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Organizational Change and Stress Management
Organizational Change and Stress Management
Organizational Change and Stress Management
LEARNING OBJECTIVES
CHAPTER OVERVIEW
The need for change has been implied throughout this text. “A casual reflection on change should indicate
that it encompasses almost all our concepts in the organizational behavior literature. Think about leadership,
motivation, organizational environment, and roles. It is impossible to think about these and other concepts without
inquiring about change.”
If environments were perfectly static, if employees’ skills and abilities were always up to date and
incapable of deteriorating, and if tomorrow were always exactly the same as today, organizational change would
have little or no relevance to managers. The real world, however, is turbulent, requiring organizations and their
members to undergo dynamic change if they are to perform at competitive levels.
Managers are the primary change agents in most organizations. By the decisions they make and their
role-modeling behaviors, they shape the organization’s change culture. For instance, management decisions
related to structural design, cultural factors, and human resource policies largely determine the level of innovation
within the organization. Similarly, management decisions, policies, and practices will determine the degree to
which the organization learns and adapts to changing environmental factors.
We found that the existence of work stress, in and of itself, need not imply lower performance. The
evidence indicates that stress can be either a positive or negative influence on employee performance. For many
people, low to moderate amounts of stress enable them to perform their jobs better by increasing their work
intensity, alertness, and ability to react. However, a high level of stress, or even a moderate amount sustained
over a long period of time, eventually takes its toll and performance declines. The impact of stress on satisfaction
is far more straightforward. Job-related tension tends to decrease general job satisfaction. Even though low to
moderate levels of stress may improve job performance, employees find stress dissatisfying.
WEB EXERCISES
At the end of each chapter of this instructor’s manual, you will find suggested exercises and ideas for researching
the WWW on OB topics. The exercises “Exploring OB Topics on the Web” are set up so that you can simply
photocopy the pages, distribute them to your class, and make assignments accordingly. You may want to assign
the exercises as an out-of-class activity, or as lab activities with your class. Within the lecture notes the graphic
will note that there is a WWW activity to support this material.
The chapter opens introducing Kun-Hee Lee, Samsung’s chairman. Lee challenged his staff to turn
Samsung into a truly innovative company, applying cutting-edge technology. Lee achieved his goal of
organizational change. Today Samsung is a leader in a number of innovative products including a combined cell
phone and hand-held device, flat-screen TV’s, and ultra-thin laptops.
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Managing Planned Change (cont.) Notes:
6. For major change efforts, top managers are increasingly turning to temporary
outside consultants with specialized knowledge in the theory and methods of
change.
• Consultant change agents can offer a more objective perspective than
insiders can.
• They are disadvantaged in that they often have an inadequate
understanding of the organization’s history, culture, operating procedures,
and personnel.
• Outside consultants are also more willing to initiate second-order changes.
• Internal change agents are often more cautious for fear of offending friends
and associates.
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Five reasons why individuals may resist change are (See Exhibit 19-2):
1. Habit: Life is complex, to cope with having to make hundreds of decisions
everyday, we all rely on habits or programmed responses.
2. Security: People with a high need for security are likely to resist change
because it threatens their feelings of safety.
3. Economic factors: Another source of individual resistance is concern that
changes will lower one’s income.
4. Fear of the unknown: Changes substitute ambiguity and uncertainty for the
known.
5. Selective information processing: Individuals shape their world through their
perceptions. Once they have created this world, it resists change.
B. Organizational Resistance
Organizations, by their very nature, are conservative. They actively resist change.
There are six major sources of organizational resistance: (See Exhibit 19-4.)
1. Structural inertia: Organizations have built-in mechanisms to produce stability;
this structural inertia acts as a counterbalance to sustain stability.
2. Limited focus of change: Organizations are made up of a number of
interdependent subsystems. Changing one affects the others.
3. Group inertia: Group norms may act as a constraint.
4. Threat to expertise: Changes in organizational patterns may threaten the
expertise of specialized groups.
5. Threat to established power relationships: Redistribution of decision-making
authority can threaten long-established power relationships.
6. Threat to established resource allocations: Groups in the organization that
control sizable resources often see change as a threat. They tend to be
content with the way things are.
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• Prior to making a change, those opposed can be brought into the decision
process, assuming they have the expertise to make a meaningful
contribution.
• The negatives—potential for a poor solution and great time consumption.
Instructor Note: At this point in the lecture you may want to introduce the TEAM EXERCISE: Power and the
Changing Environment found in the text and at the end of the chapter notes.
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4. Managers who have spent their entire careers with a single organization and
eventually achieve a senior position in the hierarchy are often major
impediments to change.
