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ORGANIZATIONAL CHANGE AND
DEVELOPMENT

By Advance Saraswati Prakashan Pvt. Ltd

Sankhamul, 01-4780359
 Learning Objectives

After comprehensive studying of this chapter, learners will be able

to:
 Know the concept, nature, and forces of change
 Explain the resistance to change
 Describe approaches to managing organizational change
 Explain creating culture for change
 Know the concept and characteristics of organizational development
 Know the organizational development value
 Explain organizational development interventions at individual, group and organizational
level

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Concept of Change

Change is the alternation in work environment that affects all the members in the
organization.
Change is inevitable, so, organization emphasize on managing change.
Business organizations operate in dynamic environment. They need to consider
'change or die' philosophy.
Managers are the change agents. They lead to the organizations by supporting in
change process and system.
"Organizational change is a collaborative effort in which several roles and individuals
are involved.”
 U. Pareek
"Change is any alternation in the work environment that affects the ways in which
employees must act."
 Newstrom and Davis
"Change refers to something which occurs to an organization, a group or an
individual."
 S. R. Dwivedi
Nature of Change

1. Change is Inevitable: The time is changeable and on the basis of changing

situation the environmental factors are also changed.
2. Alternation in Work Procedures: Change is concerned with alternation in
working process, procedures and system to meet changing demand and
expectation of customers.
Contd…
3. Revolution or Evolution: The change may be either in the form of revolution
that is concerned with prompt change in organizational performance or evolution
that is concerned with gradual development in working system to fulfill changing
needs of the society.

4. Face Transitional Stage: Change organizations have to face transition stage

while want to reach desired future stage of affair from current stage.

5. Affected by Environment: The factors like people, structure, technology,

competition, world political system etc affect for the survival and growth of
business organization.

6. Essential for Survive: Organizations having static and stationary are less
successful as compare to the organizations having flexible and adaptable on the
basis of changing environment of the society.

7. Need Planned Change: Planned change is constituted with intentional and goal
oriented change in activities to adapt with changing environment of business.

8. Areas of Change: The areas that the managers can change in organizational
performance may be in structure, technology, physical setting or business
process, people and their behaviour.
Forces of Organizational Change
Contd…

1. Internal Forces: All conditions and forces within the organization

affecting in business operation is internal forces.
a. Change in Owners: Owners are the investors who have direct interest in welfare
and prosperity of business organization who directly or indirectly involve in
management of the business.

b. Change in Goals: Management brings change to adapt with changing

environment of business. Such changes in goals bring change in organizational
performance.

c. Change in Board of Directors: The members of board of directors are the

representatives of shareholders who directly involve in day-to-day operation of the
company.

d. Change in Plans and Strategies: Management needs to change plans and

strategies on the basis of changing objectives of the organization.
Contd…

e. Change in Organizational Resources: The success and failure of the

organization depends upon the effective and efficient utilization of these
resources. The change in resources including human resource brings change in
organization.

f. Change in Organizational Structure: Organizational structure is the foundation

of organization, which consists of job definition, division of work, hierarchy of
authority, and job responsibility.

g. Change in Work Environment: Good working environment is essential for

better performance of the organization. If any change is occurred in working
environment, it brings change in organization.

h. Change in Job Technology: Management needs to introduce new job technology

to maximize productivity. The change in job technology brings change in
organization.
Contd…

2. External Forces: The external forces refer to environment and

institutions outsides the organization that potentially can affect the
organizational performance. Management of an organization cannot
control the change in external forces; it needs to adapt itself by modifying
its goals, plans, policies and strategies on the basis of changing external
forces.
a. Task/ Specific Forces: Task forces have direct and immediate impact on the
managerial decision and action.

i. Customers: Customers represent potential uncertainty to an organization

because their taste and preference may change due to time and fashion.

ii. Suppliers: The management of every organization seeks to ensure regular and
steady flow of needed inputs at the reasonable price.

