Leadership and Change Management Chapter 3

CHAPTER 3
OVERVIEW OF CHANGE MANAGEMENT
What is change?
Change is the coping process of moving from the present state to a desired state that
individuals, groups and organizations undertake in response to dynamic internal and
external factors that change current realities.
Defining Change Management
Change management has typically been defined as a process involving unfreezing,
moving, and refreezing values, practices, and procedures within organizations.
Unfreezing refers to the creation of a perceived discrepancy between the existing and
ideal state of an organization that generates a desire for change and lowers people’s
resistance to change. Moving refers to the various processes such as training,
education, and restructuring that lead to the development of new behaviors, attitudes,
and beliefs. Refreezing refers to reestablishing a new state of equilibrium within the
organization by stabilizing the new patterns through a variety of support mechanisms.
Change management is the process during which the changes of a system are
implemented in a controlled manner by following a pre-defined framework/model
with, to some extent, reasonable modifications
Change management is a set of processes employed to ensure that significant changes
are implemented in a controlled and systematic manner.
One of the goals of change management is the alignment of people and culture with
strategic shifts in the organization, to overcome resistance to change in order to
increase engagement and the achievement of the organization’s goal for effective
transformation.
Achieving sustainable change begins with a clear understanding of the current state
of the organization, followed by the implementation of appropriate and targeted
strategies. The focus of change management is on the outcome the change will
produce – the NEW arrangements that must be understood
Forces/Drivers for change

Organizations change doesn’t happen out of the blue. It is catalyzed by a number of

forces that trigger first awareness and then action. These signals for change usually
originate in the organization’s environment or marketplace. Such signals can include
bold moves by competitors, new technology, or shifts in government regulations.
Failures in the performance of a leader’s own organization can also signal the need
for change. Whatever their source, these events require the organization to respond.
Too often signals for change occur without leaders noticing. Or leaders may receive a
signal for change and act on it without fully understanding its implications, or worse,
without appreciating what change in the organization the signal is requiring. These
shortcomings limit leaders’ ability to define the change needed and the outcomes for
Page 1
 Leadership and Change Management Chapter 3

it. How do leaders explore these signals and accurately interpret their meaning? How
can they be more certain that they are asking their organizations to change in the
ways that are really needed?
The Drivers of Change Model
The Drivers of Change Model clarifies what drives the need for change, especially
transformational change. The model portrays a sequence to these triggers, with one
trigger calling forth change in the next, and the next, and so on. A demand-and-
response relationship exists between these various catalysts, although many of the
forces are in fact iterative and can have reciprocal influence.
The model describes seven drivers. It shows that the drivers move from what is
external and impersonal to what is internal and personal
The Drivers of Change Model illustrates that changes in the larger external domains,
such as shifts in the environment or marketplace, demand a response (change) in the
more specific domains of business strategy and organizational design, which, in turn,
require change in the human domains of culture and people’s behaviors and ways of
thinking. The external domains are clearly more familiar to leaders—environment,
marketplace, business, and organization—while the internal ones—culture, behavior,
and mindset—are new to most, yet equally essential.

Environment

Marketplace Requirements for Success

Business Imperatives

Organizational Imperatives

Cultural Imperatives

Leader and Employee Behavior

Leader and Employee Mindset

Fig 3.1. Drivers of Change Model

Environment: The dynamics of the larger context within which organizations

and people operate. These forces include: social, business and economic,
political, governmental, technological, demographic, legal, and natural
environment.

