Master of Business Administration- MBA Semester 4

NAME : PUJA GUHA

ROLL NO. : 571112609

LEARNING CENTER
: 01637
CODE
DATE OF SUBMISSION : 15-02-2013

MU0018 Change Management

Q1. What are the requirements for making organizational change.
Ans. Cummings and Worley (Organization Development and Change, 1995)
describe a comprehensive, five-phase, general process for managing change,
including:

Motivating Change: - This phase includes creating a readiness for change in your
client organization and developing approaches to overcome resistance to change.
General guidelines for managing this phase include enlightening members of the
organization about the need for change, expressing the current status of the
organization and where it needs to be in the future, and developing realistic
approaches about how change might be accomplished. People need to feel that
their concerns are being heard. Leaders must widely communicate the need for the
change and how the change can be accomplished successfully. Leaders must listen
to the employees people need to feel that the approach to change will include
their strong input and ongoing involvement.
Creating Vision: - Leaders in the organization must articulate a clear vision that
describes what the change effort is striving to accomplish. Ideally, people in the
organization have strong input to the creation of the vision and how it can be
achieved. The vision should clearly depict how the achievement of the vision will
improve the organization. It is critically important that people believe that the vision
is relevant and realistic. Research indicates that cynicism is increasing in
organizations in regard to change efforts.
Developing Political Support: - This phase of change management is often
overlooked, yet it is the phase that often stops successful change from occurring.
Politics in organizations is about power. Power is important among members of the
organization when striving for the resources and influence necessary to successfully
carry out their jobs. Power is also important when striving to maintain jobs and job
security. Power usually comes from credibility, whether from strong expertise or
integrity. Power also comes from the authority of ones position in the organization.
Managing Transition: - This phase occurs when the organization works to make
the actual transition from the current state to the future state. In consultations, this
phase usually is called implementation of the action plans.
The plans can include a wide variety of interventions, or activities designed to
make a change in the organization, for example, creating and/or modifying major
structures and processes in the organization. These changes might require ongoing
coaching, training and enforcement of new policies and procedures.
Sustaining Momentum: - Often, the most difficult phase in managing change is
this phase when leaders work to sustain the momentum of the implementation and
adjustment of plans. Change efforts can encounter a wide variety of obstacles, for
example, strong resistance from members of the organization, sudden departure of
a key leader in the organization, or a dramatic reduction in sales. Strong, visible,
ongoing support from top leadership is critically important to show overall credibility
and accountabilities in the change effort. Those participating in the change effort
often require ongoing support, often in the form of provision of resources, along with
training and coaching. The role of support cannot be minimized despite its
importance during organizational change; the role of support is often forgotten.
Q2. What is an organizational design? Explain its
components.
Ans. Organizational design is a step-by-step methodology which identifies
dysfunctional aspects of work flow, procedures, structures and systems, realigns
them to fit current business realities/goals and then develops plans to implement
the new changes. The process focuses on improving both the technical and people
side of the business.

I. Work Specialization:- Describes the degree to which tasks in an organization

are divided into separate jobs. The main idea of this organizational design is that an
entire job is not done by one individual. It is broken down into steps, and a different
person completes each step. Individual employees specialize in doing part of an
activity rather than the entire activity.

II. Departmentalization: - It is the basis by which jobs are grouped together. For
instance every organization has its own specific way of classifying and grouping
work activities.

There are five common forms of departmentalization:

Functional Departmentalization: - As shown in the Figure 2-1, it
groups jobs by functions performed. It can be used in all kinds of
organizations; it depends on the goals each of them wants to achieve.

Figure 2-1Functional Departmentalization example

Diff erent aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Efficiencies from o Poor

putting together communication across
similar specialties and functional areas
people with common
skills, knowledge, and o Limited view of
orientations organizational goals

o Coordination
 within functional area

o In-depth
specialization

Product Departmentalization: - It groups jobs by product line. Each

manager is responsible of an area within the organization depending of
his/her specialization

Figure 2: Product Departmentalization example

Source: Bombardier Annual Report

Diff erent aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Allows o Duplication of
specialization in functions
particular products and
services o Limited view of
organizational goals
o Managers can
become experts in
their industry

o Closer to
customers

Geographical Departmentalization: - It groups jobs on the basis of

territory or geography.
Figure 2-3: Geographical Departmentalization example

Diff erent aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o More effective o Duplication of

and efficient handling functions
of specific regional
issues that arise o Can feel isolated
from other
o Serve needs of organizational areas
unique geographic
markets better

Process Departmentalization: - It groups on the basis of product or

customer fl ow.

