Management 7th Edition Robbins Solutions Manual

Management 7th Edition Robbins
Solutions Manual
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C H A P T E R S E V E N
Managing
Chapter outline
change and
innovation 7
Learning outcomes
Opening vignette: The need for change at Qantas
In today’s dynamic workplace, managers can be
Forces for change sure that one thing will remain constant—
External forces change. In order to compete successfully,
Internal forces managers must embrace change and encourage
Two views of the change process creativity and innovation among all the
The calm waters metaphor employees in their organisation.
The white-water rapids metaphor
Putting the two views in perspective In the opening vignette to Chapter 7 we have
Managing organisational change selected Qantas as an example of the types of
What is organisational change? challenges that managers may encounter as they
Types of change try to introduce change in their organisations.
Changing structure Qantas is undergoing some difficult times as
Changing technology CEO Alan Joyce tries to steer the Australian
Changing people
carrier through turbulence in the wake of the
Managing resistance to change
GFC, a high Australian dollar and aggressive
Why people resist change
competition domestically from Virgin Australia
Using force-field analysis
Techniques for reducing resistance
and internationally from government-owned or
Contemporary issues in managing change supported carriers such as Emirates, Singapore
Changing organisational cultures Airlines and Air New Zealand. While managers
Understanding the situational factors appreciate and support the need for continual
How can cultural change be accomplished? adaptation to marketplace demands, regular non-
Handling employee stress managerial employees often do not understand
What is stress? why so much change is necessary. The ability to
What causes stress? manage change is therefore an essential skill for
What are the symptoms of stress? contemporary managers.
How can stress be reduced?
Making change happen successfully As your students study Chapter 7, they will
Stimulating innovation discover ways to manage change successfully
Creativity versus innovation and to stimulate creativity and innovation. We
Stimulating and nurturing innovation have also focused on one of the most challenging
Structural variables issues of today—how sustainability will drive
Cultural variables
change, which is undoubtedly something your
Human resource variables
students will experience in the coming years.
Change, innovation and sustainability
Sustainability-driven change
Social and environmental entrepreneurs
Sustainability—a profound challenge for change
Copyright ©2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd)–9781486006335/Robbins/Management/7th edition
Many PowerPoint slides, including both original text art and newly created images, have been
developed and are available for you to coordinate with Chapter 7 presentation materials.
LEARNING OUTCOMES
Change is a constant for organisations and thus for managers. Because change cannot be eliminated,
managers must learn how to manage it successfully. Because innovation is often closely tied to an
organisation’s change efforts, managers must know how to manage it as well. This chapter focuses on
the following learning outcomes:
7.1 Explain why handling change is an integral part of every manager’s job.
7.2 Compare and contrast the two views on the change process.
7.3 Classify types of organisational change.
7.4 Explain how to manage resistance to change.
7.5 Discuss contemporary issues in managing change.
7.6 Describe techniques for stimulating innovation.
7.7 Discuss the connection between change, innovation and sustainability.
ANNOTATED OUTLINE
1. CHAPTER OVERVIEW.
Change and change management are important aspects of a manager’s job. Instead of trying
to eliminate change, managers must realise that change is always present and that they should
seek ways to manage change successfully. This chapter focuses on ways to manage change
effectively and how to promote innovation in an organisation.
➢ NOTES Educational Materials to Use
2. FORCES FOR CHANGE.

Both external and internal forces create the need for change as illustrated in Table 7.1.
A. External forces.
External forces creating the need for change come from various sources:
1. The marketplace
2. Government laws and regulations
3. Technology
4. Labour markets
5. The economy
B. Internal forces.
Internal forces creating the need for change usually originate from the internal
operations of the organisation or from the impact of external changes. These internal
forces include:
1. Changes in strategy
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2. Changes in the workforce
3. New equipment
4. Changes in employee attitudes
3. TWO VIEWS OF THE CHANGE PROCESS.

Two very different metaphors can be used to describe the change process.
A. The calm waters metaphor.
The calm waters metaphor characterises the process of change as a ship crossing
a calm sea. It can be illustrated by Lewin’s three-step process for change. (See
Figure 7.1)
1. Unfreezing the equilibrium is the first step. This can be accomplished in one
of three ways.
a. Increasing driving forces, which direct behaviour away from the
status quo.
b. Decreasing restraining forces, which hinder movement from the
existing equilibrium.
c. Combining the two approaches.
2. The next step is to implement the change itself.
3. The final step is to refreeze the situation.
B. The white-water rapids metaphor.

The white-water rapids metaphor describes change that takes place in uncertain and
dynamic environments.
C. Putting the two views in perspective.

To put the two views in perspective, it is helpful to note that not every manager
constantly faces a world of chaotic change. However, the number of managers who
do not face this type of environment is dwindling fast! Managers in such businesses
as telecommunications, computer software, pharmaceuticals and women’s high-
fashion clothing have long confronted a world of white-water rapids. These managers
used to envy their counterparts in industries such as banking, utilities, publishing, oil
exploration and air transportation, where the environment was historically more
stable and predictable. However, those days of stability and predictability are long
gone!
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Managing from a
Global Perspective Nokia mobile phones signal dead
This Managing from a Global Perspective box uses Nokia to illustrate how a company’s failure
to adapt to external changes can place it in a difficult position. As the world’s biggest maker of
mobile phones, Nokia, a Finnish company, used to be a global powerhouse. However, Nokia
phones lost popularity due to its unwillingness to change, or to adapt to changes in consumer
preferences.
Although innovation is important for all organisations, it is absolutely critical for mobile phone
companies as change in this industry is continual, unpredictable and sudden. Seeing the buzz
created by the iPhone, Nokia neglected the growing fondness for apps and touch screens and
believed that its products were superior. One of the paradoxes of business is that many times a
business is the victim of its own success. Obviously, Nokia made the mistake of
underestimating the competition (i.e. Apple) and not paying attention to the customer. When
companies fail to take these considerations into account, they are sure to fail. Now it is back to
the drawing board again for Nokia after having sold its mobile phone business to Microsoft.
Hopefully it has learned from its experiences.
4. MANAGING ORGANISATIONAL CHANGE.

