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Change Management

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Managers, at one point or another, will have to make changes in some, if not all aspects of their workplace. These changes refer to organizational change, which is any alteration of people, structure, or technology. Most often, changes are initiated and coordinated by a manager within the organization. However, the change agent could be a non-manager – for example – a change specialist from the HR department or even an outside consultant whose expertise is in change implementation.

Managers, at one point or another, will have to make changes in some, if not all aspects of their workplace. These changes refer to organizational change, which is any alteration of people, structure, or technology. Most often, changes are initiated and coordinated by a manager within the organization. However, the change agent could be a non-manager – for example – a change specialist from the HR department or even an outside consultant whose expertise is in change implementation.

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Change Management

  1. 1. Organizational Change and Development: MANAGEMENT OF CHANGE I. Introduction Change is the only constant thing in the world. Due to the rapid changes in our environment, we as individuals are forced to change to adapt to the emerging new conditions. It is also the same idea used in evolution and in Darwin’s natural selection wherein people change to adapt to the changing environment to subsist. Just like us, organizations must change and generate fast responses to the changing environment in order to survive and prosper. Change implies a situation. It might be in a form of a new boss, new site, new team roles, new policy, structure or system. Organization change is triggered by a relevant environmental shift that once sensed by the organization and act upon leads to an intentionally generated response by the organization to address the situation. This intentional response is called “planned organizational change.” It has four interrelated components (1) a change intervention that alters (2) key organizational target variables that then impact (3) individual organizational members & their on-the-job behaviors resulting in changes in (4) organizational outcomes. (Porras & Silvers: P81) This planned change interventions can be divided into two general types (1) organization development and (2) organization transformation. This paper however will focus on organization change and development with reference to management of change in particular. II. Organizational Change and Development Managers, at one point or another, will have to make changes in some, if not all aspects of their workplace. These changes refer to organizational change, which is any alteration of people, structure, or technology. Most often, changes are initiated and coordinated by a manager within the organization. However, the change agent could be a non-manager – for example – a change specialist from the HR department or even an outside consultant whose expertise is in change implementation. For major system-wide changes, an organization often hires outside consultants to provide advice and assistance. Because they are from the outside, they offer an objective perspective that insiders may lack. However, outside consultants are usually at a disadvantage because they have a limited understanding of the organization’s history, culture, operating procedures, and people. Outside consultants also are likely to initiate more drastic change than insiders would (which can be either a benefit or a disadvantage) because they don’t have to live with the repercussions after the change is implemented. In contrast, internal managers who act as change agents may be more thoughtful, but possibly overcautious, because they must live with the consequences of their decisions. When changes are introduced and are managed effectively, this may often lead to organizational development. Beckhard (1969) defines OD as an effort [that is] (1) planned, (2) organization-wide, and (3) managed from the top, to (4) increase organization effectiveness and health through (5) planned interventions in the organization’s processes, using behavioral science
  2. 2. knowledge. Similarly, Cummings and Worley (1997) view organization development as a system-wide application of behavioral science knowledge to the planned development and reinforcement of organizational strategies, structures, and processes for improving an organization’s effectiveness. French, et al. (2000) reiterate the importance of studying Organization Development. 1) OD works and its programs can improve individual performance, create better morale, and increase organizational profitability. OD techniques have the ability to solve many organizational problems; 2) The use of OD is growing and is applied throughout the gamut of today’s organizations and industries; 3) It is now recognized that human assets are the most important and OD offers a variety of methods to strengthen the human side of organizations that is beneficial to both the individual and the organization; and 4) OD is a critical management tool especially in relation to change. Its concepts and techniques will soon be an essential part of a well-trained manager’s repertoire. A good understanding of OD has great practical value for present and future managers and leaders. Indeed, organizations today do not exist in an environment characterized by stability and status quo. As Prahalad (1998) stated, the future belongs to the imaginative and to those who have the courage to overcome the discontinuities and reshape their organizations to meet the challenges of the so-called new economy. III. Forces for Change An organization is subject to pressure for change from too many sources. Moreover, it is difficult to predict what types of pressures for change will be most significant in the next decade because the complexity of events and the rapidity of change are increasing. However, it is possible – and important – to discuss the broad categories of pressures that probably will have major effects on organizations. Category Examples Type of Pressure for Change People Generation X, Y, Z Twixters Global Labor Supplies Senior Citizens Workforce Diversity Demands for different training, benefits, workplace arrangements, and compensation systems Technology Manufacturing in Space Internet Global Design Teams More education and training for workers at all levels, more new products, products move faster to market Information Processing and Communication Computer-Satellite Communications Global Sourcing Videoconferencing Faster reaction times, immediate responses to questions, new products, different office arrangements, telecommuting Globalization and Competition Global Markets International Trade Agreements Global competition, more competing products with more features and options, lower costs, higher quality
