MODULE – 4

ORGANIZATION
CHANGE
It is not the strongest of the species that survives, nor
the most intelligent, but the one most responsive to
change. —Charles Darwin
 1. Concept
 Change has been defined as any alteration to the
status quo in an organization initiated by internal
or external factors that impact both the
organization and the individual.
 How management act to change the status quo
will determine the organization’s long term ability
to survive.
 No company today is in a particularly stable
environment.
 Company's need to manage both short and long
term changes
 Change or die” – rallying cry among todays
mangers world wide
 Three different types of skills may be
required on the part of manager to
effectively implement the change
process.
 They are: 1.Skills in identifying the
problems that demand solutions.
 2.Skills in formulating strategies and
techniques to solve these problems.
 3.Skills in implementing processes to
gain acceptance from the people affected
by change
 Forces for change

1. Changing nature of the workforce : Almost every

organization must adjust to a multicultural environment,
demographic changes, immigration, and outsourcing.
2. Technology is continually changing jobs and organizations.
It is not difficult to imagine the idea of an office becoming an
antiquated concept in the near future.
3. Economic shocks also have a significant impact on
organizations. During the great recession of 2007 to 2009,
millions of jobs were lost worldwide; home values dropped
dramatically; and many large, well-known corporations like
Merrill Lynch, Countrywide Financial, and Ameriquest
disappeared or were acquired. Recovery has occurred in
many countries, and with it has come new job prospects and
investments. Other countries, like Greece, struggle to regain
their economic footing, limiting the economic viability of
many Greek organizations.
4. Competition is changing. Competitors are as likely to
be across the ocean as across town. Successful
organizations are fast on their feet, capable of
developing new products rapidly and getting them to
market quickly. In other words, they are flexible and
require an equally flexible and responsive workforce
5. Social trends don’t remain static either. Organizations
must therefore adjust product and marketing strategies
continually to be sensitive to changing social trends, as
Instagram did when it debuted “Instagram Stories,”
media (e.g., pictures, videos, text) that disappears some
time after sending, essentially re-creating “Snapchat
Stories. Consumers, employees, and organizational
leaders are also increasingly sensitive to environmental
concerns.
6. world politics : Rising health care costs, Negative
social attitudes toward business and executive
 Planned Change
 Some organizations treat all change as an accidental
occurrence.
 Planned change : change as an intentional, goal-
oriented activity
 What are the goals of planned change?

First, it seeks to improve the ability of the organization

to adapt to changes in its environment.
Second, it seeks to change employee behavior.
 Who in organizations is responsible for managing
change activities?
 The answer is change agents. They see a future for the
organization others have not identified, and they are
able to motivate, invent, and implement this vision.
Change agents can be managers or nonmanagers,
current or new employees, or outside consultants
 Planned change can described in terms of
order of magnitude:
 First-order change is linear and
continuous. It implies no fundamental
shifts in the assumptions that
organizational members hold about the
world or how the organization could
improve its functioning.
 Second-order change is a multidimensional,
multi-level, discontinuous, radical change
involving reframing of assumptions about
the organization and the world in which it
operates.
 What can change agents do?
 A change agent is a person from inside or outside the
organization who helps an organization transform itself
by focusing on matters as organizational effectiveness,
improvement, and development.
 A change agent, also known as an advocate of change,
is a person who acts as a catalyst for the change
management process.
 The change agents can bring about changes which fall
under four categories:
 a. Structure
 b. Technology
 c. Physical setting
 d. People
 A. Changing Structure
 As the conditions change, the org needs to
undergo structural changes to suit the changed
conditions.
 Focus on work specialization, span of control,
departmentalization, centralization versus
decentralization, formalization, job design etc.
 Determines how tasks are formally divided,
grouped and coordinated.
 For eg., departmental responsibilities can be
combined, spans of control widened, vertical
layers reduced etc., to make the organization
less bureaucratic. Decision making process can
be speeded up by increasing decentralization.
 Also changing the simple structure to a
team-based structure or a matrix design.
• Jobs and work schedules may be
redesigned.
