MS-10[Organisational Design, Development and Change].pdf

8/18/2019 MS-10[Organisational Design, Development and Change].pdf

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2. neo-classical

3. modern approach

Now we will describe

Classical View point:

these concepts have come to be popularly known as classical concepts or classical theories

of organisation. The structure of an organisation received emphasis under this school of

thought. According to the classical view, “An organisation is the structure of the

relationships, power, objectives, roles, activities, communications and other factors that

exist when persons work together.

The streams of concepts in the “classical” mould are based on the same assumptions, but

are developed rather independently. Bureaucracy as a concept, first developed by Max

Weber, presents a descriptive, detached, scholarly point of view. Administrative theories

not only described macro aspects of organisations but also focused on principles and

practice for better performance. Scientific management thought focused mainly in micro

aspects like individual worker, foreman, work process, etc. The classical theorists on the

whole, with scientific management stream being a minor exception, viewed organisations

as mechanistic structures. Let us consider the three streams of classical theories briefly : i.e

Bureaucracy, Administrative theory and Scientific Management.

Bureaucracy

Bureaucracy is the dominant feature of ancient civilizations as well as modern

organisations in contemporary world. Max Weber describes an “ideal type” approach to

outline the characterstics of a fully developed bureaucratic form of organisation. The

features that the described as being characterstic of a bureaucracy are common to all social

institutions, be they political, religious, industry, business, military, educational or

government organisations. Size and complexity produce bureaucracy. As such, the rigid

structures, fixed jurisdictions, impersonal rules and mundane routine, concomitant with

bureaucracies often result in delays, produce inertia, encourage buck-passing, lead to

wastage of resources and cause frustration. As such, in general parlance the word

‘bureaucracy’ has come to have a negative connotation and many tended to wish it away.

But the features that characterize bureaucracy have become inevitable and ubiquitous withthe growing size and complexity in organisations. There is need, therefore, to understand

and improve bureaucracies than indulge in dysfunctional debates over their relevance.

Administrative Theory

Administrative theory is another stream of thought in the classical mould.

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Among the several proponents of the Administrative theory, the earliest and significant

contribution came from Henri F Fayol, a French industrialist, in 1916. The 14 principles

that capture the essence of the administrative theory could be summarized as follows:

Division of work. Division of work or specialization gives higher productivity because one

can work at activities in which one is comparatively highly skilled.

Authority and responsibility. Authority is the right to give orders. An organisational

member has responsibility to accomplish the organisational objectives of his position.

Appropriate sanctions are required to encourage good and to discourage poor

performance.

Discipline. There must be respect for and obedience to the rules and objectives of the

organisation.

Unity of command. To reduce confusion and conflicts each member should receive orders

from and be responsible to only one superior.

Unity of direction. An organistion is effective when members work together toward the

same objectives.

Subordination of individual interest to general interest. The interests of one employee or

group of employees should not prevail over that of the organisation.

Remuneration of personnel. Pay should be fair and should reward good performance,

decentralization.

Centralisation. A good balance should be found between centralisation anddecentralization.

Scalar chain. There is scalar chain or hierarchy dictated by the principle of unity of

command linking all members of the organisation from the top to the bottom.

Order. There is a place for everything and everyone which ought to be so occupied.

Equity. Justice, largely based on predetermined conventions, should prevail in the

organisation.

Stability of tenure of personnel. Time is required for an employee to get used to new workand succeed in doing it well.

Initiative. The freedom to think out and execute plans at all levels.

Espirit de corps. “Union is strength”.

Scientific Management



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The third stream of classic school of thought is the scientific management. Whereas

bureaucracy and administrative theory focused on macro aspects of the structure and

processes of human organisations, scientific management concerned itself with micro

aspects such as physical activities of work through time-and-motion study and examination

of men-machine relationships. Unlike in the other two, the scientific management and

based its inductive reasoning on detailed study and empirical evidence. In juxtaposition theprinciples of bureaucracy and administrative theory were formed by synthesising

experience and observation with abstract reasoning.

