Chapter 6 - Managing Change PDF

The Case for Change • Organizational change: any alteration of people, structure, or technology in an organization • Change agent: someone who acts as a catalyst and assumes the responsibility for managing the change process Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 6-1...

The Case for Change • Organizational change: any alteration of people, structure, or technology in an organization • Change agent: someone who acts as a catalyst and assumes the responsibility for managing the change process Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 6-1 External and Internal Forces for Change External Internal Changing consumer needs and wants New organizational strategy New governmental laws Change in composition of workforce Changing technology New equipment Economic changes Changing employee attitudes Copyright © 2018 Pearson Education, Ltd. All Rights Reserved External Factors • Changing consumer needs and wants • New governmental laws • Changing technology • Economic changes Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Internal Factors • New organizational strategy • Change in composition of workforce • New equipment • Changing employee attitudes Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Calm Waters Versus White-Water Rapids Metaphors • Calm waters metaphor: The “calm waters” metaphor of change suggests that change is an occasional disruption in the normal flow of events and can be planned and managed as it happens using Lewin's three-step change process: – Unfreezing the status quo – Changing to a new state – Refreezing to make the change permanent Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 6-2 The Three-Step Change Process Exhibit 6-2 illustrates Kurt Lewin’s three-step change process. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved White-Water Rapids Metaphor • White-water rapids metaphor: the lack of environmental stability and predictability requires that managers and organizations continually adapt and manage change actively to survive Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Reactive Versus Proactive Change Processes • Reactive: reacting to a situation that has occurred • Proactive: acting in advance of a situation Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 6-3 Four Types of Change Exhibit 6-3 shows the four main areas of change managers face. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Types of Change: Strategy Failure to change strategy when circumstances dictate could undermine a company’s success. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Types of Change: Structure • Changing structural components • Changing structural design When change is Required? Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Types of Change: Technology • New equipment, tools, or methods • Automation (Robotic technology) • Computerization (IS) Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Types of Change: People • Organizational development: change methods that focus on people and the nature and quality of interpersonal work relationships • Changing people involves changing attitudes, expectations, perceptions, and behaviors— something that’s not easy to do Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Figure 6-4: Popular Organizational Development Techniques The most popular OD techniques are described in Exhibit 6-4 Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Why Do People Resist Change? • Uncertainty • Habit • Fear of loss • Belief change is inconsistent with goals of organization Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Techniques for Reducing Resistance to Change? • Education and communication • Participation • Facilitation and support • Negotiation • Manipulation and co-optation • Coercion (Force) Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 6-5 Techniques for Reducing Resistance to Change Technique When Used Advantage Disadvantage Education and communication When resistance is due to misinformation Clear up misunderstandings May not work when mutual trust and credibility are lacking Participation When resisters have the expertise to make a contribution Increase involvement and acceptance Time-consuming; has potential for a poor solution Facilitation and support When resisters are fearful and anxiety ridden Can facilitate needed adjustments Expensive; no guarantee of success Negotiation When resistance comes from a powerful group Can “buy” commitment Potentially high cost; opens doors for others to apply pressure too Manipulation and co-optation When a powerful group’s endorsement is needed Inexpensive, easy way to gain support Can back re, causing change agent to lose credibility Coercion (force) When a powerful group’s endorsement is needed Inexpensive, easy way to gain support May be illegal; may undermine change agent’s credibility Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Leading Change • Managers can make change happen successfully by: – making organization change capable (next table) – understanding their own role in process – giving employees a role in the change Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 6-6 Change-Capable Organizations Characteristics Link the present and the future. Think of work as more than an extension of the past; think about future opportunities and issues and factor them into today’s decisions. Make learning a way of life. Change-friendly organizations excel at knowledge sharing and management. Actively support and encourage day-to-day improvements and changes. Successful change can come from the small changes as well as the big ones. Ensure diverse teams. Diversity ensures that things won’t be done like they’ve always been done. Encourage mavericks. Because their ideas and approaches are outside the mainstream, mavericks can help bring about radical change. Shelter breakthroughs. Change-friendly organizations have found ways to protect those breakthrough ideas. Integrate technology. Use technology to implement changes. Build and deepen trust. People are more likely to support changes when the organization’s culture is trusting and managers have credibility and integrity. Couple permanence with perpetual change. Because change is the only constant, companies need to figure out how to protect their core strengths during times of change. Support an entrepreneurial mindset. Many younger employees bring a more entrepreneurial mindset to organizations and can serve as catalysts for radical change. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Creating a Culture for Change • The fact that an organization’s culture is made up of relatively stable and permanent characteristics tends to make it very resistant to change. