ORGANISATIONAL CHANGE & ORGANISATIONAL

CULTURE
• FORCES FOR ORGANISATIONAL CHANGE
Organizational change is inevitable. Survival of even the most successful organizations cannot
be taken for granted, unless and until they adjust according to the changes occurring in the
environment such as globalization, technological advancement, competition in the market,
changing profiles of customers and employees, etc. If organizations fail to change, the cost of
failure may be quite high. Organizations encounter many different forces for change, which
may be external or internal.

External Forces for Change

• Competition in the market- Due to multiple options available to the customers, there
is inevitable pressure on companies that drive prices downward and it continues to be
a dreadful competitive force that is apparent in all sectors such as retail grocery
business, computers, airfares, mobile phones, textiles, automobiles, etc. Competition
can influence a change in the organization by the price structure and product lines.

• Technological advancement- Technological advancement has brought about major

changes in organizations. It has not only changed the way the work is performed, but
has also changed work relationship and organizational structure. In fact, there is not a
single organization which has not been forced to change by the technological
advancement in structure, communication, way of doing business, etc.

• Globalization- Globalization is the process of economic integration at the international

level. It has made organizations to rethink the boundaries of their markets and to
encourage their employees to think globally. Globalization forces organizations to
bring structural changes. The information technology and aviation industries have
demolished geopolitical boundaries. While globalization has opened up opportunities
for products, services, and people to travel to different parts of the world, it has also
created pressure on organizations to manufacture high-quality products and provide
high-quality services at low cost.

• Government policies- It is a major factor that forces organizations to change their way
of conducting business. Changes in the government rules and regulations necessitate
changes in organizations.

• Workforce diversity- Workforce diversity is a dominant factor that forces

organizations to change in terms of structure, policies, and rules and regulations.
Diversity has emerged as an issue because of imbalanced representation of diverse
groups in the workforce. It makes an organization reposition itself, launch a new
project, create a new idea, develop a new marketing plan, etc. All these involve
considerable change. Organizations need to effectively manage diversity if they are to
receive maximum contribution and commitment from employees.
• Social and political pressures- These forces are created by social and political events.
Similarly, political events can also create substantial change. 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.

Internal Forces for Change

• Change in leadership- Leadership brings changes in culture and values of
organizations.

• Change in employee and customer expectations- Both employees and customers are
now better informed and educated because of the available choices. Both are highly
demanding and are beginning to almost dictate to organizations.
• Human resource problems/prospects- Organizations are forced to change, which
arise due to 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 immediately.

• Managerial behaviour/decisions- Unwarranted interpersonal conflict between

managers and their subordinates is a sign that change is needed. If an organization fails
to address the problem immediately, productivity of both the manager and the employee
decreases. Many organizations organize interpersonal skills training for both the
manager and the employee or simply separate the two.

PROCESS OF PLANNED CHANGE

• Management of organizational change is a complex process. Organizational change
does not occur instantaneously. Instead, it involves formidable exercise on the part of
management. A major organizational change requires considerable planning.
The various steps involved in a planned change are as follows:

• 1. Identifying need for change,

• 2. Elements to be changed,
• 3. Planning for change,

• 4. Assessing change forces,

• 5. Actions for change, and
• 6. Feedback.
Identifying Need for Change: The first basic step in planned change is to identify when
change in the organization is required because change for the sake of change may produce
much stronger resistance while useful and necessary changes may get support from people.
For organizational change, there should be a trigger, either from the environment in the
form of a substantial change or internal (poor organizational performance, new strategic
 thrust, etc.). This trigger should be analyzed to assess need for change and its direction. For
example, if there is entry of a new powerful competitor with latest technology in the market,
this may not affect the organization immediately but may affect it at a later stage.
Elements to be Changed: What elements of the organization should be changed will largely
be decided by need and objectives of the change. While the process of identification of change
will provide clue why change should take place, this stage takes the analysis further by
diagnosing the problems caused because of which the change is required. For example,
declining profit may require change but does not specify what elements are to be changed.
Therefore, it is necessary to diagnose the factors which are responsible for declining profit.
Planning for Change: At this stage, managers should plan about how the change can be
brought in the light of the above two steps. Planning for change includes who will bring change,
when to bring change, and how to bring change.
Assessing Change Forces: The planned change is not automatic rather there are many forces
in individuals, groups, and even in the organization which resist such change. Unless the
cooperation of people is not ensured, any change process will not succeed. For this purpose,
the management has to create an environment in which change will be accepted by the
people. This problem is referred to the problem of overcoming resistance to change. In a
group process, there are some forces favoring and some opposing change to maintain
equilibrium. This has been referred to as field of forces by Kurt Lewin. Field of Forces states
that in any situation, there are both driving and restraining forces which influence any change
that may occur. Driving forces are those which affect a situation by pushing it in a particular
direction; they tend to initiate a change and keep it going. Restraining forces act to restrain
change or to decrease the driving forces. Equilibrium is reached when the sum of driving forces
equals the sum of restraining forces.
Organizational equilibrium is not static but is quasi-static and management may change
this equilibrium by some efforts. For introducing change, management may face three types
of situations based on the operation of field of forces:
1. If the driving forces far outweigh the restraining forces, management can push driving
forces and overpower restraining forces.
2. If the restraining forces are stronger than the driving forces, management may either
give up the change programme or pursue it by concentrating on driving forces and
changing restraining forces into driving ones or immobilizing them.
3. If driving and restraining forces are fairly equal, management can push up the driving
forces and, at the same time, can convert or immobilize restraining forces.
Actions for Change: Actions for change comprise three stages - unfreezing, changing, and
refreezing.
Unfreezing: It is the process in which a person casts aside his old behaviour which
might be inappropriate, irrelevant, or inadequate to the changing demands of the
situation. This aspect of action is as important as the action relating to changing the target.
 Just as a farmer must clear a field before planting new seeds, so must manager help
employees clear their minds of old roles and purposes.
Changing: This is the stage at which the individuals being changed learn new
behaviour - methods of working, new thinking, perception of new roles, etc. There are
a variety of ways through which all these can be inculcated. Smith has provided guidelines
for effective change which are as follows:
1. Recognize that the primary purpose of change is to improve performance results.
2. Make individuals responsible for their own change.
3. Encourage improvisation, team performance, and coordinated initiatives.
4. Ensure that people see how they fit into the larger organizational picture.
5. Encourage learning by doing and provide just-in-time training for performance.
6. Use positive energy, meaningful language, and courageous leadership to drive change
relentlessly.
Refreezing: Refreezing means that what has been learned is integrated into actual
practice. At this stage, the individuals internalize the new beliefs, feelings, and behaviors
learned during the changing phase. They adopt these elements as a permanent part of their
behaviour repertoire. Often, there is a tendency that individuals revert back gradually to
their old behaviors, which they were displaying before the change, in the absence of
suitable reinforcement. Therefore, reinforcement is necessary for the internalization of new
behaviour.
Feedback: Management of change requires feedback and follow-up actions to ensure that
change programme is progressing in right direction without producing any dysfunctional effect.
Since a change programme is likely to solve some problems and produce other problems,
though of minor magnitude, it is desirable that management has constant watch as the change
programme progresses. Problems created by the change should be tackled immediately so that
it gives better results to the organization. Feedback received from the initial attempt of change
programme may be used to modify the subsequent programme. Normally, the impact of the
change programme is measured in terms of its objectives. Therefore, objectives of the change
should be defined operationally so that measurement is easier.

Resistance to change
• Our egos are fragile, and we often see change as threatening. Even when employees are
shown data that suggest they need to change, they latch onto whatever data they can
find that suggest they are okay and don’t need to change. Employees who have
negative feelings about a change cope by not thinking about it, increasing their use
of sick time, or quitting. All these reactions can sap the organization of vital energy
when it is most needed. Resistance to change doesn’t just come from lower levels
 of the organization. In many cases, higher-level managers will resist changes
proposed by subordinates, especially if these leaders are focused on immediate
performance. Conversely, when leaders are more focused on mastery and exploration,
they are more willing to hear and adopt subordinates’ suggestions for change.