iii. Competitors: Manger of an organization should have ability to forecast

customers’ demand and develop new strategy to increase market share and face
compitition.
Contd…
iv. Government: A new legislation enacted by the government to protect public
interest may create new challenges to the business organizations.
v. Pressure Groups: These pressure groups consist of labour unions affiliated
with political parties, consumers’ association, human right activates,
environmental associations, media, social institutions etc.
vi. Financial Institutions: Financial institutions consist of commercial banks,
development banks, finance companies, insurance companies etc to whom
every business organization needs to maintain cordial working relationship.
vii. Strategic Alliance: When two or more companies work together in joint
venture or other partnership form, it is known as strategic alliance.
Agreement among travel agency, airline, and hotel to provide service to
same guests is an example of strategic alliance.
b. General Forces: General forces involve broad external factors that can
affect business activities of an organization. These forces are uncontrollable
and require proper monitoring of the components to adapt on the basis of
emerging changes.
Contd…

i. Change in Political Forces: The political-legal forces refer to government

regulation and legal system for business that involve constitution, political
philosophy, political parties, political institutions, and legal institutions.

ii. Change in Economic Forces: Economic forces indicate the system of producing
and distributing goods and services that involve economic system, economic
policies, economic conditions, capital markets, and globalization.

iii. Change in Socio-culture Forces: These forces involve tradition, social values,
believes, norms, attitudes, custom, and demographic composition within which an
organization operates.

iv. Change in Technology: It focuses on machines and equipment, transmission of

information, new techniques and processes, research and development. The
innovation of automation, robotics, and computerization bring tremendous
change in production and distribution system.
Contd…
Areas of Organizational Change
 Contd…
1. Change in Structure:
Change in structure involves making alternation in authority relations, job redesign, change
in coordination mechanisms, change in span of control, and similar other structural
variables. Managers can change one or more of the key elements of structure of the
organization.

2. Change in Technology:
The major technological changes usually involve the introduction of new work process, new
equipment and tools, or new methods of production and distribution. Today, work processes
are changed from manual process to automation or computerization.

3. Change in Physical Setting (Business Process):

Managers need to consider work demand, formal interaction with all the members, and
social needs when making decision about space configurations, interior redesign,
equipment placement etc. For radical redesign in business processes it is necessary to
consider saving in cost, effort and time.

4. Change in People/ Behaviour:

Change in people refers to changes in employee attitudes, skill, expectations, perceptions,
and behaviour. The popular approaches to manage change in behaviour of people involve
Lewin's classic three step model of the change process, action research, and organizational
development.
Resistance to Change
Contd…
1. Individual Resistance:
a. Habit: Human beings by nature have habit to do regular work or to make
programmed decision. They do not want to accept change if it needs to change in
habit.

b. Security: Generally, people feel that change brings threaten in job security and
that is the reason that they hesitate to accept it. For example, when computer
system was introduced in traditional banks of Nepal.

c. Economic Factors: The probability of loss of present economic gain is one of the
reasons of resistance to change. They may fear of reduction in responsibility and
working hours and due to which remuneration will automatically be minimized.

d. Fear of Unknown: People having limited knowledge, lack of creativity and

initiation may feel fear of unknown if any change is occurred in work place, co-
workers, or in working system.

e. Selective Information Processing: Individuals shape their world through their

perception. When something is selected in processing information, people do not
want to divert their perception towards others.
 Contd…
2. Organizational Resistance
a. Structural Inertia: Organizations have their own structure and system to maintain
stability in performance. When an organization is confronted with change, this structural
inertia acts as resistance.

b. Limited Focus on Change: Organization's total system is constituted with a number of

inter-related and inter-dependent subsystems. Therefore, limited changes in subsystems
become worthless as they may be neutralized by total system.

c. Group Inertia: If individuals want to change their behaviour, group norms may act as a
constraint.

d. Threat to Expertise: Change in organizational systems and procedures may threaten to

the expertise of one specialized group whereas another group of expertise may get
opportunity.

e. Threat to Established Power Relationships: Managers who always want to remain in

power do not want to accept change as it may reduce their status in the organization,
even if that change will be beneficial for organization.

f. Threat to Established Resource Allocation: Any change in organizational system may

bring the concept of re-allocation of resources into departments.
Creating Culture for Change
 Contd…
1. Education and Communication: One of the reliable and practical techniques of
overcoming resistance to change is education to the people. It helps the employees to
understand and recognize the logic of a change.

