
 Outside Pressure - Outside pressures come from changes in the legal,
competitive, technological, and economic environments.

Organizations are viewed as open systems with multiple levels and interrelated parts
that exist in the context of a larger environment. Thus, change at one level of the
organization i.e. individual member, work team, or total organization, can affect other
levels. Change in one part or design feature of the organization, such as a reward
system, work design, or organization structure, can require supporting changes in other
parts. Change in the organization’s environment can necessitate change within the
organization, and so on.

Organization change involves an ongoing series of diagnostic, action planning,

implementation, and evaluation actions. These activities overlap and feedback on each
other, so that initial diagnosis informs action planning and implementation while
evaluation guides subsequent diagnosis and modification of the changes.

Areas of Organizational Change :

Bateman and Zeithaml identified four major areas of organizational change : Strategy,
Technology, Structure, and People. All four areas are related, and companies often
must institute changes in the other areas when they attempt to change one area.

 Strategy Changes : It takes place on a large scale, for example, when a company
shifts its resources to enter a new line of business, or on a small scale, for
example, when a company makes productivity improvements in order to reduce
costs.
 There are three basic stages for a company making a strategic change :

 Realizing that the current strategy is no longer suitable for the company's
situation;

 Establishing a vision for the company's future direction; and

 Implementing the change and setting up new systems to support it.

 Technological Changes : These are often introduced as components of larger

strategic changes, although they sometimes take place on their own. An
important aspect of changing technology is determining who in the organization
will be threatened by the change. To be successful, a technology change must
be incorporated into company's overall systems, and a management structure
must be created to support it.

 Structural Changes : These changes can also occur due to strategic changes, as
in the case where a company decides to acquire another business and must
integrate it, as well as due to operational changes or changes in managerial
style. For example, a company that wished to implement more participative
decision making might need to change its hierarchical structure.

 People Changes : These changes become necessary due to other changes, or

sometimes companies simply seek to change workers' attitudes and behaviors in
order to increase their effectiveness. "Attempting a strategic change, introducing
a new technology, and other changes in the work environment may affect
people's attitudes (sometimes in a negative way).

In any case, people changes can be the most difficult and important part of the
overall change process. The science of organization development was created to
deal with changing people on the job through techniques such as education and
training, team building, and career planning.

General Approaches to Change :

The processes and activities used to initiate and carry out organization change are
deeply embedded in values of openness, trust, and collaboration among organization
members; they are grounded in beliefs that members should be treated maturely and
actively involved in change. Based on these fundamentals, applications of
Organizational Development have evolved to meet the emerging demands of
organizations and their environments. These changes are reacted in how
Organizational Development is carried out and practiced in organizations today. To
understand this evolution of Organizational Development practice requires knowledge of
three general approaches to change:

(1) Lewin’s Three Steps

(2) Action Research
(3) Action Learning

Lewins Three Steps : This approach to organization change derives from the work of
Lewin and his colleagues on how to overcome resistance to change and how to sustain
change once it is made. It starts from the premise that targets of change and the social
processes underlying the mare relatively stable when forces driving for change are
roughly equal to forces resisting change. To change this status quo requires a three
step process :

(1) Unfreezing the balance of forces that keep the change target stable

(2) Moving the change target to a new level or kind of behavior

(3) Refreezing the balance of forces to reinforce the new behaviors and to keep them
stable. This simple yet profound framework has guided Organizational Development
practice for over half a century. It has led to numerous techniques for leading and
managing change.

 Unfreezing : This step underscores the need to assess the present situation
before change is contemplated. Referred to as a ‘force field analysis’, this
diagnosis examines the driving and restraining forces in the change situation that
maintain the status quo. It can reveal which forces are strongest (or weakest)
and which are easiest (or hardest) to modify. Such information is essential for
unfreezing the current situation and creating a readiness for change among
organization members. For example, a force field analysis might discover that the
key forces restraining change are members’ lack of understanding about the
need for change and strong group norms about task performance. Techniques to
overcome these resistances, and thus to unfreeze the status quo, might include
clearer and more direct communication about the rationale underlying the
proposed changes and member participation in the change process itself.

