You are on page 1of 21

Organization Development and Change

Transformational Change

Thomas G. Cummings Christopher G. Worley

Learning Objectives for Chapter Twenty


To explore a framework that categorizes different types of organizational change efforts with emphasis on the features of transformational change To understand three kinds of interventions against the background of transformational change, integrated strategic change, organization design, and culture change.

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-2

Characteristics of Transformational Change

Triggered by Environmental and Internal Disruptions


Industry discontinuities-

legal, political, technological, economic, technological Product lifecycle shifts Internal company dynamics- size, portfolio, executive turnover

Aimed at Competitive Advantage


Uniqueness-

resources, processes Value- premium, low cost Difficult to imitate


Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-3

Characteristics of Transformational Change contd Systemic and Revolutionary Change Demands a New Organizing Paradigm- gamma change, organizational learning, continuous improvement, commitment based Driven by Senior Executives and Line Management- envisioning, energising, enabling Involves Significant Learning- perceiving, thinking, behaving

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-4

Integrated Strategic Change (ISC)


Integrated Strategic Change is a deliberate coordinated process that leads to gradual or radical systemic realignments between the environment and a firms strategic orientation resulting in improvement in performance and effectiveness.
Initially developed by Worley, Hitchin & Ross
Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-5

Integrated Strategic Change (ISC) ~ Key Features Strategic Orientation- strategy & design are the relevant unit of analysis Integrated whole- creating the Strategic Plan, gaining commitment & support for it, planning its implementation & executing it Integrating Individuals and Groups into the Process
Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-6

The Integrated Strategic Change Process

Strategy S1

Strategic Change Plan Implementation

Strategy S2

Organization O1

Organization O2

Strategic Analysis

Strategic Choice
Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-7

ISC Application Stages

Strategic Analysis
Assess the readiness for change and top

managements ability to carry out change Diagnose the Current Strategic Orientation

Strategic Choice
Top management determines the content of the

strategic change- what products, markets, production, positioning, organization structures & processes

Designing the Strategic Change Plan


Development of a comprehensive agenda to achieve

the change- how to move from current to desired state

Implementing the Strategic Change Plan


Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-8

Organizational Design
Conceptual Framework

Strategy Structure Work Design Human Resources Practices Management and Information Systems Fit, Congruence, Alignment among Organizational Elements
Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

Key Point

20-9

Organization Design Model


Organization Strategy
Strategic Fit

Organization Design
Management and Information Systems

Structure
Design Fit

Human Resource Practices

Work Design
20-10

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

Organization Designs

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-11

Organization Design Application Stages

Clarifying the Design Focus

Create the overall framework, begins with examining strategy and objectives and determining organization capabilities needed

Designing the Organization

Results in an overall design for the organization, detailed designs for the components, and preliminary plans for how to implement

Implementing the Design

Puts the new structures, practices and systems into place, draws heavily leading and managing change methods

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-12

The Concept of Organization Culture


Artifacts Norms Values

Basic Assumptions

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-13

The Concept of Organization Culture contd

Artifacts highest level of cultural


manifestation, visible symbols of deeper levels of norms, values and basic assumptions Eg: behaviors, clothing, language, structures, systems, procedures, dcor, space arrangements, noise levels etc.

Norms unwritten rules of behavior, guide how


members behave in particular situations, inferred from observation of other members interactions. Eg: its not ok for sales execs to process customers who were working with another sales 20-14 exec
Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

The Concept of Organization Culture contd

Values -

what is important in the orgnaziation & what deserves attention. Eg: cutomer service

Basic assumptions taken for granted assumptions


about how organizational problems should be solved, nonconfrontalble & non-debateable assumptions about the environment, human nature, human nature, human activity & human relationships; basic assumptions tell people how to perceive, think & feel. Eg: fundamental dignity of people, treating customers with extraordinory service is morally right
Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-15

Diagnosing Organization Culture

Behavioral Approach from observation, group interviews


Pattern of behaviors (artifacts) most related to

performance

Competing Values Approach from specifically designed survey


Pattern of values emphasis characterizing the

organization two value pairs:


Internal focus & integration vs extenal focus & differentiation Flexibility & discretion vs stability & control

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-16

Diagnosing Organization Culture contd Competing Values Approach Flexibility & Discretion Internal Focus & Integration

Clan

Adhocracy

Hierarchy

Market

Stability & Control


20-17

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

Diagnosing Organization Culture contd Competing Values Approach Hierarchy Culture


A business that adheres to formal rules, regulations and bureaucracy is demonstrating a hierarchy culture. This type of company typically has several traditional layers of management, and emphasis is placed on following the chain of command. Power, status and position help the leaders within a hierarchy culture manage their employees, and organized, efficient operations are a central part of the organization's strategy and mission. It is prevalent among government organizations and large companies, and many businesses demonstrate at least some elements of the hierarchy culture in day-to-day operations.

Market Culture
The market culture gained popularity among businesses in the 1960s. This culture is similar to the hierarchy culture in its emphasis on organization and control. However, the market culture places great value on the external relationships with customers, suppliers and creditors, for example, believing that successful relationships will increase the company's competitiveness. According to ongoing studies conducted by Angelo Kinicki and his colleagues at the W. P. Carey School of Business at Arizona State University, the market culture is the culture type most likely to yield the best financial results.
Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-18

Diagnosing Organization Culture contd Competing Values Approach Clan Culture


Businesses displaying the clan culture strongly emphasize internal collaboration. Acting more like a family than a structured corporation, companies with this type of culture are concerned with teamwork and morale, and Kinicki determined that this culture type produced the highest level of employee satisfaction. Clan corporations typically have a flat internal structure, led by a single leader or owner who acts as a paternalistic or mentoring influence. This culture strongly emphasizes loyalty, a companywide shared vision and goals, and ongoing employee development.

Adhocracy Culture
The adhocracy culture places most importance on flexibility and innovation. Adaptability and quick reactions to the changing market, competition and external environment is an integral component of corporate strategy in this type of business. Leadership in an adhocracy culture is demonstrated by entrepreneurship and risk taking. The emphasis is always on growth opportunities and employees are encouraged to experiment with new ideas. What might seem like chaos and disorder to the hierarchy culture is valued and embraced in the fast-moving adhocracy culture.
Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-19

Diagnosing Organization Culture contd Deep Assumptions Approach interview process involving both insiders & outsiders, culture workshops Pattern of unexamined assumptions that solve internal integration and external adaptation problems well enough to be taught to others

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-20

Culture Change Application Stages


Establish a clear strategic vision Get top-management commitment Model culture change at the highest level Modify the organization to support change Select and socialize newcomers; downsize deviants Develop ethical and legal sensitivity

Cummings & Worley, 9e (c) 2008 South-Western/ Cengage Learning

20-21