Figure 2-4: Process Departmentalization example

Diff erent aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o More efficient o Can only be

flow of work activities used with certain types
of products
Customer Departmentalization: - It groups jobs on the basis of common
customers

Figure 2-5: Customer Departmentalization example

Diff erent aspects on this type of departmentalization:

Positive Aspects Negative Aspects

o Customers' o Duplication of
needs and problems functions
can be met by
specialists o Limited view of
organizational goals

III. Chain of command : - It is defined as a continuous line of authority that

extends from upper organizational levels to the lowest levels and clarifies who
reports to whom. There are three important concepts attached to this theory:
Authority: Refers to the rights inherent in a managerial position to
tell people what to do and to expect them to do it.
Responsibility: The obligation to perform any assigned duties.
Unity of command: The management principle that each person
should report to only one manager.

IV. Span of Control: - It is important to a large degree because it determines the

number of levels and managers an organization has. Also, determines the number
of employees a manager can efficiently and effectively manage.

V. Centralization and Decentralization

More Centralization More Decentralization

Environment is stable Environment is complex,

Lower-level managers
are not as capable or
experienced at making
decisions as upper-level
uncertain.
Lower-level managers
are capable and
experienced at making
 managers. decisions.

Lower-level managers Lower-level managers

do not want to have say want a voice in
in decisions decisions.

Decisions are significant. Decisions are relatively

minor.
Organization is facing a
crisis or the risk of Corporate culture is
company failure. open to allowing
managers to have a say
Company is large. in what happens.

Effective Company is
implementation of
company strategies
depends on managers
retaining say over what
happens.
geographically
dispersed.
Effective
implementation of
company strategies
depends on managers
having involvement and
flexibility to make
decisions

VI. Formalization: - It refers to the degree to which jobs within the organization are
standardized and the extent to which employee behavior is guided by rules and
procedures.

Q3. How do change managers recognize resistance of employees to

change?
Ans. It is important to be able to spot the resistance to change when it occurs
rather than get surprised when the change mysteriously fails. Identifying the same
will help you to respond appropriately to it. This is one of the biggest challenges
faced by the change managers. If you can catch the resistance early, it will then
give you a chance to respond to it before it takes hold, hence, effectively nipping it
in the bud. Let us first look into some of the early signs of resistance.

These can be in the form of:

Gossip: - When a change is announced, the tom-toms will start beating loudly and
the grapevine will bear fruits of much and varied opinion. Keep your ear to the
ground so as to know what is being said around the coffee points. Listen particularly
for declarations of intent and attempts to organize resistance.
Grumbling and complaints are natural ways of airing discomfort, so you should not
try to squash it as this will anyway lead you to failure. The biggest danger happens
when it is allowed to ferment in an information vacuum.
Respond to the gossip by opening it up, show that you are listening to the concerns
and that are taking them seriously. Providing lots of valid information will help to fill
the vacuum.

Testing: - Just as a high school class tests a teacher's ability to maintain discipline,
so will some brave souls test out what would happen when they resist the change.
An example, the resisters may not turn up to a meeting or may openly challenge a
decision.
How you deal with such early resistance has a significant effect on what happens
next. For example, you can shout at them and hurt their sentiments, or you can take
an adult position, describe what they have done and assertively question their
motives.

Resistance to change can occur in two ways, namely:

Individual action: - Individuals, may resist, however, this is generally limited to

the extent of their personal power. For those with a lower power, this may include
passive refusals and covert action. For those with more power, the resistance may
include open challenge and criticism.
An individual action must be handled individually. It should be started with those
who possess a greater power and then the message gets automatically conveyed to
those below. An example of dealing with an individual who is resisting change:
Disciplining a senior executive can send a strong signal to the other resistors.

Collective action: - People generally do not bother of organizing unless and until
they have serious issues with the change. This gives rise to what is known as
organized resistance. Organized resistance is usually a sign of a serious problem.
When these people find a common voice in the organized resistance, then their
words and actions could create a significant threat to the change, even though they
might be individually less powerful.

