Unit-1 Ocd

Organizational change
Chapter 1
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10-

There is no permanent
organizational chart for the world…
It is of supreme importance to be
ready at all times to take
advantage of new opportunities.
Roberto C. Goizueta
Former Chairman and CEO
Coca-Cola Company

Nature of Change
 PEST
 Pace of Change varies
 Change source in past and forecast in future
 Work and home
 Conventional technologies to superior
technologies
 More rapid, complex, turbulent, and more
unpredictable
 How soon present will become obsolete
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 10- 3

Nature of Change
 Globalization of market
 Technological changes
 Political realignment
 Changing demographics
 Changing customer preferences
 Organizational restructuring
Change is everywhere

 Change is defined as to make or become
different, give or begin to have a
different form
 Change means dissatisfaction with the
old and belief in the new
 Change underlies a quantitatively
different way of perceiving, thinking and
behaving and to improve over the past
and present

 Change may be conceived as
continuous and intrinsic to an
organization
 Change may be conceived as extrinsic
and discontinuous
 Change as patterned and predictable
 Change as complex and unpredictable
 Duality or bipolarity of change

What is Organizational Change?
 Organizational change: the process by
which organizations move from their
present state to some desired future state
to increase their effectiveness
 Goal is to find improved ways of using
resources and capabilities in order to increase
an organization’s ability to create value
 Targets of change include improving
effectiveness at four different levels
 Human resources
 Functional resources
 Technological capabilities
 Organizational capabilities

Internal Change Factors
 Technical Production  Organizational

Processes Culture
 Production  Values
 New Technologies  Norms
 Quality  New Member
 Political Processes Socialization
 New Organizational Goals
 Conflict
 New Leadership

External Change Factors
Immediate
 Immediate  General
 General Environment
Environment
Environment
Environment  Foreign
Foreign Competition
Competition
 Domestic
Domestic Competition
Competition  Social
Social Movements
Movements
 Population Trends Political-Economic
Population Trends 
Political-Economic
 Social Trends
Social Trends Movements
Movements
 Government Actions
Government Actions
 Technology
Technology
 Professionalization
Professionalization
 Culture
Culture Contact
Contact

External & Internal forces
External Forces
 Macro environment (PEST factors)
 Micro Environment (Consumers,
Suppliers, Stake Holders)

 Opportunities & Threats (SWOT)
Internal Forces
 Internal Environment (Men, Money,
Machinery, Materials, Minutes)
 Strengths & Weaknesses (SWOT)
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FORCES FOR CHANGE
(a) External Forces .
 Political and Social
 Economic
 Demographic characteristics,
 Technological advances,
 Market changes
 Increased global competition
 Government-deregulations, foreign exchange, anti
trust law, antidumping duties, suspension,

protectionism, IPR
 Changing customer needs and preferences
10-
b) Internal Forces
 System dynamics
 Inadequacy of administrative process
 Individual or group expectation
 Structure focused change
 Technological
 Human resource problems and Prospects
 Managerial behavior/decisions
 Profitability issues
 Resource constraints

Levels of Organizational
Change
 Levels
 Levels of
of analysis:
analysis:
 Structural
Structural change
change
Group
 Cross-culture
 Cross-culture variation
variation

Group change
change
in
in restructuring
restructuring
 Individual
Individual change
change  U.S.
U.S.
 Japan
Japan
 Germany
Germany
 China
China
 South
South Africa
Africa

LEVELS OF CHANGE
 (a) Individual Level Change
 Job assignment, physical Move, Change in maturity of a
person
 Not significant on organisation, but significant on group
 b) Group Level Changes
 Major effect because organizational activities are done in
groups like departments or informal groups
 affect workflows, job design, social organisation, influence
and status systems, and communication patterns.
 Managers must consider group factors
 (c) Organization Level Changes
 involves major programs 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
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TYPES OF CHANGE
 a) Strategic Change
 Change in the mission (when acquired)
 b) Structural Change
 Decentralization
 c) Process-oriented Change
 In manufacturing operations
 d) People-oriented Change
 Self – actualization (Motivation, Loyalty, Training,
Relationships)
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 Happened
 Reactive
 Anticipatory
 Planned
 Incremental
 Operational
 Strategic
 Directional

 Fundamental
 Total
 Transformational
 Revolutionary
 recreation

Happened Change
 This is Change that is rather unpredictable
and that takes place naturally due to
external forces.
 It is profound and traumatic, for it is out of
direct control and produces a future state
that is largely unknown.
 This type of change occurs when an
organisation reaches a plateau in its life
cycle and falls prey to unwieldy demands
from the environment.