Neoclassical Viewpoint

The neoclassical theory, also referred to as the human relations school of thought reflects a

modification to and improvement over the classical theories. While classical theories

focused more on structure and physical aspects of work the neoclassical theory recognizes

the primary of psychological and social aspects of the worker as an individual and his

relations within and among groups and the organisation. Though neoclassical philosophycould be traced to ancient times, it gained currency only after the world War I, particulary

in the wake of the “Hawthrone experiments” at Western Electric Company by Elton Mayo

during 1924 to 1932.

The neoclassical viewpoint thus gave birth to human relations movement and provided the

thrust toward democratisation of organisational power structures and participative

management. The emerging changes in social, economic, political and technical

environment of organisations also seems to have provided the rationale for such shift in

emphasis.

The neoclassical viewpoint does not replace classical concepts. The need for order,

rationality, structure, etc. have been modified to highlight the importance of relaxing the

rigid and impersonal structures and consider each person as an individual with feelings

and social influences that effect performance on the job.

Modern (Systems) Viewpoint

Modern theories of organisation and management have been developed largely since the

1930s. The perspective here is to provide a systems viewpoint. Among the several persons

who contributed to the modern theory, it was perhaps Chester I. Bernard, who in 1983,

provided a comprehensive explanation of the modern view of management and

organisation. He considered the individual, organisation, suppliers and consumers as part

of the environment. Ten years later, Weiner;s pioneering work on cybernetics developed

concepts of systems control by information feedback. He described an adaptive system

(including an orgainsation) as mainly dependent upon measurement and correction

through feedback. An organisation is viewed as a system consisting of five parts: inputs,

process, output, feedback and environment as shown in Figure .



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Input Process Outputs

The GST approach suggests the following nine levels of systems complexity:

1. The most basic level is the static structure. It could be termed the level of frameworks.

An example would be the anatomy of the universe.

2. The second level is the simple dynamic system. It incorporates necessary Predetermined

motions. This could be termed the level of clockworks.

3. The next level is a cybernetic system characterized by automatic feedback Control

mechanisms. This could be thought of as the level of clockworks.

4. The fourth level is called the “open-systems” level. It is a self -maintaining Structure and

is the level where life begins to differentiate from nonlife. This is the level of the cell.

5. The fifth level can be termed the “genetic-societal” level. It is typified by the plant and

occupies the empirical world of the botanist.

6. The next is the animal level, which is characterized by increased mobility, Teleological

behaviour, and self-awareness.

7. The seventh level is the human level. The major difference between the human level and

the animal level is the human’s possession of self -consciousness.

8. The next level is that of social organisations. The important unit in a social organisation

is not the human per se but rather the organisatonal role that the person assumes.

9. The ninth and last level is reserved for transcendental systems. This allows for ultimates,

absolute and the inescapable unknowables.

Each level is more complex than the one that precedes it. However, no stage is as yet fullydeveloped and knowledge about different levels is for varying degrees. Beyond the second

level none of the theories are comprehensive or fully meaningful. Over the last here

decades further developments in research into organisations may have added to the

existing knowledge, but human organisations continue to be extremely complex.



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The systems approach points to the interdependent nature of everything that forms part of

or concerns an organisation. A system is composed of elements which are related to and

dependent upon one another and which, when in interaction, from a unitary whole.

Systems framework covers both general and specialized systems and closed and open

analysis. A general systems approach to the management processes deals with formal

organisation and concepts relating to different disciplines such as technical, social,

psychological and philosophical. Specific management systems deal with aspects relating to

organisation structure, job design, specific functions of management, etc.

A closed system operates in a closed loop, devoid of external inputs. An open system, in

contrast, is a dynamic input-output system “in continual interaction with environment to

achieve a steady state of dynamic equilibrium while still retaining the capacity for work or

energy t ransformation”.

While the classical theorists recognised only a closed system viewpoint, the modern

theorists believe in organisations as open systems. The work of D.Katz and R L Kahn

provided the intellectual basis to merge classical, neoclassical and modern viewpoints.

Here below we are describing the different approaches to organisation in relevence

of 7s model.