Q4. What are the challenges that managers face in implementing

successful change?
Ans. There are many challenges that have to be addressed for implementing the
change. It is human tendency to resist the changes since the change require
learning new skills when we are very much comfortable with the old rules.
There are many challenges that have to be faced by the organization that have to
be implemented by the organization. They are:

There is more competition from other countries in the market of today. In this
situation we have to look with our organization whether the organization is able to
cope with the market after implementing the change.

There will be some socio, economic problems like the resource allocations and the
impact of the resource allocation like depletion of resources on the environment.

There are some changes may affect the life style of the people. There may be extra
effort that is needed in the case of change process.

There is a need to learn about the learning of new skills in the case of
implementation of change that has to be carried out.
There are many theories that explain why the people resist the change even when
there is a necessity for the change. The resistance to change is the major challenge
that is faced in all the organizations of todays world,

Resistance to change can be averted via some factors. They are:

Commitment: From the top level authorities in the organization to the low level
authorities, each employee has to commit for the plan. This begins at the top so
that it shows the good leadership.
A change mandate: it is necessary to tell the employee in a very convincing
way that the change is necessary and it is not a choice.
Input: Any employee who is going to undergo the change must be given an
opportunity to raise their queries in the respected way.
Accountability: Every individual those who are involved in the change process
are responsible for implementing their own individual change activity. If they do
not meet that responsibility then they may have to face some consequences.
Rewards and celebrations: The successful implementation in the organization
should be well acknowledged. The organization as a whole should honor the
successful implementation.
Evaluation: The Examination of the implementation is carried at the regular
intervals for the success of the organization.
Whenever a change takes place in an organization, the personal compact, that is,
the relationship between the employers and employees gets affected.

Q5. Explain the Dissipative Equilibrium Change Model.

Ans. The dissipative systems model

The theory of dissipative structure upon which the current discussion is based can
be treated as the open systems model extended with a capability to continuously
impose a revolutionary change or transformation.

The theory of dissipative structure: - Pioneered by the Brussels school of

thought in the 1970s (Prigogine, 1976; Nicolis and Prigogine, 1977, 1989; Prigogine
and Stengers, 1984), this theory is firmly rooted in physics and chemistry.
Nevertheless, it was later applied to urban spatial evolution (Allen and Sanglier,
1978, 1979a, 1979b, 1981), organisational change and transformation (Gemmill and
Smith, 1985; Leifer, 1989; Macintosh and Maclean, 1999), changes in small groups
and group dynamics (Smith and Gemmill, 1991), and political revolutions and
change in political systems (Artigiani, 1987a, 1987b; Byeon, 1999).

Dissipative structure in physical systems

The most prominent example of dissipative structure in a physical system is
convection in a liquid (Nicolis and Prigogine, 1977; Jantsch, 1980; Prigogine and
Stengers, 1984). If cooking oil is heated in a shallow pan, the following macroscopic
changes occur. Firstly, while the temperature of liquid is relatively uniform, heat is
transmitted through the body of liquid by means of conduction in which the
molecules heat energy (molecular vibration) is transmitted to neighbouring
molecules via collision without major change of position. We can say that the
system is still in a thermodynamic equilibrium. Next, as the pan is heated further,
the temperature gradient between the upper and lower portion of the oil in the pan
becomes more pronounced and thermal non-equilibrium increases. At a certain
temperature gradient, convection starts and heat is then transferred by the bulk
movement of molecules. Evidently, however, the surrounding environment at first
suppresses the smaller convection streams, but beyond a certain temperature
gradient, the fluctuations are reinforced rather than suppressed. The system moves
into a dynamic regime, switching from conduction to convection, and a new
macroscopic order called Benard cells (i.e. a pattern of regular hexagonal cells that
appear on the surface of liquid) emerges, caused by a macroscopic fluctuation and
stabilised by an exchange of energy with the environment. Such a structure is called
a hydrodynamic dissipative structure, and is a version of spatial structure (Haken,
1980).

