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Chapter 4

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Department
Human Resources
Course
MHR 650
Professor
Frank Miller
Semester
Winter

Description
Chapter 4: What Changes in Organizations Types of Changes 1. First-order change: incremental change, maintains and develops the organization a. Tuning (anticipatory and incremental) – incremental changes are made that anticipate changes to the external environment. These changes involve adjustment or modification to enable a better fit between the organization and the environment b. Adaption (reactive and incremental) – eg. Catch-up response of other New York banks to install ATM machines following Citibank’s lead - E.g. continuous and smaller changes to the structure of an organisation 2. Second-order change: transformational, fundamentally changes the way an organization functions at its core a. Reorientation (anticipatory and discontinuous) – involves “frame bending”, major modification of the organization but by building on past strengths and history b. Re-creation (reactive and discontinuous) – involves “frame breaking”, major upheaval where the organization breaks with past practices and directions - Palmer and Dunford found eight commonly occurring recommendations for major organizational change in order to cope with hypercompetitive business environments: o Delayering – reducing the number of vertical levels in the organization o Networks/alliances – involving internal and external strategic collaboration o Outsourcing – of activities in which the organization has no distinctive competence o Disaggregation – breaking up the organization into smaller business units o Empowerment – introduction of mechanisms to provide employees with the authority, resources, and encouragement to take actions o Flexible work groups – for specific purposes that are disbanded or reformed upon completion of the task o Short-term staffing – in which people are contracted to the organization for a short period of time to work on specific issues/tasks o Reduction of internal and external boundaries – to encourage communication and resource sharing Three Types of Transformational Change o Type 1 – occurs when an organization moves from an entrepreneurial to professional management structure (eg. Apple Computers from an entrepreneurial company under found Steve Jobs to larger professional company under John Sculley o Type 2 – involves the revitalization of already-established companies. The organization remains in the same market but focuses on how to rebuild itself in order to operate more effectively (eg. Canada computers faced changing environment in customer needs, so they downsized, lowered production costs and placed more emphasis on teamwork) o Type 3 – involves visionary change in which the organization fundamentally changes the business in which it is involved (eg. Starbucks from a local roaster to string of national company owned coffee retail stores, did not initially sell coffee as a drink) Key Factors Influencing Transformation Types Design of Type 1: Entrepreneurial to Transformations Professional Management Type 2: Revitalization Type 3: Business Vision Organizational Growth in markets and competition Major change in environment May or may not involve Environment environmental change Business Concept No transformation No transformation Major transformation Building Blocks of Changing culture, management, and Change needed in markets, services, Change in markets, services, Organizational Success operational systems resources, operational and resources, operational and measurement systems, and culture measurement systems, and culture Organizational Size Associated with rapid growth Usually change, including downsizing May involve size change Between 1 & 2 ndOrder Change 1. Mid-range Changes a. 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 b. 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 - Overcomes inertia but is not revolutionary - Avoids the alarming implications of large scale change - Designed to destroy outdated aspects of the organization’s old identity while simultaneously building on other, still relevant, elements 2. Punctuated Equilibrium - Long periods of stability followed by short bursts of change and instability 3. Robust Transformation - Considers environmental conditions as being temporary and requiring robust responses including the enactment of new capabilities Implication for Change Manager Image of Managing Change Care needs to be taken in assuming that types of Interpreter: The change manager as interpreter organizational changes can be neatly categorized image reminds us that whether a change is adaptive, as small, adaptive, and incremental compared to reactive, or transforming will depend upon the those that are large and transformational. perspective of the person doing the considering Multiple types of changes simultaneously should Navigator: when implementing multiple changes, also be considered. In addition, some changes there is likely to be contact with different groups that require other changes nested under them in will require negotiation and navigation through a order for another change to proceed. range of issues—not all of which they will be able to control. From chaos theory we know that small changes, Nurturer: Change managers can nurture and shape at an individual level, may have larger, people’s perceptions and reactions to change but not unanticipated consequences throughout the control them. organization There are a number of inertial forces that act as a Coach: the managers of change are likely to assume drag on individuals and organizations in that, as long as people have been well “coached” in a adopting adaptive, first-order change. variety of organizational skills, then, when organizational “problems” are triggered, they will take the initiative and make appropriate adaptive changes to alter organizational practices and routines. Change managers need to remember what might Director: Change managers who adopt a directing appear at first sight to be a paradox, that often image of change also need to remember that they will change is needed in order to remain stable. need to provide directions about stability: telling people what will not be changing, or what will remain the same. Change may mean adding on to, and integrating, What this reminds the managers of change is that rather than removing and replacing current they need to assess how carrying out a change will practices. impact upon current practices There is often an implicit assumption that
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