The University of Sydney Page 1 WORK 5003 – Management and Organisations Management and Organisational Change Presented by Phillip McDonald Work and Organisational Studies The University of Sydney Page 2 Introduction –  Organisational Change is the significant alteration to organisational structure, strategy, systems, style, employees, skills and/or superordinate goals (presumption of planned change). –  Managing (or coping with) change has become one of the major strategic priorities for HRM, OD and management generally. –  Consistent with Grey's comments regarding 'fast capitalism’, the cycles of planned change have become faster. –  Broadly there are pressures on organisations to change that emanate from both inside the organisation and forces external to it. –  Within organisations there are arguments that as they age there is a requirement for strategies of renewal (workforce, machinery, buildings) which brings about changes to at a basic level activities and tasks all the way through to large scale transformational change. The University of Sydney Page 3 Introduction: Internal Triggers Some of the internal factors that might trigger change include: –  Increasing costs (material, staff) –  Employee discontent –  Loss of orders, declining sales, customer complaints –  Performance not meeting expectations (tasks) –  Decisions not made or postponed –  New technology –  A new CEO –  A new strategy The University of Sydney Page 4 Introduction: External Triggers Social: –  Changes in education; knowledge; demographics; social roles; worklife balance. Market & Competition: –  Changes to markets (emergence of new markets, saturation of old markets); –  Changes to competition (competitor products, changes due to politics). Technological: –  New digital technologies; ICT allow tasks to be done differently. Economic: –  Price; interest rates; economic growth rates (recession). Political (legislative): –  Regulation of industry; regulation of labour markets and employment law; regulation of markets. The University of Sydney Page 5 Organisational Change in Context Organisational Change Organisational Structure Power & Politics Rational – Legal Authority Decision- Making Organisational Culture Ethics Control Systems Stakeholders The University of Sydney Page 6 Introduction: Why is Change Difficult? –  There is a tension between stability, unity and change. There are impediments to change - particularly if the change involves loss of certainty, material loss and perhaps loss of status and power (i.e.: interests). –  Culture can be an impediment to change - which is perhaps one reason for the preoccupation with cultural change in the 1980s –  Remember Schein: culture is "pattern of basic assumptions - invented, discovered or developed by a given group as it learns to cope with its problems of external adaption and internal integration” –  Change can tip an existing culture upside-down! The University of Sydney Page 7 Another Possible Reason… The University of Sydney Page 8 Organisational Change: Planned, or Just Happens? –  Organisations are not fixed or stable. Some writers refer to “processes of organising” rather than organisation. –  The boundaries between organisations and their respective environments can be blurred: organisations are part of a wider social system –  (No man is an island, entire unto itself; every man is a piece of the continent, a part of the main … - John Donne, 1572-1631) –  One view is that organisations are always changing, uncontrollably, because the workers are social agents The University of Sydney Page 9 Organisational Change: Planned, or Just Happens? (2) –  An alternative view is that change can be programmed, planned and implemented – usually in response to changes in the environment –  A tension exists in views about whether i) change can be planned and managed, and, ii) the necessity of change is used as a means of ordering organisational life and setting employee expectations. The University of Sydney Page 10 Organisational Change: according to Catbert The University of Sydney Page 11 Philosophies of Change According to Chia (1999) and Tsoukas and Chia (2002), there are two main philosophical theories underpinning change: –  Universe in a state of flux (Heraclitus): –  “… change requires intervention into an ongoing process in which the energy and movement are already present and only require channelling or influencing. Change has its own momentum.” (Linstead et al, 2009, 622). –  Universe basically stable (Parmenides): –  “we will view change as difficult, requiring energy to be be generated to overcome inertia and resistance, force to be exerted to the keep the change in motion until it is completed, and control put in place to prevent decay or slippage into the the pre-change state.” (Linstead et al, 2009, 622) –  Organisational change theorists tend to adopt one of these two philosophical positions. The University of Sydney Page 12 Philosophies of Change (2) –  The difference between the “flux” and the “stable” philosophies is captured in the difference between the concepts of “organisation” (stable) and “organising” (flux). –  There are tensions within organisations: –  “While organisation aims at stemming change, it is also the outcome of change.” (Tsoukas and Chia, 2002, 570) –  Linstead et al also refer to the paradoxes of change The University of Sydney Page 13 Paradoxes of Change 1.  