ORGANIZATIONAL CHANGE AND DEVELOPMENT Unit -1

Organisational Change

Organisational change refers to relatively enduring alteration of the present state of an

organisation or its components or interrelation amongst the components and their differential
and integrated functions in totality in order to attain greater viability in line context of the
present and anticipated future environment.
 Organizational change is the process by which organization move from their present
state to some desired future state to increase effectiveness.
 When an organization system is disturbed by some internal or external forces change
frequently occur or any alteration which occur in the overall work environment of an
organization.
Characteristics of Organizational change
 Change happen for the pressure of both internal and external forces in the
organization.
 Change in any part of the organization affect the whole organization.
 Change may affect people, structure, technology, and other element of the
organization.
 Change also affect the rate of speed and degree of significance of the organization.
 Change may be reactive or proactive.

Forces/factors of organisational change

External factors:-

1. Technology: - The adoption of new technologies, such as computers, telecommunication

systems, robotics and flexible. Manufacturing operations have a profound impact on
organisations that adopt them.

2. Social changes: - After globalisation there is a radical change shift in one value placed on
higher education, lifestyle, views on marriage, joint family system and shopping preferences.

3. Marketing conditions: - The need, wants, appreciations, liking, disliking and preferences
of customers are changing frequently. Consumer is emerging as a ‘king’ who is actually
deciding factor of market forces.

4. Globalisation: - Global economy refers that competitors are likely to come from different
countries. Organisations will encounter a wide variety of dynamic changes – merger,
acquisition, down rising etc.

5. Political forces: - As long as currencies fluctuate and some economies outperform other,
assets will flow across borders.

Internal forces:-

1. Changes in managerial personnel:- Changes in the functioning of top level professional

manager bring changes in one organisation in terms of organisation design, delegation of
authority, allocation of work, firing responsibility and installation of supervision and contact
etc.

2. Shift in social cultural values: - workers are more educated, less conservative and more
women are joining the work force. They place greater emphasis on human values, such as
dignity recognition, social status, equality etc.
3. To have a dynamic environment: - if one organisation is not moving forward, then it will
not survive and grow. Flexibility, specialisation, standardisation, modernisation and
automation are the necessities of the time. Required changes should be incorporated so that
employees modify their attitude towards changes.
4. Deficiency in the existing structures : - Changes may be required in the present setup of
the organisation to meet the challenges imposed by the workforces and technology. These
deficiencies
may be in the form of more no of levels, lack of cooperation and coordination, poor system
of committee, lack of uniform policy decisions, multiplicity of committee autocracy in
decision making, centralisation and so on.
Internal Pressures for Change:
A. Work force C. Managerial personnel
B. Avoid developing inertia D. Management structure
External Pressures for Change:
A. Technological advances C. Political Forces
B. Marketing conditions D. Social changes
Nature of Organisational Change
Organisational Change is the alteration of work environment in organisation. It implies a
new equilibrium b/w different component of the organisation-technology, structural
arrangements, job design and people.

Features of Organisational Change:-

1. When change occurs in any part of the organisation, it distributes the old equilibrium,
necessitating the development of new equilibrium depends on the degree of change and its
impact on the organisation.

2. Any change may affect the whole organisation: some parts of the org. may be affected
more, others less, some parts are affects directly, others indirectly.

3. Organisational Change is a continuous process. However, some changes which are of

minor type may be absorbed by the existing system equilibrium; others, which are major
ones, may require special changes efforts.
Planned change
According to Thomas and Bennis, “planned change is one deliberate design and implements
of a structural innovation, anew policy or goal, or a change in operating philosophy, climate,
or style.” Planned change attempts at all aspects of one organisation which are closely
interrelated; technology, task, people, structure.

Structure
Task Technology

People
Technology related changes may include:-

-> Introduction of automated data processing devices like computers to facilitate

managerial planning and control.

-> Change in methods of production like conversion of unit production to mass production.

Task related changes more focuses on:-

-> High internal work motivation and

-> High quality work performance.

Structure related changes:-

-> Changing the no hierarchical levels.

-> Changing line-staff to functional authority.

People related changes:-

-> Skill change and

-> Behaviour change.