  3. 3. Emerging Nations Government Stringent Regulations New Restrictions Tariffs and Higher Taxes Customer satisfaction despite increased prices IV. Resistance to Change Change is inevitable; so is resistance to change. Paradoxically, organizations both promote and resist change. As an agent for change, the organization asks prospective customers or clients to change their current purchasing habits by switching to the company’s product or service, asks current customers to change by increasing their purchases, and asks suppliers to reduce the costs of raw materials. The organization resists change in that its structure and control systems protect the daily tasks of producing a product or service from uncertainties in the environment. The organization must have some elements of permanence to avoid mirroring the instability of the environment, yet it must also react to external shifts with internal change to maintain currency and relevance in the marketplace. A commonly held view is that all resistance to change needs to be overcome, but that is not always the case. Resistance to change can be used for the benefit of the organization and need not be eliminated entirely. By revealing a legitimate concern that a proposed change may harm the organization or that other alternatives might be better, resistance may alert the organization to reexamine the change. For example, an organization may be considering acquiring a company in a completely different industry. Resistance to such a proposal may cause the organization to examine the advantages and disadvantages of the move more carefully. Without resistance, the decision might be made before the pros and cons have been sufficiently explored. Resistance may come from the organization, the individual, or both. Determining the ultimate source is often difficult, however, because organizations are composed of individuals. A. Individual Sources of Resistance Individual sources of resistance to change are rooted in basic human characteristics such as needs and perceptions. Researchers have identified six reasons for individual resistance to change: habit, security, economic factors, fear of the unknown, lack of awareness, and social factors. 1. Habit. It is easier to do a job the same way every day if the steps in the job are repeated over and over. Learning an entirely new set of steps makes the job more difficult. For the same amount of return (pay), most people prefer to do easier rather than harder work. Individual Sources of Resistance Examples 1. Habit Altered tasks 2. Security Altered tasks or reporting relationships 3. Economic Factors Changed pay and benefits 4. Fear of the Unknown New job, new boss 5. Lack of Awareness Isolated groups not heeding notices 6. Social Factors Group norms
  4. 4. 2. Security. Some employees like the comfort and security of doing things the same old way. They gain a feeling of constancy and safety from knowing that some things stay the same despite all the change going on around them. People who believe their security is threatened by a change are likely to resist the change. 3. Economic Factors. Change may threaten employee’s steady paychecks. Workers may fear that change will make their jobs obsolete or reduce their opportunities for future pay increases. 4. Fear of the Unknown. Some people fear anything unfamiliar. Changes in reporting relationships and job duties create anxiety for such employees. Employees become familiar with their bosses and their jobs and develop relationships with others within the organization, such as contact people for various situations. These relationships and contacts help facilitate their work. Any disruption of familiar patterns may create fear because it can cause delays and foster the belief that nothing is getting accomplished. 5. Lack of Awareness. Because of perceptual limitations such as lack of attention or selective attention, a person may not recognize a change in a rule or procedure and thus may not alter his or her behavior. People may pay attention only to things that support their point of view. As an example, employees in an isolated regional sales office may not notice – or may ignore – directives from headquarters regarding a change in reporting procedures for expense accounts. They may therefore continue the current practice as long as possible. 6. Social Factors. People may resist change for fear of what others will think. The group can be a powerful motivator of behavior. Employees may believe change will hurt their image, result in ostracism from the group, or simply make them “different.” For example, an employee who agrees to conform to work rules established by management may be ridiculed by others who openly disobey the rules. B. Organizational Sources of Resistance Daniel Kratz and Robert Kahn have identified six major organizational sources of resistance: overdetermination, narrow focus of change, group inertia, threatened expertise, threatened power, and changes in resource allocation. Of course, not every organization or every change situation displays all six sources. Organizational Sources of Resistance Examples 1. Overdetermination Employment system, job descriptions, evaluation and reward system, organization culture 2. Narrow Focus of Change Structure changed with no concern given to other issues, e.g. jobs, people 3. Group Inertia Group norms 4. Threatened Expertise People move out of area of expertise 5. Threatened Power Decentralized decision-making 6. Resource Allocation Increased use of part-time help
