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MANAGING ORGANISATIONAL CHANGE

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MANAGING ORGANISATIONAL CHANGE

1.1 INTRODUCTION

  • Organisation is a social system. All parts of organisation affect all other parts. That is, there is so much of interrelationship of parts that anything happening at one end is transmitted to the other end. This interrelationship is not only between the elements and parts of organisation, but also with the environment around it.

 

  • When organisation functions, these relationship and interrelationships get established and gradually organization obtains a systematised and orderly behaviour.

 

  • The whole system is said to be in equilibrium. This becomes an established way of life and any disturbance to this established way of life naturally exercises pressure on some elements which are accustomed to that way of life.

 

  • This event evokes a reaction which may suggest acceptance of it, lack of interest in it or there may be counter pressure opposed to the disturbance.

 

  • In some cases, the impact of accepting or ignoring a disturbance may not be much different, but otherwise, the former connotes cooperation and the latter, lack of interest.

 

  • The term ‘change’ refers to any alternation which occurs in the overall work environment of an organisation. It is to be emphasised that ‘change is the law of nature’. Nothing is permanent except change.

 

Characteristics of Change

 

  • Change has the following characteristics:
  • Change often results from the pressure of forces which are both outside and inside the organisation;
  • The whole organisation tends to be affected by the change in any part of it
  • Change takes place in all parts of the organisation, but at varying rates of speed and degrees of significance.

 

  • An organisational is an open system which means that it is in a constant interactional and interdependent relationship with its environment.
  • Any change in its external environment, such as changes in consumer tastes and preferences, competition, economic policies of the Government, etc., make it imperative for an organisation to make changes in its internal system.
  • Further, organisation is composed of a number of subsystem, which are also in a dynamic relationship of interaction and interdependence with one another. Any change in a subsystem creates a chain of changes throughout the entire system.

1.2 CONCEPT OF ORGANISATIONAL CHANGE

  • The term ‘organisational change’ implies the creation of imbalances in the existing pattern of situation. When an organization operates and functions for a long time, an adjustment between its technical, human and structural set-up is established. It tends to approximate an equilibrium in relation to its environment.

 

  • In other words, organisation members evolve a tentative set of relations with the environment. They have an adjustment with their job, working conditions, friends and colleagues etc.

 

  • Change requires individuals to make new adjustments. Hence the fear of adjustment gives rise to the problem of change and resistance to change.

 

  • Individual comes in to danger. On the other hand, groups resist change where their existence is in danger or a total change in overall work environment is contemplated.

 

  • Management of change may be defined as a conscious and concerted initiative by those who are in-charge of the destiny of the business undertaking or firm to keep a constant and intelligent watch over the behaviour of uncontrollable forces, to assess their impact and influence of the controllable forces, and to evolve appropriate strategies and action programmes to maintain a dynamic equilibrium between the controllable and uncontrollable forces.

 

  • The controllable forces are those forces about which sufficient information is available. Such forces can be managed easily.

 

  • Uncontrollable forces are those about which not much is known. These forces exert a powerful influence on the behaviour of controllable forces and limit the scope of managerial action.

 

 

1.3 FORCES FOR CHANGE

  • Organisations encounter many different forces for change. These forces come from external sources outside the organisation and from internal sources. Awareness of these forces can help managers determine when they should consider implementing an organisational change.
  • The external and internal forces for change are as follows:

 

  1. External Forces
  • External forces for change originate outside the organisation. Because these forces have global effects, they may cause an organisation to question the essence of what business it is in and the process by which products and services are produced.

 

  • There are four key external forces for change: demographic characteristics, technological advances, market changes, and social and political pressures.