2. Participation: It is difficult for individuals to resist change decision in which they have
participated. It reduces feeling of misunderstanding and develops the attitude of
membership and belongingness among the employees.

3. Facilitation and Support: Change may create fear and anxiety among the employees
due to lack of sufficient knowledge. They can play the role of facilitators to provide
technical support and counseling.

4. Negotiation: When resistance comes from a group of people, agreement can be initiated
with group members by offering a specific reward.

5. Manipulation and Cooptation: It involves tactful presentation of case and events to

create zeal among the employees to accept change which consist of twisting and
distorting facts to make them appear more attractive, and withholding undesirable
information.

6. Coercion: In this technique employees who are resisting change have given two options
either to accept the change or quit the job. Other common examples of coercion involve
threats of transfer, loss of promotion, negative performance evaluation, and poor letter of
Approaches to Managing Organizational Change
 Contd…
1. Kurt Lewin's Three Steps Model:
a. The main objective of unfreezing stage is to create awareness of how the status quo
(current level of acceptability) is providing negative impact in organizational activities. It
creates awareness among employees for necessity of change in the organization to
create and maintain a competitive advantage in the market. For this purpose, it is
essential to maintain proper communication and interaction with employees to inform
them about the imminent change, the logic behind it and its benefits for organization
and for each employee.

b. Changing: This step is also referred to as transitioning or moving stage. This changing
step is marked by the implementation of the change. During the changing period people
begin to learn the new behaviours, processes and ways of thinking. For this purpose it is
essential to provide education, communication, support and proper guidance for
employees so that they become familiar with the change. Therefore, change process
must be carefully planned and executed in practice.

c. Refreezing: The changes made to organizational goals, structure, processes, incentives

or employees are accepted and refrozen as the new norm and practice. New change
should consider as culture of the organization and all the employees do work according
to new procedures.
Contd…

2. Action Research
a. Diagnosing: In this step, the actual problem is identified to promote the starting
of the action research through employees' interview, review records, and carefully
listening the concern of employees.

b. Analysis: After collecting necessary information, another step of action research

is to analyze such collected information. While analyzing information it is
necessary to identify problems and recommend suggestion to resolve a solution.

c. Taking Action: Here a specific alternative is selected to solve the issue. Before
selecting a course of action for implementation, it is essential to perform detail
discuss with employees who are responsible for implementation.

d. Evaluation: The final step of action research is to evaluate the impact of change
implementation. It facilitates to know that impact of change is happening in
accordance of expectation or not. It is supportive for researches to take further
steps if impact of change is not getting expected outcomes.
Contd…

3. Organization Development Interventions

a. Survey Feedback: In survey feedback, information of attitudes of employees
about wage level, structure, hours of work, working conditions and relations with
co-workers are collected and the results are supplied to the top executive teams.
They analyze the data, find out the problem, evaluate the results and develop the
means to correct the problems identified.

b. Process Consultation: The process consultants meet the members of the

department and work teams and observe their interaction, problem identification
skills, and solving procedures. Finally, they provide proper information and
guidance to the management for improving working process.

c. Sensitivity Training: Sensitivity training refers to a method of changing

behaviour through unstructured group interaction. The main advantages of
sensitivity training is that participants able to develop decision making, criticism
accepting, understanding other views, working in team, environment of mutual
support and problem solving ability.
Contd…

d. Team Building: It is important to recognize work group’s problems as

early as possible so that solutions can be applied before the problems can
do any damage. All the conflicts are resolved on the basis of mutual
understanding. It facilitates to manage change through mutual interaction
and understanding among group members.
e. Counseling and Coaching: Counseling and coaching of managers or
outside experts facilitates to change on attitude, perception, belief and
value of employees. encourages employees to accept the change for
achieving organizational goals and to meet their personal objectives.
f. Inter-group Relationship: There are problems among two or more
different groups who are interdependent among themselves. The
activities of these groups must be harmonized and coordinated to achieve
the organizational goals. If any unhealthy competition between the
groups is found it must be eliminated.
 Organizational Development (OD)

OD is a long run plan to change behavioural attitudes and performance of the organization.