• Resistance to change can be positive if it leads to open discussion and debate. These
responses are usually preferable to apathy or silence and can indicate that members of
the organization are engaged in the process, providing change agents an opportunity to
explain the change effort. Change agents can also monitor the resistance to modify the
change to fit the preferences of members of the organization. Resistance doesn’t
necessarily surface in standardized ways. It can be overt, implicit, immediate, or
deferred. It’s easiest for management to deal with overt and immediate resistance such
as complaints, a work slowdown, or a strike threat. The greater challenge is managing
resistance that is implicit or deferred because these responses—loss of loyalty or
motivation, increased errors or absenteeism—are more subtle and more difficult to
recognize for what they are. Deferred actions also cloud the link between the change
and the reaction to it, sometimes surfacing weeks, months, or even years later. Or a
single change of little inherent impact may be the straw that breaks the camel’s back
because resistance to earlier changes has been deferred and stockpiled.

Sources of Resistance of Change

Individual Sources

• Habit—To cope with life’s complexities, we rely on habits or programmed responses.

But when confronted with change, this tendency to respond in our accustomed ways
becomes a source of resistance.

• Security—People with a high need for security are likely to resist change because it
threatens their feelings of safety.
• Economic factors—Changes in job tasks or established work routines can arouse
economic fears if people are concerned that they won’t be able to perform the new tasks
or routines to their previous standards, especially when pay is closely tied to
productivity.
• Fear of the unknown—Change substitutes ambiguity and uncertainty for the unknown.

• Selective information processing—Individuals are guilty of selectively processing

information in order to keep their perceptions intact. They hear what they want to hear,
and they ignore information that challenges the world they’ve created.
Organizational Sources

• Structural inertia—Organizations have built-in mechanisms—such as their selection

processes and formalized regulations—to produce stability. When an organization is
confronted with change, this structural inertia acts as a counter balance to sustain
stability.
 • Limited focus of change—Organizations consist of a number of interdependent
subsystems. One can’t be changed without affecting the others. So limited changes in
subsystems tend to be nullified by the larger system.

• Group inertia—Even if individuals want to change their behavior, group norms may
act as a constraint.
• Threat to expertise—Changes in organizational patterns may threaten the expertise of
specialized groups.

• Threat to established power relationships—Any redistribution of decision-making

authority can threaten long-established power relationships within the organization.

Overcoming Resistance to Change

• Communication: Communication is more important than ever in times of change.
One study of German companies revealed changes are most effective when a
company communicates a rationale that balances the interests of various
stakeholders (shareholders, employees, community, customers) rather than those
of shareholders only. Other research on a changing organization in the Philippines
found that formal information sessions decreased employees’ anxiety about the
change, while providing high-quality information about the change increased their
commitment to it.

• Participation: It’s difficult to resist a change decision in which we’ve participated.

Assuming participants have the expertise to make a meaningful contribution, their
involvement can reduce resistance, obtain commitment, and increase the quality
of the change decision However, against these advantages are the negatives: the
potential for a poor solution and a great consumption of time.

• Implementing Changes fairly: One-way organizations can minimize negative

impact is to make sure change is implemented fairly. Procedural fairness is
especially important when employees perceive an outcome as negative, so it’s
crucial that employees see the reason for the change and perceive its
implementation as consistent and fair.

• Building Support and Commitment: When managers or employees have low

emotional commitment to change, they resist it and favor the status quo.
Employees are also more accepting of changes when they are committed to the
organization as a whole. So, firing up employees and emphasizing their
commitment to the organization overall can help them emotionally commit to the
change rather than embrace the status quo. When employees’ fear and anxiety are
high, counseling and therapy, new-skills training, or a short-paid leave of absence
may facilitate adjustment to change.

