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lOMoARcPSD Summary - book "Managing Organizational Change" - chapter 2-6 Organisational Theory & Dynamics

2-6

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OTD Managing Organizational Change

Chapter 2 - 6

Chapter 2: Images of Change

The images we hold of organizations affect our interpretations of what we think is going on, what we think needs to happen and how we think things should happen

These images are held by us often without our being aware either of their existence or of how they affect our thinking, perception, and actions

Images of Managing Change: Where they come from

Images of Managing

Two images:

1. Management as Control

Underlies the classic Fayol characterization of management as involving activities such as planning, organizing, commanding, coordinating and controlling

Associated with top-down, hierarchical view of management

Organization is treated as a machine

2. Management as Shaping

Sees managing as being about shaping an organization and what happens in it

Associated with a participative style of managing in which people are encouraged to be involved in decisions and to help identify how things can be done better

The final behaviour of the organism can only be shaped not controlled

It is through such shaping actions that organizational capabilities are enhanced

Images of Change Outcomes

Intended Change Outcomes:

Dominant assumption is that intended change outcomes can be achieved

Change is treated as the realization of prior intent through the action of change managers

o

Empirical Rational Strategies: assume that people are rational and follow their own self- interest. Effective change occurs when a change can be demonstrated as desirable and aligned with the interests of the group affected by the change

o

Normative-re-educative strategies: assume that changes occur when people dispense with their old, normative orientations and gain commitment to new ones

o

Power coercive strategies: rely upon achieving intentional change by those with greater power gaining compliance in behaviour from those with lesser power.

Partially Intended Change Outcomes:

Some, but not all changes intentions are achievable

Unintended Change Outcomes:

This image implies that managers often have great difficulty in achieving intentional change outcomes, because there are a variety of forces that either lead to change outcomes that are not

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intended by managers or inhibit the ability of managers to implement changes that they desire. These forces may be internal or external:

o

Internally: may include departmental or interunit politics

o

Externally: may include a variety of factors such as confrontational industrial relations environment

Six Images of managing Change

Image 1: Change Manager as Director

Director image is based on an image of management as control and of change outcomes as being achievable

Assumption: change is a strategic choice that managers make and the survival and general well- being of the organization depends on them

Image 2: Change Manager as Navigator

Navigator image: control is still seen as at the heart of management action, although a variety of factors external to managers mean that while they may achieve some intended change outcomes, others will occur over which they have to little control

managing change is only partially controllable

Image 3: Change Manager as Caretaker

the ideal image of management is still one of control, although the ability to exercise control is severely constrained by a variety of forces that propel change relatively independent of a managers intentions

Theoretical Underpinning of the Image

Life-Cycle Theory: views organizations as passing through well-defined stages (birth, growth, maturity, decline, death). Managers can do little change to stop this natural development. Caretakers help the organization through the different stages.

Population Ecology Theory: focuses on how the environment selects organizations for survival or extinction, with whole populations of organizations changing as a result of ongoing cycles of variation. managers have little sway over change

o

Organizational Variation: can occur as the result of random change

o

Organizational Selection: can occur when an environment selects organizations that are of best fit to its conditions

o

Organizational Retention: consists of forces that retain various organizational forms and thereby serve as a counterinfluence to the forces of variation and selection

Institutional Theory: argues that change managers take similar actions across populations of organizations, by pressures of interconnections within the industry. Three types of pressures:

o

Coercive: compulsiveness, for example by the government

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Mimetic: imitate the structures and practices of other organizations

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Normative: changes occur through the professionalizing of work such that managers in different organizations utilize similar values

Image 4: Change Manager as Coach

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Assumption: change managers are able to intentionally shape the organization´s capabilities in particular ways. The coach relies upon building in the right set of values, skills, and drills that are deemed to be the best ones that organizational members will be able to draw on adeptly.