Reactive Change
 Changes that are clearly in response to an event or
a series of
 events are termed Reactive changes. Generally
most companies are engaged in
 Reactive, often incremental change. These changes
are attempted when the demand for
 a company's product / service register an increase
or decrease or a problem / crisis
 occurs or develops. Technological changes, for
example force organisations to invest
 in modern technologies.

Anticipatory Change
 Change carried out in expectation of an event,
or series of events is called Anticipatory change.
 Organisations, in terms of their anticipation,
may tune in or re orient themselves to future
demands.
 Turning in would involve making incremental
changes in anticipation of external events.
 Reorientation is from 'here' to 'there' in
anticipation of changing environment.

Planned Changes
 Planned change or developmental
change is undertaken to improve upon
the current ways of operations.
 It is calculated change, initiated to
achieve a certain desirable
output/performance and to make the
organisation more responsive to
internal and external demands.

Incremental Change:
 Changes directed at the micro level and focused
on units/sub units/components with in an
organisation are termed incremental changes.
 Changes are brought in gradually and are usually
adaptive in nature.
 It is assumed that these small changes will help in
setting large change process and lead the system
slowly in a healthier direction.
 It also provides the organisation an opportunity to
learn from its own experiences.

Operational Change
 This is necessitated when an organisation needs to
improve the quality of its products or services due
to external competition, customer's changing
requirements and demands or internal
organisational dynamics.
 Improvement of production and service capabilities
could center on quality, timeliness, cost saving and
such other factors.
 The organization's goals remaining same, intended
change focuses on how to improve existing
operations to perform better

Strategic Change
 Change that addressed the organisation as a
whole or to most of the organization's
components including strategy may be
called strategic change.
 An example could be a change in the
organization's management style.
 Toyota has recently taken step’s to change
its overall corporate management
philosophy

Directional Change
 A change in direction may become imperative
for an organisation due to severe competition
or regulatory shifts in Govt.
 Policy and control, (for example on pricing,
import/export restrictions etc).
 Directional change is also critical when the
organisation is developing a new strategy and
incapable of executing its current strategy
effectively.

Total Change:
 For total change, organisation is constrained to
develop a new vision and a strong link between
its strategies, employees and business
performance.
 The organisation has to achieve a turn around
or perish.
 Total change is necessary to extricate the
organisation from the rot that has set in due to
long term failure of the business, employee
organisation value incongruence,

Transformational Change
 Such a change involves the entire or greater part
of the organisation.
 It could be a change in the shape (size and
complexity) structure (systems, ownership and
the like), or nature (basic assumptions, culture,
technology etc) of the organisation.
 The conditions that prompt organisational
transformation are the experience or anticipation
of a severe threat to survival.

Revolutionary Change
 About changes in the organisational
strategy and design represent
revolutionary change.
 Such changes comprise 3E's.
 Envisioning which is to articulate a
clear and credible vision and a new
strategy to realize the vision.

Recreation
 This involves a significant or drastic
change in an organization's strategy and
design or a radical departure from its
current practices to achieve a total
transformation.
 It is tantamount to letting down the old
structure and rebuilding a new one.
 Recreation is metamorphosis-becoming
not just better but different.

Fundamental Change
 This entails a redefinition of the current
purpose or mission of the organisation.
 It may be necessitated by drastic
changes in the business environment, the
failure of the current corporate
leadership, problems with employee
morale or a low turnover.

Types of Change in Organizations
 Evolutionary change: change that
is gradual, incremental, and narrowly
focused
 Revolutionary change: change
that is sudden, drastic, and broadly
focused

Developments in
Evolutionary Change
 Sociotechnical systems theory: a theory
that proposes the importance of changing
role and task or technical relationships to
increase organizational effectiveness
 Total quality management (TQM): an
ongoing and constant effort by all of an
organization’s functions to find new ways to
improve the quality of the organization’s
goods and services
 Flexible workers and Flexible work
teams
Developments in
Revolutionary Change
 Reengineering: the process by which
managers redesign how tasks are bundled
into roles and functions to improve
organizational effectiveness
 Focuses on business processes versus functions
 Deliberately ignores the existing arrangement of
tasks, roles, and work activities
 E-engineering: refers to companies’
attempts to use information systems to
improve their performance