Most managers, at one point or another, will have to make changes in some aspects of their
workplace.
A. What is organisational change?
Organisational change is any alteration of people, structure or technology.
A change agent is an individual who acts as a catalyst and manages the change
process. This person could be a manager or a non-manager (such as a specialist or an
external consultant). Managers act as change agents and initiate change because they
are committed to improving organisational performance.
B. Types of change.
The manager’s options for change essentially fall into three categories: structure,
technology and people. (See Figure 7.2)
1. Changing structure.
a. Managers can alter one or more of the structural components, such as
work specialisation, departmentalisation, chain of command, span of
control, centralisation/decentralisation and formalisation.
b. Frequently, the design of the organisation’s structure is changed in
order to meet new demands.
2. Changing technology.
a. Competitive factors or new innovations often require the introduction
of new equipment, tools or operating methods.
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b. Automation is a technological change that replaces certain tasks done
by people with machines.
c. Computerisation has probably been the most visible technological
change in recent years.
3. Changing people (their attitudes, expectations, perceptions and behaviours).

(See Figure 7.3)
a. Organisational development (OD) focuses on techniques or
programs to change people and the nature and quality of
interpersonal work relationships.
b. Team building includes interaction among members of work teams
so that they may learn how each other thinks and works.
c. Intergroup development involves changing the attitudes, stereotypes
and perceptions that work groups have of each other.
d. Survey feedback is a technique for assessing attitudes, identifying
discrepancies among them and resolving differences by using the
survey information in feedback groups.
e. Sensitivity training is a method of changing behaviour through
unstructured group interaction.
f. Process consultation involves help given by an outside consultant to a
manager in perceiving, understanding and acting upon interpersonal
processes.
5. MANAGING RESISTANCE TO CHANGE.

Organisations can build up inertia that actually motivates employees to resist change.
A. Why people resist change.
An individual is likely to resist change for the following reasons:
1. Uncertainty
2. Concern over personal loss
3. Belief that the change is not in the best interest of the organisation
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B. Using force-field analysis.
A useful technique for analysing change situations is Kurt Lewin’s force-field
analysis method. This method proposes that two sets of forces operate in any
system—forces that operate for change (the driving forces) and forces that
operate against change (the resisting forces). (See Figure 7.4)
Managing Workforce Gender diversity in leadership

Diversity and Inclusion needs to change!
On 6 November 2013, 21 leading male executives and CEOs from some of Australia’s largest
and oldest commercial and public institutions came out with a strong call for greater action and
publicly pledged to do more for the advancement of women in their organisations. Calling
themselves Male Champions for Change, they turned up in force at a forum in Sydney where
they launched a very public campaign for change to lift the number of women in their own
senior ranks and to put pressure on companies they deal with to do the same. ‘Too often’, they
said in a joint statement, ‘we have found that women’s experiences and their advancement are
... dependent on whether they are lucky enough to have a manager or sponsor who is
supportive and inclusive. We need to end the leadership lottery.’
In the same week, the Business Council of Australia released a report that called on its
members— the CEOs of Australia’s top 100 corporations—to have a good, hard think about
their recruitment, promotion and retention strategies in relation to women. ‘To take 90 per cent
of company leadership from just 50 per cent of the talent pool—the males—simply does not
make sense’, the report, entitled Increasing the Number of Women in Senior Executive
Positions, said. ‘Women lag, in terms of career prospects and remuneration, from day one of
the job. As their careers progress, the gender gap widens, with men nine times more likely to
reach senior executive ranks than women.’
How do your students feel about these two initiatives? Will these two very strong action calls
for change help to generate a major shift in Australian organisations? Get your students to
think about how Australian businesses can change in this regard. What do they see as the
‘elephant in the room’? Are some managers guilty of being misogynists?
C. Techniques for reducing resistance.

Six actions have been proposed for use by managers in dealing with resistance to
change. (See Table 7.2)
1. Education and communication
2. Participation
3. Facilitation and support
4. Negotiation
5. Manipulation and co-optation
6. Coercion
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Managing for Community involvement to
Sustainability overcome resistance
Alternative ‘clean’ energy sources will be needed to deal with the increasing problems of
climate change and global warming. One such source is wind farms, but in Australia—like in the
rest of the world—there has been a lot of resistance from various stakeholders when proposals
have been put forward for the construction of such farms. This Managing for Sustainability box
outlines some of the reasons why there has been such resistance but also describes how
companies involved in this process can learn from other countries when it comes to working
out strategies to overcome the resistance.
Managing change successfully requires an understanding of why people resist change and the
actions that can be used to reduce resistance. When using the right approach, for example by
using education and participation, some wind farm companies in Europe have been able to get
the communities on their side.
6. CONTEMPORARY ISSUES IN MANAGING CHANGE.

Critical change issues today include: organisational cultures, managing the downsized
workplace, employee stress and successful change action.
A. Changing organisational cultures.
If an organisation’s culture becomes inappropriate, it may need to be changed.
1. Culture is resistant to change because:
a. Culture consists of relatively stable and permanent characteristics.
b. Culture is formed over a long period of time.
c. Strong cultures have highly committed people.
2. Understanding the situational factors.

Understanding the situational factors can help facilitate cultural change. The
following conditions stimulate cultural change:
a. A dramatic crisis occurs.
b. Leadership changes hands.
c. The organisation is young and small.
d. The culture is weak.
3. How can cultural change be accomplished?