 

  • Demographic Characteristics
  • Organisations need to effectively manage diversity if they are to receive maximum contribution and commitment from employees.
  • Technological Advancements
  • Both manufacturing and service organisations are increasingly using technology as a means to improve productivity and market competitiveness.
  • Manufacturing companies, for instance, have automated their operations with robotics, computerized numerical control (CNC) which is used for metal cutting operations, and computer-aided design (CAD). CAD is a computerized process of drafting and designing engineering drawings of products.
  • Companies have just begun to work on computer-integrated manufacturing (CIM). This highly technical process attempts to integrate product design with product planning, control, and operations.
  • Office automation consists of a host of computerized technologies that are used to obtain, store, analyse, retrieve, and communicate information.
  • Market Changes
  • The emergence of a global economy is forcing companies to change the way they do business. Companies are having to forge new partnerships with their suppliers in order to deliver higher quality products at lower prices.
  • Social and Political Pressures
  • These forces are created by social and political events.
  • Personal values affect employees’ needs, priorities, and motivation; managers thus may need to adjust their managerial style or approach to fit changing employee values.
  • Political events can create substantial change. For example, the collapse of both the Berlin Wall and communism in Russia created many new business opportunities.
  • Although it is difficult for organisations to predict changes in political forces, many organisations hire lobbyists and consultants to help them detect and respond to social and political changes.

 

  1. Internal Forces
  • Internal forces for change come from inside the organisation. These forces may be subtle such as low morale, or can manifest in outward signs such as low productivity and conflict.
  • Internal forces for change come from both human resource problems and managerial behaviour/decisions.

 

  • Human Resource Problems/Prospects
  • These problems stem from employee perceptions about how they are treated at work and the match between individual and organisation needs and desires.
  • Dissatisfaction is a symptom of an underlying employee problem that should be addressed.
  • Unusual or high levels of absenteeism and turnover also represent forces for change.
  • Organisations might respond to these problems by using the various approaches to job design by implementing realistic job previews, by reducing employees role conflict, overload, and ambiguity, and by removing the different stresses.
  • Prospects for positive change stem from employee participation and suggestions.

 

  • Managerial Behaviour/Decisions
  • Excessive interpersonal conflict between managers and their subordinates is a sign that change is needed. Both the manager and the employee may need interpersonal skills training, or the two may simply need to be separated: for example, one of the parties might be transferred to a new department.
  • Inappropriate leadership behaviours, such as inadequate direction or support, may result in human resource problems requiring change. Leadership training is one potential solution for this problem.

 

1.4 LEVELS OF CHANGE

  • Change can be at individual, group and organisational levels:

 

  • Individual Level Change
  • At the individual level change is reflected in such developments as changes in a job assignment, physical move to a different location, or the change in maturity of a person which occurs overtime.
  • It is said that changes at the individual level will seldom have significant implications for the total organisation.
  • This is not true because a significance change at the individual level will have its repercussions on the group which, in turn, might influence the wider organisation.
  • A manager who desires to implement a major change at the individual level, transferring an employee for instance, must understand that the change will have repercussions beyond the individual.

 

  • Group Level Changes
  • Most organisational changes have their major effects at the group level. This is because most activities in organisations are organised on group basis. The groups could be departments, or informal work groups.
  • Changes at the group level can affect work flows, job design, social organisation, influence and status systems, and communication patterns.
  • Managers must consider group factors when implementing change. Informal groups can pose a major barrier to change because of the inherent strengths they contain. Formal groups can resist change, as exemplified by the resistance demonstrated by unions to the changes proposed by management.
  • Because of the powerful influence that groups can have on individuals, effective implementation of change at the group level can frequently overcome resistance at the individual level.

 

  • Organization Level Changes
  • Change at this level involves major programmes that affect both individuals and groups.
  • Decisions regarding these changes are generally made by senior management and are seldom implemented by only a single manager.
  • Frequently they occur over long periods of time and require considerable planning for implementation.
  • Example of these changes would be reorganisation of the organisation structure and responsibilities, revamping of employee remuneration system, or major shifts in an organisation’s objectives.
  • Change at the organisational level is generally referred to as organization development.

