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BA5018 ORGANISATIONAL THEORY, DESIGN AND DEVELOPMENT

UNIT IV ORGANISATIONAL CHANGE

Meaning – Forces for Change - Resistance to Change – Types and forms of change – Evolutionary
and Revolutionary change – Change process -Organisation Development – HR functions and
Strategic Change Management - Implications for practicing Managers.

1. Organization Change
Organization Change: Organizational change is the process by which organization
move from their present state to some desired future state to increase effectiveness.
The change may be 1) Structural change 2) Technology Change and 3) People change
When an organization system is disturbed by some internal or external forces
change frequently occur or any alteration will occur in the overall work environment.

Characteristics of organizational change

1. Change happen for pressure of both Process of organization change
internal and external forces Step 1: Old state
2. Any part of the change affects the whole Step 2: Unfreeze: Awareness of need for change
organization Step 3: Change: Movement from old state to new sate
3. Change affect people Step 4: Refreeze: Assurance of permanent change
4. Change affect technology Step 5: New state
5. Change affect overall element of the
organization
6. Change affect the rate of speed and degree Models of change
of significance of the organization
7. Change may be reactive (React for past 1) Kurt’s model of change
experience) or proactive (Acting before a 2) System model of change: Refer figure three
problem arises). 3) Kotter’s Eight step Change model
General reactions are anger, denial and i. Create Urgency
acceptance ii. Form a Powerful Coalition (alliance)
iii. Create a Vision for Change
iv. Communicate the Vision
v. Remove Obstacles
Change agents: A person is responsible for
vi. Create Short-term Wins
managing change activities.
vii. Build on the Change
The change agents may be managers, current
viii. Anchor the Changes in Corporate
employees, newly hired employees, or outside
Culture
consultants.
Process of planned change according to Kurt Lewin
or Kurt’s model of change
1. Unfreezing: Provide rationale for change
2. Moving : Provide information that suspects
proposed changes
3. Freezing: Implement new evaluation and
systems.
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2. Resistance to change
Resistance: In general resistance means refusal to accept. Factors determining Speed of Change
Resistance to change means: Effort to block new way of 1. Urgency
doing things. Effort to refuse organizational change. The 2. Degree of support
act of opposing the change. 3. Amount and complexity of change
The different kinds of resistance to change are 4. Environment support
1) Individual resistance 5. Knowledge and skills available
2) Group resistance 6. Financial and other resources
3) Organizational resistance
Reasons for individual resistance
1. Economic factors: salary, compensation,
monetary rewards…etc
2. Habits
3. Insecurity and Fear
4. Lack of communication
5. Extend of change
6. Psychological factors
Reasons for group resistance
1. Threatened
2. Group cohesiveness
3. Group status
4. Group norms
5. Social interaction
Reasons for Organizational resistance
1. Past success
2. Stability of system
3. Resource limitation
4. Sunk cost: Cost that already occurred that
cannot be recovered
5. Threatened power
What and where went Nokia Wrong?

Ways to minimize resistance to change

1. Communication
2. Training
3. Employee involvement
4. Stress management
5. Coercion
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3. Forces of change

(1) External forces of change: External forces for change originate outside the organization.

There are four key external forces for change: 

 Demographic characteristics:
 Technological advances
 Market changes
 Social and political pressures
Other external forces
Technology
Marketing conditions
Special changes
Political factors
Business cycles
Lab our market shift
Workforce diversity
Globalization
Government policies
Competition
Resource scarcity
(2) Internal forces of change: Internal forces come from inside the organization.
(i) Human Resource Problems/Prospects
(ii) Managerial Behavior/Decisions
(c) Organization Level Changes
Others internal forces
Work force
Managerial personnel
Management structure
Changes in the work climate
New equipment
New processes
Lab our surplus and shortages
Social Change
Failing effectiveness

FORCES FOR CHANGE

FORCES FOR CHANGE: Organizations encounter many different forces for change. These forces
come from external sources outside the organization and from internal sources.

Awareness of these forces can help managers determine when they should consider
implementing an organizational change. The external and internal forces for change are as
follows:
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(a) External Forces: External forces for change originate outside the organization. Because these
forces have global effects, they may cause an organization to question the essence of what
business it is in and the process by which products and services are produced.

