Journal of Business and Psychology, Vol. 18, No.

4, Summer 2004 ( 2004)

WHO STARTED THIS? INVESTIGATING DIFFERENT SOURCES OF ORGANIZATIONAL CHANGE Mark A. Griffin Alannah E. Rafferty Claire M. Mason
Queensland University of Technology

ABSTRACT: This study explored whether organizational change had differential effects on perceptions of group leadership and group morale, depending on the source of the change activity. Data on work group leadership and morale was collected in two waves of an employee survey, and data on change activities were collected in the second wave of the survey. When leaders outside of a work group initiated change, employees reported more negative perceptions of their work group leader. However, when the work group leader initiated change, perceptions of that leader tended to be more positive. Finally, change activities initiated by group members did not influence perceptions of work group leadership, but were associated with improved work group morale. KEY WORDS: organizational change; work group leadership; work group morale.

INTRODUCTION Organizations are increasingly required to be flexible and adapt to changing environmental demands (Pulakos, Arad, Donovan, & PlamonThe authors thank Malcolm Douglas, Charles Linsley, and Margaret Poropat for their support in conducting this research. Address correspondence to Mark A. Griffin, Australian Centre in Strategic Management, Queensland University of Technology, GPO Box 2434, Brisbane, Queensland, 4001, Australia. E-mail: m.griffin@qut.edu.au. 555
0889-3268/04/0600-0555/0 2004 Human Sciences Press, Inc.

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don, 2000; Volberda, 1996). To enhance adaptability, all levels of an organization should be involved in initiating and implementing change (Beer, 1999; Mohrman, 1999). However, many change management models assume that chief executive officers and senior management are solely responsible for implementing and driving organizational changes (Beer, 1999; Mohrman, 1999; Nadler & Tushman, 1995). This CEO-centric view neglects other sources of change within organizations (Beer, Eisenstat, & Spector, 1990; Mohrman, 1999). For example, Spreitzer and Quinn (1996) report that the role of middle managers has shifted so that instead of being concerned with maintenance of the status quo, they are now responsible for stimulating and directing change. In addition, the current emphasis on adaptability and self-management in the work place means that employees are increasingly required to initiate and implement change and innovation (Pfeffer & Veiga, 1999). Organizational change can therefore initiate from sources other than senior management. In the present study, we looked at three potential sources of organizational change, and investigated their impact on work groups in a large organization. The sources of change were a) leaders outside the work group, b) leaders within the work group, and c) employees within the work group. We argue that these three sources of change will have different effects, both because they tend to be associated with different types of change activities, and because the activities of these three groups will tend to be interpreted and perceived differently. To investigate whether the effect of change activities would vary according to the source of the change activity, we compared their impact on the work groups perceptions of supportive leadership and work group morale. We begin by justifying our decision to focus on these three sources of change. We then discuss the likely effects associated with change activities initiated from each of the three sources.

Differentiating Sources of Change Senior leaders are the source of change most often considered in studies of organizational change. This focus is not surprising given that organizational change often involves major interventions, is implemented across the whole organization, and requires the strategic input of executive level managers. Research in this area has addressed changes such as organizational restructuring (McKinley & Scherer, 2000), mergers (Buono & Bowditch, 1989), and organizational downsizing efforts (Freeman, 1999; Mishra & Spreitzer, 1998). Changes of this type involve fundamental alterations in core organizational processes such as organizational design, strategy, or structure. Therefore, the