There is a need for a comprehensive, coordinated strategy for managing
cultural change. (See Table 7.3)
Three points to remember when it comes to achieving cultural change:
a. To change culture often takes seven to ten years.
b. The change agents (the corporate CEOs) are in many cases outsiders.
c. The CEOs started their new jobs by trying to create an atmosphere of
perceived crisis.
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B. Handling employee stress.
Change can create stress. The dynamic and uncertain environment that is
characteristic of mergers, restructurings, forced retirements and downsizings can
create a large number of employees who are overworked and stressed out.
1. What is stress?
Stress is the adverse reaction people have to excessive pressure placed on
them from extraordinary demands, constraints or opportunities.
2. What causes stress?
Stress can be caused by personal factors and by job-related factors called
stressors. (See Figure 7.5)
Research shows that stress may be related to the organisation or to personal

factors. Important variables that have been known to cause employee stress
include:
a. Task demands
b. Role demands
1) Role conflict: Work expectations that are hard to satisfy
2) Role overload: Having more work to accomplish than time
permits
3) Role ambiguity: When role expectations are not clearly
understood.
c. Interpersonal demands
d. Organisational structure
e. Organisational leadership
f. Personality
1) Type A personality: People who have a chronic sense of
urgency and an excessive competitive drive.
2) Type B personality: People who are relaxed and easygoing
and accept change easily.
3. What are the symptoms of stress?

Stress can be exhibited in a number of ways. For example, an employee who
is experiencing a high degree of stress may become depressed, accident prone
or argumentative and may be easily distracted. Figure 7.6 groups stress
symptoms into three categories:
a. Physical
b. Psychological
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c. Behavioural
4. How can stress be reduced?

Stress can be reduced through various methods.
a. Employee selection plays an important role in preventing some job-
related stress.
b. Job redesign that increases opportunities for employee participation
and social support can lessen stress.
c. Employee counselling can provide stress relief.
d. Time-management programs may be helpful in sorting out employee
priorities.
e. Various fitness programs can also be useful.
C. Making change happen successfully.

Organisational change is not only necessary when strategies change or crises occur; it
is an ongoing daily challenge for managers all over the world. Managers can increase
the likelihood of making change happen successfully by:
1. Making the organisation ready for change. Table 7.4 summarises the
characteristics of becoming a change-capable organisation.
2. Recognising the important role they play in the change process.
3. Getting all organisational members involved.
Thinking Critically
about Ethics Change can kill
It is becoming increasingly clear that the pressures and associated stresses of the modern-day
workplace are having a major impact on people’s health. Research has clearly identified that
too much stress can be bad for our health and well-being. That connection has proved itself
painfully and tragically at France Télécom, as outlined in this Thinking Critically about Ethics
box. Between 2008 and 2011, more than 50 people at France Télécom committed suicide and
many were attributed to work-related problems due to drastic changes within the company.
Explore your students’ reactions to the situation at France Télécom. What factors, both inside
the company and externally, appear to have contributed to this situation? What stress
symptoms might have alerted managers to a problem? Should managers be free to make
decisions that are in the best interests of the company without worrying about employee
reactions? Has France Télécom’s management done enough to address the situation? Are
there any ethical issues involved in managing change? What do your students think?
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7. STIMULATING INNOVATION.
Innovation is essential to organisational success in a dynamic marketplace.
A. Creativity versus innovation.
There is a difference between creativity and innovation.
1. Creativity is the ability to combine ideas in a unique way or to make unusual
associations between ideas.
2. Innovation is the process of taking a creative idea and turning it into a useful
product, service or method of operation. Table 7.5 lists the top 15 innovative
companies around the world.
B. Stimulating and nurturing innovation.

How can managers foster innovation? By using the systems model, we can see how to
foster innovation. (See Figure 7.7) Three sets of variables have been found to
stimulate innovation. (See Figure 7.8)
1. Structural variables can be summarised as follows:
a. Organic structures positively influence innovation.
b. The easy availability of organisational resources provides a critical
building block for innovation.
c. Frequent inter-unit communication helps break down barriers to
innovation.
Managers Who Ratan Tata,

Made a Difference Indian business guru
In this Managers Who Made a Difference box we feature Ratan Tata, the Chairman of one of
India’s largest conglomerates, who has been a strong advocate of innovation within the Tata
Group of companies. As we discuss in this chapter, innovation is closely tied to change and the
ability to manage change is an essential skill for contemporary managers. Tata has an
interesting way to promote innovation within his company. Each year, Tata host a competition
designed to promote internal innovation. Last year 1700 employee teams participated. The
prize for the winners? Tata does not give cash, but instead gives awards that promote team
respect and recognition. This is something that has paid off for the company in the form of the
creativity and ingenuity that is now unfolding across the wide expanse of the Tata Group.
Ratan Tata understands that innovation is one of the major keys to the Tata Group’s ongoing
success. That is why he sees that his primary role, as the Chairman of the company, is to
ensure that creativity and innovation continue to thrive in his organisation. Many other
managers could well learn from his example.
2. Cultural variables show that an innovative culture is likely to be characterised

by the following:
a. Acceptance of ambiguity
b. Tolerance of the impractical
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c. Low external controls
d. Tolerance of risk
e. Tolerance of conflict
f. Focus on ends rather than means
g. Open systems focus
3. Human resource variables are indicative of the important role that people
play in innovative organisations.
a. Innovative organisations actively promote the training and
development of their employees so their knowledge remains current.
b. Innovative organisations offer employees high job security.
c. Innovative organisations encourage individuals to become idea
champions—individuals who actively and enthusiastically support a
new idea, build support, overcome resistance and ensure that the
innovation is implemented.
8. CHANGE, INNOVATION AND SUSTAINABILITY.

The impacts of a changing climate and the actions that are required to deal with other
environmental and social issues are becoming a major catalyst or force for change.
A. Sustainability-driven change.
Sustainability has become a driver for change and innovation in many industries.
1. Change in large and well-established organisations can be difficult to
achieve. Much of the attention of these large organisations has been focused
on doing existing things better.
2. For global sustainability to happen, creative destruction—which is the
process of transformation that accompanies radical innovation—may need to
happen.
3. In the past, many different forces have set off innovation-generating creative
destruction in various industries; these forces include radical new products,
changes in customer preferences, new technologies, new methods of
organising or managing and new legislation.
4. As opposed to traditional market-driven innovation, sustainability-driven
innovation must incorporate the added variables of environmental and social
impacts.
5. Innovation in relation to more sustainable business operations in existing

organisations can occur in two ways:
a. First, it can occur through an incremental—or competency-
enhancing—approach, where businesses pursuing this path can
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continue profiting from their proven technology and organisational
competency base.
b. Second, it can occur through a departure from the present knowledge
base —thus, a competency-destroying approach—which may require
vastly different organisational, managerial and infrastructure
requirements.
6. As a result of this, there will be major changes and a number of organisations
may find it difficult to survive the Sustainability Age. However, new
organisations will emerge that have the potential to be tomorrow’s large
successful companies.
B. Social and environmental entrepreneurs.