  5. 5. 1. Overdetermination. Organizations have several systems designed to maintain stability. For example, consider how organizations control employees’ performance. Job candidates must have certain specific skills so that they can do the job the organization needs them to do. A new employee is given a job description, and the supervisor trains, coaches, and counsels the employee in job tasks. The new employee usually serves some type of probationary period that culminates in a performance review; thereafter, the employee’s performance is regularly evaluated. Finally, rewards, punishment, and discipline are administered, depending on the level of performance. Such as system is said to be characterized by overdetermination, or structural inertia, in that one could probably have the same effect on employee performance with fewer procedures and safeguards. In other words, the structure of the organization produces resistance to change because it was designed to maintain stability. Another important source of overdetemination is the culture of the organization. The culture of an organization can have powerful and long-lasting effects on the behavior of its employees. 2. Narrow Focus of Change. Many efforts to create change in organizations adopt too narrow a focus. Any effort to force change in the tasks of individuals or groups must take into account the interdependence among organizational elements such as people, structure, tasks, and the information system. For example, some attempts at redesigning jobs fail because the organization structure within which the jobs must function is inappropriate for the redesigned jobs. 3. Group Inertia. When an employee attempts to change his or her work behavior, the group may resist by refusing to change other behaviors that are necessary complements to the individual’s altered behavior. In other words, group norms may act as a brake on individual attempts at behavior change. 4. Threatened Expertise. A change in the organization may threaten the specialized expertise that individuals and groups have developed over the years. A job redesign or a structural change may transfer responsibility for a specialized task from the current expert to someone else, threatening the specialist’s expertise and building his or her resistance to the change. 5. Threatened Power. Any redistribution of decision-making authority, such as with reengineering or team-based management, may threaten an individual’s power relationships with others. If an organization is decentralizing its decision making, managers who wielded their decision-making powers in return for special favors from others may resist the change because they do not want to lose their power base. 6. Resource Allocation. Groups that are satisfied with current resource allocation methods may resist any change they believe will threaten future allocations. Resources in this context can mean anything from monetary rewards and equipment to additional seasonal help to more computer time. These six sources explain most types of organization-based resistance to change. All are based on people and social relationships. Many of these sources of resistance can be traced to
  6. 6. groups or individuals who are afraid of losing something – resources, power, or comfort in a routine. V. Processes for Planned Organization Change External forces may impose change on an organization. Ideally, however, the organization will not only respond to change but will also anticipate it, prepare for it through planning, and incorporate it in the organization strategy. Organization change can be viewed from a static point of view, such as that of Lewin, or from a dynamic perspective. A. Lewin’s Process Model Planned organization change requires a systematic process of movement from one condition to another. Kurt Lewin suggested that efforts to bring about planned change in organizations should approach change as a multistage process. His model of planned change is made up of three steps – unfreezing, change, and refreezing. Unfreezing is the process by which people become aware of the need for change. If people are satisfied with current practices and procedures, they may have little or no interest in making changes. The key factor in unfreezing is making employees understand the importance of a change and how their jobs will be affected by it. The employees who will be most affected by the change must be made aware of why it is needed, which in effect makes them dissatisfied enough with current operations to be motivated to change. Creating in employees the awareness of the need for change is the responsibility of the leadership of the organization. Change itself is the movement from the old way of doing things to a new way. Change may entail installing new equipment, restructuring the organization, implementing a new performance appraisal system – anything that alters existing relationships or activities. Refreezing makes new behaviors relatively permanent and resistant to further change. Examples of refreezing techniques include repeating newly learned skills in a training session and role playing to teach how the new skill can be used in a real-life work situation. Refreezing is necessary because, without it, the old ways of doing things might soon reassert themselves while the new ways are forgotten. For example, many employees who attend special training sessions apply themselves diligently and resolve to change things in their organizations. But when they return to the workplace, they find it easier to conform to the old ways than to make new waves. There usually are few, if any, rewards for trying to change the organizational status quo. In fact, the personal sanctions against doing so may be difficult to tolerate. Learning theory and reinforcement theory can play important roles in the refreezing phase.