• Change itself is a very real threat to their status and position, yet, they may
be expected to implement changes.
• When forced to introduce change, these long-time power holders tend to
implement first-order changes. Radical change is too threatening.
5. Power struggles within the organization will determine the speed and quantity
of change.
• Long-time career executives will be sources of resistance.
• Boards of directors that recognize the imperative for the rapid introduction
of second-order change in their organizations frequently turn to outside
candidates for new leadership.
Instructor Note: At this point in the lecture you may want to introduce the POINT—COUNTER POINT:
Managing Change is an Episodic Activity found in the text and at the end of the chapter notes. A suggestion for a
class exercise follows.
1. Kurt Lewin argued that successful change in organizations should follow three
steps (See Exhibit 9-5):
• Unfreezing the status quo
• Movement to a new state
• Refreezing the new change to make it permanent
2. The status quo can be considered to be an equilibrium state.
2. To move from this equilibrium—to overcome the pressures of both individual
resistance and group conformity—unfreezing is necessary.
• The driving forces, which direct behavior away from the status quo, can be
increased.
• The restraining forces, which hinder movement from the existing
equilibrium, can be decreased.
4. Once the change has been implemented, the new situation needs to be
refrozen so that it can be sustained over time.
• 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.
• The objective of refreezing is to stabilize the new situation by balancing the
driving and restraining forces.
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C. Organizational Development
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A. Stimulating Innovation
3. Sources of innovation:
• Structural variables are the most studied potential source of innovation.
• First, organic structures positively influence innovation because they
facilitate flexibility, adaptation and cross-fertilization.
• Second, long tenure in management is associated with innovation.
Managerial tenure apparently provides legitimacy and knowledge of how to
accomplish tasks and obtain desired outcomes.
• Third, innovation is nurtured where there are slack resources.
• Finally, inter-unit communication is high in innovative organizations. There
is a high use of committee, task forces, cross-functional teams and other
mechanisms that facilitate interaction.
4. Innovative organizations tend to have similar cultures:
• They encourage experimentation.
• They reward both successes and failures.
• They celebrate mistakes.
• Managers in innovative organizations recognize that failures are a natural
by-product of venturing into the unknown.
5. Human resources:
• Innovative organizations actively promote the training and development.
They offer high job security so employees do not fear getting fired for making
mistakes.
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Instructor Note: At this point in the lecture you may want to introduce the OB IN THE NEWS EXERCISE:
Innovative Concept or Hair-Brain Idea? found in the text and below. A suggestion for a class exercise follows.
Richard Nobel has a solution to the public’s mounting frustration with airline service. He’s going to create
an air-taxi service unlike any other. Travelers will be able to summon one of his planes, like a taxi cab, to a nearby
airport and then fly straight to the local airport closest to their destination. The cost? About the same as a first-
class ticket.
There are 2,071 airfields in Europe and 5,736 in North America. Yet only 3 percent are used by large
commercial jets. Recognizing that there should be a large market for people who want to travel on their schedule,
not the airlines, and would prefer a more direct flight, Nobel is creating the basis for a worldwide taxi-system. It
would make use of small airports. It would rely on the global-positioning system to monitor flights and guide
takeoffs and landings at airports without control towers. And it would have a state-of-the-art Internet based
reservation system.
“The airlines think the solution to airport congestion is bigger planes and bigger airports, “ says Nobel.
“That’s precisely what passengers don’t want. We’re coming the other way, offering point-to-point service that you
schedule at your convenience.”
The most innovative aspect of Nobel’s idea is the development of a low-cost (under $2 million), fuel-
efficient plane that would make up his taxi fleet. That plane, dubbed the F1 Air Taxi, will be designed for trips of
under 1,000 miles. Able to carry five passengers, this prop-jet would be able to meet or beat the average speed of
commercial jets on short hops, get passengers closer to their destination, and avoid the congestion at big airports.
The F1 is being built by Pegasus Aviation in the United Kingdom, with 18 companies providing goods and
services to minimize costs.
Will the idea work? Only time will tell. But one executive at the firm that is designing Nobel’s Web site and
reservation system says, “This is out-of-the box thinking—a whole new approach to airline congestion. I think
[Nobel] has a real market—and a small-business aircraft that could take a lot of the market from existing business
planes.”
Source: Based on O. Port, “Taxi! Get Me to Nebraska,” Business Week, November 20, 2000, pp. 134–39.
Class Exercise:
1. This activity requires that you have on-line access and computer projection capabilities, or the class can visit
the computer lab together, or you can assign it as a separate activity, or print and distribute the ideas to the
class.