The concept of OD was first evolved by Richard Beckhard in the mid of 1950s to integrate
organizational and individual interest in change.

The main motive of OD is to initiate organization more adjustable and innovative so that
efficiency can be maintained on change.

For this purpose, education and training culture must encourage in the organization to
ensure planned change and to adapt in changing environment.

"Organizational development is the process of planned change and improvement of the

organization through application of knowledge of the behavioural science."
 According to Ricky W. Griffin

"Organizational development is a collection of planned change interventions, built on

humanistic-democratic values, that seeks to improve organizational effectiveness and
employee well-being."  Stephen P
Robbins
Characteristics of OD
 Contd…
1. Long-term Plan: It emphasizes on long term plan to improve working efficiency of the organization
prepared by focusing long term objectives of the organization.
2. Broad Based: It is the broad based approach implemented to bring comprehensive change in
overall system of the organization like organizational redesign, change in organizational philosophies,
culture, system and skills etc.
3. Dynamic Process: It is a dynamic process and amendable on the basis of requirement which needs
investment of huge capital and time. It is essential to adapt with changing environment of the society
and market.
4. System Perspective: Only some change on subsystems may become worthless if it cannot effect
on whole system. So, it emphasizes change on whole system on the basis of requirement.
5. Focus on Behaviour: It focuses on behaviour science rather than mechanistic approach. The record
of action and reaction of people in each stage of work is taken into account for future plan.
6. Research Based: OD experts collect data and information and analyze information through
mathematical and statistical relevant tools.
7. Empowered Process: It emphasizes employees to utilize their full potentiality and talent through
independency, own idea and knowledge etc.
8. Team Work: OD emphasizes on collaborative and group effort. It recognizes that team work would
be the strength for achievement of goal.
Organizational Development Values
Contd…

1. Respect for People:

In OD process, there must be feeling of respect and honour among all the members of the
organization. They should be treated with dignity and respect.

2. Trust and Support:

There should be the system of mutual trust, authenticity, openness, and a supportive
climate.

3. Power Equalization:
There should be system of proper division of work, rules, regulation and working system.
Authority and responsibility must be proper delegated.

4. Confrontation:
When people do activities in group, there is the possibility of problems and conflict in every
stage of performance. Functional problems should be openly discussed by the members
concerned.

5. Participation:
The employees who will be affected by changed should involve in decisions making process.
It will be supportive for effective implementation of OD change.
Organizational Development Interventions
Contd…

1. At Individual Level
a. Survey Feedback: In survey feedback intervention, researchers collects
information of impact of change of employees and such data and information
provide to the managers.

b. Sensitivity Training: Sensitivity training refers to a method of changing

behaviour through unstructured group interaction where participants share their
opinion, view, idea, and knowledge toward each other about the assigned subject
matter.

c. Counseling and Coaching: Counseling and coaching of managers or outside

experts facilitates to change on attitude, perception, belief and value of employees.

2. Group Level Intervention

a. Process Consultation: The process consultants meet the members of the
department and work teams and observe their interaction, problem identification
skills, and solving procedures.
 Contd…
b. Team Building: Team building activities are designed to enhance the effectiveness and
satisfaction of individuals who work in groups in order to improve group effectiveness.

c. Inter-group Development: There are problems among two or more different groups who
are interdependent among themselves that must be harmonized and coordinated to achieve
the organizational goals.

3. Organizational Level Interventions

a. Goal Setting and Planning: Each department in an organization sets the goals and
formulates the plans for effective performance and sent to the top management which in turn
sends them back to the departments after some modification.

b. Organizational Restructuring: It involves redefining hierarchy of authority, division of

work, authority and responsibility, formal relationship, channel of communication and
coordination mechanisms.

c. Technological Changes: It is essential to introduce new technology in organizational

activities. Information technology should be widely used for production and distribution
function.

d. Quality of Work Life Programs: Employees are the main stakeholders of organizational
development by accepting change. Therefore, it is essential to introduce quality of work life
programs.
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01-4750359, 9843262646
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