PHAMHOANGHI EN,MBA,PG.

( CSU)

CHAPTER 10 TYPES AND FORMS OF ORGANIZATIONAL CHANGE TEACHING OBJECTIVES 1. To define organizational change as the process by which organizations reach their desired goals. (10.1) 2. To examine the various targets of change. (10.1) 3. To discuss both the forces for change and the resistances to change. (10.2) 2. To contrast the revolutionary and evolutionary approaches to change. (10.3) 4. To explain Lewins Force Field Theory of Change. (10.4) 5. To explain and apply the basic steps of action research. (10.4) 6. To examine the various components of Organizational Development. (10.5) CHAPTER SUMMARY This chapter examines organizational change, including technological change. Technological change requires that organizations learn how to manage the innovation process. Organizational change is defined as the process by which organizations reach desired goals. Planned organizational change creates value for stakeholders. Several forces for change plus resistances to change are examined. The major forces for change are competitive, economic, political, global, demographic, social, and ethical forces. The major resistances to change at the organizational level are structure, culture, and strategy. Resistances at the functional level are differences in subunit orientation and power and conflict struggles. Resistances at the group level are norms, cohesiveness, and groupthink. Resistances at the individual level are cognitive biases, uncertainty and insecurity, selective perception and retention, and habit. Evolutionary change is distinguished from revolutionary change. Reengineering, downsizing, restructuring, and TQM are discussed as methods for change. Included in this are the use of flexible workers and flexible work teams. Change is also viewed through Lewins Force Field Theory of Change. The concepts and steps associated with action research are detailed to show how organizations reach a desired future state. Various concepts associated with organizational development are discussed as a tool to help both the organization and the individuals in the organization maximize their

effectiveness and achieve their goals. CHAPTER OUTLINE 10.1 What Is Organizational Change? Organizational change occurs when an organization restructures resources to increase the ability to create value and improve effectiveness. A declining company seeks ways

PHAMHOANGHI EN,MBA,PG.( CSU)

to regain customers; a growing organization designs new products. Change is prevalent. In the past 10 years, over 50 percent of all Fortune 500 companies have undergone significant restructuring. Targets of Change Organizational change includes changes in four areas: 1. Human resources are an organizations most important asset. Q. What changes are made in human resources? A. Changes include: investment in training, socializing employees, changing norms to motivate a diverse workforce, monitoring promotion and reward systems, and changing top management. 2. Functional resources can be transferred to maximize value creation as the environment changes. Thus, key functions grow in importance. Organizations can change structure, culture, and technology to improve the value created by functions. Q. Give examples of structural and technology changes. A. A product team culture increases development time. Technology that uses selfmanaged work teams increases productivity and quality. 3. Technological capabilities provide new products, change existing ones, and create a core competence. Improving the reliability and quality of goods and services is an important capability. Organizations may need to restructure to achieve the benefits of new technology. 4. Organizational capabilities are imbedded in operations. Organizations use human and functional resources to seize technological opportunities through structure and culture. These four resources are interdependent, so changing one leads to a change in others. Recruiting a team of scientists leads to restructuring a product team.

10.2 Forces for and Resistance to Organizational Change Organizations face both the forces of change and resistances to change. (Fig. 10.1) Forces of change require change or loss of competitive edge. Competitive forces spur change, because an organization must equal or surpass rivals to sustain a competitive advantage in efficiency, quality, innovation, or customer responsiveness. Managing change is crucial when competing for customers.

PHAMHOANGHI EN,MBA,PG.( CSU)

Economic, political, and global forces, such as the North American Free Trade Agreement (NAFTA) or other economic unions, are significant forces of change. The European Union (EU) has increased to 20 countries. Production in an EU country eliminates tariffs, so Japan produces cars in England to avoid foreign tariffs. The three distinct economic spheresNorth America, Europe, and Asiaexpect to have more trade within their arena than across spheres. Low-cost competitors, low-cost inputs, and new technological developments are realities of global competition. Organizations may need structural change to enter foreign markets and adapt to different cultures. Demographic and social forces include an increasingly diverse workforce, changing, hiring and promotion. Many workers want to balance work and leisure. Companies need flexibility in scheduling to meet employee childcare needs. Ethical forces place greater demands on firms for honest, corporate behavior, so some firms have hired ethics officers to report offenses or give ethical advice. Organizations protect whistleblowers and foreign employees. Organizational Insight 10.1: Nike, Reebok, Adidas, and the Sweatshops These companies came under scrutiny because the countries that they outsourced production to paid very low wages and had extremely poor working conditions. Public outcry is a good example of a force that forces an organization to change. Q. What environmental forces caused these companies to change their practices? A. In this case, it was primarily the general public. Transition into the resistances to change section to discuss what may prevent these organizations from changing immediately. Notes_________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ___________________________________________

Resistances to Change can occur at the organizational level, group level, or individual level. Organizational-Level Power and conflict: If change benefits one function at the expense of another, conflict impedes the change process. Powerful divisions, such as IBMs mainframe division, can sabotage change. Then, they must analyze how the change will affect the organization, and determinewhich type of change to pursue.10.3Evolutionary and