Organization Change /

Organization Development
Professor Alexander Settles
Structure should follow strategy
Growth
Concentration
Diversification
Stability
No change
Retrenchment
Turnaround
Divestment
Liquidation
Definition of OD
Organization Development (OD) is a
planned process of change in an
organizations culture through the
utilization of behavioral science
technology, research, and theory.
Definition of OD
OD refers to a long-range effort to
improve an organizations problem-
solving capabilities and its ability to cope
with changes in its external environment
with the help of external or internal
behavioral-scientist consultants.
Definition of OD
OD is an effort (1) planned, (2)
organization-wide, and (3) managed from
the top, to (4) increase organization
effectiveness and health through (5)
planned interventions in the
organizations processes, using
behavioral science knowledge.
Organization Development is...
a systemwide application and transfer of
behavioral science knowledge to the
planned development, improvement, and
reinforcement of the strategies,
structures, and processes that lead to
organization effectiveness.

Action Research Model









Feedback to Client
Data gathering after
action

Problem Identification


Joint action planning


Consultation with a
behavioral scientist


Data gathering &
preliminary diagnosis


Joint diagnosis


Action

Initiate the Inquiry
Inquire into Best Practices
Discover Themes
Envision a Preferred Future
Design and Deliver Ways to
Create the Future
Positive Model
Comparison of
Planned Change Models
Similarities
Change preceded by diagnosis or preparation
Apply behavioral science knowledge
Stress involvement of organization members
Recognize the role of a consultant
Differences
General vs. specific activities
Centrality of consultant role
Problem-solving vs. social constructionism
General Model of Planned Change
Evaluating
and
Institutionalizing
Change
Planning
and
Implementing
Change
Diagnosing
Entering
and
Contracting
Processes for Planned
Organization Change
Process Model
Planned organization change requires a
systematic process of movement from one
condition to another
Unfreezing
Process by which people become aware of the need
for change
Change
Movement from the old way of doing things to a new
way
Refreezing
Process of making new behaviors relatively
permanent and resistant to further change
Process of Organizational Change
Processes for Planned
Organization Change
The Continuous Change Process Model
Incorporates the forces for change, a problem-
solving process, a change agent, and transition
management
Takes a top management perspective
Perceives forces and trends that indicate
need for change
Determines alternatives for change
Selects the appropriate alternative
Continuous Change Process Model of
Organization Change
Processes for Planned
Organization Change
The Continuous Change Process Model
Change agent: a person responsible for managing a
change effort
Assists management with problem recognition/definition
Can be involved in generating/evaluating potential action
plans
Can be from inside or outside of the organization
Implements the change
Measures, evaluates, controls the desired results
Transition management
Process of systematically planning, organizing, and
implementing change
OD: Group and Individual
Change
To set team
goals and
priorities
To examine
relationships
among those
doing the
work
To analyze
and allocate
the way work
is performed
To examine
how a group
is working
Team Building Goals
Resistance to Change
The Resistance to Change Paradox
Organizations invite change when change offers
competitive advantage
Organizations resist change when change threatens
the organizations structure and control systems
Organizations must balance stability (permanence)
with the need to react to external shifts (change)
Resistance can warn of the need to reexamine the
need for change
Resistance to Change:
Sources of Resistance to Change
Organizational
Sources
Overdetermination
Narrow focus of
change
Group inertia
Threatened
expertise
Threatened power
Resource allocation
changes

Individual
Sources
Habit
Security
Economic factors
Fear of the
unknown
Lack of
awareness
Social factors
Managing Successful Organization
Change and Development
Keys to Managing Change in
Organizations
Consider international issues
Take a holistic view
Start small
Secure top management support
Encourage participation by those affected by
the change
Foster open communication
Reward those who contribute to change
Different Types of
Planned Change
Magnitude of Change
Incremental
Quantum
Degree of Organization
Over organized
Underorganized
Domestic vs. International Settings
Diagnosing
Organizational Systems
The key to effective diagnosis is
Know what to look for at each
organizational level
Recognize how the levels affect each
other
Organization-Level
Diagnostic Model
Inputs
Technology