Process of planned change

Identifying the Elements to be Planning for Assessing

need for change changed change change forces

Action for
Feedback change

Refreezing changing unfreezing

Change Agents:
• A Persons in organization responsible for managing change activities.
• Can be managers or non-managers, current employees, newly hired employees
or outside consultants.

Speed of Change:
 Resistance to change
Individual Resistance:
• Below are stated some reasons why people resists changes. Some of these appear to
be rational or emotional. These reasons are:-
• Economic factors
• Extend of change
• Habits
• Psychological factors
• Insecurity
• Social factors
• Lack of communication
Group Resistance:
Most organizational changes have impact on formal groups in the organization the main
reason why the groups resists change is that they fear that their cohesiveness or existence is
threatened by it.
Organizational Resistance:
Organizational resistance means the change is resisted at the level of the organization itself.
Some organization are so designed that they resist new ideas, this is specifically true in case
of organization which are conservative in nature. Majority of the business firm are also
resistance to changes. The major reason for organizational resistance are:-
• Threat to power • Threat to specialization
• Group inertia • Resource constants
• Organizational structure • Sunk costs

Can be understood in two ways:-

Resistance as a cost:-

e.g. in order to above its manufacturing capacity of two wheelers, one Bajaj auto ltd.
Procured land near its old plant site but later shifted the new plant site away from the
old plant because of resisting work culture of the old plant which was expected to
percolate to the new plant also. On this phenomenon Madhur Bajaj, MD of Bajaj
Auto commented that “ The Pune plant is fully saturate. We wanted a new plant
culture and new layout. We saw resistance to change at the existing plant.

Resistance as benefit:-

1. It may signal the need for more effective communication about the meaning and
purpose of a change or need to rethink precisely how a proposed change will affect
one org. and its members.
2. It also highlights real inadequacies in one proposed change and suggests better
ways for developing and introducing change.
Overcoming resistance to change

At individual levels At group Level

Involvement group contact
Commitment (private and public) participation
Leadership (effective leader) group dynamics training for
change

Meaning and Importance:

• Any alteration or modification of status quo, which occurs in the overall work
environment of an organisation, is change.
 • Change is making things different.
• Organisation change refers to alterations in structural relationships and role of the
people in it.
Some views about change are:
• “The only thing constant and consistent is a change.”
• “Individuals and organisations have to adapt to environment and must change.” –
Darwin
• Internet (IT) is second industrial revolution, which will have same effect on
companies as first industrial revolution, except that it will be over in two or three
decades. The changes that used to take place in one or two decades will occur in one
or two years.

Several models of sequential steps or stages in change have been suggested. All these
models envisage change as a continuous process involving several stages. The following
eight stages are proposed here as framework of organizational change:
1. Initiation: Invitation is the stage of vocalization of the need for change. Organizational
change starts when someone takes the initiative of proposing that something has to be done
at the level of the corporate management where the concern for some dimension of
organizational functioning is shared and discussed. The idea may be mooted at the level of
the corporate management, at times based on observations or recommendations by some
other level of the organization, and sometimes as a result of discussion at the level of the
corporate management. This usually leads to the hiring of a consultant from outside, or
discussion with the appropriate set of people within the organization.
2. Motivation: Motivation is the stage of the involvement of people in detailed thinking
about the proposed change. At this stage both the corporate management and the expert who
helps in the organizational change take necessary steps to involve at large section of the
organization in thinking about the various dimensions of the change process.
3. Diagnosis: Diagnosis is an attempt to search for the main cause of the symptoms
encountered.
4. Information Collection: At this stage detailed information is collected on the dimension
indicated by the diagnosis. Based on the diagnosis the necessary information is collected.
5. Deliberation: The deliberation stage is concerned with evaluating various alternatives
generated for change.
6. Action Proposal: This is the stage of framing up an action proposal.
7. Implementation: Implementation is concerned with translating the proposal into action.
8. Stabilization: Stabilisation is the stage of internalising change and making it a part of the
organization’s normal life. The various stages in the process of organizational change may be
useful to pay attention to the process in the beginning much more and this will help to pay
less attention to the process as the organizational change proceeds further. Later much more
attention can be given to the task. It is necessary to understand the psychological process
behind each stage of change, and the behavioural outcomes or indicators.
These are suggested in fig.
S. No Stage of adoption Psychological (cover) Behavioural outcomes
process
1. Initiation Arousal Readiness:
dissatisfaction with the
present state
2. Motivation Selectivity and Seeing or hearing
stimulus perception about
Innovation
3. Diagnosis Orientation, and Gathering information
exploration And data
4. Information collection Exploration Collecting more
relevant data
5. Deliberation Cognitive Discussion,
reorganization planning
and reinforcement
6. Proposal Expectancy Presenting one pay off and detailed
proposal with acceptance by the
planning group