The 7-S-Model is better known as McKinsey 7-S. This is because the two persons who

developed this model, Tom Peters and Robert Waterman, have been consultants at

McKinsey & Co at that time. Thy published their 7-S-Model in their article “Structure Is Not

Organization” (1980) and in their books “The Art of Japanese Management” (1981) and “In

Search of Excellence” (1982).

The model starts on the premise that an organization is not just Structure, but consists of

seven elements:

Those seven elements are distinguished in so called hard S’s and soft S’s. The hard elements

(green circles) are feasible and easy to identify. They can be found in strategy statements,

corporate plans, organizational charts and other documentations.

The four soft S’s however, are hardly feasible. They are difficult to describe since

capabilities, values and elements of corporate culture are continuously developing and

changing. They are highly determined by the people at work in the organization. Therefore

it is much more difficult to plan or to influence the characteristics of the soft elements.

Although the soft factors are below the surface, they can have a great impact of the hard

Structures, Strategies and Systems of the organization.

Description



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The Hard S’s

Strategy Actions a company plans in response to or anticipation of changes in its external

environment.

Structure Basis for specialization and co-ordination influenced primarily by strategy and by

organization size and diversity.

Systems Formal and informal procedures that support the strategy and structure. (Systems

are more powerful than they are given credit)

The Soft S’s

Style / Culture The culture of the organization, consisting of two components:

• Organizational Culture: the dominant values and beliefs, and norms, which develop over

time and become relatively enduring features of organizational life.

• Management Style: more a matter of what managers do than what they say; How do a

company’s managers spend their time? What are they focusing attention on? Symbolism –

the creation and maintenance (or sometimes deconstruction) of meaning is a fundamental

responsibility of managers.

Staff The people/human resource management – processes used to develop managers,

socialization processes, ways of shaping basic values of management cadre, ways of

introducing young recruits to the company, ways of helping to manage the careers of

employees

Skills The distinctive competences – what the company does best, ways of expanding or

shifting competences

Shared Values / Superordinate Goals Guiding concepts, fundamental ideas around which a

business is built – must be simple, usually stated at abstract level, have great meaning

inside the organization even though outsiders may not see or understand them.

Effective organizations achieve a fit between these seven elements. This criterion is the

origin of the other name of the model: Diagnostic Model for Organizational Effectiveness.

If one element changes then this will affect all the others. For example, a change in HR-systems like internal career plans and management training will have an impact on

organizational culture (management style) and thus will affect structures, processes, and

finally characteristic competences of the organization.

In change processes, many organizations focus their efforts on the hard S’s, Strategy,

Structure and Systems. They care less for the soft S’s, Skills, Staff, Style and Shared Values.



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Peters and Waterman in “In Search of Excellence” commented however, that most

successful companies work hard at these soft S’s. The soft factors can make or break a

successful change process, since new structures and strategies are difficult to build upon

inappropriate cultures and values. These problems often come up in the dissatisfying

results of spectacular mega-mergers. The lack of success and synergies in such mergers is

often based in a clash of completely different cultures, values, and styles, which make itdifficult to establish effective common systems and structures.

The 7-S Model is a valuable tool to initiate change processes and to give them direction. A

helpful application is to determine the current state of each element and to compare this

with the ideal state. Based in this it is possible to develop action plans to achieve the

intended state.

Q2. Discuss the universal perspectives of Organisational Design. Identify

the restructuring strategy being adopted by an organisation you are

familiar with and make a brief analysis of the contingent factors thathave influenced the strategy of the said organisation. Briefly describe

the organisation you are referring to.

Ans:

Organization Design is a formal, guided process for integrating the people,

information and technology of an organization. It is used to match the form of the

organization as closely as possible to the purpose(s) the organization seeks to

achieve.