Developments in
Revolutionary Change (cont.)
 Restructuring: changing task and authority
relationships and redesigning organizational
structure and culture to improve organizational
effectiveness
 Downsizing: the process of streamlining the
organizational hierarchy and laying off managers
and workers to reduce bureaucratic costs
 Innovation: the process by which organizations
use their skills and resources to:
 Create new technologies
 Develop new goods and services
 Better respond to the needs of their customers
 One of the most difficult instruments of change to manage

Targets of Change
 Human Resource changes include:
 Investment in training and development
 Socializing employees into the
organizational culture
 Changing organizational norms and
values to motivate a multicultural and
diverse workforce
 Promotion and reward systems
 Changing the composition of the top-
management team
Targets of Change
 Functional Resources changes Include:
 Transferring resources to the functions
where the most value can be created in
response to environmental change
 An organization can improve the value that
its functions create by changing its
structure, culture, and technology

Targets of Change
 Technological capabilities changes include:
 Efforts intended to give an organization the
capacity to change itself in order to exploit
market opportunities
 Adoption and use of new technologies
 Development of new products/ technologies
and the changing of existing one’s
 Technological capabilities are a core
competence

Targets of Change
 Organizational capabilities changes
include:
 Changing organizational design
 Culture and structure
 Changing strategy
 Changes that permeate entire
organization

Figure 10.1: Forces for and
Resistances to Change

Levin's Force-Field
Theory of Change
 Argues that two sets of opposing forces within an
organization determine how change will take place
 Forces for change and forces making organizations
resistant to change
 When forces for and against change are equal, the
organization is in a state of inertia
 To change an organization, managers must increase
forces for change and/or decrease forces resisting change

Figure 10.2: Levin's Force-Field
Theory of Change

Figure 10.5: Levin's Three-Step
Change Process

Managing Change:
Action Research
 Action research: a
strategy for generating
and acquiring
knowledge that
managers can use to
define an organization’s
desired future state
 Used to plan a change
program that allows the
organization to reach
that state
 Helps in the unfreezing,
changing, and refreezing
process

System model of change
 Organization wide change
 People Culture
 Task Technology
 Design Strategy

 Organization has six interacting variables
that could serve as the focus of planned
change
 People
 culture
 Task
 Technology
 Design
 strategy
organizational vision and strategic
planning.
 Complexity and forces
 Need for change for its own survival
and growth
 It needs either vision or an overall
direction that guides change
 A idea, a vision, or a dream of a leader
or a group could provide this direction

What is vision
 Is a concise and clear description of
where an organization is going
 It is futuristic and refers to the end
goal to be achieved and the reality
that come into existence
 Statement of vision reflect the best of
an organization
 Simple, aspirational and non-limiting.

 The ability to formulate a future that is
based on the present but better it
 An idea or image of the future
 A super ordinate goal that can
generate a unique rush of power
 The sheet anchor of an organizations
or one’s effort
 An underlying philosophy and
compelling purpose of an organization
 The purpose of vision is to guide, to remind,
to inspire, to control and to free employees
 Which reflect the culture and values of an
organization and its core competencies
 Which is a picture of a process not a
structure. It is something that can breath,
grow, adapt, and learn.it is an ongoing,
participative, flexible, ever-evolving part of
an organizational life

Vision and mission
 Vision focuses on the future, a mission
statement is concerned with the present
 Mission is considered in two ways
 A strategic tool
 Enables an organization to function as a
collective unity
 What and strong norms and values
 A mission is said to exist when culture and
strategy are mutually supportive
 Values, purpose, strategy and behavior

 Values reflects the beliefs and principles that
govern an organizations behavior and tend to be
normative
 Purpose helps examine what the company is for in
order to benefit the shareholders, satisfy all
stakeholders, or make a significant contribution to
community or society
 Strategy refers to the ways and means of achieving
the purpose
 Behaviour is an outcome of translating purpose and
strategy into tangible standards, actions, policies

 Organizational change involves
redefining or revising the mission
statement change in an organizations
purpose and strategy in the context of
a changing business environment
necessitates revising its mission
statement