(i) Demographic Characteristics: The workforce is more diverse and there is a business
imperative to effectively manage diversity. Organizations need to effectively manage diversity
if they are to receive maximum contribution and commitment from employees. Ex. Net
generation culture.

(ii) Technological Advancements: Both manufacturing and service organizations are

increasingly using technology as a means to improve productivity and market competitiveness.
Manufacturing companies, for instance, have automated their operations with robotics,
Computerized Numerical control (CNC) which is used for metal cutting operations, and
computer-aided design (CAD). Companies have just begun to work on computer-integrated
manufacturing (CIM). This highly technical process attempts to integrate product design with
product planning, control, and operations. Office automation consists of a host of
computerized technologies that are used to obtain, store, analyse, retrieve, and communicate
information.

(iii) Market Changes: The emergence of a global economy is forcing Indian companies to change
the way they do business. Companies have to forge new partnerships with their suppliers in
order to deliver higher quality products at lower prices.

Customers choice is changing Customers demands are changing Easy switching to new market
Ex: Wal-Mart, Superbazar, Flip-kart, Tradus

(iv) Social and Political Pressures: These forces are created by social and political events.
Personal values affect employees’ needs, priorities, and motivation; managers thus may need
to adjust their managerial style or approach to fit changing employee values. Political events
can create substantial change.

For example: Helmet was made compulsory in 2006. Statutory Warning on Tobacco products.
Maternity leave to workers etc. Although it is difficult for organizations to predict changes in
political forces, many organizations hire lobbyists and consultants to help them detect and
respond to social and political changes.

(b) Internal Forces: Internal forces come from inside the organization. These forces may be
subtle such as low morale, or can manifest in outward signs such as low productivity and
conflict. Internal forces for change come from both human resource problems and managerial
behavior/decisions.

(i) Human Resource Problems/Prospects: These problems stem from employee perceptions
about how they are treated at work and the match between individual and organization needs
and desires.

Dissatisfaction is a symptom of an underlying employee problem that should be

addressed. Unusual or high levels of absenteeism and turnover also represent forces for change.
Organizations might respond to these problems by using the various approaches to job design
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by implementing realistic job previews, by reducing employees role conflict, overload, and
ambiguity, and by removing the different stresses. Prospects for positive change stem from
employee participation and suggestions.

(ii) Managerial Behavior/Decisions: Excessive interpersonal conflict between managers and

their subordinates is a sign that change is needed. Both the manager and the employee may
need interpersonal skills training, or the two may simply need to be separated.

For example, one of the parties might be transferred to a new department.

Ex.: Inappropriate leadership behaviour

(III) Organization Level Changes: Change at this level involves major programmes that affect
both individuals and groups. Decisions regarding these changes are generally made by senior
management and are seldom implemented by only a single manager. Frequently they occur
over long periods of time and require considerable planning for implementation.

Example of these changes would be reorganization of the organization structure and

responsibilities, revamping of employee remuneration system, or major shifts in an
organization's objectives. Change at the organizational level is generally referred to as
organization development.

4) Evolutionary and Revolutionary change

Revolutionary change: The revolutionary change is immediate, dramatic, and forced
down –a high-pressure mandate from above coming from “upstairs” when senior
leadership says that it must be done.

Once the decision is made, a room for discussion may be accepted, but the
change is going to take place one way or another. It can take a day, a week, or a month,
and sometimes even a quarter, but the change will occur.

Advantages

 High chances for the change to take effect.

 The change will be quick.
 No resources issues. All the required resources will be allocated.
 No internal politics. Full Political cover by management to eliminate opposition.
 Looks good on external reports and communication.

Disadvantages

 Culture and DNA. Change may “break” the culture and DNA.
 Implemented changes often rolled back and followed by new changes with a risk
of going into loops of changes.
 Leadership changes: if the change does not provide the benefit expected, or
fails, the people who lead it will be replaced.
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 A shift of priority: other processes are being put aside. All focus of the company
is on the change.
 Engagement. As not all people understand the change and the reasoning, not
everyone is engaged, so the solution applied often leaves pain points or gaps.
 Attrition. As a result of the change, the people are leaving the organization, as
they don’t understand it, or find themselves shifted to a different role.