Strategy Structure



HR Measurement
Systems Systems


General
Environment

Industry
Structure


Design Components
O
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Outputs
Organization Environments
and Inputs
Environmental Types
General Environment
Task Environment and Industry Structure
Rate of Change and Complexity
Enacted Environment
Environmental Dimensions
Information Uncertainty
Resource Dependency
Organization Design Components
Strategy
the way an organization uses its resources
(human, economic, or technical) to gain
and sustain a competitive advantage
Technology
the way an organization converts inputs
into products and services
Structure
how attention and resources are focused
on task accomplishment
Organization Design Components
Human Resource Systems
the mechanisms for selecting, developing,
appraising, and rewarding organization
members
Measurement Systems
methods of gathering, assessing, and
disseminating information on the activities of
groups and individuals in organizations
Organization Design Components
Organization Culture
The basic assumptions, values, and norms
shared by organization members
Represents both an outcome of organization
design and a foundation or constraint to
change

Outputs
Organization Performance
e.g., profits, profitability, stock price
Productivity
e.g., cost/employee, cost/unit, error rates,
quality
Stakeholder Satisfaction
e.g., market share, employee satisfaction,
regulation compliance
Goal Clarity

Task Group
Structure Functioning

Group Performance
Composition Norms
Group-Level Diagnostic Model
Inputs Design Components Outputs


Organization
Design




Group
Effectiveness



Group-Level Design Components
Goal Clarity
extent to which group understands its objectives
Task Structure
the way the groups work is designed
Team Functioning
the quality of group dynamics among members
Group Composition
the characteristics of group members
Performance Norms
the unwritten rules that govern behavior
Group-Level Outputs
Product or Service Quality
Productivity
e.g., cost/member, number of decisions
Team Cohesiveness
e.g., commitment to group and
organization
Work Satisfaction
Possible Effects of Feedback
Feedback occurs
What is the direction
of the feedback?
Is the energy created
by the feedback?
No
Change
Do structures and
processes turn energy
into action?
Change
Failure,
frustration,
no change
Anxiety,
resistance,
no change
Energy to use
data to identify and
solve problems
Energy
to deny or
fight data
NO
YES
NO
YES
The Design of
Effective Interventions
Contingencies Related to the
Change Situation



Readiness for Change
Capability to Change
Cultural Context
Capabilities of the Change Agent
The Design of
Effective Interventions
Contingencies Related to the
Target of Change




Strategic Issues
Technology and structure issues
Human resources issues
Human process issues
Intervention Overview
Human Process Interventions
Technostructural Interventions
Human Resources Management
Interventions
Strategic Interventions
Human Process Interventions
Process Consultation and Team
Building
Third-party Interventions (Conflict
Resolution)
Organization Confrontation Meeting
Intergroup Relationships
Large-group Interventions
Technostructural Interventions
Structural Design
Downsizing
Reengineering
Parallel Structures
High Involvement Organizations
Total Quality Management
Work Design
Human Resources Management
Interventions
Goal Setting
Performance Appraisal
Reward Systems
Coaching and Mentoring
Career Planning and Development
Management and Leadership
Managing Work Force Diversity
Employee Wellness Programs
Strategic Interventions
Transformational Change
Integrated Strategic Change
Organization Design
Culture Change
Continuous Change
Mergers and Acquisitions
Alliances and Networks
Strategic Interventions
Transorganizational Change
Self-designing Organizations
Organization Learning and Knowledge
Management
Built to Change Organizations

