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 Chapter 7
Managing Change and
Innovation

Change is a constant for organizations and thus for managers. Because change can’t be
eliminated, managers must learn how to manage it successfully. Because innovation is
often closely tied to an organization’s change efforts, managers must know how to
manage it as well. Focus on the following learning objectives as you read and study this
chapter.

LEARNING OBJECTIVES

1. Compare and contrast views on the change process.

2. Classify types of organizational change.
3. Explain how to manage resistance to change.
4. Discuss contemporary issues in managing change.
5. Describe techniques for stimulating innovation.

It’s Your Career

Be Change Ready: Overcoming Resistance

Change takes us out of our comfort zone. But to survive and thrive in your career,
you’re going to have to be change ready. As you’ll see throughout this chapter, change
is inevitable. So, the more easily you can adapt . . . the more successful, appreciated,
and happier you’ll be. Here are some suggestions for you to overcome your resistance
to change:

1. Evaluate your change readiness. Are you intimidated by change?

2. Accept the idea of change. Accept the fact that change happens and make a
mental note to work at being more comfortable with that.
3. Develop your flexibility. Shift from focusing on the “change” to focusing on the
“new experiences.”
4. Prepare for change. Have a positive attitude about change. Be the person
who’s a positive force in your workplace.

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CHAPTER OUTLINE

INTRODUCTION
Change and change management are important aspects of the manager’s job.
Chapter 7 focuses on ways to manage change effectively and to promote
innovation in an organization.

7.1 THE CHANGE PROCESS

Exhibit 7-1 shows that both external and internal forces create the need for
change. External forces creating the need for change come from various
sources:
1. The marketplace
2. Government laws and regulations
3. Technology
4. Labor markets
5. The economy

Internal forces creating change usually originate from the internal operations of
the organization or from the impact of external changes. These internal forces
include:
1. Changes in strategy
2. Changes in the workforce
3. New equipment
4. Changes in employee attitudes
A. Two Views of the Change Process. Two very different metaphors can
be used to describe the change process.
1. The calm waters metaphor characterizes the process of change
as being like a ship crossing a calm sea. The calm waters
metaphor can be illustrated by Lewin’s 3-step process for change
(see Exhibit 7-2).
a. Unfreezing the equilibrium is the first step. Unfreezing the
equilibrium can be accomplished in one of three ways:
1. Increasing driving forces, which are forces that direct
behavior away from the status quo.
2. Decreasing restraining forces, which are forces that hinder
movement from the existing equilibrium.
3. Combining the two approaches.
b. The next step is to implement the change itself.
c. The final step is to refreeze the situation.
B. The white-water rapids metaphor describes change that takes place in
uncertain and dynamic environments. To put the two views into
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 rapidly dwindling!

7.2 TYPES OF ORGANIZATIONAL CHANGE

A. What is organizational change? Organizational change is defined as
any alteration of people, structure, or technology in an organization.
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 Instead of trying to eliminate change, managers must realize that change
is always present and that they should seek ways to manage change
successfully. Change requires a catalyst. The manager may act as a
change agent— someone who acts as a catalyst and assumes the
responsibility for managing the change process.
B. Types of Change
What can a manager change? A manager may make changes in three
categories: structure, technology, and people. (See Exhibit 7-3)
1. Changing Structure
a. Managers can alter one or more structural components of
the organization, such as work specialization,
departmentalization, chain of command, span of control,
centralization and decentralization, and formalization.
b. Frequently, the design of the organization’s structure is
changed in order to meet new demands.
2. Changing Technology
a. Competitive factors or new innovations often require
introduction of new equipment, tools, or operating
methods.
b. Automation is a technological change that replaces certain
tasks done by people with machines.
c. Computerization has probably been the most visible
technological change in recent years.
3. Changing People
a. Organizational development (OD) is techniques or
programs to change people and the nature and quality of
interpersonal work relationships.
b. Exhibit 7-4 provides descriptions of the most popular OD
approaches.

FUTURE VISION: Life-Long Learning

When employees are busy doing their regular job tasks, how can innovation ever
flourish? When job performance is evaluated by what you get done, how you get it
done, and when you get it done, how can innovation ever happen? This has been the
challenge facing organizations wanting to be more innovative. One solution has been
to give employees mandated time to experiment with their own ideas on company-
related projects. Google has its “20% Time” initiative, which encourages employees
to spend 20 percent of their time at work on projects not related to their job
descriptions. Other companies—Facebook, Apple, LinkedIn, 3M, Hewlett-Packard,
among others—have similar initiatives.