 Job descriptions can be redefined, jobs
enriched or flexible working hours
introduced, organization's compensation
system may be modified, incentives to
increase motivation etc
 B. Changing Technology
 Today, major technological changes involve
introduction of new equipment, tools, or
methods, automation and computerization.
 Automation is a technological change that
replaces people with machines which work
automatically, without intervention from human
beings.
 Computerization has enabled introduction of
management information systems which has
totally changed the way in which business
organizations operate
 c. Changing the Physical Setting
 The layout of the workplace is done
taking into consideration, work demands,
formal interaction requirements, and
social needs.
 It includes decisions regarding space
configurations, interior design,
equipment's installation and the like.
 The layout of work place needs changes
as products produced by the organization
changes, technology is changed etc
d. Changing People
 This involves changing the attitudes
and behaviours of organizational
members through processes of
communication, decision- making
and problem solving.
 Professional Orientation.
 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 feel negatively toward a change cope by
not thinking about it, increasing their use of sick time, or
quitting.
 Resistance to change doesn’t come only from lower levels
of the organization. In many cases, higher-level managers
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.
 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
 Sources of Resistance to Change can be two types ;

1. Individual sources
2. Organizational sorces
Overcoming Resistance to Change
 Eight tactics can help change agents deal with
resistance to change
 1. 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.
2. 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.
3. 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.
Motivating employees and emphasizing their
commitment to the organization overall can help them
commit emotionally 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
4. Develop Positive Relationships : People are more
willing to accept changes if they trust the managers
implementing them and see them as legitimate.
 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.
 Another set of studies found that individuals who
usually resisted 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.
5. 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, are kept informed about its progress,
and perceive its implementation as consistent and fair.
6. 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
7. Selecting People Who Accept Change : Research
suggests the ability to accept and adapt easily to change is
related to personality—some people are simply more
receptive to change.
 Individuals who are emotionally stable, have high core
self-evaluations, are willing to take risks, and are flexible
in their behavior are prime candidates.
 This seems to be universal. One study of managers in the
United States, Europe, and Asia found those with a
positive self-concept and high risk tolerance coped better
with organizational change.
 Individuals higher in general mental ability are also
better able to learn and to adapt to changes in the
workplace.
 In sum, an impressive body of evidence shows
organizations can facilitate change by selecting people
predisposed to accept it.
8. Coercion : Last on the list of tactics is
coercion, the application of direct threats
or force on the resisters. Other examples
include threatening employees with
transfers, blocked promotions, negative
performance evaluations, and poor letters
of recommendation.
 The Politics of Change
 No discussion of resistance would be complete without
a brief mention of the politics of change.
 Because change invariably threatens the status quo, it
inherently implies political activity. Politics suggests
the impetus for change is more likely to come from
outside change agents, employees new to the
organization (who have less invested in the status
quo), or managers slightly removed from the main
power structure.
 Managers who have spent a long time with an
organization and who have achieved a senior position
in the hierarchy are often major impediments to
change. For them, change can be a very real threat to
their status and position.
 Of course, as you might guess, when forced to
introduce change, these longtime power holders tend
Approaches to Managing Organization
Change
1. Lewin’s Three-Step Model of the Change
Process
 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
 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
 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
 Kotter’s Eight-Step Plan
 John Kotter of Harvard Business School built on
Lewin’s three-step model to create a more detailed
approach for implementing change.
 Kotter began by listing common mistakes managers
make when trying to initiate change.
 They may fail to create a sense of urgency about the
need for change, a coalition for managing the change
process, and a vision for change, and they may fail to
communicate effectively about it and/or to anchor the
changes into the organization’s culture.
 They also may fail to remove obstacles that could
impede the vision’s achievement and/or provide short-
term and achievable goals.
 Finally, they may declare victory too soon
 Kotter established eight sequential steps to overcome these
problems
Action Research
 Action research is a change process based on the
systematic collection of data and selection of a change
action based on what the analyzed data indicate.
 Its value is in providing a scientific methodology for
managing planned change. Action research consists of
five steps (note how they closely parallel the scientific
method): diagnosis, analysis, feedback, action, and
evaluation.
 The change agent, often an outside consultant in action
research, begins by gathering information about
problems, concerns, and needed changes from members
of the organization.
 Diagnosis : In action research, the change agent asks
questions, reviews records, and interviews employees by
actively listening to their concerns.