Various social and environmental entrepreneurs are now starting to take advantage of
the heightened public awareness of social and environmental issues to create new
products and services.
1. Social and environmental innovation may become a considerable competitive
advantage opening up new market opportunities.
2. A number of initiatives are now in place to encourage environmental
entrepreneurs such as the Virgin Earth Challenge and the Clinton Global
Initiative.
3. It is also important that sustainable business practices include a social
element. For example, meeting human needs in the developing world is as
important as dealing with the environmental concerns.
C. Sustainability—a profound challenge for change.

The challenges that lie ahead in achieving more sustainable approaches to business
are enormous, considering the scale of change and innovation needed.
1. Idea champions in established companies and emerging environmental and
social entrepreneurs will therefore need assistance when they embark on this
road to change.
2. Governments around the world need to develop regulatory systems and
mechanisms that accelerate the adoption of sustainable business practices.
3. Global financial institutions such as banks will also have to play a leading
role in shaping a more sustainable world. Many of them are now signing up
to the Equator Principles—voluntary guidelines for determining, assessing
and managing social and environmental risk in project financing.
4. Few companies are currently considered fully sustainable, however a growing
number of companies have shown that developing more sustainable business
operations through innovation is possible as they move on a path towards
sustainability.
5. With pressure being applied from outside organisations, particularly in
relation to global warming and climate change, organisations can no longer
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continue with business as usual and overlook the necessity of achieving more
sustainable business operations.
6. It may be wise to remember Charles Darwin’s conclusion: ‘It is not the
strongest of the species that survive, nor the most intelligent, but the ones
most responsive to change.’
Answers to REVIEW QUESTIONS
1. Explain why handling change is an integral part of every manager’s job.

Handling change is an integral part of the manager’s job because change is an organisational
reality for all managers. Managers must take steps to make their organisations more efficient
and flexible because of external and internal forces for change. (LO: 7.1, Explain why handling
change is an integral part of every manager’s job.)
2. Identify the external and internal forces for change.

External forces that create the need for change include changes in the marketplace, government
laws and regulations, technology, fluctuations in labour markets and economic change. Internal
forces include the organisation’s strategy, workforce composition changes, the introduction of
new equipment and employee attitude shifts. (LO: 7.1, Explain why handling change is an
integral part of every manager’s job.)
3. Contrast the calm waters and the white-water rapids metaphors for change.
According to the calm waters metaphor, change is a process of unfreezing, attempting a new
behaviour and refreezing to develop a new equilibrium for the organisation. Change is seen as a
routine, easily managed phenomenon. In contrast, the white-water rapids metaphor suggests
that the environment is dynamic and uncertain. Change is constant, bordering on chaos. In
today’s complex environment, more companies find themselves in the white-water rapids with
regard to change. (LO: 7.2, Compare and contrast the two views on the change process.)
4. Explain Lewin’s three-step model of the change process.

According to Lewin, successful change can be planned and requires (1) unfreezing the status
quo, (2) changing to a new state, and then (3) refreezing to make the change permanent. The
status quo can be considered an equilibrium state. To move from this equilibrium, unfreezing is
necessary according to Lewin. Unfreezing can be thought of as preparing for the needed
change. Once unfreezing has been accomplished the change itself can be implemented.
However, merely introducing change does not ensure that the change will take hold. The new
situation needs to be refrozen so that it can be sustained over time. Unless this last step is done,
there is a strong chance that the change will be short-lived as employees revert to the original
equilibrium state—that is, the old ways of doing things. The objective of refreezing is to
stabilise the new situation by reinforcing the new behaviours. (LO: 7.2, Compare and contrast
the two views on the change process.)
5. Discuss the environment that managers face today.

It is important to note that Lewin’s three-step process treats change simply as a break in the
organisation’s equilibrium state. However, the environment that most managers face today is a
complex and very dynamic environment, where change is an ongoing process, and which
requires organisations to be incredibly flexible and able to respond quickly to every changing
condition. Disruptions in the status quo are not occasional and temporary. Instead managers
7-13
must accept that the days of the environment being stable and predictable are gone for many
businesses. Today, an organisation that treats change as occasional disturbance in an otherwise
calm and stable world runs a great risk. Too much is changing too fast for any organisation or
its managers to be complacent. Most competitive advantages last a short time only—often less
than 18 months. It is no longer business as usual. And managers must be ready to manage the
changes facing their organisations or work areas efficiently and effectively. (LO: 7.2, Compare
and contrast the two views on the change process.)
6. Define organisational change.

Organisational change is any alteration in people, structure or technology. (LO: 7.3, Classify
types of organisational change.)
7. Contrast using internal and external change agents.

A change agent is someone who acts as a catalyst for change and assumes responsibility for
managing the change process. The change agent can be an internal member of the organisation
such as a manager or change specialist from the human resources department, or it can be an
external outside consultant. For major system-wide changes, an organisation will often hire
outside consultants to provide advice and assistance. Because they are from the outside, they
can offer an objective perspective that insiders may lack. However, outside consultants are
usually at a disadvantage because they have an extremely limited understanding of the
organisation’s history, culture, operating procedures and people. Outside consultants are also
prone to initiate more drastic change than insiders would (which can be either a benefit or a
disadvantage) because they do not have to live with the repercussions after the change is
implemented. In contrast, internal managers who act as change agents may be more thoughtful
(and possibly overcautious) because they must live with the consequences of their decisions.
(LO: 7.3, Classify types of organisational change.)
8. Describe how managers might change structure, technology and people.