  7. 7. Lewin’s Process of Organization Change B. The Continuous Change Process Model Perhaps because Lewin’s model is very simple and straightforward, virtually all models of organization change use his approach. However, it does not deal with several important issues, hence the emergence of the continuous process model. This approach treats planned change from the perspective of top management and indicates that change is continuous. It is important to note that change becomes continuous in organizations, although different steps are probably occurring simultaneously throughout the organization. The model below incorporates Lewin’s concept into the implementation phase. In this approach, top management perceives that certain forces or trends call for change, and the issue is subjected to the organization’s usual problem-solving and decision-making processes. Usually, top management defines its goals in terms of what the organization or certain processes or outputs will be like after the change. Alternatives for change are generated and evaluated, and an acceptable one is selected. Early in the process, the organization may seek the assistance of a change agent – a person who will be responsible for managing the change effort. The change agent may also help management recognize and define the problem or the need for the change and may be involved in generating and evaluating potential plans of action. The change agent may be a member of the organization, an outsider such as a consultant, or even someone from headquarters whom employees view as an outsider. The final step is measurement, evaluation and control. The change agent and top- management group assess the degree to which the change is having the desired effect; that is, they measure progress toward the goals of the change and make appropriate changes if necessary. Old State Unfreezing Changing Refreezing New State (Awareness of Need for Change) (Movement from Old State to New State) (Assurance of Permanent Change) Old ideas and practices need to be cast aside so that new ones can be learned. New ideas and practices are learned. What has been learned is integrated into actual practice and are incorporated into the employee’s routine behavior.
  8. 8. 1. Forces for Change 2. Recognize and Define Problem 3. Problem- Solving Process Change Agent 5. Measure, Evaluate, Control 4. Implement the Change Transition Management Continuous Change Process Model of Organization Change Transition management is the process of systematically planning, organizing, and implementing change, from the disassembly of the current state to the realization of a fully functional future state within an organization. No matter how management plan and implement the change, there will always be unanticipated and unpredictable things that happen along the way. One key role of transition management is to deal with these unintended consequences. It also ensures that business continues while the change is occurring. VI. Managing Successful Organization Change and Development Change management is a structured approach to shifting/transitioning individuals, teams, and organizations from a current state to a desired future state. It is an organizational process aimed at helping employees to accept and embrace changes in their current business environment. In project management, change management refers to a project management process where changes to a project are formally introduced and approved. Examples of organizational change include, but are not limited to (1) mission changes, (2) strategic changes, (3) operational changes, including structural changes, (4) technological changes, and (5) changing the attitudes and behaviors of personnel. As a multidisciplinary practice that has evolved from scholarly research, organizational change management should begin with a systematic diagnosis of the current situation in order to determine both the need for change and the capability to change. The objectives, content, and process of change should all be specified as part of a change management plan. Change management processes may include creative marketing to enable communication between change audiences, but also deep social understanding about leadership’s styles and group dynamics. As a visible track on transformation projects, organizational change management aligns groups’ expectations, communicates, integrates teams and manages people training. It makes use of performance metrics, such as financial results, operational efficiency, leadership commitment, communication effectiveness, and the perceived need for change to design appropriate strategies, in order to avoid change failures or solve troubled change projects. Successful change management is more likely to occur if the following are included.
