Institutionalization and Change

Renni Rengganis – 29011025

Magister of Science in Management

SBM-ITB

Outline

• Understand about management fads and fashion

• Be familiar with he organizational change imperative

• Be familiar with the notion of institutionalization

• Understand about the various forms of isomorphism

• Be familiar with the concepts of discourse and organizational

knowledge

• Understand the relationships between sense making,

institutionalization, and change management.

Management Fads and Fashion

Challenges : proliferation of change programs

Some management theorist have referred to the change programs as management fads and fashions.

Nova scotia power (company): • Senior manager often search for ready-made (popular solution)• Packaged change programs, which have become very popular, are a

powerful option for managers seeking widespread change• The content and focus of packaged change programs have change

significantly over the same period

The Organizational Change Imperative

Organizational change has become an “imperatives” rather than a strategic choice. Manager feel compelled to adopt rather than consider the option of it.

For example :

Abbot laboratories had used = TQM, BPR, Balanced scorecard

Bank of America had used = TQM and Six sigma

Bombardier had used = Culture change, BSC, and Six sigma

Each are felt to compelled to introduce programmatic change ( the popular change program). Yet in their day-to-day operation, each of this companies also highlights stability as an important part of their identity.

Institutionalization

Change happens but organizational change is linked to institutionalization.

Institution as an organization :Criteria of relatively stable value system that strongly influences recurring behaviors and activities that characterize the organization’s core operation.

Ex: Mcd’s value is fast service, this become a core value in every franchise store all over the world.

Institutionalization :A process where organizational activities come from a pattern of behavior through frequent and habitual reproduction by members of organization, and where a number of patterns of behavior build up overtime to shape the character of the organization.

Macro institutionalization

Over the past 30 years there has been increasing research into the macro influences on institutionalization. This research looks at how organizations, particularly within the same filed, increasingly come o look alike each other in terms of structure, process, rules and personal.

Ex : university

This process of homogenization caused 3 central factors, known as isomorphic pressures:

1. Coercive isomorphic

2. Normative isomorphic

3. Mimetic isomorphic

Coercive Isomorphic Pressures

Where companies feel compelled to conform to the standards, processes, structures, and regulations of other more powerful organizations due to legal, economic, or other threat social threat.

Ex : Halal Certified, hypermarket pricing policies etc.

Normative Isomorphic Pressures

Where a company comes to adopt the existing practices, structures, or regulations of other organizations because they share similar values, beliefs, goals, and legitimacy needs.

Ex : professionalization (lawyer, doctor, etc)

Mimetic Isomorphic Pressures

Where an organization attempts to deal with uncertainty or adopt what it sees as winning formula by copying many of the attributes of successful organizations in the field.

Ex : JNE has program YES (yakin esok sampai), United Airlines

Discourse and Organizational Change

Beyond isomorphic pressures, there is evidence that powerful sets of ideas, beliefs and practice strongly influence the way that organizations are establish and maintained.

This sets called discourses.: confront as knowledge about how the world works and who and what should be valued.

Ex : woman are not capable to be engineers. idea about globalization

Sensemaking, Institutionalization, & Change Management

Powerful pressures on managers to conform to existing organization structures and procedures (institutionalization), while attempting to deal with global change (discourse). These pressures can be understood for what they are.

Managers can make strategies choices :

1. Prediction

2. Alignment

3. Avoidance

Predictions Strategy :

Refers to development of a plan of action that attempts to asses the next wave of management practices and implement them ahead of competitors. (innovators)

Alignment strategy :

A choice that a company makes to develop management strategies that are in line with cutting-edge companies. Is the easiest strategy, usually just follow well-establish and widespread strategies.

Avoidance strategies :

Less used and refers to a conscious decision to resist going with the flow and follow other companies just because they are popular and widespread.. The most difficult strategy. Unchanging values and beliefs that gives them their unique, identity, and appeal.

Thank You