7. Implementation Acquiring new-learned Extended use of the

Acquiring Innovation drives
new-learned

Nature of change can be as under:

• Keith Davis has stated that lithe whole organisation tends to be
affected by change in any part.
• Individual Change and Organisation Change:
• Organisations introduce change through people, people learn to adapt their
attitude and are willing to meet changing environment.
• Organisational change refers to process of growth, decline and transformation
within the organisation.
• Organisation Change can be either through:
• a. Behavioural approach through individuals and groups.
• Changing the attitudes and behaviours of employees through processes
of communication, decision-making, problem-solving. Here focus is
changing the people work relationships (OD).
• b. Non-behavioural approach through:
• Change in policies, structure, and
• Technology, physical layout of work space.
• Both kinds-behavioural and non-behavioural changes are
interdependent.
• Reactive Change or Proactive Change:
• Reactive forces make it necessary and it is passive compliance to
demands.
 • Proactive change means, particular change is desirable and initiated in
a planned manner. Planned change activities are intentional and goal
oriented.
Types of Change:
• Continuous or Incremental Change or Gradual Slow Change.
• Discontinuous or Radical Change.
• Participative Change.
• Directive Change.
• They further state that the first two types of change refer to overall nature of
the change process, while the last two refer to the way in which the change
process is brought about.
• Knowledge of these types of change help the change agent to use appropriate
strategies. How to select right type of change approach.
• A change programme will depend on the analysis of the environment.
• The specific changes which take place in the environment can be seen as
opportunities or threats such as change in organisation markets may grow, and
organisation may need revitalisation towards greater market orientation.
• Type of change can be participative or consultative.
• Other types of changes can be change by exception and paradigm change.
• Organisational Growth and Organisational Transformation:
• Organisational change refers to process of growth, decline and transformation
within the organisation.
• The organisational growth differs from organisational transformation in the
focus in the organisation.
• In case of growth, focus is more on the” outside”, i.e. markets, customers,
segments, what product/ market facilities to be setup, joint-ventures,
certification, etc.
• While in the case of transformation, the focus is more on the “inside”, i.e.
cultural issues are given more importance. For example, existing relationships,
people, systems, departmental positions, power structures, information
sharing, etc.
Linda Ackerman distinguishes between three types of change:
• The first type of change is development change.
• This refers to improving what already exists in the organisation. This is the
same as convergence, incremental or evolutionary change.
• The second type of change is transitional change.
• Which involves moving from the current state to a known new state through’ a
transition state. Restructuring, mergers, introduction of new processes M
technologies, systems and procedures are examples of transitional change. In
transitional change the organisation retains some of its old aspects and adds on
new ones.
• The third type of change is called transformational change.
• This type of change is a fundamental re-invention of the organisation by
changing its leadership, mission, culture, structure, strategy, human resource
practices and so on.
• Transformational changes the fundamental image of business as seen by
customers and employees. Transformational focuses on creating ‘mind share’
more than ‘market share.
Need for Change:
 Technological innovations have multiplied; products and know how are fast becoming
obsolete.
• Basic resources have progressively become more expensive.
• Competition has sharply increased.
• Communication and computers have reduced the time needed to make decisions,
• Environmental and consumer interest- groups have become highly influential.
• The drive for social equity has gained momentum,
• The economic interdependence among countries has become more apparent.
These and many other changes compel organisations to cope with the environment and
become more adaptive. If they do not adopt to the circumstances they become extinct.