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Understanding the Situational Factors • Conditions that facilitate change: – dramatic crisis occurs (unexpected) – leadership changes hands – culture is weak Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 6-7 Changing Culture Strategies for Managing Cultural Change Set the tone through management behavior; top managers, particularly, need to be positive role models. Create new stories, symbols, and rituals to replace those currently in use. Select, promote, and support employees who adopt the new values. Redesign socialization processes to align with the new values. To encourage acceptance of the new values, change the reward system. Replace unwritten norms with clearly specified expectations. Shake up current subcultures through job transfers, job rotation, and/or terminations. Work to get consensus through employee participation and creating a climate with a high level of trust. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Employee Stress • Stress: the adverse reaction people have to excessive pressure placed on them from extraordinary demands, constraints, or opportunities • Stressors: factors that cause stress Copyright © 2018 Pearson Education, Ltd. All Rights Reserved What Causes Stress? • Task demands • Role demands – Role conflicts – Role overload – Role ambiguity • Interpersonal demands • Organization structure • Organizational leadership Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Personal Factors • Type A personality: people who have a chronic sense of urgency and an excessive competitive drive • Type B personality: people who are relaxed and easygoing and accept change easily Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Figure 6-8 Symptoms of Stress As Exhibit 6-8 shows, stress symptoms can be grouped under three general categories: physical, psychological, and behavioral. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved How Can Stress Be Reduced? • Realistic job preview during selection process • Performance planning program, e.g. MBO • Job redesign • Addressing personal stress – counseling – time management programs – wellness programs Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Creativity Versus Innovation • Creativity: the ability to combine ideas in a unique way or to make unusual associations between ideas • Innovation: taking creative ideas and turning them into useful products or work methods Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Stimulating and Nurturing Innovation • An environment that stimulates innovation includes three variables: the organization’s structure, culture, and human resource practices. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Figure 6-9 Innovation Variables Exhibit 6-9 shows the three variables in an environment that stimulates innovation. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Structural Variables • Organic structures • Plentiful resources • High interunit communication • Minimal time pressure • Work and non-work support Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Cultural Variables • Acceptance of ambiguity • Tolerance of the impractical • Low external controls • Tolerance of risks • Tolerance of conflict • Focus on ends • Open-system focus • Positive feedback Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Human Resource Variables • Idea champion: individual who actively and enthusiastically supports new ideas, builds support, overcomes resistance, and ensures that innovations are implemented Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Innovation and Design Thinking • When a business approaches innovation with a design-thinking mentality, the emphasis is on getting a deeper understanding of what customers need and want. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Disruptive Innovation Definition • Disruptive innovation: innovations in products, services, or processes that radically change an industry’s rules of the game (Innovations that improve a product or service in ways that the market does not expect) • Sustaining innovation: small and incremental changes in established products rather than dramatic breakthroughs Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Exhibit 6-10 Examples of Past Disruptive Innovators Established Business Disruptor Established Business Disruptor Compact disc Apple iTunes Traveler’s checks ATMs and Visa Carbon paper Xerox copy machine Encyclopedias Wikipedia Canvas tennis shoes Nike athletic shoes Newspaper classified ads Craig’s List Portable radio Sony Walkman AM/FM radio stations Sirius XM Sony Walkman Apple iPod Tax preparation services Intuit’s Turbo Tax Typewriters IBM PC Yellow Pages Google Weekly news magazines CNN Paper maps Garmin’s GPS TV networks Cable and Netflix Paperback books Kindle Local travel agencies Expedia Lawyers Legal Zoom Stockbrokers eTrade Taxis Uber Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Why Disruptive Innovation Is Important • Disruptive innovations are a threat to many established businesses, and responding with sustaining innovations isn’t enough. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Who’s Vulnerable? (at risk) • Large, established, and highly profitable organizations are most vulnerable to disruptive innovations because they have the most to lose and are most vested in their current markets and technologies. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Implications • For entrepreneurs (Business man) • For corporate managers – Skunk works: a small group within a large organization, given a high degree of autonomy and unhampered by corporate bureaucracy, whose mission is to develop a project primarily for the sake of radical innovation • For career planning Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 6.2 • Compare and contrast views on the change process. – Calm waters metaphor – White water rapids metaphor – Lewin’s three-step model Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 6.3 • Classify areas of organizational change. – – – – Strategy Structure Technology People Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 6.4 • Explain how to manage change. – People resist change because of uncertainty, habit, concern over personal loss, and the belief that the change is not in the organization’s best interest. – Techniques for reducing resistance to change include: education and communication, participation, facilitation, negotiation, manipulation and co-optation, and coercion Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 6.5 • Discuss contemporary issues in managing change. – Managers lead the change process by:  Making organization change capable  Understanding own role  Giving employees a role in change process – Managers help employees deal with stress by:  Ensuring employees’ abilities match job  Improving organizational communication  Using a performance planning program  Redesigning jobs Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 6.6 • Describe techniques for stimulating innovation. – Creativity – Innovation – Design thinking and innovation Copyright © 2018 Pearson Education, Ltd. All Rights Reserved Review Learning Objective 6.7 • Explain why managing disruptive technology is important. – Disruptive innovation exists when a smaller company with fewer resources is able to successfully challenge established incumbent businesses. – Disruptive innovation presents an as- set to organizations that recognize the market potential of the technology. Copyright © 2018 Pearson Education, Ltd. All Rights Reserved