 Moving : This stage involves intervening in the situation to change it.

Organizational Development includes a variety of interventions for improving
 organizations. These change programs address organization issues having to do
with human processes, strategic choices, human resource management, and
work designs and structures. To implement these changes effectively,
Organizational Development has devised methods for creating a compelling
vision of the desired changes, developing political support for them, and
managing the transition from the current to the desired situation.

 Refreezing : This final step involves making changes a permanent part of the
organization’s functioning. When this stage is ignored, organization changes
rarely persist but regress to their previous stable state. Thus, refreezing calls for
re-balancing the driving and restraining forces in the changed situation so it
remains relatively stable. Organizational Development has discovered a variety
of practices that can contribute to such permanence. Generally referred to as
‘institutionalizing’ change, these methods include : reinforcing organization
changes by making rewards contingent on them, socializing existing members
and newcomers in to the beliefs, norms, and values underlying the changes,
diffusing changes throughout the organization to provide a wider base of support
for them, and sensing and calibrating the changes to detect deviations from
desired changes and to take corrective actions.

Action Research : This approach to organization change shows that research can be
practical; it can serve as an instrument for action and change. Action research applies
scientific methods to help organizations identify problems, discover their underlying
causes, and implement appropriate changes. It can also produce new knowledge about
organizations and change that can be applied elsewhere. In addition to its problem
solving focus, action research is highly collaborative, involving both Organizational
Development practitioners and organization members in the research and action
process. Such participation gains members’ input and commitment to the changes, thus
increasing the chances that they will be implemented. It can also result in higher quality,
more situation relevant changes. Although several variants of action research have
been developed, applications to Organizational Development generally involve the
following cyclical activities :

(1) Preliminary data gathering and diagnosis

(2) Action planning
(3) Implementation
(4) Assessment.
In practice, these activities result in an iterative process where initial research informs
action, and additional research informs further action, and so on.

 Preliminary data gathering and diagnosis - Action research typically

starts with a pressing problem that organization members are motivated to
resolve. Based on this presenting issue, preliminary data are gathered to
determine whether the problem has been correctly identified and to
diagnose its underlying causes. This initial research is generally informed
by diagnostic models that show what features of the organization to
examine and what data to collect to discover the source of organizational
problems. Organizational Development practitioners use diagnostic
models to assess various aspects of organizations, from members’
individual motivation to relationships between the organization and other
organizations in its environment. They use a variety of methods to collect
diagnostic data, from informal interviews with a few people to formal
surveys of the total organization. When these data are collected and
analyzed appropriately, they provide valid information about causes of
organization problems.
 Action planning – Based on this preliminary research, participants
develop action plans specifying what organization changes will be made
and how they will be implemented. The choice and design of change
interventions depend on a variety of factors having to do with the target of
change and the change situation itself. In selecting a change target,
participants can draw on a large diversity of Organizational Development
interventions to improve various aspects and problems of organizations.
Indeed, Organizational Development is known primarily for its
interventions, such as team building, self-managed teams, and high
involvement organizations. The preliminary diagnosis guides which of
those interventions are most relevant for the organization. Moreover, it
helps participants choose interventions that are likely to succeed in their
specific change situation. Researchers have identified key situational
contingencies that can affect intervention success, such as individual
differences among members and the nature of the organization’s
technology and competitive situation. Knowledge of these contingencies
can help to assure that action plans fit well with the change situation.
 Implementation : Implementing action plans involves making changes
that move the organization towards its desired future. Such change does
not occur instantly but requires a transition period during which members
learn how to enact the changes and make them work. Organizational
Development has identified activities and structures that can facilitate this
transition phase. These include specifying the change tasks that need to
 occur, temporally ordering them, and monitoring their progress. It also
involves identifying key stake holders whose commitment is needed for
change to occur and gaining their support. In cases where change is large
scale and involves several features and levels of the organization, special
structures for managing the change process may need to be created.
These structures mobilizer sources for change, coordinate the changes,
and account for progress. Members who have both the power to make
change happen and the respect of key stake holders lead them.
 Assessment - This final phase of action research involves gathering and
analyzing data to determine the effects of the changes. Such information
is used to decide whether the changes are having their intended results,
and, if not, how they can be modified to be more effective. Assessment
tends to occur at different stages of the change process both during
implementation and after it is completed. During implementation,
evaluation provides timely feedback about whether the changes are being
implemented as intended. Because organization change generally
involves considerable learning and experimentation, such information is
vital to members learning new behaviors and procedures needed to
implement change. Assessment that occurs after implementation provides
feedback about the overall impact of the organization changes. It helps
members determine whether the changes should continue to be supported
or whether other possible interventions should be tried.

