Textbook Notes - Chapter 16

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10 Nov 2010
MGTB27 / 01 Week 13
- Best Buy implemented period changes in strategy and culture to foster growth and innovation
The Concept of Organizational Change
- Common experience indicates that organizations are far from static and that change is not
neither good or bad but rather how change is implemented and managed that is important
Why Organizations Must Change
- There are two basic sources that pressure organizations to change: external & internal sources
- Environmental changes must be matched with organizational changes if the organization is to
remain effective (e.g. The turntable market virtually disappeared due to CD players)
- The external environment can also increase the competitiveness of business brought on by a
more global economy, deregulation, and advanced technology (organizations are forced to be
competitive by being leaner and meaner)
- Internal factors such as low productivity, conflict, strikes, sabotage, high absenteeism and
turnover signal that change within an organization is necessary
- Often times, internal forces for change occur in response to organizational changes designed
to deal with the external environment (e.g. after merger & acquisition, culture clash/conflict)
solutions then use the threat as a motivator for change
- Some organizations may be paralyzed by the threat, behave rigidly, and exhibit inactivity
- Change almost always needs investment of resources such as: money, management time,
modifications of routines and processes (if these prerequisites are missing, inactivity occurs)
environment is (e.g. if in a dynamic environment, need more change to be effective)
- If organization exhibit too much change or too little change, this is can be ineffective
What Organizations Can Change
- Choice of what needs to be changed within an organization depends on a well-informed
analysis of the internal and external forces. Factors that can be changed include:
o Goals and strategies
Changing goals and the strategies they use to reach these goals
E.g. expansion, introducing new products and pursuit of new markets
o Technology
Technological change can vary from minor (e.g. introducing online portal) to
major (e.g. moving from a rigid assembly line to flexible manufacturing)
o Job design
Redesigning jobs to offer more or less variety, autonomy, identity, feedback...
o Structure
Organizations can be modified by tallness, span of control, networking,
centralization, formalization, and changing from functional to product form
o Processes
Basic processes of how work is accomplished may be changed
E.g. some stages in a project can be done concurrently rather than sequentially
o Culture
Changing an organizational culture is critical since one of the main reason of
reported failure of organizational change is failure to change the culture
Chapter 16 ± Organizational Change, Development, and Innovation (pg. 529 ± 559)
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MGTB27 / 02 Week 13
Consider to be a fundamental aspect of organizational change since it provides
an organization with a competitive advantage and long-term effectiveness
o People
Membership of an organization can be changed in two senses:
x Revise the hiring process to take advantage of diverse labour pool
x Introduce training and development methods to existing members
- A change in one area often calls for changes in others and failure to recognize this can lead to
severe problems (e.g. a company wants to expand so they may have to consider major
structural changes and decentralization of decision-making power)
- Changes in goals, strategies, technology, structure, process, job design, and culture require
organizations to give serious attention to people changes (those who are affected by change)
The Change Process
- Psychologist Kurt Lewin suggest that the sequence or process of changing an organization
involves three basic stages ± unfreezing, changing, and refreezing
- Unfreezing
o Unfreezing is recognizing that some current state of affairs is unsatisfactory
o E.g. recognizing present structure, task design, or technology is ineffective
o Crises are likely to stimulate unfreezing (e.g. dramatic drop in sales, big lawsuit)
o Unfreezing can also occur without crisis where employee attitude surveys, customer
surveys, and accounting data can be used to anticipate a crisis before it is reached
- Change
o Change is the implementation of a program or plan to move the organization or its
members to a more satisfactory state
o Change efforts can range from minor (e.g. simple skills training; only a few members
are affected) to a major (e.g. extensive job enrichment, radical restructuring)
o Research showed that those who were more strongly identified with the organization
showed interest in the details of the change process while those who identified less
strongly were more concerned with the outcomes of the change
- Refreezing
o Refreezing is the condition that exists when newly developed behaviours, attitudes, or
structures become an enduring part of the organization
o Effectiveness of change can be examined and desirability to extend change discussed
o Refreezing is a relative and temporary state of affairs
that are hyper-turbulent (constantly changing, unpredictable), to achieve a seamless
³PRUSKLQJ´UDWKHUWKDQDVWHS-like process change, organizational learning is used
The Learning Organization
- Organizational learning is the process through which an organization acquires, develops,
and transfers knowledge throughout the organization
- There are two methods of organizational learning:
o Knowledge acquisition ± acquisition, distribution, and interpretation of knowledge that
already exist but which is external to the organization
o Knowledge development- development of new knowledge that occurs in an
organization through dialogue and experience
- Organizational learning occurs when organizational members interact and share experience &
knowledge, & through the distribution of new knowledge & info throughout the organization
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MGTB27 / 03 Week 13
- Learning organizations are organizations that has systems and processes for creating,
acquiring, and transferring knowledge to modify and change its behaviour to reflect new
knowledge and insights (organizational change is more likely to occur)
- Four key dimensions critical for a learning organization:
o Vision/support
goals where learning is a critical key part to organizational success
o Culture
Supports learning, knowledge and information sharing, risk taking, and
continuous learning is considered a regular part of organizational life
o Learning systems/dynamics
Employees are challenged to think, solve problems, make decisions, and
Managers must be active in coaching, mentoring, and facilitating learning
o Knowledge management/infrastructure
Established systems and structures to acquire, code, store, and distribute
important information and knowledge to those who need it, when they need it
- Research has shown that there is a positive relationship between learning organization
- Learning organizations are better able to change and transform themselves due to their great
capacity for acquiring and transferring knowledge
- Learning is a prerequisite for organizational change and transformation
Issues in the Change Process
- There are problems that may occur between stages of change, these include: diagnosis,
resistance, evaluation, and institutionalization
- Diagnosis is the systematic collection of information relevant to impending organizational
- Initial diagnosis may show that a problem exists and contributes to unfreezing
- After unfreezing occurs, further diagnosis is required to clarify the problem and suggest what
changes are needed
- For relatively routine diagnosis, this may be handled through existing channels (e.g. hospital
director believe lab technicians are inadequately trained, work with HR department to devise
training programs that correct inadequacies)
- For complex and non-routine diagnosis, change agents (experts in the application of
behavioural science knowledge to organizational diagnosis and change) can be brought in to
provide an independent and objective diagnosis while working with the people who are about
to undergo change (organizations can have in-house change agents or bring in agents)
- Possible to obtain diagnostic information through a combination of observations, interviews,
questionnaires, and views of customers or clients can be used
- Careful diagnosis is crucial in order to clarify the problem and suggest appropriate strategies
for implementing change without resistance
- People may resist both unfreezing and change since change is frequently resisted by those at
whom it is targeted to
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