Enduring long-term policy versus exciting ‘play on the day’ 2. Cynicism as a product of successful change 3. Lack of internal care 4. Disillusionment with the quick fix 5.  Commitment versus motivation 6.  High productivity can occur with low morale 7. Bureaucracy and politics subvert empowerment 8. The CEO: energizer or distraction? The University of Sydney Page 14 Philosphies of Change: Vand De Ven and Poole’s Typology NB: arrow represent likely consequences of change, not causation The University of Sydney Page 15 Open Systems Model Figure 13.2 The organization as an open system SOURCE: Roger Plant (1987) Managing Change and Making it Stick, London: Fontana Collins, p. 99. The University of Sydney Page 16 The Burke-Litwin Model SOURCE: Reprinted from Journal of Management 18(3): 528, Warner Burke and G.H. Litwin (1992) ‘A causal model of organizational performance’. Copyright, with permission from Elsevier. The University of Sydney Page 17 Lewin’s 3 Stage Model of Planned Change Unfreezing: –  Creating the case for change (unfreezing existing attitudes and behaviour) –  Increase the strength of driving forces –  Reduce the strength of resisting forces Changing: –  May involve experimentation –  New patterns of behaviour –  New systems, technology –  Turnover Refreezing: –  Positive reinforcement of desired outcomes, attitudes & behaviour –  Appraisal of change program The University of Sydney Page 18 Lewin’s 3 Stage Model (2) The University of Sydney Page 19 Lewin’s Force Field Analysis The University of Sydney Page 20 Force Field Analysis: An Example The University of Sydney Page 21 Organisational Development There are many step or stage 'models' of organisational change that fit broadly around the 'planned change' approach of Lewin. Another commonly used model is Kotter: The University of Sydney Page 22 Commonly Identified Steps in Change Management Linstead et al reviewed the list of “n-step” change models and found they commonly include steps such as: 1.  Recognise the need for change 2.  Diagnose organisational readiness for change and likely effects on different parts of the organisation 3.  Identify likely sources of resistance 4.  Set the overall vision for change 5.  Educate and enthuse people about the change (special emphasis to those identified in step 3) 6.  Get involvement 7.  Identify and specify change targets 8.  Clarify and decide on specific change approaches/techniques 9.  Implement change 10.  Support change (identify the disaffected early; energise change agents 11.  Evaluate the change The University of Sydney Page 23 Context and Process Approaches We know that context is important in change processes. The 'force field' and 'n-step' approaches are quite normative in outlook (a set of prescriptive steps). Other writers have sought to explain organisational change by using more qualitative, historical (longitudinal) approaches. These are helpful in identifying important factors that impact on organisational change, but not so useful as 'management tools.' One attempt to try and adapt a 'process framework ' is the model by Dawson (next slide). Dawson identifies the role played by trade unions in change processes (important in the UK, Europe, Australia and Canada) which is sometimes overlooked in the US literature. The importance of institutional factors is also emphasised by Dunphy and Stace. The University of Sydney Page 24 Dawson’s Process Framework Organizational change: A processual framework Source: Reprinted by permission of Sage Publications Ltd from Patrick Dawson, Organizational Change, copyright © Sage Ltd 1994 The University of Sydney Page 25 Dunphy & Stace Model The University of Sydney Page 26 Adams: Barriers to Organisational Change As noted organisational change is often resisted by a number of parties with in an organisation. Some common barriers include: –  Emotional blocks (fear and uncertainty) –  Cultural blocks (this may be where a ‘strong’ culture works against organisational objectives) –  Cognitive blocks (transfer of ideas and information) –  Perceptual blocks (inability to see beyond one interpretation) –  Environmental blocks (lack of support) The University of Sydney Page 27 Psychological and Emotional Reactions The University of Sydney Page 28 Psychological and Emotional Reactions (2) Shock or surprise, disbelief and, in extreme cases, panic and immobilization; a sense of being over-whelmed and an inability to act and feel normally. Denial of the need for change or validity of new ideas; group cohesiveness may increase, even evoking euphoria. Defence in relation to jobs, territory, practices, behaviour, norms etc; feelings of frustration and depression; articulations of ritualistic behaviours; provides the effect of creating time and ‘space’ to allow people to come to terms with the changes. The University of Sydney Page 29 Psychological and Emotional Reactions (3) Discarding or the process of letting go of the past: a gradual process of perception, starting with recognition; awareness that change is necessary or inevitable; understanding of existing ‘incompetencies’; acceptance of new realities; awakening sense that present anxieties are too much to bear or the future not as forbidding as it first seemed; creates tensions; people feel disoriented and upset. Adaptation is when individuals begin to test the new system, experimenting with new