Universal Perspectives

The Bureaucratic Model

Max Weber, a German sociologist, conceptualized the idea of bureaucracy. A

bureaucracy is a form of organizational structure in which people can be held fully

accountable for their actions because they are required to act in accordance with

well-specified and agreed-upon rules and standard operating procedures. Basic

Elements of the Bureaucratic Structure are:

formal rules and behavior bounded by rules

uniformity of operations continuity despite changes in personnel

functional division of labor based on functional specialization

rational allocation of tasks

impersonal orientation



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The organisation I are familiar with is Toyata and make a brief analysis

of the contingent factors that have influenced the strategy

Continuing Their coverage of the Toyota Recommendations from the Quality

Advisory Panel, today we highlight the first recommendation, and it’s one that all

corporations struggle with at some point:

The findings from the Toyota Quality Advisory Board:

a) Toyota North American Quality Advisory Panel Conclusions: The high-level

summary of the findings from the quality advisory panel.

b) Balance Between Local and Global Management Control: How can Toyota best

balance decision making between Toyota Motor Corporation in Japan and its

regional operations in the North America and the world?c) Responses to Problems Raised by Internal and External Sources: The panel

found that problems raised by sources external to Toyota were not treated as

seriously as those found within Toyota. The panel claims that this violates the

tenets of the Toyota Production System.

d) Management Responsibility for Quality and Safety: Because Toyota treated

Safety as a subset of Quality, the panel believes that this has led to the

blurring of the lines and makes the question “Who is Responsible?” more

difficult to answer; consequently, this has led to the old adage of “if everyone

is responsible, then nobody is accountable”.

e) The Challenges of Integrating Electronics and Software: Has the integration of

software led to safety problems?

f) Management of Supplier Product Quality: As Toyota becomes more and more

decentralized, has Toyota maintained the rigorous supplier quality

requirements it once had?

According to the Quality Advisory Panel, Toyota has remained too much on the side

of an organizational structure that is too globally centralized. In the Panel’s words:

a) In the Panel’s view, Toyota has erred too much on the side of global

centralization and needs to shift the balance somewhat toward greater local

authority and control.

b) Toyota has traditionally structured its global operations to maximize control

by TMC in Japan. Decision-making structures involving everything from



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recalls, communications, marketing, and vehicle design and development

have historically been centrally managed and tightly controlled by TMC.

c) To accomplish this, Toyota has structured its global operations around

functional “silos,” each of which reports separately to TMC. In North America,

Toyota does not have one chief executive in charge of all its divisions (e.g.,

sales and marketing, general corporate, engineering, and manufacturing).

Instead, there are individual heads of each division, each of which reports

directly to TMC in Japan.

Apparently, strategy and structure go hand-in-hand and Toyota’s lack of a strategy

led to it’s organizational structure. The outcome has, in large part, led to the public

relations nightmare that Toyota has had to deal with.

In its review, the Panel has determined that this structure contributed to several of

Toyota’s quality and safety issues in North America. Specifically, Toyota’s tight ly-controlled global structure:

a) hindered information sharing and contributed to miscommunication;

b) and delayed response time to quality and safety issues, fueling criticism that

Toyota was being unresponsive to regulators and customers.

The Quality Advisory Panel provides specific recommendations for Toyota on how it

can change its organizational structure to better allow quicker decision making and

faster flow of information:

a) Work to further break down the regional “silo” structure in North America

and consider appointing one chief executive for North American operations

with responsibility for all regional functional organizations.

b) Identify additional critical cross-silo processes and organize decision-making

teams around them. Toyota’s inclusion of senior executives from North

America in decisions regarding product recalls in North America appears to

be a model for this. However, Toyota must be ever mindful that when

responding to critical and emergent safety issues, decision making by

committee can be inefficient and time-consuming. Toyota should considerwhat other decision-making models might be employed in emergency

situations.

c) Strengthen communication among global regions, especially regarding

reports of vehicle safety issues in vehicles that may share parts across

regions. It is not enough to improve the channels of communication between



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Toyota’s regional operations and TMC. Toyota should also find ways to

facilitate communication across regions, especially regarding critical safety

issues. As part of that effort, Toyota should consider appointing a director

from one of its key regional markets such as North America.

d) Develop clearer lines of communication, authority, and decision making

between North America and TMC. This is especially important as it relates to

gathering and responding to direct feedback from customers, lawmakers,

regulators, and other stakeholders. This will allow North America and other

regions to benefit from the additional autonomy and authority they have been

granted.

e) Continue to increase North American involvement in the product

development and design process for vehicles in North American markets.