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changes are initiated at a strategic level in the organization and are typically external to operational work groups. Work group leaders also represent a potential source of organizational change activities. Because work group leaders have a smaller span of influence than senior leaders, change initiated from this source is likely to occur on a smaller scale. This type of change has received less attention than large-scale organizational change, although recent work has begun to address this issue (e.g., Spreitzer & Quinn, 1996). There are two lines of research that indicate work group leaders have a particularly important role for initiating and supporting change. First, the team work literature suggests that team leaders can be key source of innovation and change in work teams (King, 1990; King & Anderson, 1990; Van de Ven, 1993). Second, recent reviews in the leadership literature suggest that transformational leadership may be important within work groups as well as at senior levels of the organization (Bass, Waldman, Avolio, & Bebb, 1987; Yukl, 1999a, 1999b). We also identified work group members as a source of change. In a study investigating work group change, Weldon (2000) found that work group members were identified as the source of change just as frequently as work group leaders. Current work design theory emphasizes the importance of employee involvement in changing the work group (Parker & Wall, 1998). Instead of simply focusing on task performance, employees are now asked to take on greater responsibility and accountability (Campbell, 2000; Mohrman, 1999), to the point where employees are encouraged to take an active part in change processes. Empirical research supports the idea that employees in self-managing work teams contribute to organizational transformation through their efforts to initiate change at a local level (Elden, 1994). Consequences of Sources of Change We propose that the change activities initiating from these three sources will tend to have different consequences for work groups. To investigate the consequences for work groups, we focused on perceptions of supportive leadership and work group morale. Supportive leadership describes the extent to which supervisors and managers within work groups are considerate and responsive to employee needs. Perceptions of leadership may be particularly susceptible to influence during periods of organizational change, because in this period new power structures and communication patterns are becoming established. The second outcome we investigated was work group morale. As operationalized in this study, work group morale represents the level of enthusiasm, energy, and well-being in the work group (James & James, 1989). This outcome is important because it describes the affective cli-

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mate of the work environment, and it has been found to be associated with a wide range of work behaviors (George 1996; Organ, 1990). Most of the existing research suggests that change has a negative impact on employees. Large-scale changes such as downsizing and restructuring have been found to create high levels of employee uncertainty (Ashford, 1988; Schabracq & Cooper, 1998), employee distress, job dissatisfaction, low trust and commitment, and increased intentions to turnover (Schweiger & DeNisi, 1991). Radical organization-wide changes disrupt the functioning of employees daily working lives, which is a highly aversive state for the majority of employees (Ashford, 1988). Gilmore, Shea, and Useem (1997) identified four major side effects of cultural transformations, including ambivalence about authority, polarized images of what is being discarded from the culture, disappointment and blame, and suppression of open dialogue about key features of the changing organization. However, most of this research has focused on change activities initiated at senior levels of the organization. These findings therefore suggest that change initiated by leaders external to the work group will have disruptive and negative consequences for employees within work groups in the organization. Therefore, we proposed the following hypothesis: H1: Change initiated by leaders outside the work group will result in negative perceptions of supportive leadership and work group morale. In contrast, change initiated by leaders within a work group was expected to have a more positive impact on employees. A key reason that change initiated by work group leaders should be more positive is the opportunity for closer interaction between leaders and employees within work groups. Local leaders have much greater opportunity to understand the concerns of employees, develop supportive roles within the work group, and respond to the specific needs of work group members (Dansereau, Graen, & Haga, 1975; Graen & Cashman, 1975). The leaders role in developing employees and providing support should allow these leaders to develop insights into the changes that will have the most positive impact on employees within the group. This close interaction should also allow leaders to engage in communication attempts to support their change efforts. For these reasons, work group leaders should be able to ensure that the change process is less stressful and more beneficial for employees. In addition, the types of change activities initiated by work group leaders may be less threatening for work group members because they are likely to be more local in their scope, and can be tailored to the specific needs of the work group. Therefore, we expected that change initi-

