Managing Organizational Change



Chapter 14 -ORGANIZATION DEVELOPMENT

Organization development (OD) is an applied field of study and practice. A pair of OD experts defined organization development as follows:

Organization development is concerned with helping managers plan change in organizing and managing people that will develop requisite commitment, coordination, and competence. Its purpose is to enhance both the effectiveness of organizations and the well-being of their members through planned interventions in the organization's human processes. structures, and systems, using knowledge of behavioral science and its intervention methods.

OD Involves Profound Change

Change agents using OD generally desire deep and long-lasting improvement. OD consultant Warner Burke, for example, who strives for fundamental cultural change, wrote: "By fundamental change, as opposed to fixing a problem or improving a procedure, I mean that some significant aspect of an organization's culture will never be the same."

OD is Value-Loaded

Owing to the fact that OD is rooted partially in humanistic psychology, many OD consultants carry certain values or biases into the client organization. They prefer cooperation over conflict, self-control over institutional control, and democratic and participative management over autocratic management.

OD Is a Diagnosis/Prescription Cycle

OD theorists and practitioners have long adhered to a medical model of organization. Like medical doctors, internal and external OD consultants approach the "sick" organization, "diagnose" its ills, "prescribe" and implement an intervention, and "monitor" progress.

OD Is Process-Oriented

Ideally, OD consultants focus on the form and not the content of behavioral and administrative dealings. For example, product design engineers and market researchers might be coached on how to communicate more effectively with one another without the consultant knowing the technical details of their conversations. In addition to communication, OD specialists focus on other processes, including problem solving, decision- making, conflict handling, trust, power sharing, and career development.

The Message Is Clear - Change Or Disappear

“There’s no off season anymore” - Nolan Ryan

“You miss 100% of the shots you never take” - Wayne Gretsky

“Somebody has to do something, and its just incredibly pathetic that it has to be us.” - Jerry Garcia, the Grateful Dead

Change - an Ongoing Process

Companies no longer have a choice, they must change to survive. Unfortunately, people tend to resist change. It is not easy to change an organization, let alone an individual. This puts increased pressure on management to learn the subtleties of change. This final chapter was written to help managers navigate the journey of change.

Stages of Change by Carnall

1. Denial

2. Defense

3. Discarding

4. Adaptation

5. Internalization

Stages of Change by Lewin

1. Unfreezing

2. Change

3. Refreezing

FORCES OF CHANGE

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. There are four key external forces for change: demographic characteristics. technological advancements, market changes, and social and political pressures. Each is now discussed.

1. Demographic Characteristics

(1) the workforce is more diverse and

2) there is a business imperative to effectively manage diversity.

2. Technological Advancements

“The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.” Warren Bennis

3. Market Changes

The emergence of a global economy is forcing US companies to change the way they do business. Companies are having to forge new partnerships with their suppliers in order to deliver higher quality products at lower prices. Consider how Thomas Stalkamp, Chrysler Corporation's vice president of purchasing, uses a win-win approach to lower suppliers' costs:

4. Social and Political Pressures

These forces are created by social and political events. Managers thus may need to adjust their managerial style or approach to fit changing employee values. Political events can create substantial change. For example, the collapse of both the Berlin Wall and communism in Russia created many new business opportunities. 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

Internal forces for change 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.

1. Human Resource Problems/Prospects

2. Managerial Behavior/Decisions

Resistance to Change

Individual Sources of Resistance

• Fear of the Unknown

• Self-Interest

• Habit

• Personality Conflicts

• Differing Perceptions

• General Mistrust

• Social Disruptions

Organizational Sources of Resistance

• Structural Inertia

• Bureaucratic Inertia

• Group Norms

• A Resistant Organizational Culture

• Threatened Power

• Threatened Expertise

• Threatened Resource Allocation

Implementing Change

Creating an Atmosphere for Change

Communicate, Communicate, Communicate!

Time Frame – 2 years to change a culture.

Training Needs

ORGANIZATIONAL CULTURE

Organizational culture is the social glue that binds members of the organization together. Organizational culture operates on two levels, which vary in terms of outward visibility and resistance to change. At the less visible level, culture reflects the values shared among organizational members. These values tend to persist over time and are more resistant to change.