Managers can alter one or more of the structural components (work specialisation,
departmentalisation, chain of command, span of control, centralisation/decentralisation and
formalisation) or introduce changes in the actual structural design of the organisation. For
instance, departmental responsibilities could be combined, organisational levels eliminated or
spans of control widened to make an organisation flatter and less bureaucratic. Or more rules
and procedures could be implemented to increase standardisation. An increase in
decentralisation can be used to make decision making faster. Even organisational downsizing
efforts involve changes in structure. Managers can also redesign jobs to affect the
organisation’s structure.
Changing technology has influenced organisational change in requiring managers to introduce
new equipment, tools or operating methods; to respond to automation by replacing people with
machines; and to expand computerisation via sophisticated information systems.
Changing people’s attitudes, expectations, perceptions and behaviours can be done through
various organisational development techniques or programs. For example, team-building
teaches work-team members to understand how each member thinks and works. Intergroup
development is the attempt to change the attitudes, stereotypes and perceptions that group
members have about each other. Sensitivity training is a method of changing behaviour through
unstructured group interaction. Survey feedback is a technique for assessing the attitudes of
organisational members, identifying discrepancies in these attitudes and perceptions and
resolving the differences by communicating survey information in feedback groups. Process
consultation uses an outside consultant to help a manager perceive, understand and act upon the
process events with which he or she must deal. (LO: 7.3, Classify types of organisational
change.)
9. Explain why people are likely to resist change.
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People resist change for three reasons: uncertainty, concern over personal loss and the belief
that the change is not in the organisation’s best interest. (LO: 7.4, Explain how to manage
resistance to change.)
10. Describe how force-field analysis can be used to identify options for dealing with resistance.
The force-field analysis is a useful technique for analysing change situations. This model
proposes that two sets of forces operate in any system—forces that operate for change (the
driving forces) and forces that operate against change (the resisting forces). If the two sets of
forces are equal in strength, then the system is in equilibrium. By identifying the specific
driving and resisting forces, managers can work out different strategies for how they can
introduce change. One change strategy would be to increase the driving forces by advocating
the reasons why the change should be introduced. However, an attempt to shift the equilibrium
may result in an increase in resistance. Another strategy (perhaps more effective) would be to
reduce the resisting forces. In fact, focusing on reducing or eliminating the forces against the
change may take the pressure off the situation and result in a change in the equilibrium and thus
result in an unfreezing of the situation which may aid the actual implementation of the change.
(LO: 7.4, Explain how to manage resistance to change.)
11. Identify the six techniques for dealing with resistance to change.
The six techniques for dealing with resistance are: (1) education and communication (giving
employees the full facts and clarification), (2) participation (bringing opponents into the
decision process), (3) facilitation and support (counselling and therapy, training or a leave of
absence), (4) negotiation (exchanging something of value for a reduction in resistance),
(5) manipulation and co-optation (covert attempts to influence or ‘buy off’ the leaders of a
resistance group by giving them a key role in the decision), and (6) coercion (using direct
threats of force, which is very often illegal). (LO: 7.4, Explain how to manage resistance to
change.)
12. Explain why organisational culture is so difficult to change and discuss how managers can
successfully implement change.
The fact that an organisation’s culture is made up of relatively stable and permanent
characteristics tends to make that culture very resistant to change. A culture takes a long time to
form, and once established it tends to become entrenched. Strong cultures are particularly
resistant to change because employees have become so committed to them. If, over time, a
certain culture becomes inappropriate to an organisation, it may be difficult for managers to
change the culture, especially in the short run. However, there are some factors that facilitate
cultural change. They include a dramatic crisis; a change of leadership; age and size of the
organisation; and a weak existing culture. However, even under the most favourable conditions
the timetables for cultural changes have to be viewed in years, not weeks or even months. Some
specific strategies for managing cultural change are outlined in Table 7.3. (LO: 7.5, Discuss
contemporary issues in managing change.)
13. Describe employee stress and explain how managers can help employees deal with stress.
Stress is the adverse reaction people have to excessive pressure placed on them for
extraordinary demands, constraints or opportunities. Stress may be related to the organisation or
personal factors. An employee experiencing a high level of stress may be depressed, accident
prone or argumentative; have difficulty making routine decisions; and become easily distracted.
Symptoms can be categorised as physical, psychological or behavioural. Managers need to
make sure that an employee’s abilities match the job requirements through employee selection.
Improved organisational communications will help reduce stress, as will a performance-
planning program such as MBO. Job redesign can reduce stress traced to boredom or work
overload. If the employee’s stress originates from personal life factors, the manager can offer
counselling, time management programs or perhaps wellness programs. (LO: 7.5, Discuss
contemporary issues in managing change.)
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14. Discuss what it takes to make change happen successfully.
Organisational change is not only necessary when strategies change or crises occur; it is an
ongoing daily challenge facing managers all over the world. Managers can increase the
likelihood of making change happen successfully by focusing on making the organisation ready
for change, understanding their own roles in the process and increasing the role of individual
employees. Some specific characteristics of change-capable organisations are outlined in Table
7.4. (LO: 7.5, Discuss contemporary issues in managing change.)
15. Explain why innovation is not just creativity.

There is a difference between creativity and innovation. Creativity is the ability to combine
ideas in a unique way or to make unusual associations between ideas. Innovation is the process
of actually taking a creative idea and turning it into a useful product, service or method of
operation. (LO: 7.6, Describe techniques for stimulating innovation.)
16. Explain the systems view of innovation.

Managers can use the systems model to identify ways to foster innovation. To get desired
output (innovative products and work methods) managers have to look at the inputs and the
transformation of those inputs. Inputs include creative people and groups within the
organisation. But just having creative people is not enough. It takes the right environment for
the innovation process to take hold and prosper, just as a flower requires the proper soil,
watering and light levels to grow. There are three sets of variables that have been found to
stimulate innovation: the organisation’s structure, culture and human resource practices. (LO:
7.6, Describe techniques for stimulating innovation.)
17. Describe the structural, cultural and human resource variables that are necessary for
innovation.
Variables associated with innovation are structural (organic structure, abundant resources and
high inter-unit communication), cultural (acceptance of ambiguity, tolerance of the impractical,
low external controls, tolerance of risks, tolerance of conflicts, focus on ends and open-system
focus), and human resources (high commitment to training and development, high job security
and creative people). (LO: 7.6, Describe techniques for stimulating innovation.)
18. Identify what idea champions are, and explain why they are important to innovation.
Idea champions are individuals who actively and enthusiastically support a new idea, build
support, overcome resistance and ensure that the innovation is implemented. These individuals
are important because they inspire and energise others with their vision of the potential of an
innovation and through their strong personal conviction to their mission. They are also good at
gaining the commitment of others to support their mission. (LO: 7.6, Describe techniques for
stimulating innovation.)
19. Explain how sustainability drives change.

