CH13 - Managing organisational change Flashcards
Organisations which fail to change are unlikely to survive. They should therefore not question whether they need to to undertake change. What should they question instead?
What to change?
What to change to ?
How to successfully manage change?
Triggers for change can be divided in external and internal. What are the external triggers?
External environmental triggers divided into 2 groups -
Macro (indirect) environmental factors, identify using PESTLE. A few examples include
Political-eg change government,competition policy,import duties
Economic- growth or recession, local labour cost,disposable income
Social- attitude to work and leisure,attitude to health and education
Technological-growth in internet, public use of IT
Legal-new labour laws, employment law
Environmental- emissions targets
Porters 5 forces(direct triggers) Competitive rivalry Power of customers Power of suppliers Threat of new entrants Threat of substitutes
These are WHY triggers!
Triggers for change can be divided in external and internal. What are the internal triggers?
Internal triggers
Philosophy-new ownership,CEO, managements style
Reorganisation- takeover, restructuring,cost reduction
Personnel- procedures, training/development, promotion
Conditions- location change, outsourcing , flexible working
Technology-new procedures/systems, change of IT Demand,integration of roles
These are WHY triggers
What needs changing can be classified by the extent of the changes required and the speed required.
Extent of change can be transformation or realignment
Speed is incremental or “Big Bang “
Describe the 4 categories under these 2 axis
- Extent=transformation, speed = incremental (evolution)
Transformational changes implemented gradually through interlinked initiatives. Proactive, anticipating need for future change.results in fundamentally different organisation. - Extent=realignment, speed = incremental (called adaptation)
Change undertaken to realign the way in which organisation operates; implemented into a series of steps. - Extent=realignment, speed = Big Bang (called reconstruction)
Change undertaken to realign the way in which organisation operates, with many initiatives implemented simultaneously. Often forced and reactive because of changing competitive context - Extent=transformation , speed = Big Bang (called revolution)
Simultaneous initiatives on many fronts. Change is likely to be forced and reactive because of changing competitive conditions.
Incremental change is known as?
Big Bang is known as?
Incremental change is know as continuous change
Big Bang is known as discontinuous change
What is difference between transformational change and realignment?
Transformation entails changing an organisations culture. It is a fundamental change that cannot be handled within the existing organisation paradigm.
Realignment does not involve fundamental reappraisal of central assumptions and beliefs and can usually be managed in the existing cultural paradigm.
Selecting approach to strategic change. Evolution or revolution? Most managers struggle with how bold they should be.
With transformational change a break from the past is needed - turning away from companies heritage and starting with a clean slate.
On the other hand incremental change- recognising the value of continuity, building on past experience, investments and loyalties.
Window of opportunity for achieving revolutionary strategic change can be small for a number of reasons- what are they?
Competitive pressure - when companies market position starts to erode quickly a rapid and dramatic response may be the only option. Especially when an organisation threatens to slip into insolvency.
Regulatory pressure - from government or regulatory agencies to push changes through in a short period of time.
First mover advantage - a more proactive reason for instigating revolutionary change is to be first to introduce a new product, service or technology and to build up barriers to entry for late movers.
Cultural process of change - why is inherent culture important ?
Culture can be embedded and resistant to change
Existing Culture can limit the types of strategy development and change that can be considered.
Faced with change, managers will seek to minimise uncertainty by defining situation in terms of what is familiar.
Faced with a change trigger management will -
Try to improve effectiveness of existing strategy,
If this doesn’t work than a change in strategy may occur but in line with existing.
Even when manager know more radical changes are needed, they find they are constrained by existing routines,assumptions and political processes.
Achieving change in an organisation is often difficult and prone to failure. Why is this and what theory’s have been identified as possible approaches for managing the change?
It is due to conflict views of different stakeholders involved
3 theories are
Lewin’s force field analysis
Lewin’s three stage model
Beer and Nohria’s theory e and theory o
What is Lewin’s force field analysis ?
Managers should consider change in terms of
The driving forces - factors encouraging and facilitating the change
The restraining forces - factors that hinder the change.
Change only successful if driving forces larger than restraining
Strengthen the driving forces, weaken the restraining forces or do both.
Model can be view from perspective of employees or organisation-
Employees faced with change-
Driving forces- fresh challenges, improved rewards,more job satisfaction
Restraining forces- anxiety over job security and loss of power or status.
From organisation view-
Driving forces-increased market share, customers demanding new product, increased efficiency.
Restraining forces - lack of training, capital outlay, fear of disruption.
Describe Lewins 3 stage model.
Known as ice cube model. 3 stages
1.Unfreezing - make need for change obvious, create initial motivation to change by convincing staff of undesirability of current situation.
Ways to achieve include-
Identify and exploit areas of stress or dissatisfaction
Introduce additional forces for change- tighter budgets, new personnel in favour of change.
Increase employee knowledge of markets, competitors and the need for change.
2. Change - identify what the new norm should be. Often involves Establishing new patterns of behaviour Setting up reporting relationships Creating new reward/incentive schemes Introducing a new styles of management
- Refreezing - stabilising the change so people don’t slip into old ways. By,
Larger rewards for those who have fully embraced the new culture
Publicity of success stories and new heroes e.g employee of the month
What are the criticisms of Lewins 3 stage model. (Ice cube model)?
Kangeroo et al suggest that it’s too simplistic.
They argue that the model is based on assumptions that organisations are stable and static so change results only from concentrated effort and only in one direction.
They argue change is multidirectional and found everywhere. It happens in all directions simultaneously and is often a continuous process
What is Beer and Nohria’s theory?
They identified that a large proportion of change initiatives failed, due to managers been overwhelmed by the detail of the change management process and failing to focus on the overall goals of the change.
Every change fall into one of these categories :
Theory E - shareholder value is main concern. Change involves incentives, layoffs, downsizing and restructuring.
Theory O - softer approach to change.cultural adjustment, enhancing employee capabilities. Incremental. Change, feedback, further change. Involving employees in change process.
Both have drawbacks. Theory E ignores feelings and attitudes of employees leading to loss of motivation and commitment.
Theory O often fails to make the tough decisions that may be needed to survive
In reality a balance is needed and both theories implemented simultaneously.
There is a spectrum of possible reactions to change. What are they?
Enthusiastic support- employees offer full support
Compliance (passive resignation) employees show indifference to change. Likely reaction is apathy & minimal contribution whilst still going along with change.
Passive resistance- employees demonstrate regressive and non learning behaviour.
Active resistance- employees do what they can to stop the change-engaging in protests, working to rule,minimal work, personal withdrawal. They can also resort to committing errors intentionally and ultimately sabotage.
Key point - Cima definition of resistance?
What 3 categories of reasons for resisting change
Resistance is “any attitude or behaviour that reflects a persons unwillingness to make or support a desired change”
Reasons for resistance to change
Job factors- fear of technological unemployment,fear of change to working conditions,fear of demotion or reduced pay.
Personal factors-implied criticism of current working method, feel less valued, work becalmed monotonous.
Social factors- dislike need to change current social environment, personal dislike of people implementing change, lack of consultation leading to rejection.