Motivating Change
Creating Vision
Developing
Political Support
Managing the Transition
Sustaining Momentum
Effective
Change
Management
Change Management Activities
Motivating Change
Creating Readiness for Change
Sensitize the organization to pressures for change
Identify gaps between actual and desired states
Convey credible positive expectations for change
Overcoming Resistance to Change
Provide empathy and support
Communicate
Involve members in planning and decision making
Creating a Vision
Discover and Describe the
Organizations Core Ideology
What are the core values that inform
members what is important in the
organization?
What is the organizations core purpose or
reason for being?
Construct the Envisioned Future
What are the bold and valued outcomes?
What is the desired future state?
Developing Political Support
Assess Change Agent Power
Identify Key Stakeholders
Influence Stakeholders
Change as a Transition State
Current
State
Transition
State
Desired
Future
State
Implementation and Evaluation
Feedback
Diagnosis
Design and
Implementation
of Interventions
Alternative
Interventions
Implementation of
Intervention
Clarify
Intention
Plan for
Next Steps
Implementation
Feedback
Measures of
the Intervention
and Immediate
Effects
Evaluation
Feedback
Measure of
Long-term
Effects
Institutionalization Framework
Organization
Characteristics
Intervention
Characteristics
Institutionalization
Processes
Indicators of
Institutionalization
Organization Characteristics
Congruence
Extent to which an intervention supports or
aligns with the current environment, strategic
orientation, or other changes taking place
Stability of Environment and Technology
Unionization
Intervention Characteristics
Goal Specificity
Programmability
Level of Change Target
Internal Support
Sponsor
Institutionalization Processes
Socialization
Commitment
Reward Allocation
Diffusion
Sensing and Calibration
Indicators of Institutionalization
Knowledge
Performance
Preferences
Normative
Consensus
Value Consensus
Contingencies Influencing
Structural Design
Environment
Organization
Size
Technology
Organization
Goals
Worldwide
Operations
Structural
Design
The Downsizing Process
Clarify the organizations strategy
Assess downsizing options and make
relevant choices
Implement the changes
Address the needs of survivors and those
who leave
Follow through with growth plans
Downsizing Tactics
Tactic Characteristics Examples

Workforce
Reduction
Reduces headcount
Short-term focus
Fosters transition

Attrition
Retirement/buyout
Layoffs

Organization
Redesign
Changes
organization
Medium-term focus
Fosters transition &
transformation

Eliminate functions,
layers, products
Merge units
Redesign tasks

Systemic
Changes culture
Long-term focus
Fosters
transformation
Change
responsibilities
Foster continuous
improvement
Downsizing is normal

The Reengineering Process
Prepare the organization
Specify the organizations strategy and
objectives
Fundamentally rethink the way work gets
done
Identify and analyze core business
processes
Define performance objectives
Design new processes
Restructure the organization around the
new business processes.
Characteristics of
Reengineered Organizations
Work units change from functional departments to process
teams
Jobs change from simple tasks to multidimensional work
Peoples roles change from controlled to empowered
The focus of performance measures and compensation shifts
from activities to results.
Organization structures change from hierarchical to flat
Managers change from supervisors to coaches; executives
change from scorekeepers to leaders
Characteristics of
Transformational Change
Triggered by Environmental and Internal
Disruptions
Aimed at Competitive Advantage
Systemic and Revolutionary Change
Demands a New Organizing Paradigm
Driven by Senior Executives and Line
Management
Involves Significant Learning

Integrated Strategic Change
(ISC)
Integrated Strategic Change
is a deliberate coordinated process that
leads to gradually or radically systemic
realignments between the environment
and a firms strategic orientation
resulting
in improvement in performance and
effectiveness.
The Integrated Strategic Change Process
Strategy
S1
Organization
O1
Organization
O2
Strategy
S2 Strategic
Change
Plan
Strategic Analysis Strategic Choice
Implementation
ISC Application Stages
Strategic Analysis
Assess the readiness for change and top
managements ability to carry out change
Diagnose the Current Strategic Orientation
Strategic Choice
Top management determines the content of the
strategic change
Designing the Strategic Change Plan
Development of a comprehensive agenda to
achieve the change
Implementing the Strategic Change Plan
Organizational Design
Conceptual Framework
Strategy
Structure
Work Design
Human Resources Practices
Management and Information Systems
Key Point
Fit, Congruence, Alignment among
Organizational Elements
Organization Design Model
Organization Strategy
Strategic Fit
Structure
Work
Design
Human Resource
Practices
Design Fit
Organization Design
Management
and Information
Systems
Organization Designs
Organization Design
Application Stages
Clarifying the Design Focus
Create the overall framework, begins with examining strategy
and objectives and determining organization capabilities
needed
Designing the Organization
Results in an overall design for the organization, detailed
designs for the components, and preliminary plans for how to
implement
Implementing the Design
Puts the new structures, practices and systems into place,
draws heavily leading and managing change methods
The Concept of Organization Culture
Basic
Assumptions
Values
Norms
Artifacts
Diagnosing Organization Culture
Behavioral Approach
Pattern of behaviors (artifacts) most related
to performance
Competing Values Approach
Pattern of values emphasis characterizing
the organization
Deep Assumptions Approach
Pattern of unexamined assumptions that
solve internal integration and external
adaptation problems well enough to be
taught to others
Competing Values Approach
Flexibility & Discretion
Stability & Control
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F
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Market
Hierarchy
Clan Adhocracy
Culture Change Application Stages
Establish a clear strategic vision
Get top-management commitment
Model culture change at the highest level
Modify the organization to support change
Select and socialize newcomers; downsize
deviants
Develop ethical and legal sensitivity