Action Learning : Action learning has been variously referred to as ‘participatory action
research’, ‘action inquiry’, and ‘self-designing organizations’. It is a relatively new and
still evolving form of planned change. Action learning moves beyond the problem
solving focus inherent in traditional applications of Organizational Development, and
treats change as a continuous learning and transformation process. It responds to the
enormous pressures for change facing organizations today. They are experiencing
competitive demands to perform more quickly and efficiently at lower cost and higher
quality. They are being forced to adapt to turbulent environments where technological,
economic, and cultural forces are changing rapidly and unpredictably. To respond to
these forces, organizations are radically transforming themselves into leaner, more
flexible structures capable of continuous adaptation and change. Such change involves
considerable learning and innovation as members try new behaviors, structures, and
processes, assess the results, make necessary adjustments, and so on. It also requires
significant support and commitment from key stake holders including managers,
employees, and staff experts. Action learning addresses these issues. It helps members
acquire the skills and expertise to design their own innovations, to manage their own
change processes, and, perhaps most important, to learn how to do these things more
effectively and efficiently. It identifies key stake holders and gets them actively involved
in analyzing the organization and its environment, designing appropriate changes, and
implementing them. It builds the capacity to change and to improve continually in to the
organization so it becomes part of normal functioning. Action learning involves a
number of interrelated actions that comprise an iterative learning process. As members
move through these activities, they learn how to change and improve the organization,
including their own work behaviors and interactions. This learning feeds in to the next
cycle of action learning and so on, thus enhancing members’ capacity to change both
the organization and themselves. Action learning generally includes the following steps :

(1) Valuing

(2) Diagnosing

(3) Designing

(4) Implementing and assessing.

 Valuing – Action learning generally starts with clarifying the values that will
guide the change process. Organization values influence members’ behaviors
and decision making; they affect which innovations and changes are seen as
good or bad. Because organization values are rarely questioned, they tend to
perpetuate the status quo. Thus, valuing seeks to make explicit the
organization’s values and to judge their relevance to competitive conditions.
This may result in modifying or replacing certain values, or considering
entirely new ones. Moreover, because stake holders often have diverse
interests, valuing attempts to uncover underlying value conflicts and to
resolve them so they do not adversely affect subsequent design and
implementation activities. Unless organization changes take in to account the
interests of different stakeholders, there is likely to be differential support and
commitment for them. Organizational Development practitioners have
developed various methods for resolving value conflicts, including
collaborating, compromising, and negotiating. The key objective is to achieve
sufficient value agreement among stakeholders so they can proceed with
changing the organization in a shared and committed direction. A common
outcome of valuing is a ‘vision statement’ that explains the values that will
guide organization change, including valued human and performance
outcomes and valued organizational conditions for achieving them. Although
valuing occurs early in action learning, members may periodically reassess
and modify the values as they continually move through the cycle of learning
activities.
 Diagnosing – This phase of action learning involves assessing the
organization against the values. This can reveal value gaps where the
 organization is not functioning or performing consistent with the values. Such
inconsistencies direct the subsequent design of organization changes to close
the gaps. Thus, action learning is aimed at continually assessing and
improving the organization in a valued direction.
 Designing – This step involves developing specific organization changes to
reduce value gaps and to move the organization in a valued direction.
Depending on the diagnosis, members may determine that limited change is
necessary and existing conditions only need to be finetuned; or that more
extensive change is needed requiring innovations that either imitate what
other organizations are doing or that are entirely new and original. Thus,
designing is not deterministic but involves considerable creativity and choice.
Members explore new ways for organizing that are consistent with the values.
They iterate back and forth between the values which serve as design guides
and the designs themselves. Designing typically results in organization
changes that are minimally specified and flexible. This enables members to
adjust the changes to fit situational contingencies during implementation. It
provides members with sufficient freedom to modify the changes as they
learn how to enact them behaviorally and how to modify and improve them as
the circumstances demand.
 Implementing and assessing – In this phase, members implement and
assess organization changes. This involves learning by doing. Members take
action to implement or modify the changes. They periodically assess whether
the changes and implementation process are progressing as intended, and, if
not, make plans to modify them. This feed back adjustment process enables
members to learn how to change the organization and themselves. It
continues indefinitely as members learn how to improve the organization
continuously.