 

1.5 TYPES OF CHANGE

  • There are various areas within the organisational domain where changes can be brought about for operational enhancement of the organisation as well as desirable behaviour of members.
  • The various types of changes that can have considerable impact on the organisational culture are:
  • Strategic Change
  • This is a change in the very mission of the organisation.
  • A single mission may have to be changed to multiple missions. For example, when British Airways acquired a major part of U.S. Air, the culture of the entire organization had to be modified to accommodate various aspects of American organisational culture into the British organisational culture.
  • Structural Change
  • Decentralized operations and participative management style have seen more recent trends in the organisational structure.
  • Since these structural changes shift the authority and responsibility to generally lower level management, it has a major impact on an organisation’s social climate and members have to be prepared to develop a team spirit as well as acquire skills to make on-the-spot decisions at points of operations.
  • Process-oriented Change
  • These changes relate to technological developments, information processing, automation and use of robotics in the manufacturing operations.
  • This means replacing or retraining personnel, heavy capital equipment investment and operational changes.
  • This would affect the organisational culture and hence changes in the behaviour patterns of members.
  • People-oriented Change
  • Even though, any organisational change affects people in some form, it is important that the behaviour and attitudes of the members be predictable and in accordance with the expectations of the organization and be consistent with the mission and policies of the enterprise.
  • These changes are directed towards performance improvement, group cohesion, dedication and loyalty to the organization as well as developing a sense of self-actualisation among the members.
  • These can be developed by closer interaction with employees and by special behavioural training and modification sessions.

 

1.6 STEPS IN MANAGING CHANGE

  • The first step in the change process is to identify the need for change and the area of change as to whether it is strategic change, process-oriented change or employee oriented change.
  • This need for change can be identified either through internal factors or through external forces that may be in place.
  • Once this need is identified, the following steps can be taken to implement such change:

 

  1. Develop new goals and objectives

The managers must identify as to what new outcomes they wish to achieve. This may be a modification of previous goals due to changed internal and external environmental or it may be a new set of goals and objectives.

  1. Select an agent for change

The management must decide as to who will initiate and oversee this change. A manager may be assigned this duty or even outside specialists and consultants can be brought in to suggest the various methods to bring in the change and monitor the change process.

  1. Diagnose the problem

It is important to gather all pertinent data regarding the area or the problem where the change is needed. This data should be critically analysed to pinpoint the key issues. Then the solutions can be focused on those key issues.

  1. Select methodology

Because of natural resistance to change, it is very important to chart out a methodology for change which would be correct and acceptable to all. Member’s emotions must be taken into consideration when devising such methodology.

  1. Develop a plan

This step involves putting together a plan as to what is to be done. For example, if the company wants to develop and implement a flexitime policy, it must decide as to what type of workers will be affected by it or whether flexitime should be given to all members or only to some designated workers.

  1. Strategy for implementation of the plan

In this stage, the management must decide on the “when”, “where” and “how” of the plan. This includes the right timing of putting the plan to work, how the plan will be communicated to workers in order to have the least resistance and how the implementation will be monitored.

  1. Implementation of the plan

Once the right timing and right channels of communications have been established, the plan is put into action. It may be in the form of simple announcement or it may require briefing sessions or in-house seminars so as to gain acceptance of all the members and specially those who are going to be directly affected by the change.

  1. Receive and evaluate feedback

Evaluation consists of comparing actual results to the set goals. Feedback will confirm if these gaols are being met so that if there is any deviation between the goals and the actual performance outcomes, then corrective measures can be taken.

 

1.7 RESISTANCE TO CHANGE

  • Resistance to change is understood to be a natural phenomenon. But not all change is resisted. In fact, if we look at any organisation closely we would probably find that more changes are accepted than resisted.
  • Accepting the fact that people have a natural instinct to adapt to their environment is the first step towards effective management of change.
  • It has the advantage of placing people in a more positive light, but also suggests that resistance to change is unnatural behaviour.
  • If managers accept this principle, then they can proceed to analyse the situation to find the (unnatural) cause of resistance. Failure to understand this characteristic of resistance can cause many managers to attempt to run through changes rather than try to understand the sources of the resistance.

 

  • Sources of resistance to change may be rational or emotional.

 

  • Rational resistance occurs when people do not have the proper knowledge or information to evaluate the change. Providing information (in the form of data, facts, or other types of concrete information) reduces the resistance.

 

  • Emotional resistance involves the psychological problems of fear, anxiety, suspicion, insecurity, and the like. These feelings are evoked because of people’s perception of how the change will affect them.