Theoretical Underpinning of the Image

Organizational Development (OD) theory reinforces the change manager as coach image. Underlying traditional OC focus is the implementation of change that stresses the importance of humanism, democracy and individual development. See also Chapter 7

Image 5: Change Manager as Interpreter

Interpreter image places the change manger in the position if creating meaning for other organizational members, helping them to make sense of various organizational events and actions

Theoretical Underpinning of the Image:

The interpreter image is present in Karl Weick´s sense-making theory of organizational change, which argues that organizations are within an ongoing process with new adjustments, in order to react in the best way to changing circumstances. Four drives that shape how capabilities are produced:

Through animation: whereby people remain in motion and may experiment

By direction: including being able to implement in novel ways direct strategies

By paying attention and updating

Through respectful, candid interaction

Image 6: Change Manager as Nurturer

Assumes that even small changes have a large impact on organizations and managers are not able to control the outcomes of these changes.

Specific outcomes and directions of change cannot be intentionally produced but rather emerge and are shaped through the qualities and capabilities of the organization

Theoretical Underpinning of the Image:

Chaos theory: organizational change is not linear, it is fundamental rather than incremental, and does not necessarily entail growth. Self-organization recognizes the chaotic nature of organizations that results from having to grapple simultaneously with both change and stability. Change manager nurtures the capacity for self-organization but has little ability to influence.

Confucian/Taoist Theory: view changes as cyclical, processional, journey oriented, beased on maintaining equilibrium, observed and followed by involved people, and normal rather than the exception. Organizational change outcomes are not intended so much as produced through the nurturing of a harmonious Ying-Yang philosophy in which each new order contains its own negation.

Using the Six-images framework

Caretaker and nurturer images are less discussed

The director, navigator, coach and interpreter change images entail, to varying degrees, much more active, intentional, and directional assumptions about the ability of change managers to proactively produce organizational change they are much more positive images than the caretaker and nurturer images.

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Three Key uses of the Six-Images Framework

Surfacing our assumptions about change

The six-images framework guides us in reflecting on the images and assumptions we hold about managing change

Assessing Dominant Images of change

The six images framework encourages change managers to reflect an whether they are dominated, for all changes, by a particular view of change and the limitations of such and image

Directs attention to whether the organization in which the change is to occur is dominated by a particular view of what is achievable and how change should unfold.

Using Multiple Images and Perspectives of Change

One of the advantages of exposure to the range of images of managing change and associated techniques is that it reduces the likelihood of a change manager using a single image because of a lack of understanding of the range of options upon which he or she is able to draw

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Image-in-use depends on the type of change

o

Image-in-use depends on the context of the change

o

Image-in-use depends on the phases of change

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Image-in-use depends on simultaneous involvement in multiple changes

Chapter 3: Why Organizations Change

Why do managers engage in change if it is such a risky activity?

One position based on economic perspective, closely aligned to images of organizational change that adopt a management as control assumption and assumes:

o In competitive economies, firm survival depends on satisfying shareholders. Managers conduct change in order to produce better organizational performance in the form of better quarterly results with correspondingly better company share prices

Alternative position: more aligned with change management images associated with the management as shaping assumption organizational learning perspective

o Organizations and human systems of all sorts are complex and evolving and therefore cannot be reduced to a single, linear objective of maximizing shareholder value. Building in the capacity to both respond to , ad shape, external changes is an alternative rationale for explaining why managers conduct change

Result of change is supposed to be stability!

Environmental Pressures for Change

Often occur where an organization´s resources base decreases as a result of reduced demand for products and sales, decrease in market share, and bad investment decisions.

Fashion Pressures:

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Mimetic isomorphism: occurs when organizations imitate the structures and practices of other organizations in their field or industry, usually ones that they consider as legitimate or successful

Organizational change can occur on response to the latest management fad or fashion: in order to be seen as professional, modern or progressive managers may change their organizations in line with the latest innovation in management practices.

Mandated Pressures:

Corporations which do not address social and environmental requirements face fines, workers´ compensation cases, criminal convictions and payment of clean-up costs

Sometimes change is forced onto an organization through formally mandated requirements. This is referred to by neo-institutional theorists as coercive isomorphism where organizations are forced to take on activities similar to those of other organizations because of outside demands placed on them to do so

These mandated pressures may be either formal or informal:

o

Formal coercive pressure: incl. gov. mandates such as new laws and policies. Organizations are forced to change to meet new legal requirements (pollution, tax laws…).

o

Informal coercive pressures: incl. commitment to certain types of organizational changes such as empowerment in order to get the support of other organizations also committed to such programs.