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ated by leaders within the work group would have a positive effect on perceptions of supportive leadership and work group morale. H2: Change initiated by leaders within the work group will result in positive perceptions of supportive leadership and work group morale. The consequences of employee initiated change have received less attention in the organizational change literature. However, research in the areas of employee involvement and self-management provides a basis for generating hypotheses about the consequences of this type of change. Practices that enhance employee involvement have generally been found to have a positive effect on outcomes such as satisfaction, commitment, and productivity (Cordery, Mueller, & Smith, 1991; Cotton, Vollrath, Froggatt, Lengnick-Hall, & Jennings, 1988; Coyle-Shapiro, 1999; Wagner, 1994; Wall, Kemp, Jackson, & Clegg, 1986). Various rationales have been provided to explain these effects. For instance, employee involvement has been argued to generate positive attitudes and behaviors by satisfying employees higher order needs (Miller & Monge, 1986), enhancing the flow of information within the organization (Wagner, Leana, Locke, & Schweiger, 1997), fostering greater identification with and involvement in the organization (Coyle-Shapiro, 1999), and enabling employees to influence decisions and gain outcomes that they value (Black & Gergersen, 1997). Since these theories can also be applied to predict the effects of employee initiated change, it seems reasonable to hypothesize that the same outcomes will result. That is, it is predicted that employees will experience more positive affective outcomes (such as work group morale) as a result of initiating organizational changes. Since these change activities are owned by the work group, we did not expect that they would have any effects on perceptions of supportive leadership. Therefore, we proposed the following hypothesis: H3: Change initiated by employees within work groups will have a positive impact on perceptions of work group morale. Sources of Change Over Time The present study was conducted over two years in a large public sector agency. The longitudinal design allowed us to explore whether levels of leadership and work group morale at Time 1 predicted the amount of change initiated by each of the three change sources between Time 1 and Time 2. Very little work has examined this issue. Therefore, we examined whether prior levels of supportive leadership and morale

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were related to subsequent initiation of change activities. We did not expect the work groups perception of supportive leadership and work group morale to be related to the amount of change subsequently initiated by leaders outside the unit. However, we expected that work group leaders who were rated as highly supportive leaders would be more likely to initiate change activities than work group leaders who were rated as less supportive. Because supportive leadership involves responding to the needs of individuals, we expected that these leaders would initiate change to improve the work group for employees. H4: Supportive leadership at Time 1 will be positively related to the amount of change initiated by unit leaders at Time 2. In contrast, we expected that prior levels of work group morale would be the best predictor of the amount of change initiated by work group employees. Positive affect in work groups can encourage a wide range of prosocial and innovative behaviors (Campbell, 2000; George, 1991). Therefore, groups with higher levels of affect should be more likely to participate in innovative behaviors associated with workplace change. H5: Work group morale at Time 1 will be positively related to the amount of change initiated by coworkers at Time 2.

METHODS Sample Participants were employees of a large Australian public sector agency who completed a survey in two consecutive years. All members of the organization were invited to participate in the survey, which provided feedback on a wide range of employee attitudes. Feedback was provided to work groups and used by each to develop improvement plans for each work group in the organization. There were 3,335 responses in the first year (response rate 73%) and 3,314 responses in the second year (response rate 72%). Participants were located in 162 work groups that were matched across the two waves of the study. Work groups undertook diverse tasks, ranging from construction to administration. Therefore, groups consisted of employees in a variety of professional, administrative, and trade occupations. All groups were managed within a hierarchical management structure. Participants were identified only by the group to which they belonged and could not be matched at the individual level. All analyses

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were based on group level data (that is, employee ratings of supportive leadership and work group morale were aggregated to the group-level). Males comprised 72.5% of the sample in the first year and 76.0% of the sample in the second year. The mean age category was 3640 years in both years of the survey. Measures Supportive leadership was assessed by five items from the School Organizational Health Questionnaire (Hart, Wearing, Conn, Carter, & Dingle, 2000). Items assessed the degree to which the work group leader was approachable, dependable, and knew the problems of staff. An example item was There is support from the manager in this work group. Alpha reliability estimates were .87 in the first year and .86 in the second year. Work group morale was assessed from the same instrument, with five items that asked about the extent to which staff showed enthusiasm, pride in their work, team spirit and energy. An example item was There is a lot of energy in this workplace. Responses to the items were made on 5-point scales, ranging from strongly disagree to strongly agree. Alpha reliability was .88 in the first year and .89 in the second year. Source of change was assessed by three single items in the second year of the study. Prior to rating these items, participants were given information about 12 different types of change that might be experienced by work groups in the organization. Potential changes were drawn from Porras and Robertsons (1992) model of the internal working environment and described changes relating to the social environment, the technological work environment, the formal organization and the physical setting. Participants were then asked to provide a rating of the extent to which change was initiated by the different sources of change over the past 12 months. The first item asked respondents to rate the extent to which change activities were initiated by people outside my work unit (e.g., senior management). The second item assessed the extent to which change activities were initiated by managers within my work unit and the third item assessed the extent to which change was initiated by employees within my work unit. Responses were made on a 5-point scale, ranging from not at all to a great deal. All measures were aggregated to the work group level and all analyses were conducted using aggregated data.

