LS 607 Managing Organizational Change chapter 1

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Implementing Organizational Change: Theory into Practice
Bert Spector
Chapter 1
Organizational
Change
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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Learning Objectives
 Identify the role of strategic renewal in
propelling change.
 Focus on the behavioral aspect of
organizational change.
 Analyze the dynamics of motivating
employees to alter their behaviors.
 Differentiate the three faces of change.

Learning Objectives
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 Understand the source of both employee
resistance to and support for change.
 Appreciate the importance of trigger
events in initiating change efforts.
 Examine the role that “going global” plays
in triggering organizational change.

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Strategic Responsiveness
 Change implementation: actions taken by organizational
leaders in order to support strategic renewal and maintain
outstanding performance in a dynamic environment.
 Strategic renewal: change in an organization’s strategy
through a process of creating new business models, new
products, services, capabilities, and knowledge bases.
Successful organizations cannot remain static if they
hope to continue that success; they must change in
order to keep up with a changing world.

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Examples of Strategic
Responsiveness
Company Altered Strategy
IBM
Move from product to
service/consulting company
Netflix
Move from providing DVDs through
mail to providing streaming on-demand
entertainment
Renault
Move from French-based to
international-focused automobile
company
Pandora
Move from selling through third parties
to selling directly to end users
Facebook
Move from restricted, college campus
only social network to become a
“universal utility” open to everyone

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Building a Vocabulary
 Turnaround: an attempt to improve the
immediate financial position of an
organization by focusing on the income
statement and the balance sheet
 Techniques and tools: organizational
processes, mechanics, and other
interactions intended to produce a product
or service

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Three Faces of Change
Type Target Rationale
Turnaround Internal resources
Improve short-term
bottom-line
performance
Tools and
techniques
Processes
Increase internal
efficiency
Transformation Behaviors
Enhance human
capabilities

Popular Change Tools and Techniques
Tool Key Points
Company
Examples
Total Quality Management
Align operational processes with the
requirement for customer-defined quality
and continuous improvement.
Globe Metallurgical, Inc.
Motorola
Westinghouse

Agile Development
A process for product development, mainly
software, based on collaborative cross-
functional team effort.
GKN Aerospace
PNC Financial
Acxiom

Balanced Scorecard
Use of a measurement system that balances
financial objectives alongside internal
business process, customer satisfaction,
and employee learning and growth.
VW of Brazil
Ricoh
Weichert Relocation

Value-Chain Integration
Capture value by linking and coordinating
the primary activities—inbound logistics,
production, outbound logistics, marketing,
and sales—of the organization.
ComputerWorld
IBM Electronics
Microsoft

Lean
Eliminate activities that do not add value
from the perspective of the customer.
Sealy
Toyota
Conmed
Considered Design
Ecological impact is considered at
beginning of new product design process
rather than as an afterthought.
Nike
Hewlett-Packard
Ford
1-8Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Transformational Change
 Effective strategic renewal efforts combine aspects
of turnaround, tools and techniques, and
transformational behavioral change.
 Transformational organizational change seeks to
create long-term, sustainable alterations in
employee behaviors.
 The way employees conduct themselves at work
impacts the bottom-line performance of the
company.
 Behavior comes from both the individual and the
organizational context in which the individual works.

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 Behavioral change: alterations in
employee behavior in order to enable the
organization to meet the demands of its
strategy while achieving and sustaining
outstanding performance
 Behavior: the enactment of roles,
responsibilities, and relationships by
employees within an organization

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 Organizational context: the setting and
circumstances in which employees work.
“Organizational culture and values,
the behaviors of leaders, as well as
rules and procedures to define a
context that shapes how employees
enact their roles, responsibilities,
and relationships”

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Sources of Behavior
Individual
Characteristics
Organizational
Context
Behavior
Organizational change seeks to
create long-term, sustainable
alterations in employee behaviors.

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 Resistance: efforts exerted by
employees either overtly or covertly to
maintain the status quo.
“Employee response to change runs across a
broad spectrum, ranging from commitment at one
end to aggressive resistance” on the other. Each
of these reactions to change helps shape the
behavior of individuals and, ultimately, the
success of a change effort.”

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 Individuals may be satisfied with the status quo.
Because their needs are being met, they may view
any potential change as negative.
 Individuals may view change as a threat, fearing it
will adversely affect them in some significant way.
 Individuals may understand that change brings both
benefits and costs, but feel that the costs far
outweigh the benefits.
 Individuals may view change as potentially positive,
but may still resist because they believe that the
organization’s management is mishandling the
change process.
 Individuals may believe in the change effort ,but still
believe that the change is not likely to succeed.
Underlying Causes of
Resistance

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Participation: A Key to Effective
Change
 Participation: the process of allowing
employees a voice in work-related
decisions.
“By diagnosing problems, understanding their
importance, and being part of the process of
formulating solutions, people develop a
psychological sense of ownership over the outcome.
That ownership now creates in employees the
heightened motivation to implement change in order
to achieve desired goals.”

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Participation truths
Imposing change from above can
lead to employee resistance.
and
A participative process can help
build support for change efforts.

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Management’s Role in
Creating Resistance
Text in this color
Resistance Cause
Satisfied with status quo Employees not included
Change is perceived as
threat
Employees see little opportunity to
get required skills
Cost outweighs benefits Inadequate articulation of goals
Belief that management is
mishandling the process
Employees’ voice and interest not
being included
Employees doubt success
Past change efforts lack sustained
success

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 Trigger event: a shift in the environment
that precipitates a need for organizational
change
“Trigger events … are so named because their magnitude and
potential for organizational as well as personal impact set into
motion a series of mental shifts as individuals strive to
understand and redefine a situation. By their very nature, they
unbalance established routines and evoke conscious thought
on the part of organizational members. They stir up feelings
and emotions that come to affect people’s reactions to the
change. In short, trigger events bring people’s mindsets into
the arena of change.”

Reasons Why Globalization Might
Require Change
 They may seek to outsource certain activities that
had previously been performed in the home country.
 They may seek to enter new, nondomestic markets.
 They may seek nondomestic suppliers for needed
raw materials.
 They may seek strategic alliances with related
companies in other countries.
 They may seek to locate research and development
activities in multiple nations as a way of better
understanding the needs of nondomestic customers.

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Strategic Renewal and
Organizational Change
Shifting Competitive
Environment
New
Opportunities
Strategic
Renewal
Organizational
Change
Altering Behavior
Patterns of
Employees

All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher.
Printed in the United States of America.
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LS 607 Managing Organizational Change chapter 1

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