Q3. Explain the contemporary approaches to job design citing suitable

examples.

Ans:

The scientific approach is not always effective, organisations began searching for

alternative job designs.

One such individual contemporary job design is job enrichment. As shown in Figure

5.1, five positive personal and work outcomes - high motivation, quality work

performance, satisfaction, absenteeism and turnover - result when people are



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allowed to function in an environment where work enables the individual to obtain

a sense of:

meaningfulness

responsibility

empowerment satisfaction in knowing the results

Whereas the individual contemporary and the scientific approaches design jobs for

individuals, the team approach designs jobs for teams of individuals. These designs

generally show a concern for the social needs of individuals as well as the

constraints of technology. Here teams of workers often rotate jobs and many follow

the product they are working on to the last step in the process. In the team

contemporary design, each worker learns to handle several duties - many requiring

different skills. Thus, they can satisfy their needs for achievement and taskaccomplishment, as well as some needs for social interaction. When faced with

decisions, teams that work well together try to involve all members in decision-

making [teamwork]. If their decisions and behaviours result in greater output, all

team members share the benefits. Typically, teams may start out making only a few

decisions.Yet, after time, training and familiarity, they begin to make more

decisions.Essentially, the team members pass through stages of greater

empowerment- allowing people the freedom and authority to do their jobs well4.In

each new stage, they make more decisions, resulting in self-managed teams.

Examples

Examples of such programs include flextime, workplace wellness, and family

support. Flexible work schedules can allow an employee to work whenever they can

as long as a certain amount of hours are worked each week and some employers

allow their employees to work from home. Sometimes employers utilize flextime

schedules that allow employees to arrive to work when they choose within specified

limits. A wellness program can involve having an exercise facility, offering

counseling, or even having programs set up to help employees lose weight or stop

smoking cigarettes.Family support programs involve help with parenting, childcare,

and some programs allow employees to leave for family purposes.

One study found that men often identify themselves with their career and work

roles while women often identified themselves with the roles of mother, wife, friend,

and daughter.The Sloan Foundation found that even though women enjoy working



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as much as men, women prefer to work nights and weekends if time needs to be

made up instead of cutting their hours. A study conducted by the Alliance for Work-

Life Progress surveyed employees to find out the type of workplace flexibility

employees say they would like to use in the following year. Burrus et. al. found that

71 percent of people want an occasional opportunity to adjust their schedule, 57

percent want to work from a location other than their office, 73 percent want to

make their work-life flexibility arrangement official, and 12 percent want to work

less hours.

Q4. Define organisational diagnosis. Discus different methods of

organizational analysis and cite how it is carried out in your

organisation or an organisation you are familiar with. Briefly describe

the organisation you are referring to.

Ans:

In the field"Corporate diagnosis is a process that involves the three steps of

publicly entering a human system, collecting valid data about experiences, and

feeding back to the system toward promoting corporate performance".

The effective diagnosis of organizational culture, and structural and

operational strengths and weaknesses are fundamental to any successful

organizational development intervention. As Beckhard said in the preface to

his seminal work.

Since the beginnings of organizational development as a profession, diagnosis

has moved from the purely behavioral towards a strategic and holistic

business diagnostic approach. Moving away from looking at human

interventions in isolation, to exploring the interactions of people in the

context in which they operate. equally as organizations are increasingly

collaborative in nature, the traditional silo approach to diagnostics is

becoming increasingly rare. Organizational development and in particular the

diagnostic phase of activities is spreading from the occupational psychologists

towards main stream business. This is important for OD practitioners as the

role is increasingly holistic.

Different methods of organizational analysis



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Strategic/organizational analysis methods depend on the particular

organization. A list of data sources is available for determining training and

HRD needs.

The list includes the following:

a)

human resource inventories (formerly known as manpower

inventories),

b) skills inventories,

c)

organizational climate measures,

d)

and efficiency indexes.

