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CHAPTER 10 TYPES AND FORMS OF ORGANIZATIONAL CHANGE

TEACHING OBJECTIVES

1. To define organizational change as the process by which organizations reach

their desired goals. (10.1)
2. To examine the various targets of change. (10.1)
3. To discuss both the forces for change and the resistances to change. (10.2)
2. To contrast the revolutionary and evolutionary approaches to change. (10.3)
4. To explain Lewin’s Force Field Theory of Change. (10.4)
5. To explain and apply the basic steps of action research. (10.4)
6. To examine the various components of Organizational Development. (10.5)

CHAPTER SUMMARY

This chapter examines organizational change, including technological change.

Technological change requires that organizations learn how to manage the innovation
process. Organizational change is defined as the process by which organizations reach
desired goals. Planned organizational change creates value for stakeholders.

Several forces for change plus resistances to change are examined. The major forces
for change are competitive, economic, political, global, demographic, social, and ethical
forces. The major resistances to change at the organizational level are structure,
culture, and strategy. Resistances at the functional level are differences in subunit
orientation and power and conflict struggles. Resistances at the group level are norms, )
cohesiveness, and groupthink. Resistances at the individual level are cognitive biases, U
uncertainty and insecurity, selective perception and retention, and habit. S
C
(
Evolutionary change is distinguished from revolutionary change. Reengineering, .
downsizing, restructuring, and TQM are discussed as methods for change. Included in G
this are the use of flexible workers and flexible work teams. P
,
Change is also viewed through Lewin’s Force Field Theory of Change. The concepts A
B
and steps associated with action research are detailed to show how organizations reach
M
a desired future state. ,
N
Various concepts associated with organizational development are discussed as a tool to E
I
help both the organization and the individuals in the organization maximize their H
effectiveness and achieve their goals.
G
N
CHAPTER OUTLINE A
O
10.1 What Is Organizational Change? H

M
Organizational change occurs when an organization restructures resources to increase A
the ability to create value and improve effectiveness. A declining company seeks ways H
P

to regain customers; a growing organization designs new products. Change is

prevalent. In the past 10 years, over 50 percent of all Fortune 500 companies have
undergone significant restructuring.

Targets of Change
Organizational change includes changes in four areas:

1. Human resources are an organization’s most important asset.

Q. What changes are made in human resources?

A. Changes include: investment in training, socializing employees, changing norms to

motivate a diverse workforce, monitoring promotion and reward systems, and changing
top management.

2. Functional resources can be transferred to maximize value creation as the

environment changes. Thus, key functions grow in importance. Organizations can
change structure, culture, and technology to improve the value created by functions.

Q. Give examples of structural and technology changes.

A. A product team culture increases development time. Technology that uses self-
managed work teams increases productivity and quality.

3. Technological capabilities provide new products, change existing ones, and )

create a core competence. Improving the reliability and quality of goods and services is U
an important capability. Organizations may need to restructure to achieve the benefits of S
new technology. C
(
.
4. Organizational capabilities are imbedded in operations. Organizations use G
human and functional resources to seize technological opportunities through structure P
and culture. ,
A
B
These four resources are interdependent, so changing one leads to a change in others.
M
Recruiting a team of scientists leads to restructuring a product team. ,
N
E
I
10.2 Forces for and Resistance to Organizational Change H

Organizations face both the forces of change and resistances to change. (Fig. 10.1) G
N
A
Forces of change require change or loss of competitive edge. O
H
Competitive forces spur change, because an organization must equal or surpass rivals
M
to sustain a competitive advantage in efficiency, quality, innovation, or customer A
responsiveness. Managing change is crucial when competing for customers. H
P

Economic, political, and global forces, such as the North American Free Trade
Agreement (NAFTA) or other economic unions, are significant forces of change. The
European Union (EU) has increased to 20 countries. Production in an EU country
eliminates tariffs, so Japan produces cars in England to avoid foreign tariffs. The three
distinct economic spheres—North America, Europe, and Asia—expect to have more
trade within their arena than across spheres.

Low-cost competitors, low-cost inputs, and new technological developments are

realities of global competition. Organizations may need structural change to enter
realities of global competition. Organizations may need structural change to enter
foreign markets and adapt to different cultures.

Demographic and social forces include an increasingly diverse workforce, changing,

hiring and promotion. Many workers want to balance work and leisure. Companies need
flexibility in scheduling to meet employee childcare needs.

Ethical forces place greater demands on firms for honest, corporate behavior, so some
firms have hired ethics officers to report offenses or give ethical advice. Organizations
protect whistleblowers and foreign employees.

Organizational Insight 10.1: Nike, Reebok, Adidas, and the Sweatshops

These companies came under scrutiny because the countries that they outsourced
production to paid very low wages and had extremely poor working conditions. Public
outcry is a good example of a force that forces an organization to change.
)
Q. What environmental forces caused these companies to change their practices? U
S
A. In this case, it was primarily the general public. C
(
.
Transition into the resistances to change section to discuss what may prevent these G
organizations from changing immediately. P
,
Notes_________________________________________________________________ A
B
______________________________________________________________________
M
______________________________________________________________________ ,
___________________________________________ N
E
I
Resistances to Change can occur at the organizational level, group level, or individual H
level.
G
N
Organizational-Level A
O
Power and conflict: If change benefits one function at the expense of another, conflict H
impedes the change process. Powerful divisions, such as IBM’s mainframe division, can
M
sabotage change. A
H
P
CHAPTER 10 TYPES AND FORMS OF
ORGANIZATIONAL CHANGE
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