Sustainability has become a driver for change and innovation in many industries. Change in
large and well-established organisations can often be difficult to achieve. Much of the attention
of these large organisations has been focused on doing existing things better. For global
sustainability to happen, creative destruction—which is the process of transformation that
accompanies radical innovation—may need to happen. In the past, many different forces have
set off innovation-generating creative destruction in various industries; these forces include
radical new products, changes in customer preferences, new technologies, new methods of
organising or managing and new legislation. As opposed to traditional market-driven
innovation, sustainability-driven innovation must incorporate the added variables of
environmental and social impacts. (LO: 7.7, Discuss the connection between change,
innovation and sustainability.)
20. Describe the importance of environmental and social entrepreneurs.
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The most promising trend currently occurring is the emergence of a new breed of social and
environmental entrepreneurs who are taking advantage of the heightened public awareness of
social and environmental issues to create new products and services that deliver market
solutions that are both socio-effective and eco-effective. These innovators and idea champions
are sustainability-centred (as opposed to traditional organisations, which are often business-
centred in how they make themselves more efficient) in looking for system-transforming,
breakthrough innovations in relation to new products, technologies, processes and business
models that are focused on alleviating social ills and combating global warming. They see the
increased awareness of sustainability as one of the biggest business opportunities in today’s
world. (LO: 7.7, Discuss the connection between change, innovation and sustainability.)
21. Discuss the challenges that lie ahead in relation to sustainability.

The challenges that lie ahead in achieving more sustainable approaches to business are
enormous, considering the scale of change and innovation needed. Idea champions in
established companies and emerging environmental and social entrepreneurs will therefore
need assistance when they embark on this road to change. Governments around the world need
to develop regulatory systems and mechanisms that accelerate the adoption of sustainable
business practices. Global financial institutions such as banks will also have to play a leading
role in shaping a more sustainable world. Few companies are currently considered fully
sustainable, however a growing number of companies have shown that developing more
sustainable business operations through innovation is possible as they move on a path towards
sustainability. With pressure being applied from outside organisations, particularly in relation
to global warming and climate change, organisations can no longer continue with business as
usual and overlook the necessity of achieving more sustainable business operations. While the
road to sustainability may not be smooth and easily travelled, it is a road that managers must go
down if they are to develop better business practices, more efficient operations, a better bottom
line, a better environment and a fairer world. Change, innovation and sustainability are the
things that really matter! (LO: 7.7, Discuss the connection between change, innovation and
sustainability.)
Answers to THINKING CRITICALLY ABOUT

MANAGEMENT ISSUES
1. Can a low-level employee be a change agent? Explain your answer.

If this low-level employee is a low-level manager, then it is possible that he or she could act as
a change agent, as any manager can be a change agent. Keep in mind, however, that as
organisations empower employees, they may be empowered as change agents also. (LO: 7.1,
Explain why handling change is an integral part of every manager’s job; AACSB: Analytic
skills.)
2. Planned change is often thought to be the best approach to take in organisations. Can
unplanned change ever be effective? Explain.
Student answers will probably vary. But, to generate discussion, you could have students think
about the plans they have for this evening, or this weekend. Then ask what would happen if a
friend called and suddenly (unplanned) offered them an opportunity to attend an event or to go
visit another location. Would they do it? Does this represent unplanned organisational change?
Or does it represent an organisation taking advantage of an unforeseen, and therefore
unplanned, opportunity? (LO: 7.2, Compare and contrast the two views on the change process;
AACSB: Analytic skills.)
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3. Organisations typically have limits to how much change they can absorb. As a manager,
what signs would you look for that might suggest that your organisation has exceeded its
capacity to change?
Signs that an organisation may have exceeded its capacity to change include an increasing level
of resistance to change. If the changes are negatively impacting employee work performance
and behaviour, that is another sign that an organisation may have exceeded its capacity to
change. (LO: 7.4, Explain how to manage resistance to change; AACSB: Analytic skills.)
4. How are demands, constraints and opportunities related to stress? Give an example for each.
This question could even be made personal for students by relating it to class assignments.
Have students give examples of when faculty members have created situations of demand,
constraint and opportunity in preparing assignments. Have them identify the level of stress they
felt. Even encourage a discussion on the different levels of stress felt by different students. For
example, the opportunity to be creative in giving a group presentation may be considered a
challenge and even fun by one student, but completely overwhelming by another student.
(LO: 7.5, Discuss contemporary issues in managing change; AACSB: Analytic skills.)
5. Innovation requires allowing people to make mistakes. However, being wrong too many
times can be damaging to one’s career. Do you agree? Why or why not? What are the
implications for nurturing innovation?
This question offers an opportunity to set up a debate in class. Have half of the class argue that
being wrong can be fatal and have the remaining half of the class argue that being wrong does
not have to be fatal. Students must, however, understand and be able to incorporate the
relationship between nurturing innovation and ‘punishing’ failure. If an organisation punishes
employees for failing, the employees will cease to ‘take the chance’ on a new innovation and
innovative activity will dry up. (LO: 7.6, Describe techniques for stimulating innovation;
AACSB: Analytic skills.)
6. What are some examples that you can come up with when it comes to organisations that have
been able to use innovation to become more sustainable?
Examples are provided in this chapter of organisations that have been able to use innovation to
become more sustainable, however, the sustainability issue is constantly evolving and many
more examples of organisations that have used innovation to become more sustainable will
continue to emerge. Encourage students to look up various organisations’ sustainability reports
to identify specific examples of what these organisations are doing about becoming more
sustainable. Also encourage students to consider the differences between being eco/socio-
efficient and eco/socio-effective. While it is encouraging to see established organisations
becoming more focused on sustainability, both in environmental and social areas, focusing just
on achieving higher levels of eco-efficiency and socio-efficiency may distract businesses from
pursuing radically different products and production methods—changes that require shifts in
mental models and not just shifting attention within existing mental models. It can be argued
that achieving truly eco-effective and socio-effective sustainability will require a departure
from the present knowledge base and organisational, managerial and infrastructure
requirements. (LO: 7.7, Discuss the connection between change, innovation and sustainability;
AACSB: Reflective thinking skills.)
BECOMING A MANAGER—Some steps to encourage your