• Develop positive relationships: People are more willing to accept changes if they
trust the managers implementing them. One study surveyed 235 employees from
a large housing corporation in the Netherlands that was experiencing a merger.
 Those who had a more positive relationship with their supervisor, and who felt
that the work environment supported development, were much more positive
about the change process. Underscoring the importance of social context, other
work shows that even individuals who are generally resistant to change will be
more willing to accept new and different ideas when they feel supported by their
coworkers and believe the environment is safe for taking risks. Another set of
studies found that individuals who were dispositionally resistant to change felt
more positive about it if they trusted the change agent. This research suggests that
if managers are able to facilitate positive relationships, they may be able to
overcome resistance to change even among those who ordinarily don’t like
changes.

• Manipulation and Cooptation: Manipulation refers to covert influence attempts.

Twisting facts to make them more attractive, withholding information, and
creating false rumors to get employees to accept change are all examples of
manipulation. If management threatens to close a manufacturing plant whose
employees are resisting an across-the-board pay cut, and if the threat is actually
unfounded, management is using manipulation. Cooptation, on the other hand,
combines manipulation and participation. It seeks to buy off the leaders of a
resistance group by giving them a key role, seeking their advice not to find a better
solution but to get their endorsement. Both manipulation and cooptation are
relatively inexpensive ways to gain the support of adversaries, but they can
backfire if the targets become aware they are being tricked or used. Once that’s
discovered, the change agent’s credibility may drop to zero.

• Selecting people Who accept Change: Research suggests the ability to easily accept
and adapt to change is related to personality—some people simply have more
positive attitudes. Individuals who are open to experience, take a positive attitude
toward change, are willing to take risks, and are flexible in their behavior are
prime candidates. This seems to be universal.

• Coercion: Last on the list of tactics is coercion, the application of direct threats or
force on the resisters. If management is determined to close a manufacturing plant
whose employees don’t acquiesce to a pay cut, the company is using coercion.
Other examples include threatening employees with transfers, blocked
promotions, negative performance evaluations, and poor letters of
recommendation.
Approaches to Managing Organizational Change
• Lewin’s three-Step model
• Kurt Lewin argued that successful change in organizations should follow three steps:
unfreezing the status quo, movement to a desired end state, and refreezing the new
change to make it permanent

• By definition, status quo is an equilibrium state. To move from equilibrium— to

overcome the pressures of both individual resistance and group conformity—
unfreezing must happen in one of three ways (see Exhibit 18-4). For one, the driving
forces, which direct behavior away from the status quo, can be increased. For
another, the restraining forces, which hinder movement away from equilibrium,
can be decreased. A third alternative is to combine the first two approaches.
Companies that have been successful in the past are likely to encounter restraining
forces because people question the need for change.

• Once the movement stage begins, it’s important to keep the momentum going.
Organizations that build up to change do less well than those that get to and through the
movement stage quickly. When change has been implemented, the new situation must
be refrozen so it can be sustained over time. Without this last step, change will likely
be short-lived and employees will attempt to revert to the previous equilibrium state.
The objective of refreezing, then, is to stabilize the new situation by balancing the
driving and restraining forces.
ORGANISATIONAL CULTURE
Organizational culture refers to a system of shared meaning held by members that
distinguishes the organization from other organizations. Seven primary characteristics
seem to capture the essence of an organization’s culture:
• 1. Innovation and risk taking. The degree to which employees are encouraged to
be innovative and take risks.

• 2. Attention to detail. The degree to which employees are expected to exhibit

precision, analysis, and attention to detail.

• 3. Outcome orientation. The degree to which management focuses on results or

outcomes rather than on the techniques and processes used to achieve them.

• 4. People orientation. The degree to which management decisions take into

consideration the effect of outcomes on people within the organization.

• 5. Team orientation. The degree to which work activities are organized around
teams rather than individuals.

• 6. Aggressiveness. The degree to which people are aggressive and competitive

rather than easy going.

