Unit 5c_Change Management

UNIT 5c_Syllabus
3. Change Management:
(a) Meaning of organizational change
(b) Approaches to managing organizational
change,
(c) Creating a culture for change,
(d) Implementing the change,
(e) Kurt Lewin Model of change.
(f) Case Studies
 Examples of Change : Success and Failures

• Titan Vs HMT
• Losing market share due to mechanical and quartz
watches
• Watch becoming a fashion accessory for both men
and women
• Aesthetics played an important role in marketing
• Diversified product range from Tata in association
with quartz
• Innovation is the key to success
 Meaning of change
• To transform or convert
• Change is the law of nature
• Nothing is permanent except change
• Make or become different
 Defining Organizational Change
• Organizational change: The process by which
organizations move from their present state
to some desired future state -
 to increase their effectiveness
 to find improved ways of using resources and
capabilities
 to increase an organization’s ability to create
value
 Organizational Change

Current State Transition State Future State

 Forces of Change
1. Development of new product
2. Entry of new competition
3. Change in consumer taste and preference
4. Shifting in socio-political, environment and
cultural framework
5. Advancement in technology
6. New emergent Market
 Need for organizational change

• Pressure to change comes from:

1. External, environmental pressures for change
2. Internal, organizational pressures for change
3. Organizational Pressure for Change
 External, environmental pressures

1. Competitive Forces. Organization must make

changes to attempt to match or exceed its
competitors on at least one of the dimensions of
efficiency, quality, innovation, and customer
responsiveness.
2. Political Forces. Political Stability e.g. ban on
Chinese App.
3. Economic Forces. The economic forces influence
organization’s change management strategy:
Globalization, deregulation and opening of
national economies.
 External, Environmental Pressures (contd)

4. Technological Forces. Technological

advancements and innovations in
communication and computer technology,
advances in manufacturing technology,
shortening of product life cycle.
5.Governmental Forces. Deregulation, Foreign
Exchange, Anti Trust Law, Protectionism
6.Ethical Forces
 Internal Pressure for Change
1. Systemic Forces. Change in any subsystem, result in a
change in the existing organizational processes and
the complete alignment as well as the relationship.
2. Inadequate Existing Administrative Processes: With
the changing times, an organization needs to change
it’s rules and existing administrative processes.
3. Individual/Group Speculations: desires and
requirements keep changing with the changing
times, which result in differences in individual as well
as group expectations
 Internal Pressure for Change (contd)
4. Structural Changes: Changes alter the existing
organizational structure as well as its overall
design. May take the form of downsizing, job
redesign, decentralization
5. People Focused Change: The major focus is laid on
people and their existing competencies, human
resource planning strategies, structural changes
and employee reorientation and replacement
6. Issues with the Profitability:
 Organizational Pressure for Change

1. Growth Pressure
2. Integration and Collaboration pressure
3. Identity pressure
4. New broom pressure
5. Power and political
 Targets of Change

• At four different levels:

1. Human resources
2. Functional resources
3. Technological capabilities
4. Organizational capabilities. These are key
intangible assets or collective skills, or
expertise such as ability to innovate, ability
to respond to changing customer needs.
2. Approaches to managing
organizational change,
 Approaches to managing organizational
change,
1. Lewin’s Three-Step Model
2. Kotter’s Eight-Step Plan
3. Action Research
4. Organizational Development
 1. Lewin’s Three-Step Model
• The process of change involves three steps
• Unfreezing: Faced with a dilemma or
disconfirmation, the individual or group
becomes aware of a need to change.
• Moving: The situation is diagnosed and new
models of behavior are explored and tested.
• Refreezing: Application of new behavior is
evaluated, and if reinforcing, adopted
 2. Kotter’s Eight-Step Plan
1. Establish the need for urgency
2. Ensure there is a powerful change group to
guide the change
3. Develop a vision
4. Communicate the vision
5. Empower the staff
6. Ensure there are short-term wins
7. Consolidate gains
8. Embed the change in the culture
 Kotter’s Eight-Step Plan (contd)
1. Establish the need for urgency by creating a
compelling reason for why the change is
needed.
2. Ensure Powerful Change Group. Form a
coalition with enough powers to lead the
change.
3. Create a new vision to direct the change and
strategies for achieving the vision.
4. Communicate vision throughout the
organization.
 Kotter’s Eight-Step Plan (contd)
5. Empower the staff . Empower others to act on the
vision by removing barriers to change and
encouraging risk taking and creative problem-solving.
6. Ensure there are short-term wins. Plan for, create,
and reward short term “wins” that move the
organization towards the new vision.
7. Consolidate gains. Consolidate improvements,
reassess changes, and make necessary adjustments
in the new programs.
8. Embed the change in the culture. Reinforce the
changes by demonstrating the relationship between
new behaviors and organizational success.
 3. Action Research

• It is a change process based on systemic

collection of data and selection of a change
action based on analysis of the data.
• The change agent often an outside consultant
begins by gathering information, taking
following steps-
1. Diagnosis. Change agent ask questions,
reviews records, interviews employees and
listens to their concerns.
 Action Research (contd)

2. Analysis. Analyses primary concerns, problem

areas and possible solution.
3.Feedback- Sharing with employees what has
been found.
4. Action. Corrective action as identified is
taken.
5. Evaluation. Study of effectiveness.
 4. Organizational Development (OD)

• OD values human and organizational growth.