RESULTS The means, standard deviations, and correlations among measures are reported in Table 1. The longitudinal measures displayed relatively

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Table 1 Means, Standard Deviations, and Correlations for All Measures (N = 162) Variables 1. Leadership T1 2. Leadership T2 3. Work group morale T1 4. Work group morale T2 5. Change initiated by leaders outside the work group 6. Change initiated by leaders within the work group 7. Change initiated by employees within the work group M SD 1. 2. 3. 4. 5. 6. 7.

3.57 0.46 1.00 3.52 0.44 .66*** 1.00 3.40 0.47 3.34 0.49 .78*** .61*** .60*** 1.00 .81*** .69*** 1.00

1.65 0.60

.13

.17*

.08

.21**

1.00

2.06 0.72

.24**

.37***

.17*

.36***

.68*** 1.00

2.01 0.69

.19*

.32***

.17*

.38***

.48***

.79*** 1.00

*p < .05; **p < .01; ***p < .001.

high correlations over time (above .60). Within time periods, supportive leadership and work group morale were strongly correlated. The correlation between leader initiated change and employee initiated change was also quite strong. Although these correlations were high, there was also evidence of different patterns of correlation across the various measures. Therefore, it was appropriate to investigate all measures in the subsequent analyses. The hypotheses were tested using structural equation modelling (LISREL VIII, Joreskog & Sorbom, 1993). Scale scores for each of the aggregated measures were used in the analysis. Error variances were estimated using the variance of the scale scores and setting the reliability of the scale scores to .95. The alpha reliabilities from the individual level data were not used to estimate the error variances because the aggregated data was expected to have a higher reliability than individual scores. A hypothetical structural model was assessed in which leadership and work group morale were correlated within time periods, and correlations were allowed among the three sources of change. Structural paths were incorporated to estimate stability between leadership at both time points and between work group morale at both time points. These paths meant that the remaining variance in leadership and morale at Time 2

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represented change in leadership and morale. Structural paths were also included from leadership and work group morale at Time 1 to each of the three sources of change, and from the three sources of change to leadership and work group morale at Time 2. This hypothetical model was almost fully saturated but retained 2 degrees of freedom because it did not include lagged paths from leadership at Time 1 to work group morale at Time 2, or from work group morale at Time 1 to leadership at Time 2. The model provided a good fit to the data [2 (2) = 5.89, p < .05, GFI = .99, NNFI = .95, CFI = 1.00] and, therefore, was used to assess the hypothesized relationships. Figure 1 displays the statistically significant paths from the hypothetical model. In partial support of Hypothesis 1, change initiated by leaders outside the work group was associated with lower levels of supportive leadership at Time 2, after controlling for levels of supportive leadership at Time 1 ( = .28, p < .01). However, the path between change initiated by leaders outside the work group and work group morale at Time 2 was not significant. It should be noted that the zero order correlation between externally initiated change and supportive leadership at Time 2 was weakly positive. In the structural model, the relationship between externally initiated change and supportive leadership at Time 2 (after controlling for leadership at Time 1) was negative, as hypothesized. The difference between the correlational and structural model results occurred because the structural model results were obtained after controlling for change initiated within the work unit and after controlling for Time 1 leadership. The result suggests that the shared variance of the three sources of change with supportive leadership was positive but, holding constant internal sources of change, higher levels of external change was associated with lower levels of supportive leadership within groups. Hypothesis 2 was also partially supported. Change initiated by work group leaders was positively related to perceptions of supportive leadership in the work group at Time 2 after controlling for perceptions of supportive leadership at Time 1 ( = .49, p < .001). However, there was not a significant link between change initiated by work group managers and work group morale at Time 2 (after controlling for work group morale at Time 1). Hypothesis 3 was supported fully. Change initiated by employees within the work group was significantly related to work group morale at Time 2 (after controlling for morale at Time 1) ( = .23, p < .05). However employee initiated change was not related to perceptions of supportive leadership at Time 2 (after controlling for perceptions of supportive leadership at Time 1). Hypothesis 4 proposed that there would be a positive link between supportive leadership at Time 1 and change initiated by work group leaders at Time 2. This hypothesis was supported as there was a direct