Some of these sources, such as efficiency indexes are continuously monitored

by many organizations as part of the normal control procedures and the data

are readily available. Other existing organizational measures can be used as abasis for performance improvement and training efforts also. Such sources

include employee surveys and interviews. For example, the Institute for Social

Research at the University of Michigan markets two instruments – Survey of

Organizations and Michigan Organizational Assessment Questionnaire – that

are supported by substantial reliability and validity data.

The Organization I am familiar with is WALMART for organizational

diagnosis

“Wal-Mart is losing business to rivals of different shapes and sizes. Customer

traffic at U.S. stores has declined for five straight quarters. Meanwhile, sales

have surged at discounters like Dollar Tree and Family Dollar Stores. A recent

study by Wells Fargo [WFC] showed that those chains often charge less than

Wal-Mart, though they carry a much smaller selection of items.”

So Wal-Mart is caught in the middle. If you want something quick, go to a

convenience store. If you want something cheap, go to Amazon. Wal-Mart? We

don’t need you any more.

“While the likes of Wal-Mart and OfficeMax have struggled to increase

revenues recently, Amazon has thrived, with sales rising 40% in 2010 to $34

billion. For the first time, annual sales of media products like books and DVDs

accounted for less than half of total revenue.”



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and checking the prices, rather than waiting in a queue. I am in and out in a

flash.

Deliver: I now have heavy groceries delivered in bulk from the local

supermarket to my kitchen. I used to hate carrying all that stuff. Now I don’t

need to. The groceries are about the same price as Amazon groceries online,

but the local supermarket guarantees the time when they will be delivered,

something Amazon is unable so far to do. So for now at least, I have the

groceries delivered by the local supermarket, not Amazon.

Treat its own staff right: One thing I still don’t like about the local

supermarket is the attitude of the staff, who seem embittered by the way they

are treated there. If they were treated better, their attitude would be better,

and they might be more inclined to find other ways that would delight me.I am obviously not a typical Wal-Mart customer and am not likely to be, at

least in Wal-Mart’s current incarnation. But my experience with the local

supermarket begins to show how one might turn a relatively unpleasant

relationship with a supermarket into something rather more promising.

For Wal-Mart to pursue this kind of a strategy, it would require a shift from an

inside-out perspective of making money for its shareholders to one of

pursuing customer capitalism and adopting an outside-in perspective thatconsistently seeks ways to delight its customers.

Mr Duke and his team would need to decide who its customers are, figure out

what are the hopes and dreams and fears and irritations and fears, find ways

to alleviate those fears and irritations and fulfill those hopes and dreams.

Q4) Write an essay on the process of change and enumerate how it is

carried out in an organization.

Ans:

Organizational Change Process

Selecting and implementing significant change is one of the most challenging

undertakings that faces an organization. If the change involves the entire



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organization and also requires new paradigms that will replace established

ways of doing business the challenge is daunting.

Research shows that the success rate for implementing major organizational

change is quite low, for several reasons. First, asking organizations to change

the way they conduct their business is similar to asking individuals to change

their lifestyle. It can be done but only with the greatest determination,

discipline, persistence, commitment and a clear plan for implementing the

change.

Second, resistance to change is a natural human phenomenon. All people

resist change, some more than others. Managing that resistance is an essential

part of the process.

Third, change creates uncertainty. Organizations generally achieve fairlypredictable results with their existing business model. Their outcomes may

not be the desired results, but they are predictable. Change is unpredictable.

The results may be far better – but they may also be far worse. And success

often looks and feels like failure until the change is very nearly completed.

Staying the course of implementing a change – which is essential for its

success – meets with continuing human and organizational resistance and

pressure to pull the plug before the process is completed.

Managing the process of change is essential to successful implementation.

Success will be based on two major factors: a defined process to guide the

change and an assigned Change Leadership Team.

The Change Leadership Team is not necessarily a full-time, dedicated team.

But it must be a team that is given the charter, the responsibility, the authority

and the accountability for the full implementation of the required changes. If

the change is organization-wide, paradigm-shifting or systemic, this may well

be the senior management team of the organization. If the change is for amajor subset of the organization, then a separate cross-functional team may

be designated. In either event, the team must be clearly defined and allocated

sufficient capacity – time, resources, and authority - to do its work.