Self-Designing Organizations
Systemic change process altering most
features of the organization
Process is ongoing, never finished
continuous improvement and change
Learning as You Goon-site innovation
Need support of multiple stakeholders
All levels of the organization adopt new
strategies and change behaviors
Organization Learning &
Knowledge Management
Organization Learning interventions
emphasize the structures and social
processes that enable employees and
teams to learn and share knowledge
Knowledge Learning focuses on the
tools and techniques that enable
organizations to collect, organize, and
translate information into useful
knowledge
Organization Learning:
An Integrative Framework
Organization
Characteristics
Structure
Information
Systems
HR Practices
Culture
Leadership
Organization
Learning Processes
Discovery
Invention
Production
Generalization
Organization
Knowledge
Tacit
Explicit
Competitive
Strategy
Organization
Performance
Knowledge Management Organization Learning
Characteristics of a
Learning Organization
Structures emphasize teamwork, information
sharing, empowerment
Information systems facilitate rapid acquisition
and sharing of complex information to manage
knowledge for competitive advantage
Human resources reinforce new skills and
knowledge
Organization culture encourages innovation
Leaders model openness and freedom to try
new things while communicating a compelling
vision
Organization Learning Processes
Single loop learning
Most common form of learning
Aimed at adapting and improving the status
quo
Double loop learning
Generative learning
Questions and changes existing assumptions
and conditions
Deuterolearning
Learning how to learn
Learning how to improve single and double
loop learning
Knowledge and Performance
Organization knowledge must be
relevant and applied effectively to the
competitive strategy
Link organization learning processes to
organization performance
Growing emphasis on the value of
intellectual assets and services

Knowledge Management
Interventions
Generating Knowledge
Identify knowledge for competitive strategy
Develop ways to acquire or create that
knowledge
Organizing Knowledge
Put knowledge into a usable form
Codification and Personalization
Distributing Knowledge
Making knowledge easy to access, use &
reuse

Built-To-Change Organizations
Organizations are designed with the
ability to change constantly to create
the best sustainable source of
competitive advantage.
Organizations operate in complex
and rapidly changing environments
Built to Change
Application Stages
Create a Change-Friendly Identity
Pursue Proximity
Build an Orchestration Capability
Establish Strategic Adjustment a Normal
Condition
Seek Virtuous Spirals