Geopolitical Pressures:

May be in the form of immediate crises or long-term geographical realignments (such as 9/11 or the fall of the Berlin Wall)

Often leading to a drop in sales and related activities

Other geographical pressures for change may occur through an escalation of mergers and acquisitions, which can have a profound effect on an industry

Four global environmental forces for change:

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Technological: requires more globally connected people and faster communication and transportation

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Greater economic integration: of currencies and international capital flows

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Maturation and slowdown: of domestic markets, leading to greater emphasis on exports and deregulation

o

Fall of socialist countries: and their reorientation toward capitalist economies

Hypercompetitive Pressures:

Aligned with the rise of e-commerce and the use of internet, organizations are confronted with global changes in consumer preferences, industry boundaries, social values and demographics

Reputation and Credibility Pressures:

Change is associated with maintaining proper corporate governance mechanisms to ensure a positive corporate reputation

Corporate reputation: “collective representation of a firm’s past actions and results that describe the firm’s ability to deliver valued outcomes to multiple stakeholders”

Maintaining and enhancing corporate reputation is therefore an important part of managing firm survival

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Why Organizations May not change in the face of external environmental Pressures

In explaining why external pressures do not always lead directly to organizational change, four debates will be discussed:

Organizational Learning vs. Threat-Rigidity

There is disagreement on whether environmental pressures facilitate or inhibit adaption and innovative organizational change

Organizational learning argues that environmental pressures such as market decline will lead to innovative organizational adaption and change as managers learn from the problems and try to close the gap between performance and aspiration

Threat-rigidity argues that such pressures will inhibit innovative change as managers’ cognitive and decision-making processes become restricted when confronted with threatening problems

Change results from performance gaps that can be threat-based such as a decline in profit or opportunity-based such as raised aspiration levels of growth

Threat-based responses may elicit a commitment to change but invoke rigid behavioural responses such as a restriction of information, decision making, and control of existing resources; opportunity- based responses may elicit new, flexible ways of moving forward but lack a high level of commitment because a residual fit remains between current capabilities and the operating environment

The paradox requires the organization to have a system that focuses on both, threats and opportunities

Environment as Objective Entity vs Environment as Cognitive Construction

Type 1 error: Occurs when the environment is stable, but managers perceive it as turbulent and take actions accordingly

Type 2 error: occurs when managers threaten the survival of their firms by failing to take actions as they perceive their environment as stable when it is turbulent

Smiricich and Stubbart identify a third view of the environment as not having an objective existence outside of individual views and perceptions of it the constructivist view.

Bogner and Barr propose that that manager´s sense-making activities contribute to the perpetuation of hypercompetitive environments.

Forces for Change vs. Forces for Stability

Whether environmental pressures will lead to innovative change will be affected by three factors (Mone):

1. The extent to which an organizations mission is institutionalized in stakeholders and the external environment: the less this is the case, the more flexible the organization can respond to change

2. The extent of diffusion of power and resources throughout the organization: the more concentrated the power in the organization, the greater the ability to make decisions and allocate resources to achieve change

3. The rationale managers employ to explain decline: the more controllable or stable the causes, the more likely managers are to introduce innovative changes since the causes of decline are perceives to be permanent

Bridging (Adapting) vs. Buffering (Shielding)

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Bridging strategies are designed to keep the organization effective by adapting parts of it to changes happening in the outside environment

Buffering strategies are designed to keep the organization effective by avoiding change through shielding parts of it from the effects of the environment

Managers use a variety of techniques to smooth jolts in the external environment including forecasting, planning and stockpiling

In practice, buffering is a “subtle concept” and various arguments exist regarding the way organizations in networks may buffer each other and the extent to which decentralizing an organization pushes buffering mechanisms further in the organization

Organizational Pressures for Change

Growth Pressures

As companies age, change in from of growth is brought about

Small business owners resist the growth of their business beyond the point at which they lost personal control of day-to-day operations

Integration and Collaboration Pressures

Some changes are made in order to better integrate the organization or create economies of scale across different business units

Identity Pressures

New Broom Pressures

New broom phenomenon, when a new CEO arrives, can act as a signal that the old ways are about to change

Power and Political Pressures

Can come in a variety of forms: some are well documented and relate to internal political pressures associated with changes at board and CEO levels