 Analysis : The change agent synthesizes this
information into primary concerns, problem
areas, and possible actions.
 Feedback : Requires sharing with employees
what has been found from the first and second
steps. The employees, with the help of the
change agent, develop action plans for bringing
about needed change.
 Action : part of action research is set in
motion. The employees and the change agent
carry out the specific actions they have
identified to correct the problem.
 Evaluation : The final step, consistent with the
scientific underpinnings of action research, is
evaluation of the action plan’s effectiveness,
 Action research provides at least two specific
benefits. First, it’s problem focused. The
change agent objectively looks for problems,
and the type of problem determines the type of
change action
 A second benefit of action research is the
lowering of resistance. Because action research
engages employees so thoroughly in the
process, it reduces resistance to change. Once
employees have actively participated in the
feedback stage, the change process typically
takes on a momentum of its own.
 Organizational Development
 Organizational development (OD) : A collection
of planned change interventions, built on
humanistic–democratic values, that seeks to
improve organizational effectiveness and
employee well-being.
 OD methods value human and organizational
growth, collaborative and participative
processes, and a spirit of inquiry. Contemporary
OD borrows heavily from postmodern
philosophy in placing heavy emphasis on the
subjective ways people see and make sense of
their work environment.
 some OD techniques or interventions
1. Sensitivity training : Training that seeks
to change behavior through
unstructured group interaction.
2. Survey feedback : The use of
questionnaires to identify discrepancies
among member perceptions; discussion
follows, and remedies are suggested.
3. Process consultation (PC): A meeting
in which a consultant assists a client in
understanding process events with
which he or she must deal and
identifying processes that need
improvement
4. Team building : High interaction among
team members to increase trust and
openness.
5. Intergroup development : Organizational
development (OD) efforts to change the
attitudes, stereotypes, and perceptions that
groups have of each other.
6. appreciative inquiry (AI) : An approach
that seeks to identify the unique qualities
and special strengths of an organization,
which can then be built on to improve
performance. The AI process consists of four
steps—discovery, dreaming, design, and destiny
 Discovery sets out to identify what people think
are the organization’s strength. Employees
recount times they felt the organization worked
best or when they specifically felt most
satisfied with their jobs.
 In dreaming, employees use information from
the discovery phase to speculate on possible
futures, such as what the organization will be
like in 5 years.
 In design, participants find a common vision of
how the organization will look in the future and
agree on its unique qualities.
 For the fourth step, participants seek to define
the organization’s destiny or how to fulfill their
dream, and they typically write action plans
 Key issues of management change -
Creating a Culture for Change
 We’ve considered how organizations can
adapt to change. But recently, some OB
scholars have focused on a more
proactive approach—how organizations
can embrace change by transforming
their cultures.
 Three approaches: managing paradox,
stimulating an innovative culture, and
creating a learning organization.
 Managing Paradox
 Paradox theory : The theory that the key paradox in
management is that there is no final optimal status for
an organization.
 In a paradox situation, we are required to balance
tensions across various courses of action. There is a
constant process of finding a balancing point, a
dynamic equilibrium, among shifting priorities over
time.
 There is no such thing as a separate discipline of
“change management” because all management is
dealing with constant change and adaptation’
 The idea of paradox sounds abstract; Learning,
organizing, perfoming, belonging etc.
Managers can learn a few lessons
from paradox theory, which states
that the key paradox in management
is that there is no final optimal
status for an organization.
For example, sometimes a company
needs to acknowledge past success
and learn how it worked, while at
other times looking backward only
hinders progress
 Stimulating a Culture of Innovation
 Definition of Innovation : We said change refers
to making things different. Innovation, a
specialized kind of change, is applied to
initiating or improving a product, process, or
service, in other words, a better solution. So all
innovations imply change, but not all changes
introduce new ideas or lead to significant
improvements.
 Sources of innovation
 1. Structural
 2. Cultural
 3. human resource categories
1. Structural variables
 Structural variables are one potential source of innovation. A
comprehensive review of the structure–innovation relationship
leads to the following conclusions:
 1. Organic structures positively influence innovation: Because
they’re lower in vertical differentiation, formalization, and
centralization, organic organizations facilitate the flexibility,
adaptation, and cross-fertilization that make the adoption of
innovations easier.