Evolutionary change: The evolutionary change is gradual. The approach is built

collaboratively. The senior management needs to be engaged, but they are not driving
the change. Leadership tends to empower people all through the organization to take
on the change. The change occurs in small chunks, and every person is to understand
the change and embrace it.

Advantages

 Culture and DNA. With high probability, if the change is successfully

implemented, it will become part of the culture. As more people have been
involved in the design and implementation, more people identify with the
change.
 Being designed by the people. More likely that the change fits the organization,
and more likely to be successful.
 More hands around it, lead to more ideas and solutions.
 More people involved in the process leads to more people supporting it and
engaging.

Disadvantages

 Wrong direction. Changes may be introduced that do not move the organization
towards where it needs to go. Although successful doesn’t bring the needed
results.
 Too many ideas. No central decision, no one clear owner, and it’s harder to reach
one direction.
 Require veterans and skilled people that are not easy to find, and that are willing
to be part of this process.

Conclusion of evolutionary and revolutionary change

Revolution is fast and reversible - evolution is slow and irreversible. For organizations,
the choice of revolutionary or evolutionary change is generally thrust upon them by
powerful internal or external factors. Whilst revolutionary change is at times necessary,
it is not always inevitable. Organizations that have been able to build a culture of
evolutionary change, however, can often cope with external shocks without the need for
revolutionary change.

How is a choice made between adopting a revolutionary approach and an evolutionary

approach? For organizations, the choice of revolutionary or evolutionary change is generally
thrust upon them by powerful internal or external factors. Whilst revolutionary change is often
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required in an organization, it can be a sign of poor management that has been unable to instill
a culture of evolutionary change in the first place.

Unless forced, a company can take either approach. Take the status quo, and go for slow,
small, “baby steps” improvements or take a revolutionary approach and run with it. Or a
combined approach, by taking the revolutionary approach and then make evolutionary
changes.

Managing Organizational change

Fig 1: Model of managing organizational change

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Figure 2: Types of organizational change

Figure 3: System model of change

System model of change: The systems approach to organizational change makes it possible to
describe change based on all characteristics of change; after all the change system presents all
those attributes dynamically and at the same time. Fluctuations in one or more attributes are
possible at any time during the course of the change process.

The input for the system model of change can be one or more elements from the organizational
context (strategy, structure, people, culture). This element experiences a change through the
influence of the change attributes of the change system. The change attributes may vary
depending on the input in the system. Thus in case of a strategic change other change attributes
than with a cultural change are involved. Moreover the change attributes will get another
interpretation when they are being looked upon from other paradigms.
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5) Organizational Development
Organizational development: The term organizational development was coined by Richard
Beckhard in the mid-1950s.Organizational development is an acronym of two words i.e.,
organization and development.

Organization: is group of people working together in a systematic way to achieve common goal.

Development: The systematic use of scientific and technical knowledge to meet specific
objectives or requirements.

“Organization development is a set of activates which may be undertaken to increase

organizational as well as human resource effectiveness”
“Organizational development is a collection of change method that tries to improve
organizational effectiveness and employee well –being”
According to Middlemist and Hitt defines “organizational development is a systematic
means for planned change that involves the entire organization and is intended to
increase organizational effectiveness.”

Objectives of organizational development

Features of organizational development 1. To apply behavioral science theories
2. To improve organizational
 Planned Change
performance
 Comprehensive Change
3. To ensure proper use of individual
 Long-range change
efforts
 Dynamic process
4. To create awareness
 Participation of change agent
5. To encourage people to solve
 Emphasis on intervention problems
 Emphasis on action 6. To establish and maintain
 Normative educational process interpersonal relation
7. To create favourable working
environment
8. To increase knowledge and skills
9. To minimize resistance to change
Process of Organizational development 10. To create job satisfaction

(1) Problem identification:

The first step in OD process involves understanding and identification of the existing
and potential problems in the organization. The awareness of the problem includes knowledge
of the possible organizational problems of growth, human satisfaction, the usage of human
resource and organizational effectiveness.
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(2)Data Collection: Having understood the exact problem in this phase, the relevant data is
collected through personal interviews, observations and questionnaires.