Chapter 4: What Changes in Organizations

Types of Changes

Distinguishing between First-Order and Second-Order Changes

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First-order, incremental change: “may involve adjustments in systems, processes, or structures, but it does not involve fundamental change in strategy, core values, or corporate identity”. They maintain and develop the organization is seen as small-scale and adaptive

Second-order, discontinuous change: “is transformational, radical, and fundamentally alters the organization at its core”. Entails not developing but transforming the nature of the organization is seen as large-scale and disruptive

Fine-tuning: occurs where incremental changes are made that anticipate changes to the external environment. These changes involve adjustment or modification to enable a better fit between organization and the environment

Adaptive: changes are incremental but reactive to changes made by other organizaitons

Reorientation: anticipatory, discontinuous change that involves “frame bending”, that is major modification of the organization but by building on past strength and history

Re-creation: is second-order change that is reactive and involves “frame breaking”, that is major upheaval where the organization breaks with past practices and directions

First-Order, Adaptive Changes

Changes as the taking of Individual Initiatives Managers have ignored the bottom-line impact of smaller, local organizational changes and, in many organizations, do not foster the conditions that allow personal initiative to emerge.

Autocratic organizations discourage initiative by removing responsibility

Meritocratic organizations constrain individual initiative and action by tightly regulating controls and procedures throughput the company

Social club organizations discourage individual initiative by requiring conformity to them rather than to the work itself

Frohman prospers that personal initiative directed toward local change is likely to occur when attributes from each of these three organizational types strong leadership, bureaucratic systems, and teamwork are balanced.

Changes as the Development of Local Routines

Organizational routines can be the source of change in organizations when they are enacted by different people who place their own interpretations and actions on how the routines should occur

2 internal dynamics drive routines toward continuous change:

o

Past outcomes fall short of what was intended

o

Achievement of outcomes opens up new possibilities

Second-Order, Transformational Change

Palmer & Dunford found 8 commonly occurring recommendations for major organizational change in order to cope with hypercompetitive business environments:

Delayering: reducing of the number of vertical levels in the organization

Networks/Alliances: involving internal and external strategic collaboration

Outsourcing: of activities in which the organization has no distinctive competences

Disaggregation: breaking up the organization into smaller business units

Empowerment

Flexible work groups: for specific purposes that are disbanded or reformed upon completion of the task

Short-term staffing

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Reduction of internal and external boundaries: encourage communication and resource sharing

Before rushing out to get rid of old organizational practices commentators caution managers to be careful in taking such radical change actions. Instead of replacing old with new they should intergrate

Transformational Types

Nadler and Tushman distinguish between frame-bending (reorientation) and frame-breaking (re- creation) transformations

Flamholtz and Randle add to such distinctions by distinguishing among three types of transformational change:

o

Type 1 transformation: occurs when an organization moves from an entrepreneurial to a professional management structure

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Type 2 transformation: involves the revitalization of already-established companies.

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Type 3 transformation: involves a visionary change in which the organization fundamentally changes the business in which it is involved

Beyond Either First-Oder or Second-Order Change

Three approaches do not retain firm distinctions between categorizing changes as either adaptive or transformational:

Midrange Organizational Change

Instead of managers engaging in either adaptive or revolutionary change middle road

Midrange changes are important where companies seek to modify the company without destroying employee loyalty and other positive company attributes

o

High inertia: can result when the change is perceived as unnecessary, there being little gap between current identity and the one that is implied in the change

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High stress: can result when the change is perceived as unattainable and the gap is too wide between the current organizational identity and the one that will occur as a result of the change

Mid-road or tectonic change is one that is large enough to overcome the inertia that plagues large organizations while avoiding the cataclysmic side effects of massive revolutions

Designed to destroy outdated aspects of the organization´s old identity while simultaneously building on other elements

Change as Punctuated Equilibrium

Punctuated Equilibrium Theory: Romanelli & Tushman portray organizations as evolving through relatively long periods of stability (equilibrium periods) in their basic patterns of activity that are punctuated by relatively short bursts of fundamental change (revolutionary periods)

Revolutionary periods substantially disrupt established activity patterns and install the basis for new equilibrium periods