 

Causes of Resistance

  • All changes are not resisted. Some are wanted by the workers. For instance, if the workers have to stand before a machine throughout the shift, they will like theintroduction of a new machine which will allow them to sit while working. Thus, resistance to change is offset by their desire to have better working conditions.
  • Sometimes, people themselves want change and new experience as they are fed up with the old practices and procedures.
  • Resistance to change is caused by individual’s attitudes which are influenced by many economic, psychological and social factors.
  1. Economic Factors
  • These factors relate to the basic economic needs of the workers like necessities of life, job security and safety.
  • These factors are:
  • Workers apprehend technological unemployment. General new technology is expected to reduce the proportion of labour input and, therefore, people resist such change as it will affect their jobs security;
  • Workers fear that they will be idle for most of the time due to increased efficiency by new technology;
  • Workers may fear that they will be demoted if they do not possess the new skills required for the new jobs; and
  • Workers resist the change of getting higher job standards which may reduce opportunity for bonus or pay incentive.

 

  1. Psychological Factors
  • These factors arise when workers perceive that factors relating to their psychological needs will be affected adversely by the proposed changes.
  • These needs are sense of pride, achievement, self-fulfilment, etc. These factors are
  • Workers may not like criticism implied in a change that the present method is inadequate and unsuitable;
  • Workers may fear that there will be fewer opportunities for developing their personal skills because new work changes will do away with the need for much manual work. This will lead to reduction of their personal pride;
  • Workers may apprehend boredom and monotony in the new jobs as a result of specialisation brought by the new technology;
  • They may fear that harder work will be required to learn and adapt to new ideas;
  • Workers may resist a change because they do not want to take trouble in learning the new things; and
  • Workers may not have the knowledge of entire change or they may be incapable of the implications of new ideas or methods.

 

  1. Social Factors
  • Individual do have certain social needs like friendship, belongingness, etc. for the fulfilment of which they develop informal relations in the organisation. They become members of certain informal groups and act as members of the group to resist change.
  • The social reasons for resistance to change are:
  • New organisational set up requires new social adjustments which are not liked by people because these involve stresses and strains. This also means discarding old social ties which is not tolerable to the workers.
  • Workers are carried by the fear that the new social set-up arising out of the change will be less satisfying than the present set up.
  • Workers also resist the changes which are brought abruptly and without consulting them.

 

  • Thus, it is obvious that resistance to change tends to focus on human relations problem, although it may appear to be related to the technological aspect of change.
  • Workers resist the changes which will affect their social relationships, upset their status and threaten their security.
  • A change may give them a feeling of insecurity, since it challenges their way of doing things and may bring less labour oriented processes.
  • Moreover, it is difficult for the workers to give up their old habits and customs. They also resist the change if they do not know it well.

 

(b) Symptoms of Resistance

  • How does resistance to change manifest itself? There are several ways. But it does not mean that these symptoms always indicate resistance. Sometimes they may be indicators of other difficulties in the organisation.

 

  • Hostility or aggression is the immediate reaction of an individual to change. The hostility may only be expressed verbally, in the way the individual strikes at the boss, a fellow workers, or even at subordinates, but hostility and aggression can also take physical forms where the striking out is of a more intense character.
  • The individual may develop apathy towards his work. He loses interest in his work. There is more spoilage of materials, excessive idling of time, and decline in performance.
  • Absenteeism and tardiness are often signs of resistance. Perhaps these are forms of apathy or attempts on the part of the individual to escape his work environment. Separation, for example, may be an extreme illustration of this attempt to escape.
  • The development of anxiety and tension is a sure sign that resistance exists. The individual finds himself uncomfortable, shaky, and tensed up on his job.
  • At the group level additional signs of resistance are exhibited. Slow downs and strikes are the usual symptoms of group resistance. Another strategy adopted by a group to resist change is “restriction of output”. Often great care is exercised in timing operations, setting standards, and otherwise working out details of a wage incentive system, and yet at least part of the work group forms into an informal group, under a leader of its own choice. This group decides what a fair days work is and develops methods of keeping the non-conformist in line. The individual who starts to respond to the incentive is held in a check by sanctions which the informal group is able to bring to bear against him.