Application Stages for
Transorganizational Development
Identification
Convention Organization
Evaluation
Who should
belong to the
transorganizational
System (TS)?
Relevant skills,
knowledge,
and resources
Key stakeholders
Should a TS
be created?
Costs and
benefits
Task
perceptions
How to organize
for task
performance?
Communication
Leadership
Policies and
procedures
How is the TS
performing?
Performance
outcomes
Quality of
interaction
Member
satisfaction
Mergers and Acquisitions
Merger - the integration of two previously
independent organizations into a completely
new organization
Acquisition - the purchase of one organization
by another for integration into the acquiring
organization.
Distinct from transorganizational systems,
such as alliances and networks, because at
least one of the organizations ceases to exist.
Merger and Acquisition Rationale
Diversification
Vertical integration
Gaining access to global markets,
technology, or other resources
Achieving operational efficiencies,
improved innovation, or resource sharing
Merger and Acquisition
Application Stages
Pre-combination Phase
The organization must identify a candidate
organization, work with it to gather information
about each other, and plan the implementation
and integration activities
Legal Combination Phase
The two organizations settle on the terms of the
deal, gain approval from regulatory agencies
and shareholders, and file appropriate legal
documents
Operational Combination Phase
Implementing the operational, technical and
cultural integration activities
Strategic Alliances
When two organizations formally agree to
pursue a set of goals
There is sharing of resources, intellectual
property, people, capital, technology,
capabilities or physical assets
Common alliances are licensing
agreements, franchises, long-term
contracts, and joint ventures
Alliance Intervention
Application Stages
Alliance Strategy Formulation
Clarify the business strategy and why an alliance is
needed
Partner Selection
Leverage similarities and differences to create
competitive advantage
Alliance Structuring and Start-up
Build and leverage trust in the relationship
Alliance Operation and Adjustment
Network Interventions
Involves three or more companies joined
together for a common purpose
Each organization in the network has goals
related to the network as well as those
focused on self-interest
Characterized by two types of change:
creating the initial network
(transorganizational development) and
managing change within an established
network

Cultural Context for Change
Context Orientation
Power Distance
Uncertainty Avoidance
Achievement Orientation
Individualism
Context
The extent to which meaning in
communication is carried in the words
Organizations in high context cultures
tend to value ceremony and ritual, the
structure is less formal, there are fewer
written policies, and people are often late
for appointments
Power Distance
Extent to which members of a society
accept that status and power are
distributed unequally in an organization
Organizations in these cultures tend to be
autocratic, possess clear status
differences, and have little employee
participation
Uncertainty Avoidance
The extent to which members of a
society tolerate the unfamiliar and
unpredictable
Organizations in these cultures tend to
value experts, prefer clear roles, avoid
conflict, and resist change
Achievement Orientation
The extent to which people in a society
value assertiveness and the acquisition of
material goods
Organizations in these cultures tend to
associate achievement with wealth and
recognition, value decisiveness, and
gender roles are clearly differentiated.
Individualism
The extent to which people in a society
believe they should be responsible for
themselves and their immediate family
Organizations in these cultures tend to
encourage personal initiative, value time
and autonomy, accept competition, and
autonomy is highly valued
International Strategic
Orientation
Characteristics of the International Design
Sell existing products/services to nondomestic
markets
Goals of increased foreign revenues
Implementing the International Orientation
OD facilitates extending the existing strategy
into the new market
Cross-cultural training and strategic planning

The Global Strategic Orientation
Characteristics of the Global Design
Centralized with a global product structure
Goals of efficiency through volume
Implementing the Global Orientation
OD supports career planning, role clarification,
employee involvement, conflict management and
senior management team building to help achieve
improved operational efficiency
OD helps the organization transition to global
integration from local responsiveness
The Multinational
Strategic Orientation
Characteristics of the Multinational Design
Operate a decentralized organization
Goals of local responsiveness through
specialization
Implementing the Multinational Orientation
OD helps with intergroup relations, local
management selection and team building
OD facilitates management development,
reward systems, and strategic alliances
Transnational Strategic
Orientation
Characteristics of the Transnational Design
Tailored products
Goals of learning and responsiveness through
integrations
Implementing the Transnational Orientation
Extensive selection and rotation
Acquire cultural knowledge and develop intergroup
relations
Build corporate vision
Global Social Change Organizations
Their primary task is a commitment to serve as an agent of
change in the creation of environmentally and socially
sustainable world futures
They have discovered and mobilized innovative social-
organizational architectures
They hold values of empowerment in the accomplishment of
their global change mission
They are globally-locally linked in structure, membership, or
partnership and thereby exist as entities beyond the nation-
state
They are multi-organizational and often cross-sectoral
Application Stages of
Global Social Change Organizations
Build the local organization
Using values to create the vision
Recognizing that internal conflict is often a function of external
conditions
Understanding the problems of success
Create horizontal linkages
Build a network of local organizations with similar views and
objectives
Develop vertical linkages
Create channels of communication and influence upward to
governmental and policy-level, decision-making processes