Change as Robust Transformation

Some environmental conditions may be temporary or undergoing continuous change and therefore require robust responses including enactment of new, perhaps unanticipated capabilities

Rethinking Linear, Equilibrium Assumptions about Change

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Mayer suggest that large groups of organizations undergo discontinuous, often unanticipated change. This can take 3 forms:

Jolts: shocks that can temporarily disrupt organizations but then eventually subside

Step Functions: new conditions that emerge that are permanent and require organizations to move from one position to another in order to achieve a better fit with the environment

Oscillation: situations where cycles of discontinuity occur, including expansions and contractions of an organization´s market or operating environment

Implications for Change Managers

7 implications that need to be considered by the managers of change:

1. Care needs to be taken in assuming that type of organizational changes can be neatly categorized as small, adaptive, and incremental compared to those that are large and transformational. The change manger as interpreter image reminds us that whether a change is adaptive, reactive or transforming it is not necessarily a given objective

2. Some changes require other changes nested under them in order for another change to proceed. Change managers need to avoid simply focusing on one change without an understanding of the way other related changes may impact upon their staff

3. Small changes, at an individual level, may have larger, unanticipated consequences throughout the organizations. Change managers can nurture and shape people´s perceptions and reactions to change but not control them. Nurturer image.

4. Adopting the coach image, the managers of change are likely to assume that, as long as people have been well coached in a variety of organizational and team skills, they will take the initiative and make appropriate adaptive change to alter organizational practices and routines

5. Often change is needed to remain stable. The more things change, the more they stay the same (paradox). Change managers who adopt a director image need to remember that they will need to provide directions about stability.

6. Changes may mean adding on to, and integrating, rather than removing and replacing current practices. What this reminds the mangers of change is that they need to assess how carrying out a change will impact upon current practices.

7. There is often an assumption that incremental, adaptive changes are less risky than large, second- order changes. An alternative position is that staying the same is risky! This requires both, assessing the scale of change (incremental/radical) from the perspective of the affected parties as well as assessing the risk involved (of changing rather than staying the same) and the different ways in which risk can be ameliorated.

Types of Changes: Lessons from the Front Line

Downsizing Downsizing, or the intentional process of permanently reducing staff members has been widespread since the 1970´s. There is a variety of approaches to downsizing: retrenchment, downscaling and down-scoping. Reasons for downsizing may include restructuring, closing or selling of a business unit, cost reduction and cost saving, increased productivity through greater efficiency and effectiveness, coping with external pressures, technological change and increased competitive pressures through greater globalization of business. It will not necessarily lead to gains in productivity where it is not associated with other changes in business strategy. And it can be financially costly.

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Retrenchment

Done by centralizing or specializing a firm´s operations to sustain or improve

Downscaling

Constituted by permanent alterations to employment and tangible resource capacity

Down-scoping

When the firm divests activities or markets in which it operated

Change Challenges of Downsizing

Employee retention

Avoiding hard landings: occur when core competencies are lost or underutilized because they were linked to key people who were lost in downsizing.

Minimizing political behaviour and loss of teamwork

Survivor syndrome: they question why change occurred, feel guilty that they remain while some of their valued work colleagues are unemployed

Communication: occur when companies are not open about the market situation they face

Due Diligence: unplanned and nonselective downsizing can lead to issues for companies such as whether the downsizing was really necessary and why it was that some people were retained and others let go.

Cultural adjustment: restructuring an organization trough any means requires significant cultural change.

Choice of restructuring technique

Technological Change

Impact of new systems may not be manifested for a significant amount of time

Managers often seek to use technologies for short term solutions without paying attention to long term results

Change Challenge to Introducing New Technologies

Goal synthesis: problem when implementing a new technology is identifying its place within the organization

Choice of technology:

Identifying political barriers: may occur through perceived loss of control and authotrity under the new system

The IT team: it is important that the It department works closely together with other departments

Communication: is the direction of, and the process for implementing a technological change

Time frame: short-term or long-term basis?

Contingency planning: overhauling a fundamental part of a firm´s infrastructure can seriously damage its day-to-day operations

Merger and Acquisitions

M&A enable organizational growth at accelerated rates

M&A can take many different forms

o

Excessive capacity: acquiring the firm has the opportunity to excessive capacity and consolidate operations in more mature industries

o

Neighbouring market expansions: before industry maturity, when a strategically sound firm acquires operations in neighbouring areas. Assumes the increased benefits to the acquired firm through lower overhead costs and increased value for the consumers.