• Following are underlying values in most OD
efforts-
1. Respect for people. Individuals are perceived
as responsible.
2. Trust and Support. Climate of trust, support,
openness.
3. Power Equalization. Effective organizations
deemphasize hierarchical authority and
control.
 Organizational Development (OD)

4. Confrontation. Problems are openly

confronted.
5. Participation. Greater the participation
greater will be the commitment to
implement the plan.
 Organizational Development (OD) Interventions

1. Sensitivity Training
2. Survey Feedback
3. Process Consultations
4. Team Building
5. Intergroup Development
6. Appreciative Inquiry (AI)- Discovery,
Dreaming, Designing)
3. Creating a culture for change
 Creating a culture for change

• Organizations can embrace change by

transforming their cultures.
• It is considered a proactive approach to
introduce change.
• There are two such approaches stimulating –
(a) an innovative culture, and
(b) creating a learning organization
1. Stimulating a Culture of Innovation
• Innovation refers to a new idea applied to
initiating or improving a product, process or
service.
• Innovative organizations encourage
experimentation.
• They reward both successes and failures as
failures are recognized as natural by-product of
venturing into unknown.
• Once a new idea is developed idea champions
enthusiastically promote it.
• idea champions have tendency to take risks.
• Idea champions have considerable autonomy
in decision-making discretions.
• idea champions display transformational
leadership.
• People in high power distance cultures prefer
idea champions to seek approval of their
innovative activities, before work begins.
• People in high uncertainty avoidance cultures
prefer idea champions to work within rules
and procedures.
 Category of Innovations
• Innovation can be categorized as –
• (a) Incremental Change. These are
improvements, such as mobile camera, virtual
key pad, slim and classy design
• (b) Transformational Change- These are
radical or disruptive breakthrough that cause
significant changes. Example:Tesla’s electric
car, PayTM wallet
 Sources of Innovation
1. Organic Structures These organizations positively
influence innovation, being lower in vertical
differentiation, formalization, centralization,
flexibility, adaptation and inter disciplinary e.g.
Tata Group Innovation Forum (TGIF).
2. Long Tenure in Management.
3. Slack Resources. Innovation is nurtured when
resources are slack and not in abundance.
4. Interunit Communication
 Example : Tata Group Innovation Forum
• In 2007, Tata group had set up Tata Group
Innovation Forum (TGIF).
• The Group has a three-pronged strategy to
encourage and enhance innovation across
business sectors and companies. These are-
• Better communication and recognition of -
 (a) Innovative ideas and efforts, and
 (b) Facilities and initiatives that enable
learning from other companies, and
 (c) Support for collaborative research and
partnerships with academia.
• The Tata Group Innovation Forum (TGIF)
achieves this by -
 (a) Organizing a number of events, seminars
and workshops, and
 (b) Facilitating interaction between Tata
managers, innovation experts such as
Professor Clayton Christensen of Harvard
Business School, best known for his theory of
disruptive innovation, and other acdeicians.
 2. Creating a Learning Organization

• Another way an organization can proactively

manage change is to make continuous growth
part of its culture – to become a learning
organization.
• Learning Organization. Just as individuals
learn, organizations too. A learning organization
develops continuous capacity to adapt and
change.
Characteristics of a Learning Organization

1. It has a shared vision that everyone agrees on.

2. People discard their old ways of thinking and
the standard routines for doing job or problem
solving, e.g. PM’s decision of demonetization
to combat black money, tax non-compliance,
etc
3. Members think of all organizational processes,
activities, functions and interactions with the
environment as part of a system of
interrelationship.
4. People openly communicate with each other
across vertical and horizontal boundaries.
5. People sublimate their personal interest
/department interests to achieve
organizations’ shared vision.
Managing a Learning Organization
• Establish a Strategy. By making commitment to
change, innovation and continuous
improvement.
• Redesign the Organizational Structure. Formal
structure can be a serious impediment.
Flattening the structures reducing boundaries,
reinforcing interdependence may be used.
• Reshape the Organizational Culture. Risk taking
and rewarding failure must be demonstrated.
4. Implementing the change
 Implementing the Change

1. Appoint a transition manager

2. Identify what needs to be done
3. Develop an implementation plan
4. Use multiple and consistent leverage points
5. Schedule activities
6. Provide needed resources
7. Reward transition behaviours
8. Develop feedback mechanisms
5. Kurt Lewin Model of change.
 Kurt Lewin Model of change.