2. Visit the “Idea a Day” website. Authors of ideas submit them for the enjoyment of all—and many truly
exemplify out-of-the-box thinking. The website idea archives can be found at: http://www.idea-a-
day.co.uk/archive.asp .
3. Lead a class discussion about what are the commonalities of these ideas. Most of these ideas are submitted
by ordinary folks. Break students into groups and have them practice brainstorming ideas. Post on board
and compare to the websites ideas. Developing creativity, and hence innovation, is a skill that can be learned
and stimulated with practice.
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B. Knowledge Management
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A. What Is Stress?
1. Environmental factors:
• Environmental uncertainty influences stress levels among employees in an
organization.
• Changes in the business cycle create economic uncertainties.
• Political uncertainties can be stress inducing.
• Technological uncertainty can cause stress because new innovations can
make an employee’s skills and experience obsolete in a very short period
of time.
2. Organizational factors:
• Pressures to avoid errors or complete tasks in a limited time period, work
overload, a demanding and insensitive boss, and unpleasant coworkers
are a few examples.
• Task demands are factors related to a person’s job. They include the
design of the individual’s job (autonomy, task variety, degree of
automation), working conditions, and the physical work layout.
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E. Consequences of Stress
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F. Managing Stress
1. High or low levels of stress sustained over long periods of time, can lead to
reduced employee performance and, thus, require action by management.
2. Individual approaches:
• Effective individual strategies include implementing time management
techniques, increasing physical exercise, relaxation training, and
expanding the social support network.
• Practicing time management principles such as:
a. making daily lists of activities to be accomplished.
b. prioritizing activities by importance and urgency.
c. scheduling activities according to the priorities set.
d. knowing your daily cycle and handling the most demanding parts of
your job during the high part of your cycle when you are most alert and
productive.
• Noncompetitive physical exercise has long been recommended as a way
to deal with excessive stress levels.
• Individuals can teach themselves to reduce tension through relaxation
techniques such as meditation, hypnosis, and biofeedback.
• Having friends, family, or work colleagues to talk to provides an outlet for
excessive stress.
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3. Organizational approaches
• Strategies that management might want to consider include:
a. improved personnel selection and job placement
b. use of realistic goal setting, redesigning of jobs
c. training
d. increased employee involvement
e. improved organizational communication
f. establishment of corporate wellness programs.
Instructor Note: At this point in the lecture you may want to introduce the CASE EXERCISE: Responding the
9/11 After Shocks found in the text and at the end of the chapter notes. A suggestion for a class exercise follows.
3. Why is participation considered such an effective technique for lessening resistance to change?
Answer – It’s difficult for individuals to resist a change decision in which they participated. Prior to making a
change, those opposed can be brought into the decision process. Assuming that the participants have the
expertise to make a meaningful contribution, their involvement can reduce resistance, obtain commitment,
and increase the quality of the change decision.
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5. How does Lewin’s three-step model of change deal with resistance to change?
Answer – To deal with that resistance, management could use positive incentives to encourage employees to
accept the change. Management might also consider unfreezing acceptance of the status quo by removing
restraining forces. Employees could be counseled individually. Each employee’s concerns and apprehensions
could be heard and specifically clarified. Assuming that most of the fears are unjustified, the counselor could
assure the employees that there was nothing to fear and then demonstrate, through tangible evidence, that
restraining forces are unwarranted. If resistance is extremely high, management may have to resort to both
reducing resistance and increasing the attractiveness of the alternative if the unfreezing is to be successful.
6. What changes can an organization that has a history of “following the leader” make to foster innovation?
Answer – Change refers to making things different. Innovation is a more specialized kind of change.
Innovation is a new idea applied to initiating or improving a product, process, or service. There are several
sources of innovation. Structural variables include developing an organic structure, providing sufficient
resources to permit innovation, and increasing communication. Managers should:
• encourage experimentation.
• reward both successes and failures.
• celebrate mistakes.
• actively promote the training and development.
• offer high job security so employees don’t fear getting fired for making mistakes.
• encourage individuals to become champions of change.
7. “Learning organizations attack fragmentation, competitiveness, and reactiveness.” Explain this statement.
Answer – A learning organization is an organization that has developed the continuous capacity to adapt and
change. Proponents envision it as a remedy for the three fundamental problems inherent in traditional
organizations: fragmentation, competition, and reactiveness.
• First, fragmentation based on specialization creates “walls” and “chimneys” that separate different
functions into independent and often warring fiefdoms. It fosters communication.
• Second, an overemphasis on competition often undermines collaboration. It emphasizes cooperation and
coordination.