However, such “company” initiatives do face tremendous obstacles, despite how

good they sound on paper. One challenge is that today’s employees face strict
monitoring in terms of time and resources. Thus, there’s a reluctance on their part
to use this time since most employees have enough to do just keeping up with their
regular tasks. And if bonuses/incentives are based on goals achieved, employees
are smart about what to spend their time on. So, how can companies make it work?
Here are some suggestions: top managers need to support the initiatives/projects and
make that support known; managers need to support employees who have that
personal passion and drive, that creative spark—clear a path for them to pursue their
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 ideas; perhaps allow employees more of an incentive to innovate (rights to design,
etc.); and last, but not least, don’t institutionalize it. Creativity and innovation, by their
very nature, involve risk and reward. Give creative individuals the space to try and to
fail and to try and to fail as needed.

The following discussion questions are posed:

Talk About It 1: What benefits do you see with such mandated experiment time for (a)
organizations? (b) Individuals?

Talk About It 2: What obstacles do these initiatives face and how can managers
overcome those obstacles?

Student answers to these questions will vary.

7.3 MANAGING RESISTANCE TO CHANGE

Managers are motivated to initiate change when they are committed to improving
organizational performance.
A. Why do People Resist Change?
Resistance to change is a natural event in organizations and occurs for
the main reasons including: uncertainty, habit, concern about personal
loss, and the belief that the change is not in the organization’s best
interest.
B. Techniques for Reducing Resistance to Change
Organizations can build up inertia that actually motivates employees to
resist change. The techniques for Reducing Resistance are listed in
Exhibit 7-5. They are:
1. Education and communication
2. Participation
3. Facilitation and support
4. Negotiation
5. Manipulation and co-optation
6. Coercion

7.4 CONTEMPORARY ISSUES IN MANAGING CHANGE

Contemporary issues related to managing change include organizational culture,
employee stress, and successful change action.
A. Changing Organizational Culture
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
Some situations can facilitate culture change, including:
a. A dramatic crisis
b. A change in leadership
c. A young organization that is small in size
d. A culture that is weak
3. How Can Cultural Change Be Accomplished?
Exhibit 7-6 demonstrates the need for a comprehensive,
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 coordinated strategy for managing cultural change.
B. Employee Stress
1. What is Stress? Stress is the adverse reaction people have to
excessive pressure placed on them from extraordinary demands,
constraints, or opportunities.
2. Causes of Stress. Research shows that stress may be related to
the organization 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. Organizational structure
e. Organizational 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. Symptoms of Stress. Stress may 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. Exhibit 7-7 groups
stress symptoms into three categories: physical, psychological,
and behavioral.
4. Reducing Stress
Employee selection, RJP, MBO, and job redesign are methods of
reducing stress in an organization.
C. Making Change Happen Successfully
Managers can increase the likelihood that change will be successful in
their organization by:
1. Focusing on preparing the organization for change
(See Exhibit 7-8 for characteristics of a change-capable
organization.)
2. Recognizing the important role they themselves play in the
change process
3. Involving every organizational member in the change

7.5 STIMULATING INNOVATION

Innovation is essential to organizational success in a dynamic marketplace.
Whether it’s Google, Facebook, or Apple, all companies rely on innovation to
deliver the products and services necessary for the marketplace.
A. Creativity versus Innovation.
1. Creativity is the ability to combine ideas in a unique way or to
make unusual associations between ideas.

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 2. Innovation is taking creative ideas and turning them into useful
products or work methods.
B. Stimulating and Nurturing Innovation
How can managers foster innovation? The systems model shows how to
foster innovation. (See Exhibit 7-9) Three sets of variables have been
found to stimulate innovation.
1. Structural variables can be summarized as follows:
a. Organic structures positively influence innovation.
b. The easy availability of organizational resources provides a
critical building block for innovation.
c. Frequent communication among work units helps to break
down barriers to innovation.
d. Minimize time pressures on creative activities.
e. Provide explicit support for creating work and nonwork
sources.
2. Cultural variables show that an innovative culture is likely to have
the following characteristics:
a. Acceptance of ambiguity
b. Tolerance of the impractical
c. Low external controls
d. Tolerance of risk
e. Tolerance of conflict
f. Focus on ends rather than means
g. An open systems focus
h. Positive feedback
i. Exhibit empowering leadership

LEADER MAKING A DIFFERENCE

Satya Nadella was named CEO of Microsoft in February 2014. Nadella is a 22-year
veteran of Microsoft. His new “slogan” is innovation, innovation, innovation. When asked
what his plans are for the software giant, he answered with that one word, innovation.
How does he plan to make innovation part of the culture? By “ruthlessly removing any
obstacles that allow us to be innovative; every individual to innovate.”