Order in a non-equilibrium state

As mentioned earlier, open systems make an effort to avoid a transition into
thermodynamic equilibrium by a continuous exchange of materials and energy with
the environment. By doing this, a negative entropy condition can be maintained. It
has been understood for a long time that entropy is a quantification of randomness,
uncertainty, and disorganisation, and negative entropy therefore corresponds to
(relative) order, certainty, and organisation (Bertalanffy, 1973; Kramer and De
Smith, 1977; Nicolis and Prigogine, 1977; Prigogine and Stengers, 1984; Miller,
1978; Van Gigch, 1978, 1991; Flood and Carson, 1993). However, the mechanics
underlying this idea had not been clear until it was explained in the work of Nicolis
and Prigogine (1977), Prigogine and Stengers (1984), and Jantsch (1980) in the
theory of dissipative structure and order that exists in the non-equilibrium condition.

According to the theory of dissipative structure, an open system has a capability to

continuously import free energy from the environment and, at the same time,
export entropy. As a consequence, the entropy of an open system can either be
maintained at the same level or decreased (negative entropy), unlike the entropy of
an isolated system (i.e. one that is completely sealed off from its environment),
which tends to increase toward a maximum at thermodynamic equilibrium. This
phenomenon can be represented in quantitative terms as follows (Nicolis and
Prigogine, 1977; Jantsch, 1980; Prigogine and Stengers, 1984). According to the
second law of thermodynamics, in any open system, change in entropy dS in a
certain time interval consists of entropy production due to an irreversible process in
the system (an internal component) diS and entropy flow due to exchange with the
environment (an external component) deS. Thus, a change in entropy in a certain
time interval can be represented as dS = deS + diS (where diS > 0). However,
unlike diS, the external component (deS) can be either positive or negative.
Therefore, if deS is negative and as numerically large as, or larger than, diS, the total
entropy may either be stationary (dS = 0) or decrease (dS < 0). In the former case,
we can say that the internal production of entropy and entropy exported to the
environment are in balance. An open system in a dissipative structure sense can be
viewed as shown in

Figure 11.4. An open systems entropy production and dissipation.

It can be concluded that order in an open system can be maintained only in a non-
equilibrium condition. In other words, an open system needs to maintain an
exchange of energy and resources with the environment in order to be able to
continuously renew itself.

Entropy and sustainability of dissipative systems

The internal structure and development of dissipative systems, as well as the
process by which they come into existence, evolve, and expire, are governed by the
transfer of energy from the environment. Unlike isolated systems (or closed systems
in a broader sense), which are always on the path to thermal equilibrium,
dissipative systems have a potential to offset the increasing entropic trend by
consuming energy and using it to export entropy to their environment, thus creating
negative entropy or negentropy, which prevents the system from moving toward an
equilibrium state. A negentropic process is, therefore, the foundation for growth and
evolution in thermodynamic systems.

For dissipative systems to sustain their growth, they must not only increase their
negentropic potential, but they must also eliminate the positive entropy that
naturally accumulates over time as systems are trying to sustain themselves. The
build up of the systems internal complexity as it grows is always accompanied by
the production of positive entropy (diS > 0), which must be dissipated out of the
system as waste or low-grade energy. Otherwise, the accumulation of positive
entropy in the system will eventually bring it to thermodynamic equilibrium, a state
in which the system cannot maintain its order and organisation (Harvey and Reed,
1997).
Q6. Suppose you are appointed as an HR Manager of a local bank. You are
assigned the task of implementing computerization in the bank. The
implementation would result in a complete shift from maintaining records
and transactions manually to a fully computerized and online system.
What are the various phases involved in the process of managing this
change?

Ans.

Change management process: - The change management process is the

sequence of steps or activities that a change management team or project leader
would follow to apply change management to a project or change. Based on Prosci's
research of the most effective and commonly applied change, most change
management processes contain the following three phases:
Phase 1 - Preparing for change (Preparation, assessment and strategy
development)
Phase 2 - Managing change (Detailed planning and change management
implementation)
Phase 3 - Reinforcing change (Data gathering, corrective action and recognition)
These phases result in the following approach as shown below in Figure 1.

It is important to note what change management is and what change management

is not, as defined by the majority of research participants.

Change management is not a stand-alone process for designing a business solution.

Change management is the processes, tools and techniques for managing the
people-side of change.

Change management is not a process improvement method.

Change management is a method for reducing and managing resistance to change

when implementing process, technology or organizational change.
Change management is not a stand-alone technique for improving organizational
performance.

Change management is a necessary component for any organizational performance

improvement process to succeed, including programs like: Six Sigma, Business
Process Reengineering, Total Quality Management, Organizational Development,
Restructuring and continuous process improvement.

Change management is about managing change to realize business results.