Methods of Changing



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One of the challenges in modifying systems is knowing the key levers and how

to use them to create and sustain change. The three levers for creating

organizational change are:

Lever One – The Senior Management Team

The single best lever is the senior management team…if they are truly aligned.

When aligned, they speak with one voice and reinforce each other throughout

the organization. If they are not aligned but give verbal agreement to change

while proceeding with their own agendas the organization loses its best

leverage point. Actually, if the senior management team is not fully aligned

and doing real work in designing the change together, they may become the

biggest point of resistance.

Lever Two – A Common Organizational Model

The second lever is having an agreed upon mental model of the organization.

This common picture of how to examine the organization and approach

change is essential to success. Otherwise, the senior team will argue about

what to change and where and why. They will each have their own root cause

analysis based on their own personal experience. And each story will have its

validity. Full alignment can only be achieved if everyone understands and

agrees to a common model.Lever Three – A Structured Change Methodology

The third lever is a structured methodology to analyze the organization,

design the change, implement it, and monitor progress until it becomes the

natural way of conducting business. Without this methodology change will be

sporadic, not sustained and employees will view the change effort as the

“initiative of the week,” waiting until it goes away. A structured methodology

based on a common model that is fully and completely implemented and

supported by the senior management team provides the leverage for

sustainable change.

The Change Management Methodology

Step One - Confirming the Compelling Need to Change



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It is not uncommon for the process to begin with significant discussion about

whether broad-based systemic change is needed, or whether smaller

incremental improvements will do the job. This often requires some external

data (market share, competitive information, etc.) as well as objective internal

data (how long does it take to complete projects vs. plan; are costs per unitincreasing or decreasing; is our organization getting better at what it does; is

competitive positioning weakening, etc.).

Step Two - Identifying the Boundary Conditions

Boundary conditions define the limits (or playground) within which change

might be considered. When senior teams begin their discussion some large

topics usually emerge very quickly. Issues such as mergers, acquisitions,

international or global initiatives, large capital investments, strategic alliancepartners, equity situations, private vs. public ownership, etc. may be debated.

Step Three - Creating the Vision of the Desired End State

A group of people aligned around a common vision are a very powerful force.

John Kennedy’s vision of "put a man on the moon by the end of the decade"

spurred NASA to unprecedented performance. Martin Luther King’s vision in

his "I have a dream" speech energized the civil rights movement. Jack Welch’s

vision for GE in which he said that "We will be number one or number two inevery category or we won’t be in it" drove incredible energy and focus

through GE. The vision of Mercedes Benz to "always make the best engineered

car in the world" has been the hallmark of its focus for decades.

Step Four - Developing the Core Work Processes

The mention of work processes typically creates mixed reactions. Everyone

agrees that some degree of process is required. Without defined processes a

company would not be able to produce a consistent payroll. It would not be

able to hire people. It would not have any consistent methodologies for its

work. It could never assure any consistency or reliability.

Step Five - Defining Key Roles and Responsibilities



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Every organization measures its performance. Unfortunately, most

organizational measures have two fundamental flaws. First, there is a

disproportional emphasis on financial measures. Financial measures are not

direct performance measures. They are the consequences of company

performance achieved or not achieved. By themselves, they indicate very little.Second, most performance measures cause the company to look through its

rear view mirror. These measures indicate past performance and do little to

help guide future performance or have a positive impact on organizational

results.

Step Eight - Reviewing System-Wide Tools

Tools are powerful forces in defining how an organization behaves. An

enterprise-wide tool can be one of the most dramatic vehicles to create (orforce) organizational change.

Step Nine - Develop Training that Enables Performance

Training is an integral part of organizational design and behavior. It is

essential to ensure that individuals have the knowledge and skills to perform

in their current jobs and prepare for new ones.

Step Ten – Aligning the Reward Systems

Traditionally reward systems have been approached conservatively in the

form of salaries for professional employees, and hourly wages for non-exempt

employees. In some companies annual bonuses or profit-sharing programs

have been added, tied to organizational performance for that year.

Documents

MS-10[Organisational Design, Development and Change].pdf