• 7. Stability. The degree to which organizational activities emphasize maintaining

the status quo in contrast to growth.

How Employees Learn Culture

Stories
• When Henry Ford II was chairman of Ford Motor Company, you would have been
hard pressed to find a manager who hadn’t heard how he reminded his executives,
when they got too arrogant, “It’s my name that’s on the building.” The message
was clear: Henry Ford II ran the company. Today, a number of senior Nike
executives spend much of their time serving as corporate storytellers. When they
tell how co-founder (and Oregon track coach) Bill Bowerman went to his
workshop and poured rubber into a waffle iron to create a better running shoe,
they’re talking about Nike’s spirit of innovation. When new hires hear tales of
Oregon running star Steve Prefontaine’s battles to make running a professional
sport and attain better performance equipment, they learn of Nike’s commitment
to helping athletes.

• Stories such as these circulate through many organizations, anchoring the present
in the past and legitimating current practices. They typically include narratives
about the organization’s founders, rule breaking, rags-to-riches successes,
workforce reductions, relocations of employees, reactions to past mistakes, and
organizational coping. Employees also create their own narratives about how they
 came to either fit or not fit with the organization during the process of
socialization, including first days on the job, early interactions with others, and
first impressions of organizational life.
Rituals

• Rituals are repetitive sequences of activities that express and reinforce the key
values of the organization—what goals are most important, and/or which people
are important versus which are expendable. Some companies have nontraditional
rituals to help support the values of their cultures. Kimpton Hotels & Restaurants,
one of Fortune’s 100 Best Companies to Work For, maintains its customer-
oriented culture with traditions like a Housekeeping Olympics that includes
blindfolded bedmaking and vacuum races. At marketing firm United
Entertainment Group, employees work unusual hours a few times a year, arriving
in the late afternoon and working until early morning. CEO Jarrod Moses does
this to support a culture of creativity. He says, “You mess with somebody’s
internal clock, and some interesting ideas come out.”
Symbols

• The layout of corporate headquarters, the types of automobiles top executives are
given, and the presence or absence of corporate aircraft are a few examples of
material symbols. Others include the size of offices, the elegance of furnishings,
perks, and attire. These convey to employees who is important, the degree of
egalitarianism top management desires, and the kinds of behavior that are
appropriate, such as risk-taking, conservative, authoritarian, participative,
individualistic, or social.
Language

• Many organizations and subunits within them use language to help members
identify with the culture, attest to their acceptance of it, and help preserve it.
Unique terms describe equipment, officers, key individuals, suppliers, customers,
or products that relate to the business. New employees may at first be
overwhelmed by acronyms and jargon that, once assimilated, act as a common
denominator to unite members of a given culture or subculture.

Influencing an Organizational Culture

CREATING AN ETHICAL ORGANISATIONAL CULTURE:
Despite differences across industries and cultures, ethical organizational cultures share
some common values and processes. Therefore, managers can create a more ethical
culture by adhering to the following principles:

• Be a visible role model. Employees will look to the actions of top management as a
benchmark for appropriate behavior, but everyone can be a role model to
positively influence the ethical atmosphere. Send a positive message.
• Communicate ethical expectations. Whenever you serve in a leadership capacity,
minimize ethical ambiguities by sharing a code of ethics that states the
organization’s primary values and the judgment rules employees must follow.

• Provide ethical training. Set up seminars, workshops, and training programs to

reinforce the organization’s standards of conduct, clarify what practices are
permissible, and address potential ethical dilemmas.

• Visibly reward ethical acts and punish unethical ones. Evaluate subordinates on
how their decisions measure up against the organization’s code of ethics. Review
the means as well as the ends. Visibly reward those who act ethically and
conspicuously punish those who don’t.

• Provide protective mechanisms. Seek formal mechanisms so everyone can discuss

ethical dilemmas and report unethical behavior without fear of reprimand. These
might include identifying ethical counselors or ethical officers for liaison roles.