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New Product or market investment: 2 firms wish to explore the other´s advantages in relation to extending product lines or global scope

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R&D: used to increase market position at a more rapid rate. A preferred method when the product that is being developed has a shorter life cycle

o

Leveraging to create new industries: resource of 2 firms are pooled and reconstructed to launch a new industry that the firm´s boundaries did not cover previously.

Change Challenges for M&A

Cost savings: are typically overvalued initially leading to focus on short-term returns

Cultural adjustment: can often lead to conflict

Balancing change and continuity: balance is needed between the disruptions caused by the change and the need for continuity of work and positions in order to retain or establish employees identity with the new organization

Due diligence: lack thereof can lead to the incorrect pricing of the target company and integration of the two organizations

Employee retention: key challenge

Contingency planning: ability to plan and set priorities and goals for the future is crucial

Power structure: change managers need to be aware of this potential issue and identify strategies for both, detecting and dealing with it

Communication: communicating effectively to employees, customers, and shareholders is an important issue when undergoing a merger or acquisition

Chapter 5: Diagnosis for Change

Diagnostic models refer to the operation of the organization as a whole. They are ways of mapping the environment they describe. Change managers as coach will focus on the diagnostic tools that highlight the goals being sought and the competencies needed to attain them. Change managers as interpreter will be attracted to the diagnostic tools that emphasize images, framing, and cognitive maps. Nurturer with an interest in emergent strategy may remain unconvinced as to the value of such diagnostic tools.

Modelling Organizations

The Six-Box Organizational Model

Marvin Weisbord´s model is based on six variable:

1. Purpose: what business are we in?

2. Structure: how do we divide up the work?

3. Rewards: do all tasks have incentives?

4. Helpful mechanisms: have we adequate coordinating technologies?

5. Relationship: how do we manage conflict among people/technologies?

6. Leadership: does someone keep the boxes in balance?

The 7-S Framework Developed by McKinsey and based on the propositions that…

Organizational effectiveness comes from the interaction of multiple factors

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Successful change requires attention to the interconnectedness of the variable

o

Structure: refers to the formal organizational design

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Strategy: refers to the chosen route to success

o

Systems: various procedures in areas such as IT

o

Style: reference to patterns in actions of mergers and others in the organization

o

Skills: the crucial attributes, the dominating capabilities

o

Superordinate goals: refer to the organization´s vision

All these variable are interconnected

The Star Model

Strategy: the basis on which all decisions are based

Structure: defined as the formal authority relationships and grouping of activities as represented on an organization chart

Processes and lateral capability: refer to the processes, either formal or informal, that coordinate activities throughout the organization

Reward systems: seek to align individual actions to organizational objectives

People practices: combines HR practices

Misalignment produces suboptimal performance

The Congruence Model

By Nadler & Tushman based on the proposition that the effectiveness of an organization is determined by the consistency (congruence) between the various elements the comprise the organization

The model sees organizations as comprising 4 components:

o

Task: the specific work activities that have to be carried out

o

Individuals: the knowledge, skills, needs and expectations of the people in the organization

o

Formal organizational arrangements: structure, processes and methods

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Informal organization: implicit, unstated values, beliefs, etc.

Context: comprised of the environment, resources and history

o

Environment: refers to factors outside the organization such as the economic, social, and technological conditions

o

Resources: assets, tangible and intangible, internal to the organization

o

History: refers to the organization´s own history

The Burke-Litwin Model

Differentiates between those elements of the model that are seen as likely to be the source of major (transformational) change and those that are more likely to be the source of change that is experiences as incremental (transactional).