Page 2
Leadership and Change Management Chapter 3

Marketplace Requirements for Success: The aggregate set of customer

requirements that determine what it takes for a business to succeed in its
marketplace and meet its customers’ needs. This includes not only actual
product or service needs, but also requirements such as speed of delivery,
customization capability, level of quality, need for innovation, level of customer
service, and so forth. Changes in marketplace requirements are the result of
changes in environmental forces. For instance, as the environment is becoming
infused with technology that makes speed and innovation commonplace,
customers are demanding higher quality, customized products and services and
expecting them faster.
Business Imperatives: Business imperatives outline what the company must do
strategically to be successful, given its customers’ changing requirements.
These can require systematic rethinking and change to the company’s mission,
strategy, goals, business model, products, services, pricing, or branding.
Essentially, business imperatives pertain to the organization’s strategy for
successfully meeting its customer requirements.
Organizational Imperatives: Organizational imperatives specify what must
change in the organization’s structure, systems, processes, technology,
resources, skill base, or staffing to implement and achieve its strategic business
imperatives successfully.
Cultural Imperatives: Cultural imperatives denote how the norms, or
collective way of being, working, and relating in the company, must change to
support and drive the organization’s new design, operations, and strategy. For
instance, a culture of teamwork may be required to support reengineering
business processes (organizational imperatives) to drive the strategy (business
imperative) of faster cycle time and increased customer responsiveness.
Leader and Employee Behavior: Collective behavior creates and expresses an
organization’s culture. Behavior speaks to more than just overt actions: It
describes the style, tone, or character that permeates what people do. It speaks
to how people’s way of being must change to establish a new culture.
Therefore, leader and employee behavior denotes the ways in which leaders and
employees must behave differently to re-create the organization’s culture to
implement and sustain the new organizational design successfully.
Leader and Employee Mindset: Mindset encompasses the worldview,
assumptions, beliefs, or mental models that cause people to behave and act as they
do. Becoming aware that each of us has a mindset, and that it directly impacts our
behavior, decisions, actions, and results, is often the critical first step in building a
person’s and an organization’s capacity to transform. Transforming mindset is a
prerequisite to sustained change in behavior and culture. A shift of mindset is often
required for organizational leaders to recognize changes in the environmental
Page 3
Leadership and Change Management Chapter 3

forces and marketplace requirements, thereby being able to determine the best new
strategic business direction, structure, or operation for the organization. A change
in employee mindset is often required for them to understand the rationale for the
changes being asked of them. And almost always, leaders and employees must
change their mindset to implement and function in the organization’s new design
and strategy successfully.
SIGNIFICANCE OF CHANGE MANAGEMENT

The subject matter holds a tremendous importance for both individual and
organization. Let us discuss some of the benefits from organization perspective.
Understanding environment (society, government, customers)
It is important for organization to understand, assess and gauge the dynamics in its
external environment in order to envisage and establish an appropriate relationship
with various actors like government, customers and society. Therefore managers
by knowing the subject of change management can better be prepared to
understand whatever is going on in the environment.
Objectives, strategy formulation & implementation (to develop competitive
advantage)
Second is consequent upon knowing the impact of change at extraneous level on its
own internal dynamics, and the foremost is objective setting and seeking
competitive advantage.
Employees (trained, high performing work practices, reliable organization)
The employees are the recipient of change plan. One such perpetual concern of
senior managers is to make organization highly reliable, therefore employees ought
to be trained and high performing one in today’s hyper competitive world.
Technology Issues
Technology is considered the engine of growth in today’s world. Perhaps the
greatest challenge for contemporary organizations is the acquisition and integration
of technology in its strategy, structure and process. As such the concern of top
managers is how to avoid organization being obsolete and how to cope and absorb
the impact of changing information and communication technologies which have
decisively influencing production and consumption behavior.
Globalization
The management of international economic and political forces what is today
known as internationalization and globalization is yet another important factor
influencing decision making of organization. No organization or nation can stay
independent and indifferent to whatever is happening at international (political)
level. For instance the impact of September 11 events have been tremendous on the
economies and organizations of developing countries like Pakistan. Similarly supra
– national institutions are becoming more assertive over nation states not only in
Page 4
Leadership and Change Management Chapter 3