Implementing and assessing can involve three levels of learning. At the

most basic level, which is referred to as ‘single loop learning’, members
concentrate on getting the changes implemented in accordance with the
values. They seek to reduce deviations from the changes’ underlying values.
This learning occurs continuously and involves considerable problem solving
and trial and error as members learn to move the organization closer to its
values. Single loop learning is involved in all approaches to organization
change, including Lewin’s three steps and action research. It enables
members to implement planned changes as intended.

Action learning goes beyond these other approaches, however, to also

include higher levels of learning called ‘double loop learning’, the next level
involves changing the values themselves. Members learn how to confront
 value inconsistencies and conflicts and modify values accordingly; they learn
how to change values that may no longer support the organization’s strategy
and competitive situation. This level of learning occurs periodically and
generally requires members to return to the valuing and designing phases.
They may learn that the values set initially need to be modified and that
renewed designing, implementing, and assessing activities need to occur. At
the highest level, action learning involves ‘deutero learning’, or learning how
to learn. This is the most difficult yet important level of action learning.
Because organization learning processes tend to be tacit and taken for
granted, members are not accustomed to examining or questioning them.
This can lead to repetition of learning mistakes and disorders. Thus, deuteron
learning is aimed at the learning process itself. Members examine values,
organizational conditions, and behaviors that inhibit single and double loop
learning; they design more effective learning processes. Members then
engage in implementing and assessing the new learning behaviors. Overtime,
deuteron learning enables members to enhance their capacity to learn, and
thus become better at implementing changes and improving the organization.

Emotional Phases of Change - Organizational change has an element of loss inherent

in the process, and it is a loss that is often deeply felt by employees. The Kubler - Ross
Grief Model addresses the emotional issues associated with change. The four
emotional states experienced throughout the change process may be expressed by
employees in behaviors that are obstacles to the process of change. By understanding
the emotions employees often encounter during change, you will be better prepared to
facilitate the change process.

Stage 1 - Denial

Stage 2 - Resistance

Stage 3 - Exploration

Stage 4 - Commitment

The first emotional state experienced during change is denial. For example,
employees encountering a change initiative might be saying to themselves, “I can’t
believe this is happening to us.” Unresolved fears about the change initiative need to be
addressed during this phase. Fear and mistrust need to be replaced by acceptance. To
be an effective change agent, you should encourage acceptance to change by initiating
trust-building activities

.The second emotional state is resistance to the change process. It is common

for employees to begin to resist the change initiative. During this phase, employees
attempt to slow down or derail the change initiative. You must be able to spot resistance
when it occurs and formulate sound strategies for overcoming it. Resistance is a natural
reaction to change, and it can take many forms. The easiest form of resistance to
recognize is those who loudly indicate their dissatisfaction with the changes taking place
in the organization. Soliciting feedback from these individuals lets you know where they
stand, so that you can overcome their objectives. Employees often resist change
through denial. These individuals refuse to acknowledge that a problem exists. For
example, competition might force a business to organize workaround processes to
improve operating efficiencies. Functional departments involved in these processes
would be combined. Employees might not see a need for this change. The reasons for
change must be fully explained so that employees understand why it is necessary to
embrace the change.