behaviours, skills, standards; search for meaning, understanding and knowledge; practice phase; learning occurs; trying to do things differently; feedback of results; successes and failures; feelings of frustration, sometimes anger. Internalization means that once people go through the cognitive process of making sense of what has happened the new behaviour becomes part of ‘normal’ behaviour. The University of Sydney Page 30 Rollinson: Resistance to Organisational Change Resistance (as opposed to opposition) can occur in different forms at different levels. –  People-focused resistance (individuals). –  System-focused resistance (complex and unfriendly systems with little training or support). –  Organisational-focused resistance (lack on integration between structure, culture, technology). –  Politics-focused resistance (loss of power or status). In terms of people-focused resistance - individuals can be worn down and become cynical about change (particularly if they go through successive change programs) The University of Sydney Page 31 Keen: Management Resistance to Change Diverting resources away from the change project (E.g. splitting the budget across other projects, seconding key staff elsewhere, moving or sharing equipment Exploiting inertia suggesting waiting for a key person’s opinion, wait for evaluations of other projects Goals can be kept vague or complex, generalised, grandiose or multidimensional Exploit lack of organisational awareness e.g. suggest that certain issues can be left until later, knowing that these will be critical Suggesting that the change is a good one and worth doing properly will involve so many people that the differing views or conflicting interests will never be sorted out or reconciled Dissipate energy in conducting surveys, excessive data gathering, studies of other change events, report production or convening special meetings Damage the credibility of the change champion Keep a low profile, don’t present an easy target to those driving change. The University of Sydney Page 32 Individual Stress: Yerkes Dodson Law The University of Sydney Page 33 Methods for Dealing With Resistance to Change Education, support and training: –  Training programs to provide employees with new knowledge skills –  Counselling programs to help employees to cope with the stress created by change Participation and involvement: –  Involvement and participation to gain acceptance (McCalman and Paton 1992). Negotiation and agreement: –  Helps management to establish change as a win–win process –  Helps employees to know what specific benefits change could bring to them. –  Avoid perception of the change processes as a ‘give’ and then ‘give a bit more’ situation –  Avoid imposed solutions that only suit managers –  Search for solutions that are agreed and accepted by most employees The University of Sydney Page 34 Methods for Dealing With Resistance to Change (2) Manipulation and cooptation: –  Manipulation implies distortion of information by emphasising the advantages of change and disregarding its disadvantages. –  Cooptation refers to involving people who are key resistors in the decision-making process and making them part of the change decisions so that they alter their approach to change. Explicit and implicit coercion: Sometimes management decides not to look for consensus, it simply makes decisions regarding change and announces the probability that redundancies or transfers will occur for those who cannot deal with change. The University of Sydney Page 35 Dawson’s Ten Lessons About Change 1.  There are no simple universal prescriptions for how to best manage change. 2.  Change strategies must be sensitive to people and context. 3.  Major change takes time 4.  Different people experience change in different ways. 5.  We can learn from all change experiences, not just the successful ones. 6.  Employees need to be trained in new methods and procedures) often overlooked). 7.  Communication must be ongoing and consistent. 8.  Change strategies must be tailored to fit the substance and context. 9.  Change is a political process. 10.  Change involves the complex interaction of often contradictory processes The University of Sydney Page 36 Organisational Change: A Practitioner’s View –  Change management occupies a lot of management time –  The truism that ‘people do not like change’ is not actually true. However, change may be difficult to implement and sustain –  Employees will often have logical reasons for not embracing change –  “n-step” models are popular in business, because they are effectively a “how-to” guide –  Large-scale change programs are often never completed –  Change management is a rich field for studying unintended consequences! –  Nothing has changed until someone walks into the office, sits down, and does something different to what they did yesterday The University of Sydney Page 37 Conclusions –  Change is a fact of organisational life –  Change may be driven by internal or external factors (or both) –  Change management is difficult: some writers argue that change ‘management’ is not really possible –  Trust is key to winning support –  Change may be significant (‘transformational’) or minor (‘continuous improvement’) The University of Sydney Page 38 References –  Linstead, S., Fullop, L. and Lilley, S. (2009) Management and Organization, 2nd ed., Palgrave Macmillan, pp 617-663