political terms but also on social issues like child labour and gender issues. So
government and states are considered somewhat less sovereign in imposing their
will over their subjects (individual and organizations) against the ever increasing
and complex interdependencies amongst states. For example the compulsions and
legal provisions of international treaties like WTO and ISO certification regimes
have decisively influenced the organizations and economies of the developing
world. Hence imperative for managers, CEOs and entrepreneurs from smaller or
larger organizations alike, of different sectors of economy, is to understand the
complexities of globalization and its impact on organization’ business.
RESISTANCE TO CHANGE
Resistance is a natural defense mechanism for those ‘losing’ something. The closer
we are to something or someone, the greater the grief or loss. Reasons for resisting
change are varied. The reasons could include perceived loss of security, money,
pride or satisfaction, friends, freedom, responsibility, authority, good working
conditions, status, lack of respect, objectionable manner, negative attitude,
personal criticism, not having had input, bad timing, challenge to authority or
second hand
Resistance: a strange, loaded word with negative and emotional baggage. But
resistance is, believe it or not, a completely natural human experience. Resistance
is how we protect ourselves from being had. When presented with significant
change, most people think of the reasons why this new idea won’t work. It’s pretty
natural to want to stay in and defend the status quo
Resistance can often be positive, in the sense that:
 You know your request has been heard and people are perhaps striving to
understand how to make it work without upsetting their environment too
much; or
 It may represent a legitimate commitment to another alternative or to a
different way of thinking.
Signs of direct resistance
 People tell you their real concerns, and how they feel, openly and honestly.
 They maintain eye contact and use “I” statements. (Pay attention to cultural
differences.)
 Bluntness may feel hurtful at the time, but is actually the more honest and
easier form of resistance to deal with.
 You know exactly where you stand; the issue is clear.

 Leads to honest negotiation or conflict resolution.

 You can put your energy into the real issue.

Page 5
Leadership and Change Management Chapter 3

Signs of indirect resistance

 People ask for more and more detail, endlessly questioning.
 They are not able to find a good time to implement, or continually assert a
rigid timetable.
 They intellectualize, debate definitions and concepts, or talk in apparently
rational terms, but not about the real concerns.
 They decide “The problem has gone away,” or press for solutions too soon.
 They say someone else is the problem, using third party language: we or they
statements.
 You have a gut feeling that something’s wrong.
 You don’t know where you stand.

 Leads to misdirected energy and frustration.

 You will be led to put energy into side issues.
Why individuals and organizations resist change?

One of the most baffling and recalcitrant of the problems which business
executives face is employee resistance to change. Such resistance may take a
number of forms — persistent reduction in output, increase in the number of
"quits" and requests for transfer, chronic quarrels, sullen hostility, wildcat or
slowdown strikes, and, of course, the expression of a lot of pseudo-logical reasons
why the change will not work. Even the more petty forms of this resistance can be
troublesome.
It is not difficult to recognize resistance to change when explicitly manifest
through things like strikes, slowdowns, and complaints. It is more difficult to
detect and cope with implicit resistance, like decreased motivation or loyalty, or
errors, absenteeism etc. Changes resisted often even when its benefits outweigh its
cost. Why does this happen? There are several overlapping reasons that people
(individuals) and organizations resist change.
Some of these reasons for employee resistance may include:
 belief that the change initiative is a temporary fad
 belief that fellow employees or managers are incompetent
 loss of authority or control

 loss of status or social standing

 lack of faith in their ability to learn new skills

 feeling of change overload (too much too soon)

 lack of trust in or dislike of managers

Page 6
Leadership and Change Management Chapter 3

 loss of job security

 loss of family or personal time

 feeling that the organization is not entitled to the extra effort

For some people resisting change, there may be multiple reasons. Adding to this
complexity is the fact that sometimes the stated reason hides the real, more deeply
personal reason. You will also need to recognize that people work through a
psychological change process as they give up the old and come to either embrace
or reject the new.

Why individuals resist change?

1. Selective Perception- when changes are initiated, individuals tends to focus on

how they will be personally affected than the big picture for the entire
organization.
2. Lack of information- People will resist change if they lack knowledge as to
what is expected or why the change is important. If people don’t have enough
information about how to change, they may fear making mistakes, so they will
not try.
3. Fear of the unknown- People resist change when they are uncertain about how it
will affect their well-being. E.g Downsizing leads to lay off
4. Habit- Many people prefer familiar actions and events, even if they are not
optimal.
5. Resentment toward the initiator- If a change seems arbitrary or unreasonable,
resentment and anger often directed toward those who initiating the change.

Why Organizations resist change?

Organizations resist change for many of the same reasons individuals do.
Following are some of the forces inside an organization which resist change.
Power maintenance- Change in decision making authority and control of
resource allocations threaten the balance of power in organization. Units
benefiting from the change will endorse it, but those losing the power will resist
it, which can often slow or prevent the change process.
Structural stability- A change may change the organization structure which
will have effects on others, which may not be acceptable.
Organizational culture- Organizational members will resist changes that force
them to abandon established organizational culture.