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Figure 1 Final Structural Model of Relationships Among Sources of Change, Supportive Leadership, and Work Group Morale

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link between leadership at Time 1 and subsequent change initiated by the work group leader ( = .35, p < .01). This result suggests that leaders who were perceived to be more supportive at Time 1 were more likely to initiate change at a later time. Hypothesis 5 was not supported as there was no significant relationship between work group morale at Time 1 and subsequent change initiated by employees within the work group.

DISCUSSION Research in the field of organizational change has focused on the impact that senior leaders or external consultants have on the implementation of large-scale changes (Beer, 1999; Mohrman, 1999; Nadler & Tushman, 1995; Nixon, 1994). The present study encourages a more inclusive analysis of sources of change across organizations. This perspective will become increasingly important as organizations are required to pursue change in how work is done, how it is managed, and who carries it out (Leana & Barry, 2000; Piderit, 2000). The need to display adaptability and flexibility requires that all organizational members are involved in the development and implementation of change (Beer, 1999). Members within work groupsboth leaders and employeescan contribute to organizational adaptability by initiating and implementing change. Results from the present study suggest that change initiated at different levels of the organization is associated with different effects. For instance, change initiated by senior leaders had quite different effects on perceptions of supportive leadership compared to change initiated by work group leaders. When employees perceived that change was imposed from outside the work group, the leader of the work group was seen as less supportive, whereas when the work group leader initiated change, they were seen as more supportive. Work group leaders may have been viewed as less supportive under conditions of externally initiated change because they did not buffer employees from the changes that were being imposed. Work group leaders may need to present changes that are initiated from a higher organizational level as their own in order to be perceived as supportive and considerate. Another explanation for the result is that work group leaders tended to attribute change activities that had negative consequences to leaders outside the work group. This process would result in employees tending to have negative perceptions of externally initiated change, and might also create the perception that the work group leader failed to shield employees from the negative effects of organizational change. Perceptions of supportive leadership at Time 2 (controlling for supportive leadership at Time 1) were most strongly associated with change