Vision and strategy
 Vision relates to where a company is going or
its directionality, strategy relates to how to get
there
 A vision statement is larger than and different
from a strategy statement
 Strategy statement in turn is larger than and
different from plans and tactics\
 What it should be
 What characterizes it
 How effective it should be
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Vision and organizational
performance
 The vision should be shared through length
and breadth of the organization
 Vision determines strategies, plans and
budgets the process of envisioning
- Enable an organization to define its
distinctive competence
- Enable the organization to look beyond the
existing company borders
- Generate new perspectives

 Help identify an appropriate configuration to
achieve the best organization environment
fit
 Be logical, deductive and plausible while at
the same time being mind stretching
 Be collectively owned based on employees
at different levels jointly constructing the
future reality and not something set out by
the top management to be followed down
the lane

Leadership and vision
 Organizational leadership plays a key
role in developing vision, and in
inspiring and committing employees to
the vision
 It is associated with the top leadership
 Not that all leaders tend to be
visionaries, but most visionaries can be
great leaders

Characteristics
 Has a strong concern and guiding purpose
 Committed to vision and its realization
 Is creative, able to generate number of ideas
 Is an effective and meaningful communicator
 Is cognizant of expectations and motives of
people
 Is willing to examine vision from time to time
 Is not afraid of failure and able to take risk
 Is willing to empower employees to be creative
and to experiment

Visionary leaders is
 Is able to understand and deal with group
dynamics and to enthuse employees in working
towards goal
 Set goals which are visible
 Ensures the credibility of goals by
accomplishing success at different stages
 Tends to involve key individuals and groups in
formulating the vision and the change plans
 Exhibit the behaviors embodied in the desired
state of vision
 Reinforcing
Strategic planning
 The ability of a company to fit in with the
changing business environment and be at the
cutting edge of competition is the key to its
longevity
 A vision and strategy to realize vision
 To plan strategically company needs to
undertake a comprehensive analysis of what it
presently is, what it should be, what it should
not be
 Business theory

 Develop a futuristic perspective
 Conduct a competitive analysis of the industry
and its strategic segments
 Examine its core competencies in the context of
competitors market segments advancements in
technology time and resources
 Operational and extrapolation of historical data
 Strategic planning is both externally and
internally oriented: externally oriented to be
able to respond to markets and competition in
the future and internally oriented to managing
its resources in order to achieve a competitive
advantage and create for itself a future

Purpose of strategic planning
 Looking forward several years to
determine where the company should
go
 Developing a realistic vision and goals
to achieve the vision
 Measuring progress towards goal
achievement
 Providing tools to guide tactical and
operational decisions
Competitive Analysis
 Analysis of business and environment that
the company operates
 It has to obtain the competitive field of
vision
 The analysis focuses on each of the
competitors unique positions taking into
account its maturity in the context of the
industry its past records, market segment,
market share, market forces and barriers
 Gathering information about competitors
assists an organizational goals
 The competitive field of vision is the strategic
map that permits an organization to plot all the
players in the arena , including suppliers,
vendors, distributors and retailers.
 A company should identify significant strategic
segments in which to compete
 Segment may also be examined in terms of how
distinct it is or the extent to which it overlaps
with the others
 To be able to decipher the competitive map a
company has to gather the necessary
intelligence
Competitive Intelligence
 CI is the search for clues and signs that enable
the comprehension of what ones competitors
plan to do or are actually doing
 It may be regarded as one of the competencies
that an organization needs to possess to position
itself strategically in business environments in
relation to its competitors
 The intelligence may be gathered with respect to
strategic decision that competitors make their
strengths and weaknesses their successes and
failures

 CI assist in determining the needs of current
and potential customers and in identifying
opportunities before they become evident
enabling an organization to implement its
strategy ahead of its competitors
 CI may be gathered in a variety of ways:
Scanning competitors annual reports and other
public documents from industry reports by
analysts, researchers and the media,
opportunistic data.