Page 7
Leadership and Change Management Chapter 3

Group norms- Any change that disrupts the group norms, tasks, or role
relationships will probably be resisted. Groups often resist changes that do not
benefit them individually

Managing Resistance to Change

Change is necessary and inevitable. The quality movement, continuous
improvement, action learning organizations, advanced technology, competition,
new consumer media, new distribution methodologies, etc all alter the landscape of
the familiar.
Successful implementation of change in organizations requires a wide range of
leadership behaviors. Some of the behaviors involve political and administrative
aspects, and others involve motivating, supporting, and guiding people. Even the
people who initially endorse a change will need support and assistance to sustain
their enthusiasm and optimism as the inevitable difficulties and setbacks occur.
Major change is always stressful and painful for people, especially when it
involves a prolonged transition period of adjustment, disruption, and dislocation.
The following guidelines describe current thinking about the best way to
implement a major change in an organization.
Seven Steps to managing Change
Step 1 Mobilize energy and commitment through joint identification of
business problems and their solutions.–Remember: You can’t order energy and
commitment the way you would a monthly report; but you can generate energy and
commitment if you involve people in the process.
Step 2 Develop a shared vision of how to organize and manage for
competitiveness.–The last thing you want are several competing visions of what
should be done. And once you have the vision, be sure that people see it as in their
personal best interest.
Step 3Identify the leadership.–You need the best people involved, and you need
them at all levels. Look to the managers of change-targeted units for that
leadership. Do not put leadership in the hands of staff personnel.
Step 4 Focus on results, not on activities.–Don’t get wrapped up in “sound good,
look good, feel good” activities. Concentrate on things that will contribute directly
and tangibly to bottom line improvement.
Step 5 Start change at the periphery, then let it spread to other units without
pushing it from the top.–You are much more likely to change the entire
organization by encouraging change in peripheral units, and letting that change
spread.

Page 8
Leadership and Change Management Chapter 3

Step 6 Institutionalize successes through formal policies, systems, and

structures.–And don’t forget to implement ways to measure the change!
Step 7 Monitor and adjust strategies in response to problems in the change
process.–Remember that some people will quit, some elements of your change
agenda will fail, and competitors may change their tactics. So be flexible.

Planned Change Once managers and an organization commit to planned

change, they need to create a logical step-by step approach in order to accomplish
the objectives. Planned change requires managers to follow an eight-step process
for successful implementations, which is illustrated as follows;

Recognize the need for change. Recognition of the need for change may occur at
the top management level or in peripheral parts of the organization. The change
may be due to either internal or external forces.
Develop the goals of the change. Remember that before any action is taken, it is
necessary to determine why the change is necessary. Both problems and
opportunities must be evaluated. Then it is important to define the needed changes
in terms of products, technology, structure, and culture.
Select a change agent. The change agent is the person who takes leadership
responsibility to implement planned change. The change agent must be alert to
things that need revamping, open to good ideas, and supportive of the
implementation of those ideas into actual practice.
Diagnose the current climate. In this step, the change agent sets about gathering
data about the climate of the organization in order to help employees prepare for
change. Preparing people for change requires direct and forceful feedback about
the negatives of the present situation, as compared to the desired future state, and
sensitizing people to the forces of change that exist in their environment.
Select an implementation method. This step requires a decision on the best way
to bring about the change. Managers can make themselves more sensitive to
pressures for change by using networks of people and organizations with different
perspectives and views, visiting other organizations exposed to new ideas, and
using external standards of performance, such as competitor’s progress.
Develop a plan. This step involves actually putting together the plan, or the
“what” information. This phase also determines the when, where, and how of the
plan. The plan is like a road map. It notes specific events and activities that must
be timed and integrated to produce the change. It also delegates responsibility for
each of the goals and objectives.
Implement the plan. After all the questions have been answered, the plan is put
into operation. Once a change has begun, initial excitement can dissipate in the
Page 9
Leadership and Change Management Chapter 3

face of everyday problems. Managers can maintain the momentum for change by
providing resources,
Follow the plan and evaluate it. During this step, managers must compare the
actual results to the goals established in Step 4. It is important to determine
whether the goals were met, and a complete follow-up and evaluation of the results
aids this determination. Change should produce positive results and not be
undertaken for its own sake.

Page 10