 2. Innovation-contingent rewards positively influence innovation:
When creativity is rewarded, firms tend to become more
innovative—especially when employees are given feedback on
their performance in addition to autonomy in doing their jobs.
 3. Innovation is nurtured when there are slack resources: Having
an abundance of resources, including an equal distribution of
wealth, allows an organization to afford to purchase or develop
innovations, bear the cost of instituting them, and absorb failures.
 4. Interunit communication is high in innovative organizations:
These organizations are heavy users of committees, task forces,
cross-functional teams, and other mechanisms that facilitate
2. Cultural variables / context
 Innovative organizations tend to have similar cultures.
They encourage experimentation and reward both
successes and failures. They celebrate mistakes.
 Unfortunately, in too many organizations, people are
rewarded for the absence of failures rather than for the
presence of successes. Such cultures extinguish risk
taking and innovation.
 Innovative organizations tend to share a common vision
as well as underlying goals. They have a shared sense
of purpose. Innovative organizations also tend to be
cohesive, mutually supportive, and encouraging of
innovation.
 People will suggest and try new ideas only when they
feel such behaviors exact no penalties. Managers in
innovative organizations recognize that failures are a
natural by-product of venturing into the unknown.
3. Human Resource Category
 Promote the training and development of their members so that they
keep current, offer high job security - no fear of getting fired for
making mistakes, and encourage individuals to become champions of
change.
 Idea champions : Individuals who take an innovation and actively and
enthusiastically promote the idea, build support, overcome
resistance, and ensure that the idea is implemented
 Champions often have similar personality characteristics: extremely
high self-confidence, persistence, energy, and a tendency to take
risks.
 They usually display traits associated with transformational
leadership—they inspire and energize others with their vision of an
innovation’s potential and their strong personal conviction about
their mission.
 Situations can also influence the extent to which idea champions are
forces for change
 Their jobs that provide considerable decision-making discretion -
helps them to implement innovations.
 Creating a Learning Organization
 Another way an organization can proactively
manage change is to make continuous growth
part of its culture—to become a learning
organization.
 A learning organization has developed the
continuous capacity to adapt and change. The
Dimensions of the Learning Organization
Questionnaire (DLOQ) has been adopted and
adapted internationally to assess the degree of
commitment to learning organization principle.
 Characteristics of a Learning Organization
 1. There exists a shared vision that everyone agrees
on.
 2. People discard their old ways of thinking and the
standard routines they use for solving problems or
doing their jobs.
 3. Members think of all organizational processes,
activities, functions, and interactions with the
environment as part of a system of interrelationships.
 4. People openly communicate with each other (across
vertical and horizontal boundaries) without fear of
criticism or punishment.
 5. People sublimate their personal self-interest and
fragmented departmental interests to work together to
achieve the organization’s shared vision.
 Proponents of the learning organization envision it as a
remedy for three fundamental problems of traditional
organizations: fragmentation, competition, and
reactiveness.
 First, fragmentation based on specialization creates
“walls” and “chimneys” that separate different functions
into independent and often warring fiefdoms.
 Second, an overemphasis on competition often undermines
collaboration. Managers compete over who is right, who
knows more, or who is more persuasive.
 And third, reactiveness misdirects management’s attention
to solving problems rather than creating. The problem
solver tries to make something go away, while a creator
tries to bring something new into being. An emphasis on
reactiveness to problems pushes out innovation and
continuous improvement and, in its place, encourages
people to concentrate on quick fixes as problems emerge.
 Managing Learning
 What can managers do to make their firms learning
organizations?
• Establish a strategy: Management needs to make
explicit its commitment to change, innovation, and
continuous improvement.
• Redesign the organization’s structure: The formal
structure can be a serious impediment to learning.
Flattening the structure, eliminating or combining
departments, and increasing the use of cross-functional
teams reinforce interdependence and reduce
boundaries.
• Reshape the organization’s culture: Managers must
demonstrate by their actions that taking risks and
admitting failures are desirable. This means rewarding
people who take chances and make mistakes. They also
need to encourage functional conflict
Thank you