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Managing Change in Organizations

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FORCES FOR CHANGE A. Organizations face a dynamic and changing environment. This requires adaptation. Nature of the workforce: 1. A multicultural environment 2. Human resource policies and practices changed to attract and keep this more diverse workforce. 3. Large expenditure on training to upgrade reading, math, computer, and other skills of employees B. Technology is changing jobs and organizations: 1. Sophisticated information technology is also making organizations more responsive. As organizations have had to become more adaptable, so too have their employees. C. Economic shocks: 1. We live in an age of discontinuity. Beginning in the early 1970s with the overnight quadrupling of world oil prices, economic shocks have continued to impose changes on organizations. 2. In India, during the world-wide recession in 200709, companies such as Dunlop, VF Arvind, and TCS had asked many of their employees to not report to work. D. Competition is changing: 1. The global economy means global competitors. 2. Established organizations need to defend themselves against both traditional competitors and small, entrepreneurial firms with innovative offerings. 3. Successful organizations will be the ones that can change in response to the competition. E. Social trends during the past generation suggest changes that organizations have to adjust for: 1. The expansion of the Internet 2. Environmental concerns F. World politics: 1. A global context for OB is required. No one could have imagined how world politics would change in recent years. II. PLANNED CHANGE A. Some organizations treat all change as an accidental occurrence; however, change as an intentional, goal-oriented activity is planned change. B. There are two goals of planned change: 1. Improve the ability of the organization to adapt to changes in its environment. 2. Change employee behavior. C. Examples of planned-change activities are needed to stimulate innovation, empower employees, and introduce work teams. D. An organizations success or failure is essentially due to the things that employees do or fail to do, so planned change is also concerned with changing the behavior of individuals and groups within the organization. E. Who in organizations are responsible for managing change activities? 1. Change agents can be managers, employees of the organization, or outside consultants.

Indian Railways saw a major change in their operations when the leadership changed from Lalu Prasad Yadav to Mamata Benerjee. b. Lalit Modi changed the landscape of cricket globally when he took over the reins at the Indian Premier League (IPL). c. As chairman of ITC, Yogesh Chander Deveshwar changed old business methods to bring ITC out of its legal, financial and organizational troubles. 2. Typically, we look to senior executives as agents of change. F. Many change agents fail because of organizational resistance to change.
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RESISTANCE TO CHANGE A. Introduction 1. Our egos are fragile, and we often see change as threatening. a. One recent study showed that even when employees are shown data that suggest they need to change, they latch onto whatever data they can find that suggests they are okay and dont need to change. b. Employees who have negative feelings about a change cope by not thinking about it, increasing their use of sick time, and quitting. c. All these reactions can sap the organization of vital energy when it is most needed. 2. Resistance to change can be positive if it leads to open discussion and debate. a. These responses are usually preferable to apathy or silence and can indicate that members of the organization are engaged in the process, providing change agents an opportunity to explain the change effort. b. Change agents can also use resistance to modify the change to fit the preferences of other members. 3. Resistance to change does not necessarily surface in standardized ways. a. Resistance can be overt, implicit, immediate, or deferred. i. It is easiest for management to deal with resistance when it is overt and immediate. ii. Implicit resistance efforts are more subtleloss of loyalty to the organization, loss of motivation to work, increased errors or mistakes, increased absenteeism due to sicknessand hence more difficult to recognize. iii. Similarly, deferred actions cloud the link between the source of the resistance and the reaction to it. b. A change may produce what appears to be only a minimal reaction at the time it is initiated, but then resistance surfaces weeks, months, or even years later. c. Reactions to change can build up and then explode seemingly totally out of proportion. d. The resistance was deferred and stockpiled, and what surfaces is a cumulative response. 4. The major forces for resistance to change categorized by their sources. a. Five reasons why individuals may resist change are: i. Habit: Life is complex; to cope with having to make hundreds of decisions every day, we all rely on habits or programmed responses. ii. Security: People with a high need for security are likely to resist change because it threatens their feelings of safety.