  9. 9. 1. Benefits management and realization to define measurable stakeholder aims, create a business case for their achievement (which should be continuously updated), and monitor assumptions, risks, dependencies, costs, return on investment, and cultural issues affecting the progress of the associated work. 2. Effective Communications that informs various stakeholders of the reasons for the change (why?), the benefits of successful implementation (what is in it for us, and you) as well as the details of the change (when? where? who is involved? how much will it cost? etc.). 3. Devise an effective education, training and/or skills upgrading scheme for the organization. 4. Counter resistance from the employees of companies and align them to overall strategic direction of the organization. 5. Provide personal counseling (if required) to alleviate any change related fears. Well-known business writers state that contemporary business organizations confront changing circumstances that put bygone eras of change to shame by comparison. The combination of global competition, computer-assisted manufacturing methods, the internet, and instant communication has implication more far-reaching than anything since the beginning of the industrial revolution. The future growth of an organization depends on their ability to master change. Change is persistent and permanent condition for all organizations. A. Managerial Actions to Reduce Resistance to Change When managers see resistance to change as dysfunctional, they can used any of the seven actions below to deal with the resistance. Depending on the type and source of resistance, managers might choose to use any of these. 1. Education and Communication - Communicate with employees to help them see the logic of change. - Educate employees through one-on-one discussions, memos, group meetings, or reports. - Appropriate if source of resistance is either poor communication or misinformation. - Must be mutual trust and credibility between managers and employees. 2. Participation - Allows those who oppose a change to participate in the decision. - Assumes that they have expertise to make meaningful contributions. - Involvement can reduce resistance, obtain commitment to seeing change succeed, and increase quality of change decision. 3. Facilitation and Support - Provide supportive efforts such as employee counseling or therapy, new skills training, or short, paid leave of absence. - Can be time-consuming and expensive. 4. Negotiation - Exchange something of value to reduce resistance. - May be necessary when resistance comes from a powerful source.
  10. 10. - Potentially high costs and likelihood of having to negotiate with other resisters. 5. Manipulation and Co-optation - Manipulation is covert attempts to influence such as twisting or distorting facts, withholding damaging information, or creating false rumors. - Co-optation is a form of manipulation and participation. - Inexpensive and easy ways to gain support of resisters. - Can fail miserably if targets feel they’ve been tricked. 6. Selecting People Who Accept Change - Ability to easily accept and adapt to change is related to personality. - Select people who are open to experience, take a positive attitude toward change, are willing to take risks, and are flexible in their behavior. 7. Coercion - Using direct threats or force. - Inexpensive and easy way to get support. - May be illegal. Even legal coercion can be perceived as bullying. B. Management of Change Strategies The seven keys to managing change in organizations relate directly to the problems identified earlier and to the view that organizations are a comprehensive system. Each can influence the elements of the social system and may help the organization avoid some of the major problems in managing the change. 1. Consider International Issues One factor to remember is how international environments dictate organization change. The environment is a significant factor in bringing about organization change. Given the additional environment complexities multinational organizations face, it follows that organization change may be even more critical to them than it is to purely domestic organization. A second point to remember is that acceptance of change varies widely around the globe. Change is a normal and accepted part of organization life in some cultures. In other cultures, change causes many more problems. Managers should remember that techniques for managing change that have worked routinely back home may not work at all and may even trigger negative responses if used indiscriminately in other cultures. 2. Take a Holistic View Managers must take a holistic view of the organization and the change project. A limited view can endanger the change effort because the subsystems of the organization are interdependent. A holistic view encompasses the culture and dominant coalition as well as the people, tasks, structure, and information subsystems. 3. Start Small