4 transformational factors are external environment, mission and strategy, leadership, and organizational culture

Fundamental premise of the model is that planned change should flow from the top of the diagram (environment) to the bottom (performance)

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The Four-Frame Model

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Without the capacity to use multiple frames, managers may become locked into their one favoured way of seeing the world

Structural frame presents organizations as akin to machines that are designed to efficiently turn inputs into outputs

Human resource frame directs attention to the relationship between the organization and the people that comprise it

Political frame suggest that we see organizations as sited where participants interact in pursuit of a range of objectives

Symbolic frame proposes that the essence of an organization may lie not in its forma structure and processes but in its culture

Component Analysis

The PESTEL Framework

PESTEL characterizes the organizational environment in terms of six factors:

Political (e.g. threat of terrorism)

Economic (e.g. unemployment rate)

Social (e.g. demographic changes)

Technological (e.g. new product development)

Environmental (e.g. environmental rules on emissions)

Legal (e.g. new laws)

Scenario Analysis Several scenarios will be discussed so that the change manger is prepared.

Gap Analysis Based on three questions:

Where are we now?

Where do we want to be?

How can we get there?

High consensus can generate 2 different courses of action

Act immediately to close the gap

Suspend action until a direct challenge to the high consensus view can be arranged

The Elements of Strategy Strategy and change intersect because both strategies may change, and change may be deemed necessary in order to realize a set strategy. The elements are:

Arenas: what business will we be in?

Vehicles: how will we get there?

Differentiators: how will we win the market place?

Staging

Economic logic

The Strategic Inventory

Defining the boundaries of the competitive environment and the key assumptions

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Is our assumption set internally consistent?

Do we understand the relative importance of each of our assumptions?

Are our key assumptions broadly understood?

Do we have a process for reviewing and validating our key assumptions and premisis?

Danger off swat analysis is that it very easily becomes a listing not of strengths but believed strengths, and believed weaknesses

Cultural Web Comprises 7 elements:

Paradigm: the set of assumptions commonly held throughout the organization in regard to basic elements of the business

Rituals and routines: regarding how organizational members treat each other and associated belief of what is right and valued

Stories: told by organizational members

Symbols: logos, office design, etc.

Control systems

Power structures

Organizational structure: refers to the nature of the formal and informal differentiation and integration of tasks within the organization

Structural Dilemmas

1. Differentiation vs integration

2. Gap vs overlap

3. Underuse vs overload

4. Lack of clarity vs lack of creativity

5. Excessive autonomy vs excessive interdependence

6. Too loose vs too tight

The Boundaryless Organization New success factors”:

Speed: in bringing products to market and in changing strategies

Flexibility: the use of ad hoc teams and malleable job descriptions

Integration: greater collaboration between specialists

Innovation: encouragement of creativity

The new success factors will only be achieved if 4 types of organizational boundaries are reduced:

Vertical boundaries: layers in the internal vertical hierarchies of organizations

Horizontal boundaries: exist between organizational units

External boundaries: those between the organization and the outside world

Geographic boundaries

Diagnosing Readiness to Change

An alternative means for assessing change readiness focuses on eight factors: values and visions, history of change, cooperation and trust, culture, resilience, rewards, respect and faces, and status quo. Individual´s beliefs in regard to 4 factors are central:

Their own capability to implement the proposed change

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The appropriateness of the proposed change

Senior management support for the change

Personally beneficial nature of the change

Stakeholder Analysis Stakeholder analysis focuses on one specific aspect of change readiness: positions of key stakeholders in regard to the proposed change

Force-Field Analysis Model for looking at the factors that can assist or hinder the implementation of change.

Forces pushing for change are: driving forces

Forces working against change are: restraining forces

Chapter 6: Resistance to Change

Commonly cited causes for the lack of success of organizational changes is resistance to change.

Support for Change

People will often embrace change and work enthusiastically in support of change. Kirkpatrick identifies the following as possible outcomes that are likely to cause people to react positively to change:

Security

Money

Authority

Status/prestige

Responsibility

Better working conditions

Self-satisfaction

Better personal contacts

Less time and effort

Signs of Resistance to Change

Resistance to change is “tridimensional”, involving affective, behavioural, and cognitive components.

Affective component: how a person feels about a change

Cognitive component: how a person thinks about a change

Behavioural component: what a person does in the face of a change

Behavioural responses may take many forms: Hultman draws a distinction between active and passive responses.

Symptoms of active resistance: being critical, finding fault, ridiculing, appealing to fear etc.

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Symptoms identified with passive resistance: agreeing verbally but not following through, failing to implement change etc.

Why do People resist Change?

Dislike of Change For the majority of people, it is contextual factors, that is, the specific characteristics of the specific change that determine how they react.