Figure: Process of Organizational development

(3) Diagnosis: OD efforts begin with diagnosis of the current situation. Usually, it is not limited
to a single problem. Rather a number of factors like attitudes, assumption, available resources
and management practice are taken into account in this phase. There are four steps in
organizational diagnosis.

 Structural analysis: Determines how the different parts of the organization are
functioning in terms of laid down goals.
 Process analysis: Process implies the manner in which events take place in a sequence.
It refers to pattern of decision making, communication, group dynamics and conflict
management patterns within organization to help in the process of attainment of
organizational goals.
 Function analysis: This includes strategic variables, performance variables, results,
achievements and final outcomes.
 Domain analysis: Domain refers to the area of the organization for organizational
diagnosis.

(4) Planning and implementation: After diagnosing the problem, the next phase of OD, with
the OD interventions, involves the planning and implementation part of the change process.

(5) Evaluation and feedback: Any OD activity is incomplete without proper feedback. Feedback
is a process of relaying evaluations to the client group by means of specific report or interaction.
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6) Organizational Development (OD) Interventions

Interventions: "Interventions" are principal learning processes in the "action" stage of
organization development.

There are interventions that focus on task issues (what people do), and those that focus on
process issues (how people go about doing it).

Organization Development (OD) interventions techniques are the methods created by OD

professionals and others. Single organization or consultant cannot use all the interventions.
They use these interventions depending upon the need or requirement.

They may be introduced by a change agent as part of an improvement program, or they

may be used by the client following a program to check on the state of the organization's health,
or to effect necessary changes in its own behavior. "Structured activities" mean such diverse
procedures as experiential exercises, questionnaires, attitude surveys, interviews, relevant
group discussions, and even lunchtime meetings between the change agent and a member of
the client organization.

The most important interventions are,

1. Survey feedback 2. Process Consultation 3. sensitivity Training 4. The Managerial grid 5. Goal
setting and Planning 6. Team Building and management by objectives 7. Job enrichment,
changes in organizational structure and participative management and Quality circles, ISO,
TQM.

ASSUMPTIONS OF Organizational Intervention (OI):

Several assumptions about the nature and functioning of organizations are made in the choice
of a particular strategy. Beckhard lists six such assumptions:

 The basic building blocks of an organization are groups (teams). Therefore, the basic
units of change are groups, not individuals.
 An always relevant change goal is the reduction of inappropriate competition between
parts of the organization and the development of a more collaborative condition.
 Decision making in a healthy organization is located where the information sources are,
rather than in a particular role or level of hierarchy.
 Organizations, subunits of organizations, and individuals continuously manage their
affairs against goals. Controls are interim measurements, not the basis of managerial
strategy.
 One goal of a healthy organization is to develop generally open communication, mutual
trust, and confidence between and across levels.
 People support what they help create. People affected by a change must be allowed
active participation and a sense of ownership in the planning and conduct of the change
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Factors that help change agent for organizational interventions

 A real need in the client system to change.

 Genuine support from management.
 Setting a personal example: listening, supporting behavior.
 A sound background in the behavioral sciences.
 A working knowledge of systems theory.
 A belief in man as a rational, self-educating being fully capable of learning better ways
to do things.

A few examples of interventions include: Team Building, Coaching, Large Group

Interventions, Mentoring, Performance Appraisal, Downsizing, TQM, Leadership
Development.

OD Intervention

 Sensitivity training
 Team building
 Survey feedback
 Behaviour modification
 Grid organization development
 Career planning
 Job expectation technique
 Organisational renewal process

Structural OD Interventions

 Job redesign
 Work schedule option
 Process consultation
 MBO
 Decision centres
 Collateral organisation

7) Strategic Change Management

Strategic change management: Strategic change management is the process of managing
change in a structured and thoughtful way in order to meet organizational goals, objectives and
missions

Therefore, change management and related processes present many managerial challenges
and, consequently, requires a systematic, structured, purposeful and integrated approach.
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Figure: Integrated management approach of change

Figure: Strategic Management Process

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Figure: Change transisiton curve and Management support

Figure: Change transition and employee reaction at various levels

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Strategic change model or five central factors of strategic change

1. Environment Assessment
2. Human Resources as Assets and Liabilities
3. Linking Strategic and Operational Change
4. Leading Change
5. Coherence

*****************All the Best*********************

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