MGT8033: LEADING ORGANISATIONAL CHANGE...2009/07/19 · MGT8033: LEADING ORGANISATIONAL CHANGE The nature of organisational change DR AHMAD FAISAL Doc: MGT8033 – M1 July 2009 Dr

MGT8033: LEADING ORGANISATIONAL CHANGE

The nature of organisationalchange

DR AHMAD FAISAL

Doc: MGT8033 – M1 July 2009 Dr Ahmad FaisalNon-Commercial Use Only

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Module Objective

On successful completion of this module, you should be able to:

•generally describe the development of OD over the last two decades

•conceptualise the hard-versus-soft approaches to change and examine the implications of this dichotomy for change agents

•describe and explain the systems approach to change and examine why this systems perspective is important

•compare and contrast the meta-models of change, and explain why these distinctions are important

•critically discuss ‘discontinuous change’ and the implications for effective change management

•analyse the dilemmas of change and examine how these might be reconciled by prudent management

•compare and contrast ‘traditional structures’ and new forms of organisation.


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Change is inevitable.

Many Individuals and organisations talk about change – success, failures and the not so… Change is much talked about – how, why leading to numerous research effort.

What drive change?

• Champy and Nohria (1996) – 3 major drivers of organisational change, technology (particularly information technology), government, and globalisation

• Hussey (1996) suggests – competition, customers, and shareholder valuemajor long-term drivers of change.

• Dunphy et al. (2003) argue that corporate sustainability within finite resource boundaries is the new driver for change.

Burnes (2000) suggests – that to examine the main models of organisational change currently being promoted in order to judge the appropriateness of the particular approaches to actually manage change. (r1.5)

Overview


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Genus (1998, p. 7) – ‘different guiding assumptions concerning the relative influence of human discretion and action on the one hand, and the environmental exigency on the other’.

Variations come from: balancing between the amount of control the organisation and its individuals have over a particular situation and the force of the environment upon that situation.

issues of the context and uncertainty of change

the content and scale of change

have implications for the way that change is viewed in organisations, the process used to implement the change (including leadership, commitment, and participation) and the method of change (including the time frame).

So how do we model the change?

Change variation


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Adizes, I. (1990). Corporate Lifecycles: how and why corporations grow and die and what to do about it . Prentice Hall

Corporate Life Cycle & Meta-Model


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occurs when organisations change all aspects of their operation in a single move in a short time frame.

Can be across the enterprise or specific areas.

Dunphy and Stace (1992) refer to this type of change as Structural Change by edict, use of authoritative power to force change in a rapid way to address the issues

The benefits include rapid change that follows the specific direction of a leader with measurable outcomes against planned goals.

The limitations are that individual change and inclusivity is often overlooked.

Used in emergency or dangerous situations, may not be successful without a strong authoritarian leader able to identify specific areas requiring change and planning the appropriate change.

Radical or revolutionary change


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a continuous process while incremental suggests an ever-increasing involvement through consensus building.

Viewing the change as management response to pressures in internal and external environments that are dealt with over time, by individual parts of the organisation in a logical problem solving process, one goal at a time. The belief is that change occurs through successive, limited and negotiated shifts.

Has been around for a relatively long time, although different periods of success have supported its legitimacy as a change approach.

Japanese companies started using for long time. through total quality management, service quality, and/or team building programs. Leadership should be consultative. It does not include change that is undertaken in quantum leaps, or dramatic policy decisions

The approach of managed incrementalism avoids both stagnation of doing little or nothing and the brutality associated with rapid corporate transformations.

Incremental or evolutionary change

An incremental approach to change provides the means for various levels of change within the organization, including the development of a learning approach for individuals, and the opportunity for groups to participate in the development of processes that increase innovation, productivity and quality. From a systems view it provides the means for systems fine-tuning or adjustment.

This approach may be limiting when fast or fundamental change is required, and Burnes (2000) identifies that it can indeed lead to a slow death. While some writers believe that this approach is relatively unimportant (Dunphy & Stace 1992) others identify that it can be part of an overall plan to transform an organisation (Burnes2000).


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change is not continuous.

While many organisations fit the incrementalist model of change for a period of time, there does come a point when they go through a period of rapid and fundamental change (Gersick 1991).

Some suggest that this model of change is really a combination of a radical change process and an incremental fine tuning approach to change.

Dunphy and Stace (1992) identify change as discontinuous in that managers encourage change to confront dilemmas.

The strength of this model of change is its link to, and recognition of the importance of the external environment and the need to ensure the environment fit.

However, rejected due to lack empirical validity of the model’s basic arguments.

Punctuated equilibrium model of organisational change


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involve wide spread change throughout the organisation that incorporate value change, strategy change, structure change, systems change, culture change that includes all stakeholders.

Indeed new measurement criteria and new communications are part of the requirement to encourage new roles and new outcomes.