• One of the cornerstone models for

understanding organizational change was
developed by Kurt Lewin back in the 1940s, and
still holds true today.
• His model is known as “Unfreeze” –
“Movement” – “Refreeze”; which refers to the
three-stage process of change that he describes.
• Lewin, a physicist as well as a social scientist,
explained organizational change using the
analogy of changing the shape of a block of ice.
• If you have a large cube of ice but realize that
what you want is a cone of ice, what do you
do? First you must melt the ice to make it
amenable to change (unfreeze). Then you
must mold the iced water into the shape you
want (change). Finally, you must solidify the
new shape (refreeze).
• Unfreeze
• This first stage of change involves preparing
the organization to accept that change is
necessary, which involves breaking down the
existing status quo before building up a new
way of operating.
• Key to this is developing a compelling message
showing why the existing way of doing things
cannot continue.
• This is easiest to frame as point to declining
sales figures, poor financial results, worrying
customer satisfaction surveys, etc.
• These show that things have to change in a
way that everyone can understand.
• To prepare the organization successfully,
process must start at its core – by challenging
the beliefs, values, attitudes, and behaviors
that currently define it.
• Using the analogy of a building, on must be
prepared to change the existing foundations
as they might not support add-on storeys.
Unless this is done, the whole building may
risk collapse.
• This first part of the change process is usually
the most difficult and stressful. Dismantling
the "way things are," It puts everyone and
everything off balance. It may evoke strong
reactions in people, and that's exactly what
needs to be done.
• By forcing the organization to re-examine its
core, effectively a (controlled) crisis is created,
which in turn builds a strong motivation to
seek out a new equilibrium.
• Without this motivation, the necessary
participation to effect any meaningful change
would not occur.
• Movement
• After the uncertainty created in the unfreeze
stage, the change stage is where people begin
to resolve their uncertainty and look for new
ways to do things.
• People start to believe and act in ways that
support the new direction.
• The transition from unfreeze to change does
not happen overnight: people take time to
embrace the new direction and participate
proactively in the change.
• In order to accept the change and contribute
to making it successful, people need to
understand how it will benefit them. Not
everyone will fall in line just because the
change is necessary and will benefit the
company.
• This is a common assumption and a pitfall that
should be avoided.
• Time and communication are the two keys to
the changes occurring successfully.
• People need time to understand the changes,
and they also need to feel highly connected to
the organization throughout the transition
period.
• Refreeze
• When the changes are taking shape and
people have embraced the new ways of
working, the organization is ready to refreeze.
• The outward signs of the refreeze are a stable
organization chart, consistent job descriptions,
and so on.
• The refreeze stage also needs to help people
and the organization internalize or
institutionalize the changes.
• This means making sure that the changes are
used all the time, and that they are
incorporated into everyday business.
• With a new sense of stability, employees feel
confident and comfortable with the new ways
of working.
Resistance to Change
 Resistance to Change
• Resistance is a very real and common issue that is
faced by change managers during the process of
change.
• It can be considered “tridimensional” –made up of
three components:
1. Affective: how a person feels about change
2. Cognitive: what they think about it
3. Behavioural: how they act or what they do in the
face of change.
• The behavioural response may take active or
 Sources of Organizational Resistance to
Change
1. Threat to established resource allocations
2. Structural inertia
3. Threat to established power relationships
4. Limited focus of change
5. Threat to expertise
6. Group inertia
Causes that lead to resistance to change

1. Fear of failure
2. Come out of your comfort zone by inculcating
new habits.
3. Failure to see the big picture
4. Reluctant to accept the new system of
control
5. Concern about support system
6. Not being pragmatic with a close-minded
approach
7. Lack of faith
8. Unwillingness to learn or develop new ideas
9. Fear of personal impact
10.Fear of uncertain outcome
How to overcome resistance to change
1. Emphasis on the vision and mission statement
2. Proper communication
3. Proper timing
4. Need for change. Survive and grow
5. Inclusive approach
6. Empower employees
7. Address employee anxiety
8. Assure support and guidance
9. Back up assurance with training
10. Always become a solution provider
UNIT 5b:Team Building
 Tuckman’s Five-Stage Theory
of Team Development

Performing
Adjourning
Norming

Storming Return to
Independence
Forming
Dependence/
interdependence

Independence

Gholipour A. 2006. Organizational Behavior. University of Tehran