Management and Organizational Studies 2181A/B Chapter Notes - Chapter 16: Richard T. Schulze, Employee Engagement, Organization Development

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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 bestbuy.com
- 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
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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
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Document Summary

Originally named as sound of music store. 1981: tornado blew off roof of most profitable store: 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 bestbuy. com. Concept 5: [2001]: sell solutions from selling individual items: sales team predict customer needs rather than satisfying them, 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: quantify profitability of each customer segment + characterized its needs.

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