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initiated by the work group leader. Leaders within work groups play an important role in structuring the work environment, and providing information and feedback to employees (Durham, Knight, & Locke, 1997; Graen & Scandura, 1987). The results of the present study show that leaders who initiate change are more likely to be perceived as supportive and effective by their employees. There is an increasing emphasis on this type of leadership role in organizations, now that work groups are being allowed greater autonomy (Mohrman, 1999; Pfeffer & Veiga, 1999; Wall et al., 1986; Spreitzer & Quinn, 1996). This research indicates that this type of leadership role should be encouraged, as it tends to foster more positive perceptions of the leader, whereas when change is initiated by managers above the work group leader, it is more likely to have a negative impact. The results for work group morale showed a different pattern to those for supportive leadership. The only unique predictor of work group morale at Time 2 (after controlling for work group morale at Time 1) was change initiated by employees within the work group. Research conducted by George (1991, 1995) indicates that a positive affective climate is associated with improved customer service and absenteeism. Therefore, employee initiated change would appear to be beneficial, both in terms of the organizations ability to adapt to change, and in terms of overall organisational effectiveness. The results did not support the proposition that change initiated by external leaders would have a negative effect on work group morale. Nor was there any support for a positive relationship between change initiated by work group leaders and work group morale at Time 2. Therefore, it appears that the effects of change activities are fairly specific to the source of the change. The results of this study suggest that both leader initiated change and work group initiated change are important in terms of developing adaptive and effective work groups (Campbell, 2000; Sagie, 1996). However, it appears that change initiated by employees is more important in terms of maintaining team viability, whereas change initiated by the work group leader has a more specific effect on work group members attitudes towards their leader. The negative impact on supportive leadership of change initiated outside the work group did not extend to workplace morale. In future research it would be useful to measure perceptions of senior management, in addition to perceptions of work group leaders. In the first instance, this would allow us to examine how changes initiated by external leaders reflect on perceptions of senior management. However, the findings of this study indicate that the actions of external leaders affect perceptions of the local work group leader. Therefore, it would be interesting to examine whether change initiated by work group leaders has a concomittant effect on perceptions of senior management.

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Despite the potential impact that work group morale may have on whether change is initiated, the longitudinal results did not support a lagged effect of work group morale on subsequent initiation of change activities by any of the sources of change. However, supportive leadership at Time 1 was related to higher levels of change initiated by work group leaders at Time 2. The findings of this study suggest that there is a strong association between supportive leadership and initiation of change by the work group leader. The results suggest the possibility of a reciprocal relationship between the initiation of change and perceptions of supportive leadership. That is, perceptions of supportive leadership at Time 1 were associated with initiation of change by the work group leader. In addition, initiation of change by the work group leader resulted in positive perceptions of supportive leadership, beyond that predicted by the level of supportive leadership at Time 1. These findings suggest that the ability to initiate and manage change may be central to the concept of supportive leadership at the work group level. There are some limitations associated with the present study that need to be addressed in future research. First, information on the source of change was based on employee reports, which may or may not provide an accurate reflection of the extent to which change activities were driven by external leaders, work group leaders, or employees within the work group. What these data do tell us is that perceptions of leadership and work group morale are affected by employees perceptions of the source of change. Second, all of the measures employed in this study were based on reports from a single source. This limitation was minimized by obtaining longitudinal data and aggregating the data to the group level of analysis. Nevertheless, it would be preferable to assess initiation of change through some alternative method. For example, it is quite conceivable that work groups could maintain records of who initiates and implements change, and why changes are adopted. Third, future research could benefit from obtaining richer data on how change is initiated by each source. In this study, participants were simply asked to rate the extent to which change was initiated by each of the three different groups within the organization. Consequently, it was not possible to determine whether the different effects associated with the different sources were due to (a) the fact that different sources tend to be associated with different types of change, (b) differences in the way change is initiated and managed by each source, or (c) differences in the way that change activities are interpreted when they are initiated from different sources. Consequently, in future studies it would be desirable to distinguish between the level at which the change activity is initiated, the type of change activity initiated, and the way in which the change is implemented. Finally, future research should consider a broader range of out-

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comes. The current study examined employee perceptions within work groups. These perceptions may have an impact on non-attitudinal outcomes such as productivity, team work, and attendance. In conclusion, the present study encourages both researchers and practitioners to acknowledge different sources of change exist within organizations and leverage the positive effects associated with locally driven change. Work group leaders and employees appear to play important role in implementing change activities, and this study suggests that there are clear benefits to involving both of these groups in change initiatives. Organizational development strategies aimed at strengthening change implementation and initiation skills at the work group level represent one means of maximizing the potential that exists across all levels of the organization. In addition, greater involvement in change might be achieved by encouraging work group leaders to take greater ownership of the change, and allowing work groups to have more control over the means through which a change is implemented.

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