What can you learn from this leader making a difference?

3. Human resource variables indicate the important role that people

play in innovative organizations.
a. Innovative organizations actively promote the training and
development of their employees so that their knowledge
will be current.
b. Innovative organizations offer employees high job security.
c. Innovative organizations encourage individuals to become
idea champions—that is, individuals who actively and
enthusiastically support new ideas, build support,
overcome resistance, and ensure that the innovations are
implemented.

C. Innovation and Design Thinking

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 Design thinking can provide a process for coming up with things that don’t
exist. When a business approaches innovation with a design thinking
mentality, the emphasis is on getting a deeper understanding of what
customers need and want. It entails knowing customers as real people
with real problems—not just as sales targets or demographic statistics.
But it also entails being able to convert those customer insights into real
and usable products.

ANSWERS TO REVIEW AND DISCUSSION

QUESTIONS

Student answers to these questions will vary.

7-1. Contrast the calm waters and white-water rapids metaphors of change.
According to the calm waters scenario, an occasional disruption (a “storm”) means
changing to deal with the disruption. On the other hand, the white-water rapids
metaphor implies a dynamic environment with constantly changing paradigms and high
levels of competition. (LO: 1, Compare and contrast views on the change process,
AACSB: Analytical thinking)

7-2. Explain Lewin’s three-step model of the change process.

In Lewin’s model, successful change usually occurs in three steps: unfreezing, change,
and refreezing. For unfreezing to occur, the organization must plan a move away from
the status quo. To move away from this equilibrium, the organization undergoes an
increase of the driving forces, which are forces pushing for change and/or a decrease in
the restraining forces, which are forces that resist change. After unfreezing, the change
itself can be implemented. To make the change permanent, the new situation needs to
be refrozen. (LO: 1, Compare and contrast views on the change process, AACSB:
Analytical thinking)

7-3. Describe how managers might change structure, technology, and people.
To change structure, management can change structural components (i.e. jobs could be
combined or levels eliminated). More rules and procedures could be implemented to
increase standardization or employees could be empowered to make decisions so
decision-making could be faster.
Technology can be changed by changing the processes by which employees work to
make them more efficient (i.e. the introduction of scientific management techniques).
Technology can be changed by introducing of new equipment, tools, or methods. Also,
companies are becoming more technologically advanced by incorporating automation
and/or computerization into their production lines.
Changing people involves changing attitudes, expectations, perceptions, and
behaviors. This can be done through organizational development initiatives that focus
on people and the nature and quality of interpersonal work relationships. (LO: 2, Classify
types of organizational change, AACSB: Analytical thinking)

7-4. Can a low-level employee be a change agent? Explain your answer.

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If the low-level employee is a low-level manager, it is possible that he or she could act as
a change analyst, just as any manager can be a change agent. However, it is important
to note that change should begin at the top and work its way down. Change is most
successful when it is supported by top management. Also, it is important to remember
that as organizations empower employees, they may empower them as change agents.
(LO: 3, Explain how to manage resistance to change, AACSB: Analytical thinking)

7-5. How are opportunities, constraints, and demands related to stress? Give an
example of each.
This question can be made more personal for students by relating it to class
assignments. Have students give an example of an instance when faculty members
have provided students with opportunities, constraints, and/or demands in preparing
assignments. Ask students to identify the level of stress they felt. Encourage a
discussion about the different levels of stress felt by different students. For example, the
opportunity to be creative in giving a group presentation may be considered an exciting
challenge to one student, while completely overwhelming another student. (LO: 3,
Explain how to manage resistance to change, AACSB: Analytical thinking)

7-6. Planned change is often thought to be the best approach to take in organizations.
Can unplanned change ever be effective? Explain.6.1 7.5
Student answers will likely vary. To generate discussion, you might ask students to think
about the plans they have for this evening, or this weekend. Then ask what would
happen if a friend called and suddenly offered them an opportunity to attend an event or
to go visit another location. Would they do it? How could this situation be compared with
unplanned organizational change? (LO: 4, Discuss contemporary issues in managing
change, AACSB: Analytical thinking)

