MANAGING ORGANIZATIONAL CHANGE

Prof.dr.dr.dr.h.c. Constantin Bratianu Faculty of Business Administration Academy of Economic Studies Bucharest

A critical perspective on models of organizational change

Change = a natural or societal process produced in a spontaneous or controlled way. Any entity will continue to operate in the same functional and structural state until a driving force will change some of its core characteristics. An organizational change is an alteration of an organizations environment, structure, technology, or people Any change is developing as a dynamic process under driving and inertial forces.

Types of changes
Spontaneous Controlled

Nature

Any change produced without human intervention

Any change produced by human intervention (canals, lakes, clouds breaking, artificial snow)

Diets (at individual level) Accidents (auto, airplane) Technology failures, catastrophes (i.e. nuclear) Epidemics Social, economical, political reforms Organizational change to adapt to the business environmental needs

Society

Conflict management and politics of change

Conflicts may appear in any organization, with respect to change Conflicts are generated between the driving forces of change and the inertial forces Conflicts may appear at any level within organization Change can be performed: top-down bottom-up across organization

Critical views of managing change

Can change be managed? Planned change can be managed Spontaneous change cannot be managed 100%, but great leaders know how to enter the change process and to direct it (i.e. like in martial arts) If, YES, should change be managed? Much better than to not to manage it What should be the relation between manageable change and non-manageable change? It should be a relation of integration

Cultural change
Cultural change means change in organizational culture That means changes of beliefs, values, symbols, rituals, traditions etc. Changing cultural values is very difficult and it takes time Changing cultural values is very important for transnational companies. Many mergers failed due to difficulties in changing organizational cultures Conflicts may appear when top management comes from a different culture than most of employees (see Craiova)

Change agents roles and relationships

Changes within an organization need a catalyst. People who act as catalysts and assume the responsibility for managing the change process are called change agents. Any manager can be a change agent. Also, any other person from inside or outside the organization (i.e. a consultant). Change agents play the role of the driving forces for the change process In order to succeed they need to constitute a critical mass

CHANGE METAPHORS
Calm waters metaphor: The organization is envisioned as a large ship crossing a calm sea, to a well known destination. The trip is predictable without problems.

White-water rapids metaphor: The organization is envisioned as a small raft navigating a raging river with uninterrupted white-water rapids.

Organizational dynamics complexity and change

Within any organization there is a field of forces representing people, processes and technologies These forces are interrelated and any change induced by any of them will be propagated throughout organization Complexity makes change more difficult, such that complexity will slow down the propagation of any change Large companies are more complex than small ones. Thus, in large companies managing change is much more difficult than in small companies

External environment

Internal environment

Internal field of forces Fi

External field of forces Fe Dynamic equilibrium: Fi = Fe

CHANGE DYNAMICS

Initial state

Final state

Catalysts

Inertial forces (Resistances)

Driving forces (Promoters)

FORCE FIELD ANALYSIS

Inertial forces

Driving forces

Internal forces

External forces

Complexity and change

People
Attitudes Behaviours Expectancies

Structures
Organizational Functional Job descriptions

Technologies
Equipments Processes Methods

PLANNED CHANGE
The basic idea of this theory is that change can be planned and managed as a controlled process.
Since change has been considered at the organization level, all research focused on Organizational Development (OD).

Kurt Lewin founded in 1945 the Research Center for Group Dynamics, with a huge influence.

MODELS OF PLANNED CHANGE

The action research model
The three-steps change model Kurt Lewins change model The eight-steps change model John Kotters change model

THE ACTION RESEARCH MODEL

Action Research has been designed to solve social and organizational problems.
It is research on action to make that action more effective. Action refers to programs and interventions designed to solve a problem or improve a condition.

The main idea is that effective solving of organizational problems must involve a rational, and systematic analysis of the issues in question.

THE ACTION RESEARCH (I)

The Action research comprises 3 components: - the organization (top management) - the subject (people where change is done) - the change agent
The 3 entities must agree to form a group, under mutually acceptable and constructed terms of reference.

THE ACTION RESEARCH (II)

The main difficulty is to gain the commitment of both the organization and the subject of the change. The strategy was to use top-down change implementation based on top managers authority. This approach is not working well in large organizations and where the distance to power is relatively small.

How can you transform an ice cube into a cylinder ?

Kurt Lewins 3 steps Change Model

Proposed by K. Lewin (1958) for implementing change in an organization through 3 stages:

Change Re-freezing Organizational culture

Unfreezing Organizational culture

PHASES OF PLANNED CHANGE

The concept of planned change implies that an organization exists in different states at different times and that planned movement can occur from one state to another.
For planned change it is important to understand not only the change but also the states through which the organization must pass.

CHANGE PROCESS CHARACTERISTICS

Trigger Critical mass Direction Speed & Acceleration Destination / No-destination Driving forces Inertial forces Residual forces (residual stress)

Kotters change model

1.Establishing a greater sense of urgency Examining seriously the market and competitive realities Identifying and discussing crises, potential crises or major opportunities
2.Creating the guiding coalition Putting together a group with enough power to lead the change Getting the group to work together like a team

Kotters change model

3.Developing a vision and a strategy Creating a vision to help direct the change effort Developing strategies for achieving that vision 4.Communicating the change vision Using every vehicle possible to constantly communicate the new vision and strategies Role modeling needed behavior by the guiding coalition

Kotters change model

5.Empowering others to act Getting rid of blockers Changing systems or structures that seriously undermine the change vision Encouraging risk taking and nontraditional ideas, activities, and actions 6.Creating short-term wins Planning for some visible performance improvements Creating those wins Visibly recognizing and rewarding people who made the wins possible

Kotters change model

7.Consolidating gains and producing even more change Using increased credibility to change all systems, structures, and policies that dont fit together and dont fit the transformation vision Hiring, promoting, and developing people who can implement the change vision Reinvigorating the process with new projects, themes, and change agents Not declaring victory too soon

Kotters change model

8.Institutionalizing changes in the culture Creating better performance through customer and productivity oriented behavior, more and better leadership, and more effective management Articulating the connections between new behaviors and firm success Developing means to ensure leadership development and succession

Kotters change model

The winning process is: 75-80% Leadership 20-25% Management Not the other way around

RESISTANCES (I)
Resistances at individual level: - lack of vision for the new organizational states - lack of information and knowledge - lack of interest/ motivation - fear of unknown - fear of possible risks - fear of loosing some privileges - thinking models (knowledge, rules, values) - envy for the new leaders of change

RESISTANCES (II)
At the organizational level: - legislation - some stakeholders (internal & external) - lack of vision for some leaders & commitment - organizational culture (values, beliefs, tradition) - organizational risks - failure of communication - people loosing their privileges, or their jobs - trade unions - organizational structure - previous successes - total costs of tangible and intangible assets

REDUCING RESISTANCES(I)
Education and communication -- when resistance is due to misinformation or lack of information Participation -- when resisters have the expertise to make a contribution Negotiation -- when resistance come from powerful group

REDUCING RESISTANCES (II)

Coercion -- when a powerful groups endorsement is needed Manipulation -- when there is a state of confusion concerning the goals of change and the ways to achieve them Developing a dynamic organizational culture -- when there is leadership vision and a strategic approach to organizational development