• Third, reactiveness misdirects management’s attention to problem solving rather than creation. It has a
proactive perspective.
9. How are opportunities, constraints, and demands related to stress? Give an example of each.
Answer – Students’ examples will vary but should take into consideration the following facts. Stress is a
dynamic condition in which an individual is confronted with an opportunity, constraint, or demand related to
what he/she desires and for which the outcome is perceived to be both uncertain and important. Opportunities
permit individuals to use stress positively to rise to the occasion and perform at or near their maximum.
Typically, stress is associated with constraints and demands. The former prevent you from doing what you
desire. The latter refers to the loss of something desired. For opportunities to cause stress, there must be
uncertainty over the outcome and the outcome must be important.
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1. How have changes in the workforce during the past 20 years affected organizational policies?
Answer –A multicultural environment requires greater sensitivity to individual differences requiring training in
diversity. Human resource policies and practices changed to attract and keep this more diverse workforce.
Large expenditure on training to upgrade reading, math, computer, and other skills of employees.
2. “Managing today is easier than at the turn of the century because the years of real change took place
between the Civil War and World War I.” Do you agree or disagree? Discuss.
Answer – Begin by having students brainstorm changes they know of that took place between 1860 and
1918. Then brainstorm changes from 1918 until today. List these items on the blackboard. Be prepared to
prompt students, because many will not have a timeframe for the changes they note; i.e., electricity,
telegraph, the railroad, the car, the airplane, etc.
4. Discuss the link between learning theories discussed in chapter 2 and the issue of organizational change.
Answer – Learning is any relatively permanent change in behavior that occurs as a result of experience. We
infer that learning has taken place if an individual behaves, reacts, responds as a result of experience in a
manner different from the way he formerly behaved. The text definition has several components that deserve
clarification.
• First, learning involves change.
• Second, the change must be relatively permanent.
• Third, our definition is concerned with behavior.
• Finally, some form of experience is necessary for learning.
5. Do you think napping on the job is an acceptable practice in the workplace? What negatives do you see, if
any, in promoting this practice?
Answer –. Student’s answers will vary on this—but most employers have policies against it. Why do they
think that is the case? Is napping a stress reliever or theft (assuming the employee is being paid while
sleeping)?
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Another way to conceptualize this is to think of managing change as analogous to captaining a ship. Like
a large ship traveling across the calm Mediterranean Sea, the ship’s captain makes the exact trip hundreds of
times. Every once in a while, however, a storm will appear, and the crew has to respond. The captain will make
the appropriate adjustments—that is, implement changes—and, having maneuvered through the storm, will return
to calm waters.
Counter Point
The episodic approach may be the dominant paradigm for handling organizational change, but it is
obsolete. It applies to a world of certainty and predictability. It treats change as the occasional disturbance in an
otherwise peaceful world. This paradigm has little resemblance to today’s environment of constant and chaotic
change. Today’s organizations are not a large ship, but more akin to a 40-foot raft. Rather than sailing a calm sea,
this raft must traverse a raging river manned by ten people who have never worked together making much of the
trip in the dark. Change is a natural state, and managing change is a continual process. Disruptions in the status
quo are not occasional, temporary, and followed by a return to an equilibrium state. There is, in fact, no
equilibrium state. Managers today face constant change, bordering on chaos. They’re being forced to play a game
they’ve never played before, governed by rules that are created as the game progresses.
Teaching notes
1. Use the debate format offered in chapter 1.
2. Choose two teams of 3–5 students. [The rest of the class will act as a jury.]
3. Have them prepare, outside of class, one side of the issue to debate in class.
4. Create a controlled debate, giving each side up to 8 minutes to make its case, 3 minutes to cross-examine the
other side, then 5 minutes in class to prepare a 3–5 minute rebuttal, and then a final 1-minute closing
argument.
5. Have the remainder of the class vote on who made the stronger case.
6. Close with a discussion of the issue leading the students to understand this is not an either/or situation, but
the best response incorporates elements of both positions.
7. Refer to Chapter 1 for the time format.
8. This will take approximately 45–60 minutes.
This perspective is based on P.B. Vail, Managing as a Performing Art: New Ideas for a World of Chaotic Change (San Francisco: Jossey-
Bass, 1989).
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Objectives
1. To describe the forces for change influencing power differentials in organizational and interpersonal
relationships.
2. To understand the effect of technological, legal/political, economic, and social changes on the power of
individuals within an organization.
The Situation
Your organization manufactures golf carts and sells them to country clubs, golf courses, and consumers. Your
team is faced with the task of assessing how environmental changes will affect individuals’ organizational power.