 

Benefits of Resistance

  • Contrary to popular opinion, resistance to change is not bad. Resistance can bring some benefits. It may encourage the management to re-examine its change proposals so that they are appropriate. In this way employees operate as a check and balance to ensure that the management properly plans and implements change.
  • Resistance can also help identify specific problem areas where change is likely to cause difficulties, so that the management can take corrective action before serious problems develop. At the same time, the management may be encouraged to do a better job of communicating the change, an approach that in the long-run should lead to better acceptance.
  • Resistance also gives management information about the intensity of employee emotions on an issue, provides emotional release for pent up employee feelings, and may encourage employee to think and talk more about a change so that they understand it better. This does not mean that resistance to change should endure. Resistance must be overcome and change introduced.

1.8 IMPLEMENTING CHANGE SUCCESSFULLY

  • Successful implementation of change requires knowledge about the change process.
  • The change process, propounded by Kurt Lewin, consists of three stages:
  • unfreezing,
  • changing,
  • refreezing

 

  • it is desirable to understand how change takes place generally. It is too well-known that people change their customs, habits, and institutions when they become dissatisfied with the status quo or when there is a more desirable substitute.

 

  • A successful change involves:
  • recognising the need for it,
  • learning a new behaviour or substitute, and
  • feeling comfortable with the new situation.

 

  1. Unfreezing
  • This is the first stage in the change process.
  • It involves casting aside existing attitudes and value systems, managerial behaviours, or organisational structure so that new ones can be learnt.
  • Unfreezing creates the need for change.
  • For unfreezing, the manager must understand the causes for resistance to change.
  • It is common knowledge that there are people who desire status quo and there are also individuals who push for change.

 

  • And the two groups may be equal in their force. The forces against change have strengths equal to those forces pushing for change.

 

 

EXAMPLE

  • An example of four forces pushing in each direction is seen in the case of the organisation that has announced the introduction of a new monthly cost report.
  • After careful analysis, a top manager may find various reasons given by subordinates for resisting change, on the one hand, or for promoting change, on the other hand.

 

  • Among the reasons given for resisting change might be:

 

  • The old report is easy to fill out because the data are readily available.
  • The old report takes very little time to think.
  • Top management has never used this report in the past for control purposes.
  • The new report will be very comprehensive and requires more time to fill out.

 

  • The reasons for advocating change might be:
  • An organisational streamlining of reporting forms is necessary.
  • Organisational control is getting out of hand.
  • If a report is going to have to be filled out, why not make it a meaningful one?
  • This new report is going to be analysed by staff personnel, and useful recommendations will be forwarded to each manager who has filled one out.

 

  • In such a situation, the manager must unfreeze the equilibrium. In doing so, three courses of action are available:
  1. increase the strength of forces that push for change;
  2. decrease the strength of forces that resist change; and
  3. change a resisting force into one supporting the change.

 

  1. Changing
  • Actual change occurs at this stage. New value systems, behaviours, or structures replace the old ones.
  • This is the action-oriented stage.
  • This can be a time of confusion, dis-orientation, and despair mixed with hope and discovery.

 

  1. Refreezing
  • Here the change becomes permanent.
  • The newly acquired values, beliefs, and structures get refrozen.
  • A new status quo is established at this stage. Refreezing is important because without it there lies a vacuum.

 

1.9 METHODS OF INTRODUCING CHANGE

  • Kotter and Schlisinger have suggested six methods of introducing change
  • The change agent must understand that there is no one universal approach to overcome resistance. Depending on each situation a different approach needs to be adopted.

 

Table 1.1 contains six approaches for introducing change together with the

situations where each change intervention is most appropriate. The advantages and

drawbacks of each approach are also listed in the table.

 

The six approaches listed in Table 1.1 will help unfreeze and change the values and behaviours of people. In other words, the approaches enable the managers to introduce change successfully.

 

  • The next crucial stage is to make the change stick otherwise there is the danger of people reverting to the pre-change position.

 

How to make the change the permanent?

  • The methods suggested for the purpose are; use of group forces, use of leadership, shared rewards, working with unions, and concern for employees.
  1. Use the Group Forces

The group exercises considerable influence on the behaviour of members. The

behaviour, attitudes, beliefs, and values of the individual are all firmly grounded in the

groups to which he belongs. How aggressive or co-operative a person is, how much selfrespect

and self-confidence he has, how energetic and productive his work is, what he aspires to, what he believes to be true and good, when he loves or hates, and what beliefs

and prejudices he holds – all these characteristics are highly determined by the

individual’s group membership. Whether they resist or accept change largely depends on

the groups. The change agent must make use of the groups to bring about change.

