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16 May 2011

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Chapter 16-Organizational Change, Development and Innovation
I. The Concept of Organizational Change
organizations are far from static
They change and these changes have a strong impact on people
changes are neither good nor bad, it is the way in which the changes are implemented and
managed that is crucial to both customers and organizational members
A. Why Organizations Must Change
All organizations face two basic sources of pressure to change - external sources and
internal sources
External sources include the global economy, deregulation, and changing technology
Internal sources include low productivity, conflict, strikes, sabotage, high absenteeism, and
As environments change, organizations must keep pace and internal changes often occur in
response to external pressures
Firms unable to anticipate or cope with such trends will cease to exist
Increase in competitiveness of business (external environment), more global economy,
deregulation and advanced technology business are leaner and meaner
Changes can also be provoked by internal environment- low productivity, confict, strikes,
sabotage and high absenteeism and turnover
Employee opinion can also be a force of change
Often, internal forces for change occur in response to organizational changes that are
designed to deal with the external environment
sometimes, when threat is perceived, organizations unfreeze, scan the environment for
solutions, and use the threat as a motivator for change
Other times, though, organizations seem paralyzed by threat, behave rigidly, and exhibit
extreme inertia
Without an investment of resources and some modification of routines and processes,
inertia will occur
Organizations should differ in the amount of change they exhibit
Organizations in a dynamic environment must generally exhibit more change to be effective
than those operating in a more stable environment
Change always requires some investment of resources, money or management time
Requires modification of routines and processes
change in and of itself is not a good thing and organizations can exhibit too much change as
well as too little
B. What Organizations Can Change
There are several specific domains in which modifications can occur as part of organizational
change. Factors that can be changed include:
Goals and strategies-Organizations frequently change the goals and the strategies they
use to reach these goals.
Technology- Technological changes can vary from minor to major.
Job design-Companies can redesign individual groups of jobs to offer more or less variety,
autonomy, identity, significance, and feedback.
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Structure-Organizations can be modified from a functional to a product form or vice versa.
Traditional structural characteristics of organizations such as formalization and
centralization can also be changed.
Processes- The basic processes by which work is accomplished can be changed.
Culture- One of the most important changes that an organization can make is to change its
culture. Changing an organization's culture is considered to be a fundamental aspect of
organizational change.
People- The membership of an organization can be changed either through a revised hiring
process or by changing the skills and attitudes of existing members through training and
1. a change in one area very often calls for changes in others
oFailure to recognize this systematic nature of change can lead to severe problems
2. changes in goals, strategies, technology, structure, process, job design and culture
almost always require that organizations give serious attention to people changes
3. in order for people to learn, organizations much learn
oMany change programs fail because of the absence of learning
C. The Learning Organization
Organizational learning -process through which organizations acquire, develop, and
transfer knowledge throughout the organization. Organizations learn through knowledge
acquisition and knowledge development
two methods of organizational learning
knowledge acquisitions: acquisition, distribution and interpretation of knowledge
that already exists but which is external to the organization
knowledge development: development of new knowledge that occurs in an
organization primarily through dialogue and experience
organizational learning occurs when organizational member interact and share experiences
and knowledge and thorough the distribution of new knowledge and information
throughout the organization
learning organization -an organization that has systems and processes for creating,
acquiring, and transferring knowledge in order to modify and change its behaviour to
reflect new knowledge and insights. There are four key dimensions that are critical for a
learning organization:
organizational change is more likely to occur in a learning organization
Four key dimensions for learning organization
1. Vision /support. Leaders must communicate a clear vision of the organization's strategy and
goals in which learning is a critical part and key to organizational success.
2. Culture. A learning organization has a culture that supports learning.
3. Learning systems/dynamics. Employees are challenged to think, solve problems, make
decisions, and act according to a systems approach by considering patterns of
interdependencies and by "learning by doing."
4. Knowledge management /infrastructure. Learning organizations have established systems
and structures to acquire, code, store, and distribute important information and knowledge
so that it is available to those who need it, when they need it.
Learning organizations have been found to be almost 50 percent more likely to have higher
overall levels of profitability than those organizations not rated as learning organizations,
and they are also better able to retain essential employees
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Learning organizations are better able to change and transform themselves because of their
greater capacity for acquiring and transferring knowledge.
D. The Change Process
Change involves a sequence of organizational events or a psychological process that occurs
over time
This sequence or process involves three basic stages - unfreezing, changing, and refreezing
Unfreezing -occurs when recognition exists that some current state of affairs is
Crises are especially likely to stimulate unfreezing
May involve the realization that the present structure task design or technology is
Crisis especially likely to stimulate unfreezing
Employee attitude surveys, customer survys, accounting data also initiate change
Change-occurs when some program or plan is implemented to move the organization
and/or its members to a more satisfactory state
Change efforts can range from minor to major.
Refreezing occurs when the newly developed behaviours, attitudes, or structures become
an enduring part of the organization
The effectiveness of the change can be examined, and the desirability of extending the
change further can be considered
II. Issues in the Change Process
There are several important issues that organizations must confront during the change
These issues represent problems that must be overcome if the process is to be effective
problems include diagnosis, resistance, evaluation, and institutionalization.
A. Diagnosis -Unfreeze
Diagnosis is the systematic collection of information relevant to impending organizational
contributes to unfreezing by showing that a problem exists, and further diagnosis can
clarify a problem and suggest just what changes should be implemented
Diagnosis can take many forms and be performed by a variety of individuals
For more complex, nonroutine problems, it is worth seeking out the diagnostic skills of a
change agent
Change agents- experts in the application of behavioural science knowledge to
organizational diagnosis and change
possible to obtain diagnostic information through a combination of observations, interviews,
questionnaires, and the scrutiny of records must perceived as trustworthy
Attention to the views of customers or clients is critical
Careful diagnosis cannot be overemphasized as it clarifies the problem and suggests what
should be changed and the proper strategy for implementing change without resistance
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