  11. 11. According to Peter Senge as cited by Griffin, et al. (2010), every successful system-wide change in large organizations starts small. He recommends that change starts with one team, usually an executive team. One team can evaluate the change, make appropriate adjustments along the way, and most importantly, show that the new system works and gets desired results. If the change makes sense, it begins to spread to other teams, groups, and divisions throughout the system. When others see the benefits, they automatically drop their inherent resistance and join in. They can voluntarily join and be committed to the success of the change effort. 4. Secure Top-Management Support The support of top management is essential to the success of any change effort. As the organization’s probable dominant coalition, it is a powerful element of the social system, and its support is necessary to deal with control and power problems. For example, a manager who plans a change in the ways in which tasks are assigned and responsibility is delegated in his or her department must notify top management and gain its support. Complications may arise if disgruntled employees complain to high-level managers who have not been notified of the change or do not support it. The employees’ complaints may jeopardize the manager’s plan – and perhaps his or her job. 5. Encourage Participation Problems related to resistance, control, and power can be overcome by broad participation in planning the change. Allowing people a voice in designing the change may give them a sense of power and control over their own destinies, which may help to win their support during implementation. 6. Foster Open Communication Open communication is an important factor in managing resistance to change and overcoming information and control problems during transitions. Employees typically recognize the uncertainties and ambiguities that arise during a transition and seek information on the change and their place in the new system. In the absence of information, the gap may be filled with inappropriate or false information, which may endanger the change process. Rumors tend to spread through the grapevine faster than accurate information can be disseminated through official channels. A manager should always be sensitive to the effects of uncertainty on employees, especially during a period of change; any news, even bad news, seems better than no news. 7. Reward Contributors Although this last point is simple, it can easily be neglected. Employees who contribute to the change in any way need to be rewarded. Too often, the only people acknowledged after a change effort are those who tried to stop it. Those who quickly grasp new work assignments, work harder to cover what otherwise might not get done during the transition, or help others adjust to changes deserve special credit – perhaps a mention in a news release or the internal company newspaper, special consideration in a performance appraisal, a merit raise, or a promotion. From a behavior perspective, individuals need to benefit in some way if they are to willingly help change something that eliminates the old, comfortable way of doing the job.
  12. 12. In the current dynamic environment, managers must anticipate the need for change and satisfy it with more responsive and competitive organization systems. These seven keys to managing organization change may also serve as general guidelines for managing organizational behavior because organizations must change or face elimination. References Porras, J. I. and Silvers, R. C. (2005). Organization Development and Transformation in Organization and Transformation: Managing Effective Change 6th Ed. Edited by French, W. L., Bell, C. H. Jr., & Zawacki, R. Beckhard, R. (1969). Organization Development: Strategies and Models. Massachusetts: Addison-Wesley Publishing. Cummings, T.G. and Worley, C.G. (1997). Organization Development and Change. 6th Ed. Minnesota: South-Western Publishing. French, W.L., Bell Jr., C.H. and Zawacki, R.A. (2000). Organization Development and Transformation: Managing Effective Change. Singapore: Irwin McGraw-Hill, Inc. Prahalad, C.K. (1998). Managing Discontinuities: The Emerging Challenges. Research Technology Management. May-June. Griffin, R.W. and Moorhead, G. (2010). Human Behavior in Organization. Philippine Ed. Pasig City: Cencage Learning Asia Pte Ltd. Gibson, J. I. and Ivancevichde, J. M. (2009). Organizations: Behavior, Structure, Processes. 13th Ed. International Ed. Singapore: Mc Graw-Hill/Irwin, Robbins, S.P. and Coulter, M. (2008). Introduction to Management. 9th Ed. Philippine Ed. Manila Office: Pearson Education South Asia Pte Ltd. McShane, S. and Von Glinow, M. (2005). Organizational Behavior: Emerging Realities for the Workplace Revolution. International Ed. New York: McGraw-Hill. GCC/

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