Top management leads this change process and should determine the process of change and the areas of non-negotiability.

Areas of joint decision-making are required to be clearly defined.

Often, change agents are recommended as drivers for this process of change an increase in the number of change consultants.

Continuous transformational model of change


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Variation and Models Complexity

Variation

Change occurs at differing Organisational Life Cycle

Some change slower than others even with the same scale of change

Different industries have differing rates of change or which are at different phases of the economic cycles.

Model

Modeling the change provide the ‘framework or map’ for the overall change, but not one is perfect.

Provides focus on issues and range of effort.

Enabling appropriate modeling but does not happen on it own.

matching the commitment to the desired outcome is key.

Complexity

It is important when considering any change that an individual responsible for change should consider the many theories and approaches available and decide upon a suitable theory or approach. Doc: MGT8033 – M1 July 2009 Dr Ahmad Faisal

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Complexities of change – planned vsemergent change

Planned change refers to change incorporated into organisational processes through conscious effort,

planned change advocates the use of a process involving diagnosis, action and evaluation that informs further action and evaluation.

rather than change that is emergent through impulse, accident or force.

This approach contends that the external environment is too dynamic to be predicted and planned change makes too many assumptions.


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planned change

Change is the result of forces that strive to maintain the status quo and forces that push for change.

Wandell et al 2007,


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planned change – Lewin’s ModelWandell et al 2007,


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planned change – Action Research Model Wandell et al 2007,

Planned change is a cyclical process where action is guided by preliminary research about the organisation.

Data gathering after action

Joint action planning

Joint diagnosis

Action

Feedback to client

Problem identification

Data gathering andpreliminary diagnosis

Consultation with a behavioural scientist


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planned change – Contemporary Action Research Wandell et al 2007,


Develop a vision with broad participation

Evaluate

Choose positive subjects

Collect positive stories with broad participation

Examine data and develop possibility propositions

Develop Action Plans

Trends in Action Research

• Moving from smaller sub-units to total systems and communities

• Promoting social change

Action Research Adaptations

• Participatory Action Research

• Appreciative Inquiry


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planned change – General modelWandell et al 2007,


Design, implementation

& evaluation

Information gathering, processing &

feedback

EnteringContracting &

diagnosing


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Complexities of change – planned changeStrengths

• Provides somewhere to start.• Gives guidance to managers.• Gives work to consultants.• Allows managers to position organisation in market.

Weaknesses• Assumes you can predict future from present.• Assumes organisations move through a series of different states at different times and that

these states can be controlled.• It concentrates on incremental change and doesn’t take account of radical,

transformational change.• It is very unitarist in perspective – developed for and in response to top down autocratic

rigid rule based organizations operating in predictable stable and controlled environment.

• Assumes management, workers and agents of change and other stakeholders can agree on a course of action, and are willing and able to do so.

• Assumes this approach to change is the only approach to change suitable for all organisations in all situations.


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Complexities of change – emergent change

Strengths• More realistic in today’s turbulent external environment.• Offers hope in the failure of planned change approaches.

Weaknesses• Not all organisations operate in a turbulent environment.• No fully developed coherent body of theory.


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Summary

We have

• examine the main views on the process of change, the radical, the incremental, the punctuated equilibrium and continuous transformation models.

• The models offer a framework for consideration g though not perfect.

• Change situation and how do the models apply to the individual, the group, the system and the context of the change?


MGT8033: LEADING ORGANISATIONAL CHANGE

Understanding Change

DR AHMAD FAISAL


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Overview

Understanding change requires knowledge:

• on the change drivers

• means available of managing change to achieve desired outcomes.

It also requires skills in decision making that address the complexities of change.

• on change drivers

• change principles and

• view these complexities from different perspectives

recognising the different needs and styles of change management ultimately affects change management itself and its outcomes.


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Drivers of Change

Over the past 40 years industry and work opportunities have changed, from production-based to service-based industry.

Unfortunately, not fast enough to ensure appropriate growths in productivity and profits.

Research continues to point to a number of factors

• the design of work

• the structure of organisations

• the lack of commitment to skills development of workers as weaknesses that hamper the ability of organisations to adapt to a changing business environment.

Read: USQ Study Guide exercise 1.1Doc: MGT8033 – M1 July 2009 Dr Ahmad FaisalNon-Commercial Use Only

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Managing Change

Change has been determined as discontinuous. That is, change today is faster, comes in ‘fits and starts’, can come from any direction, is often traumatic and quite revolutionary, as many things happen at once.

Change has been determined as discontinuous. That is, change today is faster, comes in ‘fits and starts’, can come from any direction, is often traumatic and quite revolutionary, as many things happen at once.

Discontinuous change is difficult, if not impossible to predict; requires a holistic approach in its management. An holistic approach recognises the need for a balanced approach to change across all the functions of the organisation and all its processes, involving all of its people.

