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Chapter 16

Chapter 16 - Organizational Change, Development and Innovation


Department
Management (MGH)
Course Code
MGHB02H3
Professor
Joanna Heathcote
Chapter
16

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Chapter 16 – Organizational Change, Development, and Innovation
The Concept of Organizational Change
Why Organizations Must Change
- Two basic sources of pressure to change, external and internal sources
- Environmental changes must be matched by organizational changes if the organization is
to remain effective
- Firms unable to anticipate or cope with new trends will cease to exit
- External environment– increased competitiveness result of global economy, deregulation
- Internal environment – low productivity, conflict, strike, sabotage, high absenteeism and
turnover
- Internal forces for change occur in response to organizational changes that are designed
to deal with the external environment i.e. merger culture clash
- Organizations can exhibit too much change as well as too little
- Change always entails some investment of resources, money/management time, always
requires some modification of routine and processes
- Organizations in dynamic environment must show more change to be effective than those
operating in a more stable environment
What Organizations can change
-Goals and strategies – i.e. expansion, introduction of new products, pursuit of new
markets
-Technology– vary from minor to major, online portal – minor, assembly line to flexible
manufacturing – major
-Job design – redesign groups to offer more or less variety, autonomy, identity,
significance and feedback
-Structure – can be modified from functional to product form, formalization and
centralization can be manipulated, tallness, spans of control, networking, modification in
rules, policies and procedures
-Processes – how work is done
-Culture – organizational culture refers to the shared beliefs, values and assumptions that
exist in an organization, culture has a strong influence on the attitudes and behaviours of
members, considered a fundamental aspect of change
-People – membership of an org can be changed such as the actual content of the
membership changed through revised hiring process, new blood or take advantage of the
opportunities that a more diverse labour pool offers
- Or the existing membership can be changed in terms of skills and attitudes by training
and development methods
- Three points to note: 1) Change in one area calls for changes in others
- 2) Changes in goals, strategies, technology, structure, process, job design and culture
always affects people, skills and favourable attitudes should be fostered before other
changes are introduced
- 3) change requires employees to learn new skills and change their attitudes
The Learning Organization
-Organizational learning – the process through which an organization acquires,
develops, and transfers knowledge throughout the organization
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- 1) org learn through knowledge acquisition, involves acquisition, distribution and
interpretation of knowledge that already exists but which is external to the org
- 2) org learn through knowledge development, development of new knowledge that occurs
in an organization through dialogue and experience
- Org learning occurs when members interact and share experiences and knowledge and
through the distribution of new knowledge and information throughout the org
-Learning organization – an organization that has systems and processes for creating,
acquiring, and transferring knowledge to modify and change its behaviour to reflect new
knowledge and insights
- Four key dimensions that are critical for a learning org:
- Vision/support – leaders must communicate clear vision of strategy and goals
- Culture – has culture that supports learning
- Learning systems/dynamics – workers challenged to think and solve problems, make
decisions
- Knowledge management/infrastructure – establish systems and structures to acquire,
code, store and distribute important info and knowledge so that it is available to those
who need it and when they need it
- Learning org 50% more likely to have higher overall levels of profitability
- Better able to change and transform themselves b/c of their greater capacity for acquiring
and transferring knowledge
The Change Process
- Kurt Lewin suggested three basic stages – unfreezing, changing, refreezing
-Unfreezing – the recognition that some current state of affairs is unsatisfactory
- Crises are especially likely to stimulate unfreezing
- The preparation of the org for change, unfreezing current attitudes and behaviours
- Employee attitude surveys, customer surveys and accounting data often used to
anticipated problems and to initiate change
-Change – the implementation of a program or plan to move the organization or its
members to a more satisfactory state
- Change efforts can range from minor to major, simple skilsl traning problem and hiring
procedure – minor, major – extensive job enrichment, radical restructuring – major
-Refreezing – the condition that exists when newly developed behaviours, attitudes or
structures become an enduring part of the organization
- At this point, effectiveness of the change can be examined and the desirability of
extending the change further can be considered
Issues in the Change Process
Diagnosis – the systematic collection of information relevant to impending organizational
change
- Provide info that contributes to unfreezing by showing a problem exists
- Relatively routine diagnosis might be handled through existing channels
-Change agents – experts in the application of behavioural science knowledge to
organizational diagnosis and change
- Change agent brings an independent, objective perspective to the diagnosis while
working with people who are about to undergo change
- Can obtain info through observations, interviews, questionnaires, and records
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- Change agents must be perceived as trustworthy by clients and also should include
people who are affected in the diagnostic process
- Proper diagnosis clarifies the problem and suggests what should be changed and the
proper strategy for implementing change w/o resistance
Resistance – overt of covert failure by org. members to support a change effort
- People may resist both unfreezing and change
- At unfreezing state, defence mechanisms might be activated to deny or rationalize the
signals of change is needed
- If change is agreed to be needed, a specific plan for change might be resisted
- Causes of resistance:
- Politics and self-interest – might feel they will lose status or their jobs
- Low individual tolerance for change – predisposition in personality
- Misunderstandings – the reason for change or the exact course for change will take
- Lack of trust – might not trust motives for proposing the change
- Different assessments of the situations – different perspectives
- A resistant organizational culture
- Various reasons for resistance for change are two major themes: 1) change is unnecessary
b/c there is only a small gap between the org.’s current identity and its ideal identity
- 2) change is unobtainable and threatening b/c the gap between the current and ideal
identity is too large
- Resistance can often be overcome with supportive, patient supervision
- If politics and self-interest is the cause, give targets of change special role in the change
process or by negotiating special incentives for change
- If misunderstanding, lack of trust or different assessments are the cause, good
communication can help
- Lower-level managers must understand the diagnosis underlying intended change and the
details of the change so that they can convey this info to employees accurately
- Involving targets of change in the change process reduces resistance
- Transformational leaders and their unfreezing practices: encourage dissent atmosphere,
question ideas, scan the org’s true performance, see how things work elsewhere,
compares itself against its competition
- Transformational leaders are good at inspiring trust and encouraging followers to
subordinate their individual self-interests for the good of the org
- They are also good at countering employee cynicism and keeps followers in the zone of
acceptance
Evaluation and Institutionalization
- Range of variables that an organization can evaluate:
- Reactions – did participants like the change program?
- Learning – what knowledge was acquired in the program?
- Behaviour – what changes in job behaviour occurred
- Outcomes – what changes in productivity, absence, etc. occurred?
- Reactions measure resistance, learning reflects change and behaviour reflects successful
refreezing
- Outcomes indicate whether refreezing is useful for the org
- Many evaluations never go beyond reactions b/c people who proposed the change might
fear failure, many evaluations are weak or nonexistent
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