Another common resistance is exhibited by individuals who willingly embrace the

change, but when they realize that it takes additional time and effort, they begin to
undermine the change process. It is best to slow down and allow people to absorb
change gradually before forging ahead.

Sometimes employees use confusion to postpone change. After explaining the

changes repeatedly, employees ask the same questions over and over again. They may
truly be confused or they may be using confusion as a form of resistance to avoid
accepting change.

The most dangerous form of resistance is referred to as malicious compliance.

Employees enthusiastically support change, but covertly undermine the effort. For
example, during presentations, the questions are polite and employees seem accepting.
As you move forward they act as though they are implementing the new program.
Months later you find out nothing has changed.

How we respond to resistance is very important. Forcing compliance may

increase resistance. Those affected by the change probably know a lot about what is
required to implement something new, and their input is important to the change
process. The degree to which employees will support your new initiatives depends on
how many of their recommendations are used. Compromise can accelerate the change
process.

The third emotional state encountered is exploration. If employees are unable to

stop the changes from occurring, they begin to explore their new roles. Both individual
roles as well as the overall role of the group are specifically defined in this stage. During
the exploring stage, it is important that unresolved issues that continue to surface be
addressed. Be alert for employees who remain angry about the change initiative. Those
individuals should be counseled at the first sign of falling back to old behaviors. If trust
has been created among the group, then peer influence can be used to encourage
behavioral change.

The final emotional state is commitment to the change initiative. Mutual

commitment is established for the change effort. Obstacles have been removed and the
focus is on successful implementation of the changes.

Reasons for Failure : Research indicates that two-thirds of all organizational changes
fail. This represents a tremendous cost to companies in money, resources, and time.
Several of the most common reasons for failed change programs include a lack of
commitment from the top, change overload, lack of incentives tied to the change
initiative and a lack of training.

Commitment from senior management is required if the change program is to

succeed. People reveal their values through their actions, not their words. Employees
infer what is important from management’s behavior.

Trying to do too much at once is often an obstacle because trying to accomplish

too many activities can create confusion. Helping the group to on well-defined steps that
carry them from one initiative to another will instill a sense of order and confidence in
the process.

Often change programs are initiated without changing incentives to reinforce the
desired new behavior. Change is expected, but the old behavior is still being rewarded.
The organization must publicly recognize and reward employees who change by linking
promotion and pay rewards to the desired behaviors. Rewards that reinforce old
methods must be eliminated.

Another cause of failure is that too little attention is given to developing the skills
people require to make a new technology work. The organization must develop
experiential training that provides real time hands-on experience with new processes
and procedures. The physical environment must also reinforce these changes.

Conclusion : Employees view the change process differently. They often view change
as disruptive. A successful change program requires that employees understand why
the need for change is necessary. Employees must buy into the change program.
Employees’ commitments must be linked to the company’s change outcomes. During
transitions, employees speculate about how change will benefit or possibly harm them.
People require more information during the change process. They want to know how
changes will affect them and how to prepare. By providing specific information to
everyone at the same time, rumors can be minimized. Communicate only the facts. Not
communicating to employees when implementing change programs is the worst mistake
a company can make. During times of uncertainty communication voids are filled with
rumors. Communication lowers stress and anxiety. When restructuring jobs or
refocusing the organization’s direction, it is very important to clarify roles and how they
support each other. Role clarification helps raise issues in a neutral manner and avoids
confusion when change is in process.

Change must be continually managed to yield sustained results. Measurement

provides a way to track progress. An effective measurement system would be specific,
simple to understand, creative and involve both managers and employees. The results
should be visually displayed so that employees can track their progress. A consistent
process of measuring the results of the change initiative combined with a rewards
program that reinforces the desired behavior is the backbone of an effective change
program.