USQ 2009 and Williams 2007


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Guiding principles of change

The MIT study (Berger et al. 1989) found that successful change emphases:

• simultaneous improvement in quality, cost and speed of commercialisation of products to avoid trade-offs in one area

• competitive benchmarking against other product leaders to improve quality and service

• closer ties to the customer to better determine needs

• closer ties to the supplier to cut inventory costs and speed-up flow of product

• integration of technology into marketing, manufacturing and learning strategies to gain value from investment

• less hierarchical and compartmentalised organisations to promote increased responsiveness in changing markets

• greater worker responsibility and commitment through training to encourage development and learning and lower turnover.


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Dilemma of change

Choices: How to manage? Which Model – radical or Incremental?

Stace and Dunphy (2001) identifies

• adaptive or rational strategy development;

• cultural or structural change;

• continuous improvement or radical transformation;

• empowerment or leadership and command;

• economic or social goals.

Do these dilemmas make sense to you? Have you experienced some or all of them in your work life?

influence of culture and power in the decision-making

Sometimes participation and consultation work; sometimes direction and coercion are necessary. At times, incremental adjustment may be consultative or directive but transformations are more likely to be coercive or directive.


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Which approach?Wandell et al 2007,

Fine Tuning

Incremental Adjustment

Modular Transformation

Corporate Transformation

Collaborative

Consultative

Directive

Coercive

Participative Evolution

Forced Evolution

Charismatic Transformation

Dictatorial Transformation

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Which approach?


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New form of organising

Many organisations today are in transition. There is no single cause, no single purpose and no single market in which they operate. Therefore no single design, and no single process for transition.

• Post industrialisation – knowledge is impetus to innovation & growth

• ‘blur of change’ – speeding up the speed of change, reduce time for application

Ultimately determine the work, structure the new processes of work, determine the reporting relationships internally and interact externally with the society, the competitors, the customers and others.


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Designing organisations

Max Weber – division of labour, hierarchical level typical traditional structure based on functions with strong on vertical information linkages lacking the horizontal emphasis, tends to shift problems to the divisions

USQ 2009 and Kerzner 2006


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Designing organisationsUSQ 2009 and Kerzner 2006

Organisations today need to place greater emphasis on flexible and agileorganisational forms which support and encourage innovation and experimentation and learning rather than the traditional command and control systems of the past (Graetz et al 2006).

• changing the boundaries of the organisation through the re-evaluation of the relationships among structures, systems, people and processes

• development of a knowledge-rich organisation valuing of the intangible elements of work such as skills, values, personal and leadership styles, sharing of knowledge, information, resources and etc.

• developing synergies, alliances and new streams

• link and leverage competence and to manage rationalisation and revitalisation

• The choice of organisational structure reflects the struggle for priority between internal efficiency and control and flexibility and external responsiveness.

• More internal control, efficiency and stability more functional

• greater importance on change, learning, innovation, flexibility and network more horizontal.


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Designing organisationsUSQ 2009 and Kerzner 2006

Project management is another alternative to traditional departmental structures.

Draws needed staff from the functional departments and the Project Manager is shown as equal in reporting status to the heads of the functional departments.

New product development projects are likely to suffer from lack of horizontal coordination in traditional structures.

Project teams provide greater horizontal coordination, but consume additional resources, they take timeand effort to develop into effective units, and there may be conflict between the goals and needs of the project teams and those of the functional departments.

common symptoms of structural deficiencies in organisations are delayed and poor decisions, failure to respond to external change and departments working at cross purposes and in conflict with each other.


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Changing structures, processes and boundariesINNFORM project (Innovating Forms of Organising) identify innovative forms of organising, summarises the nine areas of change across the interplay of the three dimensions.

evidence that organisational structures are moving toward flatter, more fluid and decentralised structures with strong development of project structures and operational decentralisation.

Japan had the most developed operational decentralisation, project forms of organising and vertical and horizontal linkages. The US on the other hand had the most strategic alliance formulations.

Multinational organisations must recognise that a specific practice or policy can represent very different changes in different contexts


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Summary

Structuring organisations involves establishing formal reportingrelationships, grouping people into departments and departments into the whole organisation, with systems to ensure efficient communication, coordination and integration of effort.

Organisation charts represent reporting relationships and departmental groupings

changes identified in the latest research involving such a paradigm shift regardless of structure, path of such change is not linear, nor universal .

Cultural and historical awareness and sensitivities are important in any change program

Regardless – Radical or Incremental, the choice of managing the overall change will make or break the organisation.


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MGT8033: LEADING ORGANISATIONAL CHANGE...2009/07/19 · MGT8033: LEADING ORGANISATIONAL CHANGE The nature of organisational change DR AHMAD FAISAL Doc: MGT8033 – M1 July 2009 Dr