7-7. Organizations typically have limits to how much change they can absorb. As a
manager, what signs would you look for that might suggest that your organization has
exceeded its capacity to change?
A sign that an organization may have exceeded its capacity to change includes an
increasing level of resistance to change. If changes are negatively impacting employee
work performance and behavior, the manager may discern that the organization has
exceeded its capacity to change. Excessive levels of stress among employees is
another indication that an organization is changing too rapidly. (LO: 4, Discuss
contemporary issues in managing change, AACSB: Analytical thinking)

7-8. Innovation requires allowing people to make mistakes. However, being wrong too
many times can be disastrous to your 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. Ask half of the students in
the class to 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 organization punishes employees for failing, employees will cease to “take a
chance” on a new innovation, and innovative activity will decline. (LO: 5 Describe
techniques for stimulating innovation, AACSB: Analytical thinking)

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PERSONAL INVENTORY ASSESSMENTS

Student answers to these questions will vary.

ETHICS DILEMMA
Stress management and counseling 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 don’t 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. Some companies
use EAP programs that keep employees’ names confidential. 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 (again with the names confidential).
This case also asks students to consider if organizations 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 causes employees’ poor behavior at
work, which can spill over into their home life. (LO: 3, Explain how to manage resistance
to change, AACSB: Ethical understanding and reasoning abilities)

SKILLS EXERCISE: DEVELOPING YOUR

CHANGE MANAGEMENT SKILL

In this exercise, students are asked to work on personal skills that will help make them
better change agents. Change management is a necessary skill for two reasons, first
managers are always making changes and second employees almost always resist
change. (LO: 4, Discuss contemporary issues in managing change, AACSB: Reflective
thinking)

WORKING TOGETHER: TEAM EXERCISE

In groups of three to four, have students create a plan for an accounting firm changing
from Generally Accepted Accounting Principles (GAAP) to the International Financial
Reporting Standards (IFRS). Students should use the following two topic areas to guide
the change: (1) using communication channels to engage and inform employees, and (2)
building needed skills and capabilities. Students should take into account that GAAP is
ingrained into the accounting profession and change will not be easy. To make the
change necessary, any plans must incorporate education and communication (why are
the new standards necessary and what do they entail), participation (getting employees
involved in the change process where they are allowed to be involved in decision-
making), and facilitation and support (making sure that information and training is
available).

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After the groups have developed a written plan, they should share with the rest of the
class. (LO: 4, Discuss contemporary issues in managing change, AACSB: Analytical
thinking)

MY TURN TO BE A MANAGER

• Take responsibility for your own future career path. Don’t depend on your
employer to provide you with career development and training opportunities.
Right now, sign up for things that will help you enhance your skills—workshops,
seminars, continuing education courses, and so on. (LO: 4, Discuss
contemporary issues in managing change, AACSB: Analytical thinking)

• Pay attention to how you handle change. Try to figure out why you resist certain
changes and not others. (LO: 1, Compare and contrast views on the change
process, AACSB: Analytical thinking)

• Pay attention to how others around you handle change. When friends or family
members resist change, practice using different approaches to managing this
resistance to change. (LO: 3, Explain how to manage resistance to change,
AACSB: Analytical thinking)

• When you find yourself experiencing dysfunctional stress, write down what’s
causing the stress, what stress symptoms you’re exhibiting, and how you’re
dealing with the stress. Keep this information in a journal and evaluate how well
your stress reducers are working and how you could handle stress better. Your
goal is to get to a point where you recognize that you’re stressed and can take
positive actions to deal with the stress. (LO: 3, Explain how to manage resistance
to change, AACSB: Analytical thinking)

• Research information on how to be a more creative person. Write down

suggestions in a bulleted list format and be prepared to present your information
in class. (LO: 5 Describe techniques for stimulating innovation, AACSB:
Analytical thinking)

• Complete the skill building modules Managing Resistance to Change and Solving
Problems Creatively found on mymanagementlab. (LO: 3, Explain how to
manage resistance to change, AACSB: Analytical thinking)

• Choose two organizations that you’re familiar with and assess whether they face
calm waters or white-water rapids environments. Write a short report, describing
these organizations and your assessment of the change environment each faces.
Be sure to explain your choice of change environment. (LO: 1, Compare and
contrast views on the change process, AACSB: Analytical thinking)