Discomfort with Uncertainty As individuals we tend to vary in terms of how comfortable we are with ambiguity. Strategic intent is not complemented by clarity as to expected actions, the chances increase that employees will fail to convert a change initiative into supporting action at their level of the organization.

Perceived Negative Effect on Interests Readiness for change will be affected by people´s perception of the likely effect of the change on their interests.

Attachment to the Established Organizational Culture/Identity Readiness for change can be significantly affected by the degree of attachment to the existing culture. Two specific mental barriers tend to undermine the acceptance of change initiatives that are interpreted as inconsistent with the existing organizational identity

Passive resistance: occurs when managers exhort subordinates to implement a change without first clarifying the connection between the change and some aspects of the organizational identity

Active resistance: occurs when a change is interpreted as directly in conflict with key elements of the organizational identity

Perceived Breach of Psychological Contract A breach or violation of the contract occurs when employees believe that the employer is no longer honouring its part of the deal. Strebel argues that employees and the organization for which they work can be seen as involved in a “personal compact” that defines their relationship. This compact may be explicit or implicit and involves three dimensions:

Formal: covers such things as the specific task that a person is employed to do, how performance is assessed and the associated level of remuneration.

Psychological: relates to expectations in terms of trust, loyalty and recognition

Social: refers to the espoused values of the organization

Lack of Conviction Helps change advocates if the belief that change is needed is widespread within the organization.

Lack of Clarity as to What is Expected Proposed changes, particularly of a strategic nature, are not complemented by clear information as to the specific implications at the level of action by individuals. Where this is the case, the chances increase that employees will fail to convert a change initiative into supporting action at their level of the organization.

Excessive Change

Two forms:

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First form occurs where an organization is pursuing several change initiatives at once and these are perceived by people in the organization as unrelated or in conflict

Second form occurs where an organization introduces a series of changes and people in the organization feel that resources are being reassigned to new initiatives before the earlier ones have been given sufficient attention for them to be efficiently implemented

Managers as Change Resistors

Most discussions of resistance to change present managers as the advocates of change with lower- level employees cast in the role of resistor

It is important to recognize that the managers in an organization are not necessarily always passionate advocates of change

Change represents a situation where differences are often to the force, e.g. where a particular change initiative is proposed by some managers in a company but opposed by others

Managers are likely to have within their ranks a range of opinions as to whether a proposed change is a good idea

Managers may feel themselves ready for change but miss the signs that it is needed boiled frog phenomenon

Managing Resistance

A “Situational” Approach Six methods for managing resistance:

Education and communication

Participation and involvement

Facilitation and support

Negotiation and agreement

Manipulation and co-optation

Explicit and implicit coercion

This approach is situational in that they argue that the selection of method by managers should be

determined by contextual factors.

The Resistance Cycle Presents the reactions of people to change as involving a progression through a series of psychological stages.

For Jick & Peiperl: stages are shock, defensive retreat, acknowledgement, and adaption and change

For Scott and Jaffe: cycle has 4 phases, beginning with denial, moving through resistance to exploration to commitment Laissez-fair response by management is likely to be unwise given that intervention may at least reduce some of the negative effects of resistance to change.

Thought Self-Leadership Thought self-leadership (TSL) is a process of influencing or leading through the purposeful control of one´s thought. It focuses attention on the reactions of the recipients of change. The strength of this approach are:

It draws attention to the way in which the framing of the situation by the recipients can directly impact on their actions in regard to the change.

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There are associated techniques that can be used to help people reframe a change situation more positively

Tinkering, Kludging and Pacing

Tinkering and kludging processes involve the reconfiguration of existing practices and business models rather that the creation of new ones

The difference between tinkering and kludging is a matter of scale, with tinkering being the more modest

Kludging is tinkering on a large-scale, as where the leveraging of existing capabilities results in the development of a new business of division

Pacing: refers to the ability to mix major change initiatives, the ones most likely to be destabilizing and disruptive, with tinkering and kludging

The power of Resistance The approach is based on the view that showing respect toward resistors build stronger relationships and thereby improves the prospects of success to change. Five “fundamental touchstones”:

Maintain clear focus

Embrace resistance

Respect those who resist

Relax

Join with the resistance

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