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Chapter 16 Organizational change, development and innovation
1. The concept of organizational change
It is the way in which the changes are implemented and managed that is crucial to both customers
Why organizations must change:
Two basic sources of pressure to change: external sources and internal sources.
----Organizations work hard to stabilize their inputs and outputs. Environmental changes must be
matched by organizational change, if the organization is to remain effective.
----Changes can be provoked by forces in the internal environment of the organization: low
productivity, conflict, high absenteeism and turnover.
----Internal forces for change occur in response to organizational changes that are designed to deal
with the external environment. (Mergers and acquisitions occur to bolster the competitiveness of
----When threat is perceived, organizations unfreeze, scan the environment for solutions (invest
resources), and use the threat as a motivator for change.
EXHIBIT 16.1 Organizations in a dynamic environment must generally show more change to be
effective than those operating in a more stable environment
What organizations can change:
The choice of what to change depends on a well-informed analysis of the internal and external
forces signaling that change is necessary. Factors include:
Goals and strategies
Technology: changes can vary from minor to major.
Job design: redesign to offer more or less variety, autonomy, identity, significance and
Structure: functional to product, formalization centralization.
Culture: culture is known to be a major factor in providing an organization with a competitive
advantage and long-term effectiveness. (fundamental aspect of organizational change0
People: The membership of an organization can be changes in two senses. First, the actual
content of the membership can be changed through a revised hiring process. Second, the
existing membership can be changed in terms of skills and attitudes by various training and
----A change in one area very often calls for changes in others.
----Changes in goals, strategies, technology, structure, process, job design and culture almost
always require that organizations give serious attention to people changes.
----Change requires employees to learn new skills and change their attitudes. However, for people
to learn, organizations must also learn.
The learning organization:
Organizational learning: The process through which an organization acquires, develops, and
transfers knowledge throughout the organization.
----Organizations learn through knowledge acquisition: This involves the acquisition, distribution,
and interpretation of knowledge that already exists but which is external to the organization.
----Organizations also learn through knowledge development. This involves the development of
new knowledge that occurs in an organization primarily through dialogue and experience.
Learning organization: An organization that has systems and processes for creating, acquiring,
and transferring knowledge to modify and change its behavior to reflect new knowledge and
insights. (Greater capacity for acquiring and transferring knowledge)
For key dimensions that are critical for a learning organization:
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.
Culture: A learning organization has a culture that supports learning.
Learning systems/ dynamics: Employees are challenged to think, solve problems, make
decisions, and act according to a systems approach. Managers must be active in coaching,
mentoring, and facilitating learning.
Knowledge management/ infrastructure: Learning organizations have established systems and
structures to acquire, code, store and distribute important information and knowledge for those
who need it. This requires the integration of people, processes, and technology.
----Research has found that learning organizations are almost 50% more likely to have higher
overall levels of profitability than those organizations not rated as learning organizations.
The change process:
Unfreezing: The recognition that some current state of affairs is unsatisfactory.
----Crises are especially likely to stimulate unfreezing.
----Employee attitude surveys, customer surveys, and accounting data are often used to anticipate
problems and to initiate change before crises are reached.
Change: The implementation of a program or plan to move the organization or its members to
a more satisfactory state.
Refreezing: The condition that exists when newly developed behaviors, attitudes, or
structures become an enduring part of the organization.
----At this point, the effectiveness of the change can be examined, and desirability of extending the
change further can be considered. Refreezing is a relative and temporary state of affairs.
2. Issues in the change process: (Problems that need to be overcome)
Diagnosis: The systematic collection of information relevant to impending organizational
----Initial diagnosis can provide information that contributes to unfreezing by showing that a
problem exists. Once unfreezing occurs, further diagnosis can clarify the problem and suggest just
what changes should be implemented.
----Relatively routine diagnosis might be handled through existing channels.
----For more complex, nonroutine problems, seek out change agents: Experts in the application of
behavior science knowledge to organizational diagnosis and change. Or outside consultants.
Resistance: Overt or covert failure by organizational members to support a change effort.
Causes of resistance:
Politics and self-interest: People might feel that they personally will lose status, power, or even
their jobs with the advent of the change.
Low individual tolerance for change: Some people uncomfortable with changes.
Misunderstanding: The reason for the change might be understood.
Lack of trust: People might clearly understand the arguments being made for change, but not
trust the motives of those proposing the change.