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Implementing Organizational Change: Theory into Practice

Bert Spector

Chapter 1

Organizational Change

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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Learning Objectives

Identify the role of strategic renewal in propelling change.

Focus on the behavioral aspect of organizational change.

Analyze the dynamics of motivating employees to alter their behaviors.

Differentiate the three faces of change.


Learning Objectives

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Understand the source of both employee resistance to and support for change.

Appreciate the importance of trigger events in initiating change efforts.

Examine the role that “going global” plays in triggering organizational change.


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Strategic Responsiveness

Change implementation: actions taken by organizational leaders in order to support strategic renewal and maintain outstanding performance in a dynamic environment.

Strategic renewal: change in an organization’s strategy through a process of creating new business models, new products, services, capabilities, and knowledge bases.

Successful organizations cannot remain static if they hope to continue that success; they must change in

order to keep up with a changing world.


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Examples of Strategic Responsiveness

Company Altered Strategy

IBMMove from product to

service/consulting company

NetflixMove from providing DVDs through

mail to providing streaming on-demand entertainment

RenaultMove from French-based to

international-focused automobile company

PandoraMove from selling through third parties

to selling directly to end users

FacebookMove from restricted, college campus

only social network to become a “universal utility” open to everyone


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Building a Vocabulary

Turnaround: an attempt to improve the immediate financial position of an organization by focusing on the income statement and the balance sheet

Techniques and tools: organizational processes, mechanics, and other interactions intended to produce a product or service


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Three Faces of Change

Type Target Rationale

Turnaround Internal resources Improve short-term

bottom-line performance

Tools and techniques

ProcessesIncrease internal

efficiency

Transformation BehaviorsEnhance human

capabilities


Popular Change Tools and Techniques

Tool Key Points Company Examples

Total Quality ManagementAlign operational processes with the requirement for customer-defined quality and continuous improvement.

Globe Metallurgical, Inc.MotorolaWestinghouse

Agile DevelopmentA process for product development, mainly software, based on collaborative cross-functional team effort.

GKN AerospacePNC FinancialAcxiom

Balanced ScorecardUse of a measurement system that balances financial objectives alongside internal business process, customer satisfaction, and employee learning and growth.

VW of BrazilRicohWeichert Relocation

Value-Chain IntegrationCapture value by linking and coordinating the primary activities—inbound logistics, production, outbound logistics, marketing, and sales—of the organization.

ComputerWorldIBM ElectronicsMicrosoft

Lean Eliminate activities that do not add value from the perspective of the customer.

SealyToyotaConmed

Considered DesignEcological impact is considered at beginning of new product design process rather than as an afterthought.

NikeHewlett-PackardFord

1-8Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Transformational Change

Effective strategic renewal efforts combine aspects of turnaround, tools and techniques, and transformational behavioral change.

Transformational organizational change seeks to create long-term, sustainable alterations in employee behaviors.

The way employees conduct themselves at work impacts the bottom-line performance of the company.

Behavior comes from both the individual and the organizational context in which the individual works.


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Building a Vocabulary

Behavioral change: alterations in employee behavior in order to enable the organization to meet the demands of its strategy while achieving and sustaining outstanding performance

Behavior: the enactment of roles, responsibilities, and relationships by employees within an organization


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Building a Vocabulary Organizational context: the setting and

circumstances in which employees work.

“Organizational culture and values, the behaviors of leaders, as well as

rules and procedures to define a context that shapes how employees

enact their roles, responsibilities, and relationships”


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Sources of Behavior

Individual

Characteristics

Organizational

Context

BehaviorOrganizational change seeks to create long-term, sustainable

alterations in employee behaviors.


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Building a Vocabulary Resistance: efforts exerted by

employees either overtly or covertly to maintain the status quo.

“Employee response to change runs across a broad spectrum, ranging from commitment at one end to aggressive resistance” on the other. Each

of these reactions to change helps shape the behavior of individuals and, ultimately, the

success of a change effort.”


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Individuals may be satisfied with the status quo. Because their needs are being met, they may view any potential change as negative.

Individuals may view change as a threat, fearing it will adversely affect them in some significant way.

Individuals may understand that change brings both benefits and costs, but feel that the costs far outweigh the benefits.

Individuals may view change as potentially positive, but may still resist because they believe that the organization’s management is mishandling the change process.

Individuals may believe in the change effort ,but still believe that the change is not likely to succeed.

Underlying Causes of Resistance


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Participation: A Key to Effective Change

Participation: the process of allowing employees a voice in work-related decisions.

“By diagnosing problems, understanding their importance, and being part of the process of

formulating solutions, people develop a psychological sense of ownership over the outcome.

That ownership now creates in employees the heightened motivation to implement change in order

to achieve desired goals.”


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Participation truths

Imposing change from above can lead to employee resistance.

andA participative process can help build support for change efforts .


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Management’s Role in Creating Resistance

Text in this colorResistance CauseSatisfied with status quo Employees not included

Change is perceived as threat

Employees see little opportunity to get required skills

Cost outweighs benefits Inadequate articulation of goals

Belief that management is mishandling the process

Employees’ voice and interest not being included

Employees doubt success Past change efforts lack sustained success


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Building a Vocabulary Trigger event: a shift in the environment

that precipitates a need for organizational change“Trigger events … are so named because their magnitude and potential for organizational as well as personal impact set into

motion a series of mental shifts as individuals strive to understand and redefine a situation. By their very nature, they unbalance established routines and evoke conscious thought on the part of organizational members. They stir up feelings and emotions that come to affect people’s reactions to the

change. In short, trigger events bring people’s mindsets into the arena of change.”


Reasons Why Globalization Might Require Change They may seek to outsource certain activities that

had previously been performed in the home country. They may seek to enter new, nondomestic markets. They may seek nondomestic suppliers for needed

raw materials. They may seek strategic alliances with related

companies in other countries. They may seek to locate research and development

activities in multiple nations as a way of better understanding the needs of nondomestic customers.


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Strategic Renewal and Organizational Change

Shifting CompetitiveEnvironment

NewOpportunities

Strategic Renewal

OrganizationalChange

Altering BehaviorPatterns ofEmployees


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means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher.

Printed in the United States of America.

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall1-21

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