• Steve’s and Mary’s recommended readings: Malcolm Gladwell, Blink (Little,

Brown, 2005); Peter Senge and others, Presence (Doubleday, 2004); Tom
Peters, Re-Imagine! (Dorling Kindersely, 2003); John P. Kotter and Dan S.
Cohen, The Heart of Change (Harvard Business School Press, 2002); Malcolm
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 Gladwell, The Tipping Point (Back Bay Books, 2002); Tom Kelley, The Art of
Innovation (Doubleday, 2001); and Ian Morrison, The Second Curve (Ballantine
Books, 1996). (LO: 1, Compare and contrast views on the change process,
AACSB: Analytical thinking) (LO: 2, Classify types of organizational change,
AACSB: Analytical thinking) (LO: 3, Explain how to manage resistance to
change, AACSB: Analytical thinking) (LO: 4, Discuss contemporary issues in
managing change, AACSB: Analytical thinking) (LO: 5 Describe techniques for
stimulating innovation, AACSB: Analytical thinking)

• Choose an organization with which you’re familiar (employer, student

organization, family business, etc.). Describe its culture (shared values and
beliefs). Select two of its values/beliefs and describe how you would go about
changing them. Put this information in a report. (LO: 4, Discuss contemporary
issues in managing change, AACSB: Analytical thinking)

• In your own words, write down three things you learned in this chapter about
being a good manager. (LO: 1, Compare and contrast views on the change
process, AACSB: Analytical thinking) (LO: 2, Classify types of organizational
change, AACSB: Analytical thinking) (LO: 3, Explain how to manage resistance
to change, AACSB: Analytical thinking) (LO: 4, Discuss contemporary issues in
managing change, AACSB: Analytical thinking) (LO: 5 Describe techniques for
stimulating innovation, AACSB: Analytical thinking)

• Self-knowledge can be a powerful learning tool. Go to mymanagementlab and

complete these self-assessment exercises: How Well Do I Handle Ambiguity?
How Creative Am I? How Well Do I Respond to Turbulent Change? How
Stressful Is My Life? and Am I Burned Out? Using the results of your
assessments, identify personal strengths and weaknesses. What will you do to
reinforce your strengths and improve your weaknesses? (LO: 1, Compare and
contrast views on the change process, AACSB: Analytical thinking) (LO: 2,
Classify types of organizational change, AACSB: Analytical thinking) (LO: 3,
Explain how to manage resistance to change, AACSB: Analytical thinking) (LO:
4, Discuss contemporary issues in managing change, AACSB: Analytical
thinking) (LO: 5 Describe techniques for stimulating innovation, AACSB:
Analytical thinking)

ANSWERS TO CASE APPLICATION 1

QUESTIONS

Student answers to these questions will vary.

In Search of the Next Big Thing

7-13. What do you think of UA’s approach to innovation? Would you expect to see this
type of innovation in an athletic wear company? Explain.
Most students will see UA as a progressive company that is trying to stay on the cutting
edge of innovation in the apparel industry. With the introduction of a variety of new
product lines, UA is making a statement by competing against companies like Nike and

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Adidas. Each year those product lines must be updated and new features added. This
makes the athletic wear industry very competitive as companies try to capture the latest
innovation and customer attention. (LO: 5 Describe techniques for stimulating
innovation, AACSB: Analytical thinking)

7-14. What do you think UA’s culture might be like in regards to innovation? (Hint: refer
to the list on page 198.)
UA would be considered both an innovative and a culture responsive culture. The
characteristics of an innovative culture are challenge and involvement, freedom, trust
and openness, idea time, playfulness/humor, 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. (LO: 5 Describe techniques for stimulating innovation, AACSB: Analytical
thinking)

7-15. Could design thinking help UA improve its innovation efforts? Discuss.
From the case, it appears that UA is currently using design thinking to improve products
for the industry. As stated by the founder, UA is determined to conquer the “next layer”
and the company is currently working on a number of innovative products. (LO: 5
Describe techniques for stimulating innovation, AACSB: Analytical thinking)

7-16. What’s your interpretation of the company’s philosophy posted prominently over
the door of its design studio? What does it say about innovation?
The slogan, “We have not yet built our defining product” is a sign to employees that
innovation is a constant process in the organization. As a company, they do not want to
rest on selling their existing products, but continually refine and push the boundaries for
new products. This is at the heart of innovation and constant improvement, the idea of
creative destruction – that existing products are replaced by better products through
innovation. (LO: 5 Describe techniques for stimulating innovation, AACSB: Analytical
thinking)

7-17. What could other companies learn from the way UA innovates?
As a fairly new company, UA is an example of what an entrepreneur can accomplish
through hard work and perseverance. Not being afraid to enter a market dominated by
companies like Nike, Plank has established a high level of brand recognition and
customer loyalty by providing high quality products that meet the needs of customers.
(LO: 5 Describe techniques for stimulating innovation, AACSB: Analytical thinking)

ANSWERS TO CASE APPLICATION 2

QUESTIONS

Student answers to these questions will vary.