Four Functions of Organizational Culture

1. Gives members an organizational identity: According to Fortune magazine, "What makes UPS stand out is its ability to attract, develop, and keep talented people. Top managers, most of whom have come up through the ranks, instill a spirit of winning so pervasive that people who fail are ranked as least best, not losers. Workers, in turn, have almost a Japanese-like identification with the company."

2. Facilitates collective commitment: UPS managers own almost all of the firm's stock. Many managers who began their careers with UPS as drivers and clerks have retired as multimillionaires. Compensation throughout the company is high by industry standards, with delivery truck drivers averaging $16 per hour. Middle managers receive generous stock bonuses and dividend checks.

3. Promotes social system stability: UPS is known for its strict standards and tight controls. For instance, employees must meet grooming standards and task performance is specified down to the finest detail. "Longtime UPSers most of the workforce due to a 4 percent turnover rate talk about their company's 'mystique,' an aura that generates an unusual mixture of passionate commitment to hard work and a strong identification with the company."

4. Shapes behavior by helping members make sense of their surroundings: UPS recruits primarily from its 40,000-person part-time workforce of college students. Only the most promising are offered full-time positions. Even those with college degrees start at bottom-rung jobs to learn the basics of the business. (Clarify and reinforce standards of behavior)

Assessing the New Culture

Step 1: Needs Assessment

Step 2: Determining Executive Direction

Step 3: Implementation Considerations

Step 4: Training

Step 5: Evaluation

Maintaining the Culture

Selection of Employees

• Socialization

• Artifacts

• Symbols

• Stories

• Rituals

• Ceremonies

GROUP SKILLS FOR ORGANIZATIONAL CHANGE

EMPOWERMENT: FROM POWER SHARING TO POWER DISTRIBUTION

Before leaving the topic of social power, we need to briefly highlight a very exciting trend in today's organizations. Some call it empowerment or power sharing. Others use traditional labels such as participative management, participative decision making, and delegation. Regardless of the term one prefers, the underlying process is the same. Namely. the decentralization of power. Where power once resided solely in the hands of managers, it now is being shifted to the hands of nonmanagers (see Figure 10-3) The overriding goal is to increase productivity and competitiveness in leaner organizations. Each step in this evolution increases the power of organizational contributors who traditionally had little or no legitimate power. Participative decision making and leadership are discussed in later chapters. So here we will describe the highest degree of empowerment delegation as a foundation concept for later chapters.

Delegation is the process of granting decision-making authority to subordinates. Importantly, delegation gives nonmanagerial employees more than simply a voice in decisions. It empowers them to make their own decisions. A prime example is the Ritz-Carlton Hotel chain:

Covey on Empowerment

What motivates people?

To motivate requires tha we first find the areas where organizational goals and needs overlap with individual needs and goals. We can then set up win-win agreements. Once these are extablihsed, people could govern or supervise themselves in terms of that agreement. We would then serve as sources of help and estable helpful organizationla systems within which self-directing, self-controlling individuals could work toward fulfilling the terms of the agreement.

The Four Conditions:

1. Win-Win Agreements

2. Self-Supervision

3. Helpful Structure and Systems

4. Accountability

There are five steps in setting up win-win relationships

First, specify desired results.

Second, set some guidelines.

Third, identify available resources.

Fourth, define accountability.

Fifth, determine the consequences (rewards).

Working toward Self-Management:

Once win-win agreements are established, people can then supervise themselves in terms of that agreement. Managers may serve as sources of help and set up helpful structures.

Normative Decision Making – Vroom & Yetton’s Model

Levels of Employee Input – Exhibit 14.02

1. Absolute

2. Shared

3. Advisory

4. Ownership

5. Following

HIGH PERFORMANCE TEAM BUILDING

What is a Team? - Definition of a Team

Types of Teams

1. Cross-Functional Teams

2. Self-Directed Teams

Stages of Team Development

1. Forming

2. Storming

3. Norming

4. Performing

5. Adjourning

DOWNSIZING

Strategies for Helping Managers to Downsize Organizations

1. Conduct an organizational assessment - reactionary style vs. visionary style

2. Help managers confront and address the emotional issues inside their organization.

3. Help managers create a vision of what the organization could or should become.

4. Develop an internal and external public image.

5. Establish plans and accountabilities.

6. Negotiate roles - initiation, implementation, support.

7. Monitor implementation process and evaluate actions.

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