  1. Change of Change Agent

The change agent must himself change. It is only then that he will be able to

reinforce a psychological climate of support for change. Unwillingness of the managers

to give up traditional managerial practices and their unpreparedness to accept new

methods are the most serious barriers to the introduction of change and to make it

permanent in organisations.

 

TABLE 1.1: METHODS OF DEALING WITH RESISTANCE TO CHANGE

  1. Shares Rewards

Another way to build support for change is to ensure that the people affected

derive benefit out of the change. Benefits include increased pay, promotion, training,

recognition, and the like.

  1. Co-operation of Unions

Taken into confidence, unions themselves can act as change agents, though they

are generally considered to be anti-change. Many union leaders are accepting the

installation of CNC machines, though it means displacement of the work force. This has

been possible because of their participation before, during, and after the change has been

introduced. A change introduced without their support may not stay for long.

 

  1. Concern for Employees

A change should not be introduced for the sake of it. Change needs to be

introduced only when necessary and it must be by evolution and not by revolution. Any

change must ultimately benefits employees. In the short-run the needs and requirements

of employees should not be affected. Any problem that has taken place because of change

needs to be looked into and corrected immediately.

 

 

 

1.10 SUMMARY

Change involves making things different. Change occurs at individual, group and

organisational levels. Change is generally resisted. The causes for resistance are rational,

psychological and sociological. Resistance manifests itself in the form of hostility,

apathy, absenteeism, tension, strikes and slowdown of work. Resistance to change is

beneficial to both the change agent and to change targets. It makes both parties take a

second look at the problem, identify irritants if any, and overcome them so that change

can be implemented successfully.

Implementation of change successfully needs knowledge about the change

process. Change process consists of three stages: unfreezing, changing, and refreezing.

Unfreezing refers to the casting aside of old beliefs, attitudes, and behaviours. Changing

refers to the learning that has taken place. There are six approaches for introducing

change. Each technique is appropriate for particular situation. It has its own merits and

drawbacks. It is the wisdom of the change agent to use an appropriate technique for a

particular situation. Refreezing involves making change permanent.

1.11 KEYWORDS

Reactive change: A response that occurs when events in the environment have

already affected the firm’s performance; problem-driven change

Unfreezing: Realizing that current practices are inappropriate and that new

behaviour must be enacted.

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Strategic management: A process that involves managers from all parts of the

organisation in the formulation and implementation of strategic goals and strategies.

Refreezing: Strengthening the new behaviour that support the change.

Proactive change: A response that is initiated before a performance gap has

occurred.

Organisational change: The process by which organisations move from their

present state to some desired future state to increase their effectiveness.

 

1.12 SELF ASSESSMENT QUESTIONS

  1. “Change for the sake of change is no change at all”. Comment on this

statement and show why change for the sake of change could be

detrimental to the health of the organization?

  1. Differentiate between the external forces and the internal forces that

induce change in the organisations.

  1. What are the various types of changes? Under what circumstances would

each change be desirable?

  1. Trace the reasons for human resistance to change in industry. How can

this be overcome?

  1. A well established manufacturing unit plans to introduce new machines

and new methods of production. The workers in the factory numbering

two hundred are fearful of the change and are resisting it in many ways.

How will you advise the management to tackle the problem?

 

1.13 REFERENCES/SUGGESTED READINGS

  • M. Beer, Organisational Change and Development, Santa Monica, CA,

Goodyear, 1980.

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  • R.M. Kanter, The Change Masters: Innovation for productivity in the

American Corporation, New York, Simon and Schuster, 1984.

  • PR Lawrence and JW Lorsch, Organisation and environment, Boston,

Harvard Business School Press, 1972.

  • M. Hammer and J. Champy, Reengineering the Corporation; New York:

Harper Collins, 1993.

  • Gareth R. Jones, Organisational Theory, Design and Change, Pearson

Education Pvt Ltd. Indian Branch, Delhi, 2004.

 

 

 

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