Workplace Stress Can Kill

7-18. What is your reaction to the situation described in this case? What factors, both
inside the company and externally, appear to have contributed to this situation?

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Students may take the side of employees, the organization, or they may see the
situation looking from both perspectives. From the employees’ perspective, they may
see the destructive power that organizations have over their employees. The suicides in
this case are a result of what the company has done by creating a stressful work
environment and the policies that may have ultimately led to employees feeling
depressed. From the company’s perspective, the causes of employee depression could
be attributed to many factors external to the organization, i.e. competitive nature of work,
economic conditions leading to underemployment, and poor employee self-esteem.
Looking at this situation from both perspectives, we can see that both internal and
external factors could be to blame for the employees’ behavior. (LO: 3, Explain how to
manage resistance to change, AACSB: Analytical thinking)

7-19. What appeared to be happening in the France Télécom’s workplace? What stress
symptoms might have alerted managers to a problem?
It appears that Télécom’s leadership was exerting pressure on their employees by
exerting high levels of task demands and by changing the organization’s structure to
produce higher levels of productivity. There are many warning signs to stress that most
managers should recognize including decreased job satisfaction, poor organizational
commitment, higher turnover and absenteeism, increased number of accidents, and
poor communication. Other symptoms that most managers are not usually trained to
see include depression, fatigue, and burnout. (LO: 3, Explain how to manage resistance
to change, AACSB: Analytical thinking)

7-20. Should managers be free to make decisions that are in the best interests of the
company without worrying about employee reactions? Discuss. What are the
implications for managing change?
The key words in the first question are “without worrying about employee reactions.”
Management actions will not always be well received by employees. There is no good
way to lay off or fire an employee. Many management decisions are made from the
standpoint of what has to be done to ensure organizational survival and discipline.
However, the idea that management would not worry about the reactions is far from the
truth of what happens in organizations. Managers should always take into account how
employees will react to their decisions – if not, then execution of those decisions could
be affected. With regard to change, in general, employees do not like change. Any plan
by management that changes the status quo should be evaluated to see how it would be
received by employees and ways to mitigate negative employee reactions should be
considered. (LO: 3, Explain how to manage resistance to change, AACSB: Analytical
thinking)

7-21. What are France Télécom’s executives doing to address the situation? Do you
think it’s enough? Are there other actions they might take? If so, describe those actions.
If not, why not?
According to the case, Télécom is working to rebuild the morale of staff and they have
halted the workplace practices identified as being particularly disruptive. The CEO has
also changed company policy on transfers and began encouraging more supportive
practices, including working from home. Other programs that Télécom could implement
involve stress reduction techniques, such as providing yoga classes, wellness programs,
and providing employees with counseling (i.e. an employee assistance program or EAP).
(LO: 3, Explain how to manage resistance to change, AACSB: Analytical thinking)

118
Copyright © 2016 Pearson Education, Inc.
7-22. What could other companies and managers learn from this situation?
What happened at Télécom is a sobering reminder about the negative effects of stress.
In addition, these behaviors are not limited to one company or country. Suicides and
homicides by employees are common occurrences in the United States. Companies
should be prepared and have policies in place to deal with employees who exhibit out of
the ordinary behavior. Counseling and stress reduction programs should be in place for
organizations where employees are exposed to high levels of stress. (LO: 3, Explain
how to manage resistance to change, AACSB: Analytical thinking)

ADDITIONAL CHAPTER INFORMATION

“Trying to turn around a giant insurance company is like trying to parallel-park a

battleship.” Any change effort that requires more than a one-page manifesto to articulate
its goal is doomed to failure. If the point of the program is complex, people lose focus—
and eventually lose their way.” Tom Valerio, who was selected by Cigna Property and
Casualty to lead a significant organizational change effort at the insurance firm, voiced
these observations about the difficulty of managing change within a large company.

The article “20/20 Change Agent” describes Valerio’s four-point plan for facilitating
change successfully in a large corporation. This article provides an excellent application
of organizational change tools and strategies to reinforce concepts presented in Chapter
13. The article, written by Bill Breen and Cheryl Dahle, can be found in FastCompany,
Issue 30, December 1999, page 402.

119
Copyright © 2016 Pearson Education, Inc.
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