Chapter 16 Organizational Change.docx

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Management and Organizational Studies
Management and Organizational Studies 2181A/B
Victoria Digby

Chapter 16 Organizational Change, Development, and Innovation Opening Vignette BEST BUY [1966- Present] - Originally named as Sound of Music Store - Founded by Dick Schulze Events - 1981: tornado blew off roof of most profitable store o Had to resort to selling massive inventory in parking lot - 1983: corporate goal = focused on niche market of adult male shopper - End of 80s: focus = industry cost leader by reduction in sales expenses from 20+% to 11.2 % - Concept III [mid 90s]: increase profit by combining low & highend products in same store - Concept 4: [end 90s]: customized products to fit consumer needs & launch of - Concept 5: [2001]: sell solutions from selling individual items o Sales team predict customer needs rather than satisfying them o 2003: expansion of international sales - 2002: CEO switch, new CEO Anderson jumped Concept 6 to Concept 7 and launched “get closer to customer” strategy (a.k.a. customer centric approach) o Quantify profitability of each customer segment + characterized its needs  E.g. Teens & online social needs o Established value position for each consumer segment o Empowered local management teams to meet needs of each segment Internal Renewals with HR - HR staff spent time to answer employee questions related to pay, pensions ,vacation time - Also partnered up with industry experts in HR processes, BEST bust outsourced much of its routine HR work o Remaining HR worked with local mgmt to allow employees to familiarize with customer-centric approach Best Buy’s ROWE (Results-Only Work Environment) - Launched by a group of employees - Purpose: change internal culture so it focuses on work output vs. physical office presence o Came from the increased competition from stores like Wal-Mart & Target - Employees began to leave office @ odd times to work from various locations o This allowed employee to learn different parts of the company’s operations as long as they complete their initial set of tasks for the day o Also gave employee time freedom to work when they want, how they want, as long as the work get done - Program increased employee engagement & satisfaction Takeaway: use of continuous renewal as the company’s corporate strategy Organizational Change What is it? - Changes effect our satisfaction with the product & service offered - To have a strong impact on the workers - Change can be neither good nor bad - Their results to the customers & members are dependent upon how they are implemented & managed Why Organizations must change? - Due to 2 basic sources of pressure o External sources  Must keep up with environmental changes  E.g. how Best Buy kept up with changes in music industry from cassettes to downloadable music  E.g. increased competitiveness of business brought on by a global economy, deregulation, advanced tech o Organization became smaller, meaner o i.e. firms laid off thousands of workers [IBM & GM] o i.e. develop falter org structures that are more responsive to competitive demands o have more middle layers of managers o having less adversarial relationship w/unions & suppliers o Internal sources (factors that signal change is necessary  Low productivity/high absenteeism/turnover  Conflict/sabotage  Strikes  Employee opinions  E.g. culture change after a merger - Organization must stabilize their inputs (from environment) and outputs (after their transformation of the inputs) o But each organization is limited in their control on the external changes (inputs) o Must keep up with industry changes Perception of Threat & Change In perceiving a threat, firm can: “Unfreeze” “Extreme Inertia” a. unfreeze => see threat as motivator for change b. Exhibit extreme inertia/do nothing (paralyzed by threat, behave rigidly) - All of these changes require: o Investment of resources: Money and/or Management time o Some modification of routine (organization system) & processes (eg. How company is run from a staff level) - Inertia occurs if any of the above factor goes missing  E.g. changing a faculty curriculum to increase enrolment but fails because we are missing the change in teaching routines - A dynamic external requirement requires firm to generally show more change to be effective than those in a stable environment - An organization with too much constant change fails to establish a regular system of behaviours needed for it to be effective o Also leads employees to become cynical abt mgmt’s competence Some Stats - Most CEOs saw organization as being poor @ executing change - Only 41% of change actually follows through o Majority experiences budget, quality, time problems o 15% were complete failures What (parts) can organizations change? - In theory: any aspect of operation - Choice of change depends on well informed analysis of internal & external forces that signal change Factors that Influence Change - Goals & Corporate strategies: expansion, intro of new products, pursuit of new markets - Technology: can be major or minor o E.g. introduction of online portal access for employees (minor change) o Shift from rigid assembly line to flexible manufacturing (major change) - Job Design o Redesign roles that allow more variety, autonomy identity, significance, feedback from employees - Structure: functional org to product form or vice versa o Operation: Formalization & centralization can be manipulated o Tallness, control spans & networking w. other firms o modifications in rules, policies, procedures - Process: change the basic process on how work is accomplished o E.g. doing parts of a project concurrently vs. sequentially - Culture: a fundamental aspect of organizational change o Is reported as the main reason of failures in organization program changes o Important to providing competitive advantage + long term effectiveness - People: change through membership in organization o Introduce new people o Change the skills & attitudes of existing staff thr training & development workshops *Notes: change in one area often leads to changes in others  E.g. change to expand firm also requires major structural changes from a more centralized to more geographic, decentralized firm - Changes in first 7 factors almost always require serious attention to people changes - E.g. fostering necessary skills & favourable attitudes before changes are introduced so people have less anxiety on job when the change has been implemented How can organization change (The Changing Process) A. Unfreeze a. Can occur with crisis b. Without crisis by using employee attitude surveys, customer surveys, accounting data to anticipate problems and initiate change be
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