Economic factors: Another source of individual resistance is concern that changes will lower ones income. iv. Fear of the unknown: Changes substitute ambiguity and uncertainty for the known. v. Selective information processing: Individuals shape their world through their perceptions. Once they have created this world, it resists change. b. There are five major sources of organizational resistance: Structural inertia: Organizations have built-in mechanisms to produce stability; this structural inertia acts as a counterbalance to sustainability. ii. Limited focus of change: Organizations are made up of a number of interdependent subsystems. Changing one affects the others. iii. Group inertia: Group norms may act as a constraint. iv. Threat to expertise: Changes in organizational patterns may threaten the expertise of specialized groups. v. Threat to established power relationships: Redistribution of decision-making authority can threaten long-established power relationships. c. Threat to established resource allocations can also be a source of organizational resistance Groups in the organization that control sizable resources often see change as a threat. They tend to be content with the way things are. 5. Its worth noting that not all change is good. a. Speed can lead to bad decisions, and sometimes those initiating change fail to realize the full magnitude of the effects or their true costs. b. Rapid, transformational change is risky, and some organizations, such as Baring Brothers Bank in the United Kingdom, have collapsed for this reason. B. Overcoming resistance to change 1. Education and communication a. Resistance can be reduced on two levels through communicating to help employees see the logic of a change. i. It fights the effects of misinformation and poor communication: if employees receive the full facts and clear up misunderstandings, resistance should subside. ii. Communication can help sell the need for change by packaging it properly. 2. Participation a. It is difficult for individuals to resist a change decision in which they participated. b. Prior to making a change, those opposed can be brought into the decision process, assuming they have the expertise to make a meaningful contribution. c. The negativespotential for a poor solution and great time consumption. 3. Building support and commitment. a. When employees fear and anxiety are high, counseling and therapy, new-skills training, or a short paid leave of absence may facilitate adjustment. b. When managers or employees have low emotional commitment to change, they favor the status quo and resist it. c. So firing up employees can also help them emotionally commit to the change rather than embrace the status quo. 4. Develop positive relationships
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People are more willing to accept changes if they trust the managers implementing them. i. One study surveyed 235 employees from a large housing corporation in the Netherlands that was experiencing a merger. ii. Those who had a more positive relationship with their supervisors, and who felt that the work environment supported development, were much more positive about the change process. Implementing changes fairly a. Organizations can minimize negative impact by making sure that employees see the reason for the change and perceive its implementation as consistent and fair. Manipulation and cooptation a. Manipulation refers to covert influence attempts, twisting and distorting facts to make them appear more attractive, withholding undesirable information, and creating false rumors to get employees to accept a change. b. Cooptation is a form of both manipulation and participation. It seeks to buy off the leaders of a resistance group by giving them a key role in the change decision. c. Both manipulation and cooptation are relatively inexpensive and easy ways to gain support. The tactics can backfire if the targets become aware that they are being tricked or used. Selecting people who accept change a. Research suggests the ability to easily accept and adapt to change is related to personalitysome people simply have more positive attitudes about change than others. i. Such individuals are open to experience, take a positive attitude toward change, are willing to take risks, and are flexible in their behavior. ii. One study of managers in the United States, Europe, and Asia found those with a positive self-concept and high-risk tolerance coped better with organizational change. iii. A study of 258 police officers found those higher in growth-needs strength, internal locus of control, and internal work motivation had more positive attitudes about organizational change efforts. iv. Another study found that selecting people based on a resistance-to-change scale worked well in winnowing out those who tended to be rigid or react emotionally to change. b. Individuals higher in general mental ability are also better able to learn and adapt to changes in the workplace. c. In sum, an impressive body of evidence shows organizations can facilitate change by selecting people predisposed to accept it. Coercion a. This is the application of direct threats or force upon the resisters. b. Examples of coercion are threats of transfer, loss of promotions, negative performance evaluations, and a poor letter of recommendation.

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APPROACHES TO MANAGING ORGANIZATIONAL CHANGE A. Lewins three-step model

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Kurt Lewin argued that successful change in organizations should follow three steps: a. Unfreezing the status quo b. Movement to a new state c. Refreezing the new change to make it permanent 2. The status quo can be considered to be an equilibrium state. a. To move from this equilibriumto overcome the pressures of both individual resistance and group conformityunfreezing must happen in one of the following three ways; i. The driving forces, which direct behavior away from the status quo, can be increased. ii. The restraining forces, which hinder movement from the existing equilibrium, can be decreased. iii. A third alternative is to combine the first two approaches. b. Once the change has been implemented, the new situation needs to be refrozen so that it can be sustained over time. i. Unless this last step is taken, there is a very high chance that the change will be short-lived and that employees will attempt to revert to the previous equilibrium state. ii. The objective of refreezing is to stabilize the new situation by balancing the driving and restraining forces.

Change Management Curve Also called as the Kubler Ross transition cycle. These stages are:

Denial Anger Bargaining Depression Acceptance

The 'grief cycle' is actually a 'change model' for helping to understand and deal with (and counsel) personal reaction to trauma. It's not just for death and dying. This is because trauma and emotional shock are relative in terms of effect on people. While death and dying are for many people the ultimate trauma, people can experience similar emotional upsets when dealing with many of life's challenges, especially if confronting something difficult for the first time, and/or if the challenge happens to threaten an area of psychological weakness, which we all possess in different ways. One person's despair (a jobchange, or exposure to risk or phobia, etc) is to another person not threatening at all. Some people love snakes and climbing mountains, whereas to others these are intensely scary things. Emotional response, and trauma, must be seen in relative not absolute terms. The model helps remind us that the other person's perspective is different to our own, whether we are the one in shock, or the one helping another to deal with their upset.

Stage

Interpretation Denial is a conscious or unconscious refusal to accept facts, information, reality, etc., relating to the situation concerned. It's a defence mechanism and perfectly natural. Some people can become locked in this stage when dealing with a traumatic change that can be ignored. Anger can manifest in different ways. People dealing with emotional upset can be angry with themselves, and/or with others, especially those close to them. Knowing this helps keep detached and nonjudgemental when experiencing the anger of someone who is very upset. Traditionally the bargaining stage for people facing death can involve attempting to bargain with whatever God the person believes in. People facing less serious trauma can bargain or seek to negotiate a compromise. For example "Can we still be friends?.." when facing a break-up. Bargaining rarely provides a sustainable solution, especially if it's a matter of life or death. Also referred to as preparatory grieving. In a way it's the dress rehearsal or the practice run for the 'aftermath' although this stage means different things depending on whom it involves. It's a sort of acceptance with emotional attachment. It's natural to feel sadness and regret, fear, uncertainty, etc. It shows that the person has at least begun to accept the reality. Again this stage definitely varies according to the person's situation, although broadly it is an indication that there is some emotional detachment and objectivity. People dying can enter this stage a long time before the people they leave behind, who must necessarily pass through their own individual stages of dealing with the grief.

1 - Denial

2 - Anger

3 - Bargaining

4 - Depression

5 - Acceptance

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