students to engage in the course material and their studies
To help your students gain an understanding of the manager’s vital role in guiding employees through
progressive stages of the change process, ask your students to recall and share in small groups a
significant change they have experienced in the workplace. (If any of your students have no
employment experience, ask them to think of a volunteer position or a group role they have taken in
the past.) Students should discuss in these small groups how a positive or negative attitude held by
7-18
their manager or leader influenced the group either to accept the change and become committed to it
or to resist the change. How did the words and actions of their manager or leader illustrate the
effectiveness of leading by example? You may wish to have each of the small groups share at least
one of their real-life examples during a discussion involving the entire class.
You could also do similar exercises with regard to either dealing with stress or becoming a more
creative person.
From our own experiences as lecturers we have found that the more we can encourage our students to
see the relevance of what they are studying, the more they will be engaged and inspired when working
through their study material.
WORKING TOGETHER: TEAM-BASED EXERCISE
Students, in groups of three or four, are asked to identify the symptoms of stress that they display or
perhaps they have seen in others. This discussion might be jump-started if students are asked in the
previous class period to bring a list of five symptoms to class. These individual lists can then be used
in the group setting. You may need to help students identify, or remind them of, situations of high
stress. Some situations might be job interviews, finals week, mid-term week, or the week right before
or after a non-teaching week when they have many assignments and/or projects due. Holiday times
such as Christmas can also be extremely stressful times. Have students describe shoppers in stores at
holiday time.
When the students have brainstormed their stress lists, have them identify their ‘Top 5’ and be willing
to share these with the class. Link these to Figure 7.6 and try to categorise the symptoms of stress as
being physical, psychological or behavioural. (LO: 7.5, Discuss contemporary issues in managing
change; AACSB: Reflective thinking skills.)
ETHICAL DILEMMA
Do organisations have an ethical responsibility to help employees deal with stress?

Stress management and counselling can be an important aid for employees. In this dilemma, students
are asked to address why employees would not take advantage of these benefits. The authors mention
a paradox that exists; employees are experiencing stress but they feel that they do not want to admit to
being stressed (which may make the stress even worse). Students are encouraged to think of ways to
change the perception of stress management programs and to get employees to participate. Another
way to take away the stigma of stress management programs may take the opposite approach and
have employees write testimonials of their benefits. These could be published in a company
newsletter (with the names kept confidential).
This ethical dilemma also asks students to consider if organisations have an ethical responsibility to
help employees deal with stress. The simple answer to this question is yes. For many employees it is
the stressful nature of the job that leads them to poor behaviour at work which can spill over into their
home life. (LO: 7.4, Explain how to manage resistance to change; LO: 7.5, Discuss contemporary
issues in managing change; AACSB: Ethical understanding and reasoning abilities.)
Answers to CASE APPLICATION Questions
Change agent at Australia Post
1. Does Australia Post face more of a calm waters or white-water rapids environment? Explain.
In answering this question, students should be encouraged to think about how communication
technology has changed over the last 20 years and how it has affected the environment in which
Australia Post operates. Ask students to consider their own utilisation of Australia Post and its
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services. Considering the introduction of the internet and changing demographics, how is
Australia Post responding to these types of change? What happens if it does not respond?
Before the digital revolution took place, the change situations that Australia Post faced were
mainly of the calm waters type. There was a need to update technology and equipment to
maintain a level of productivity, service and quality that would keep Australia Post efficiency
levels high. Today, Australia Post faces more of a white-water-rapids environment. Although
the company provides a service (mail delivery) that has been performed for centuries, there is
now an increasing effort to keep up in the parcel delivery business. It is no longer possible to
deal with change through gradual development and refinement of current practices. Instead,
radical change will be required at Australia Post. The stability and predictability of the calm
waters situation does not exist anymore. (LO: 7.2, Compare and contrast the two views on the
change process; AACSB: Analytic skills.)
2. What external and internal forces are impacting on Australia Post?

Changes in the market place, changing governmental regulations, changing technology and
economic changes are all external factors that force the company to change. As these forces
impact on Australia Post there will be pressure to develop a new organisational strategy,
introduce new technology and to restructure its operations. These forces may also include a
rising level of job dissatisfaction as employees become concerned about how the changes will
impact on them. (LO: 7.1, Explain why handling change is an integral part of every manager’s
job; AACSB: Analytic skills.)
3. How would you evaluate Australia Post’s change strategy—what is being changed when it
comes to structure, technology and people?
Because of Australia Post’s declining post delivery service (due to fewer letters being sent) and
its stronger focus on being competitive in parcel delivery service (where Australia Post does not
have a monopoly), it would be expected that there would be structural, technological and
human resource changes in addition to the cultural change that its CEO Ahmed Fahour is
seeking to introduce.
In today’s dynamic workplace, managers can be sure that one thing will remain constant—
change. In order to compete successfully, managers must be able to introduce change
effectively. To help your students gain an understanding of the manager’s vital role in guiding
employees through progressive stages of the change process, ask your students to recall and
share in small groups a significant change they have experienced in the workplace. (If any of
your students have no employment experience, ask them to think of a volunteer position or a
group role they have taken in the past.)
Students should discuss in these small groups how a positive or negative attitude held by their
manager or leader influenced the ability of the group either to accept the change and become
committed to it or to resist the change. How did the words and actions of their manager or
leader illustrate the effectiveness of leading by example? You may wish to have each of the
small groups share at least one of their real-life examples during a discussion involving the
entire class. (LO: 7.3, Classify types of organisational change; AACSB: Analytic skills.)
4. Would you expect some resistance to change to occur when it comes to the introduction of
these changes and the changes to the company’s culture? Could stress also be an issue at
Australia Post?
Change can definitely create stress in the organisation. It can also create uncertainty and fear of
job loss. These types of change often result in employee layoffs. Considering the strong
emotions that can arise during times of layoffs and the fact Australia Post had previously tried
to change and had been ineffective, they need to consider how the various techniques of dealing
with resistance to change outlined in Table 7.2 may assist Australia Post in the change process.
In working on this question it may also be an excellent opportunity to introduce the students to
the force-field analysis. For example, you can organise the students into groups to identify the
7-20
forces for change and the forces against change and then identify strategies to either increase
the driving forces or reducing the resisting force to change the equilibrium or status quo.
Another option would be to look at the strategies for managing cultural change as outlined in
Table 7.3 and come up with ideas how management at Australia Post can accomplish a change
in Australia Post’s culture. (LO: 7.4, Explain how to manage resistance, LO: 7.5, Discuss
contemporary issues in managing change; AACSB: Analytic skills.)
5. Why is innovation so important to Australia Post?