 Gathering CI can succeed if CI is considered an
organizational competency, the top
management is committed to it, it is considered
a priority and granted sufficient resources in
terms of staff and funding
 An organization while trying to obtain CI about
other organization must be smart enough to
guard itself against competitors
 To be vigilant should be part of organizational
culture the organization should also try to retain
its competent managers and lose them to
competitors
Self analysis
 A company should engage in self analysis so as
to determine what its core capabilities are
 The essence of a firm is in fact reflected in its
core capabilities: technology, R&D,
innovativeness, good customer/supplier relations
 It is in terms of the core competencies as related
to customer needs that a company can diversify
 Core competencies often emerge from an
interaction of few key players in the company
and a series of experimental successes in the
market place

Aspects
 Uniqueness
 Commonality
 Application
 Endurance
 Persistence
 Relevance
 Company image
 Potential competencies
 Critical success factors

Future scenarios
 Based on competitive and self analysis an
organization may prepare scenarios to assist
 Scenarios are speculative, detailed, well thought
out narratives of future business environments
based on an agreed upon set of future
circumstances comprising the next 5,10,15 years
 Helps to manage organizational change by
foresight rather than hindsight
 Scenarios have been part of standard strategy
tool kit of many leading firms

Factors
 Time frame
 Scope
 Environmental fluctuations
 Unknowability
 Scenario preparation begin by
assuming particular end states and
how business related environmental
forces influence these end states

 Three or four scenarios can be generated – the
best, the worst, most likely and least likely
 Each type of scenario forms the basis for
identifying strategies in terms of how to face
challenges presented by the future business
environment effectively
 The risks involved also examined
 Scenario specific, fundamental risks,

Basic paradigms to realize
vision or strategy
 Strategy structure system model
 Purpose process people model

Strategy structure system
model
 Many organizations strategies are designed
around structured systems based on the
paradigm that strategy determines the structure
and system are designed to support the
structure
 Organizations are conceived as collection of
structures and systems with the organizational
architecture designed to provide order,
uniformity and symmetry
 The structure and system will elicit right
behavior from employees

 The 3s model works well when
organizations are limited in their size and
complexity and the business environment
in which they operate are stable
 Its approach is mechanistic
 Setback with the changing times
 External internal factors
 The 3s model is data depenent

Purpose process people
model
 3 Ps model is concerned with the process and the
people creating a learning environment enabling
people to take initiative, innovate, and cooperate
to achieve a desired purpose
 3 Ps emphasizes
 Clarifying or redefining and building an engaging
corporate purpose
 The effective management of the process in line
with the purpose as well as the fact that an
organization be considered a portfolio of
processes

 Characterizing the organizational process
by entrepreneurism, internal
competency building, and periodic
organizational renewal
 Involving employees, and enhancing
their competency and commitment to
the desired purpose
 Focusing individual and team activities
around processes rather than tasks

 3 Ps model moves form the chart centered
mechanistic approach of the 3 S model
 Change does nit only happen through 3 s,
organizational dynamics are complex
 A company is a integrative function of process
as driven by the purpose of the organization
 Business –input-output through process


Tapping collective wisdom
 Enhancing employees organizational
consciousness
 Involving people in redefining its purpose and
the strategic direction in which it should move
 Clarifying the employees roles and
responsibilities and contractual relationship
between him/her and the organization
 Creating in employees a sense of ownership for
his/her job
 Providing infrastructure that enables emplyees

Process that enable organizational
and individual competency
 Focusing on process critical to the business strategy
 Examining the processes
 Simplifying complex process
 Belief in the assumption of organizational core
competencies are distributed across
 The organization climate characterized by
congruence of goals and vales of the organization
and individual
 An information management system designed to
assist
 Supportive and nurturing management practices

Organizational Development (OD)
 Organizational development (OD):
a series of techniques and methods
that managers can use in their action
research program to increase the
adaptability of their organization
 Goal is to improve organizational
effectiveness and to help people in
organizations reach their potential and
realize their goals and objectives
 Can be used to unfreeze, change, and
refreeze attitudes and behaviors
Organizational Development
(cont.)
 OD techniques to deal with resistance
to change
 Education and communication: inform
workers about change and how they will be
affected
 Participation and empowerment:
involve workers in change
 Facilitation: help employees with change
 Bargaining and negotiation
 Manipulation: change the situation to
secure acceptance
 Coercion: force workers to accept change
Organizational Development
(cont.)
OD techniques to promote
change
 Counseling, Sensitivity training, and
Process consultation
 Team building, Intergroup training,
and Organizational mirroring

 Total organizational interventions
 Organizational confrontation meeting

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Organizational change

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 Technical Production  Organizational

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Suppliers, Stake Holders)

 Increased global competition

 Government-deregulations, foreign exchange, anti

trust law, antidumping duties, suspension,

 Inadequacy of administrative process

 Individual or group expectation

 Structure focused change

 Human resource problems and Prospects

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