Read each of the five scenarios and then, for each, identify the five members in the organization whose power will
increase most in light of the environmental condition(s).
The Procedure
1. Divide the class into teams of three to four students each.
2. Teams should read each scenario and identify the five members whose power will increase most in light of
the external environmental condition described.
3. Teams should then address the question: Assuming that the five environmental changes are taking place at
once, which five members of the organization will now have the most power?
4. After 20 to 30 minutes, representatives of each team will be selected to present and justify their conclusions
to the entire class. Discussion will begin with scenario 1 and proceed through to scenario 5 and the “all at
once” scenario.
Source: Adapted from J. E. Barbuto, Jr., “Power and the Changing Environment,” Journal of Management Education, April 2000, pp. 288–96.
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Sheryl Hicks is not a complainer. If she has a major ache, she usually suffers in silence. Although her
employer, Atlantic Mutual Insurance, has an employee assistance program—to provide emotional and
psychological support in the workplace—she certainly would never think to use it, even if she did have a worry on
her mind. “They say it’s confidential, but who really knows?” asked Ms. Hicks, an administrative assistant at the
insurance company.
But Sheryl Hicks’ life changed on September 11, 2001. Her office at 130 Broadway in New York City, was
near the World Trade Center. “I watched the whole thing from my 33rd-floor office window.”
Ms. Hicks had never seen bodies fall from high rises or planes slam into buildings and cause them to
crumble. She had never been covered with jet fuel, as she was when she fled the area on that day. Nor had she
ever had such vivid nightmares that forced her to relive 9/11 over and over.
“Every time I talked to people they wanted details, which made it worse for me,” said Ms. Hicks. “I had so
much anger about what had happened to my life and the lives of so many people and the city where I’ve worked
for 36 years.”
Two weeks after 9/11, Ms. Hicks was still suffering serious aftereffects. Even though she lives on Staten
Island and Atlantic Mutual’s offices have been temporarily relocated to Madison, New Jersey, not an hour goes by
when she doesn’t have flashbacks of her experiences on 9/11.
Source: Based on A. Ellin, “Traumatized Workers Look for Healing on the Job,” New York Times, September 30, 2001, p. BU-10.
Questions
1. What should Atlantic Mutual’s management do, if anything, to cope with the aftereffects of 9/11?
2. How long would you expect employees to be adversely effected by 9/11 if a company provided no formal
assistance for dealing with anger and stress?
3. What, if anything, should management do about employees who appear to be suffering from this trauma but
will neither admit it nor accept help from their employer?
4. At what point does employee assistance in dealing with this trauma step over the line and become an
invasion of an employee’s privacy?
Student’s answers will vary on the above questions. Encourage them to think about what would happen to the
organization if it did nothing to assist Ms. Hicks and other employees like her. What do we think the likely
outcomes would be given our study OB?
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www.goto.com
www.google.com
www.excite.com
www.lycos.com
www.hotbot.com
www.looksmart.com
1. What would be your strategy if you were called upon to be a “change agent” for your
organization? How would you begin, gather information, and create buy-in for your ideas? Go
to FastCompany’s website where they featured an article on this topic at:
http://www.fastcompany.com/online/05/changetips.html . Even more interesting, read several of
the reader responses linked at the bottom of the page. Write a short reaction paper on why you
think there is such a difference from the article’s perspective vs. the readers’ comments. What
OB strategies would you use as change agent to address some of those readers’ concerns.
3. What’s the difference between Learning Organizations and Organizational Learning? For a
brief overview of the two, go to: http://www.brint.com/papers/orglrng.htm . Develop a table
outlining the differences between the two and bring to class for further discussion.
4. Write a two page paper on Knowledge Management. It can be a general paper, or you can
choose to focus on different aspects of KM such as the challenges of such system or how KM
enhances organizational effectiveness or innovation. For an overview on Knowledge
Management go to: http://www.outsights.com/systems/kmgmt/kmgmt.htm as a place to start.
Don’t hesitate to do your own search—there are many, many interesting sites on this topic.
6. Dealing with individual stress requires a knowledge of various coping skills and the willingness
to put them into practice. Visit: http://www.shpm.com/articles/stress/stress2.html for tips on
how to deal with everyday stressors. For tips on how deal with “college blues” visit the
International Stress Management Association’s journal archives at: http://www.isma-
usa.org/article0701.htm .
7. Visit the Oklahoma State University’s Environmental Health and Safety On-line Library for a
collection of articles and other resources for stress management at:
http://www.pp.okstate.edu/ehs/links/stress.htm . Select and article or two to read that interests
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you and print. Bring them to class and be prepared to make a short presentation on what you
learned.
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