Students should see that doing nothing to keep pace with external change can lead to failure in
the market and an inability to keep pace with competitors. With a culture of creativity, a
company is ready and able to respond as opportunity (or threats) present themselves. Students
should be encouraged to refer to Figure 7.8 and come up with ideas how an organisation such
as Australia Post can become more innovative.
Australia Post would need to develop a more innovative and customer-responsive culture. The
characteristics of an innovative culture are challenge and involvement, freedom, trust and
openness, idea time, playfulness/humour, conflict resolution, debates and risk taking. A
customer-responsive culture has five characteristics: outgoing and friendly employees; jobs
with few rigid rules, procedures and regulations; empowerment; clear roles and expectations;
and employees who are conscientious in their desire to please the customer.
A more organic structure may be desirable in that it encourages high inter-unit communication
which facilitates the flexibility, adaptability and cross-fertilisation necessary for innovation.
Australia Post also needs to develop a more innovative culture and in this a much more open-
system focus will be necessary to monitor the environment and respond rapidly to changes as
they occur. This also means a culture that has a higher acceptance of ambiguity, tolerance of
risk and conflict. Finally, Australia Post may also consider the use of idea champions to nurture
innovations and ensure that they are implemented. Perhaps Australia Post could learn from
some of the processes and practices that are in place at companies that are regarded as highly
innovative and customer-responsive and do some benchmarking to identify how they can
stimulate more creativity and innovation within the company. (LO: 7.6, Describe techniques for
stimulating innovation, LO: 7.7, Discuss the connection between change, innovation and
sustainability; AACSB: Analytic skills.)
6. What can other organisations and managers learn from Australia Post?
The implications for managing change and innovation could be described as the need to be
prepared, flexible and open to changes. Although you may be a profitable and highly successful
company, there are changes that can occur in the external environment in which you operate
which can suddenly change the whole situation. Australia Post may have been somewhat slow
in understanding the early signs of the upcoming changes in technology and customer
behaviour and as a result was not prepared for the changes that eventually took place. Even
profitable and successful organisations need to constantly look for new ways to cut costs, make
profits, provide customer service, develop products/services, etc. For many organisations it may
be vital to develop some of the characteristics of change-capable organisations as outlined in
Table 7.4 (LO: 7.1, Explain why handling change is an integral part of every manager’s job,
LO: 7.5, Discuss contemporary issues in managing change; AACSB: Reflective thinking
skills.)
7-21
Cover illustration © mcherevan / Shutterstock.com.
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➢ NOTES Educational Materials to Use

2. FORCES FOR CHANGE.

➢ NOTES Educational Materials to Use

➢ NOTES Educational Materials to Use

3. TWO VIEWS OF THE CHANGE PROCESS.

➢ NOTES Educational Materials to Use

B. The white-water rapids metaphor.

➢ NOTES Educational Materials to Use

C. Putting the two views in perspective.

➢ NOTES Educational Materials to Use

4. MANAGING ORGANISATIONAL CHANGE.

➢ NOTES Educational Materials to Use

➢ NOTES Educational Materials to Use

➢ NOTES Educational Materials to Use

3. Changing people (their attitudes, expectations, perceptions and behaviours).

➢ NOTES Educational Materials to Use

5. MANAGING RESISTANCE TO CHANGE.

➢ NOTES Educational Materials to Use

➢ NOTES Educational Materials to Use

Managing Workforce Gender diversity in leadership

C. Techniques for reducing resistance.

➢ NOTES Educational Materials to Use

6. CONTEMPORARY ISSUES IN MANAGING CHANGE.

➢ NOTES Educational Materials to Use

2. Understanding the situational factors.

➢ NOTES Educational Materials to Use

3. How can cultural change be accomplished?

➢ NOTES Educational Materials to Use

Research shows that stress may be related to the organisation or to personal

➢ NOTES Educational Materials to Use

3. What are the symptoms of stress?

➢ NOTES Educational Materials to Use

4. How can stress be reduced?

➢ NOTES Educational Materials to Use

C. Making change happen successfully.

➢ NOTES Educational Materials to Use

➢ NOTES Educational Materials to Use

B. Stimulating and nurturing innovation.

➢ NOTES Educational Materials to Use

Managers Who Ratan Tata,

2. Cultural variables show that an innovative culture is likely to be characterised

➢ NOTES Educational Materials to Use

➢ NOTES Educational Materials to Use

8. CHANGE, INNOVATION AND SUSTAINABILITY.

➢ NOTES Educational Materials to Use

5. Innovation in relation to more sustainable business operations in existing

➢ NOTES Educational Materials to Use

B. Social and environmental entrepreneurs.

➢ NOTES Educational Materials to Use

C. Sustainability—a profound challenge for change.

➢ NOTES Educational Materials to Use

Answers to REVIEW QUESTIONS

1. Explain why handling change is an integral part of every manager’s job.

2. Identify the external and internal forces for change.

4. Explain Lewin’s three-step model of the change process.

5. Discuss the environment that managers face today.

6. Define organisational change.

7. Contrast using internal and external change agents.