Organizational
Change
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Organizational Change at Ford
Ford Motor Co. CEO Alan
Mulally successfully
transformed the troubled
automaker by having a
compelling vision and
applying several other
organizational change
practices.
15-2
Lewin’s Force Field Analysis Model


Developed by Kurt Lewin
Driving forces
Restraining
Forces
• Push organizations toward change
• External forces or leader’s vision

Restraining forces
• Resistance to change -- employee
behaviors that block the change
process
Driving
Forces
15-3
Force Field Analysis Model
Restraining
Forces
Desired
Conditions
Restraining
Forces
Restraining
Forces
Current
Conditions
Driving
Forces
Before
Change
Driving
Forces
Driving
Forces
During
Change
After
Change
15-4
Not Hoppy About Change
Mina Ishiwatari (front left)
wanted to improve Hoppy drink’s
brand image, but most staff
resisted these changes. “I tried
to take a new marketing
approach to change the image
of Hoppy . . . but no one would
listen to me.” Ishiwatari’s
persistence improved Hoppy’s
popularity in Tokyo with limited
support or budget.
15-5
Restraining Forces
(Resistance to Change)

Many forms of resistance
• e.g., complaints, absenteeism,
passive noncompliance

View resistance as a
resource
1. Symptoms of deeper problems
in the change process
2. A form of constructive conflict -may improve decisions in the
change process
3. A form of voice – helps
procedural justice
15-6
Why People Resist Change
1. Direct
costs
• Losing something of value due to change
2. Saving
face
• Not invented here syndrome
3. Fear
of the unknown
• Risk of personal loss
• Concern about being unable to adjust
15-7
Why People Resist Change
4.
(con’t)
Breaking routines
• Cost of moving away from our “comfort zones”
• Requires time/effort to learn new routines
5.
Incongruent team dynamics
• Norms contrary to the desired change
6.
Incongruent organizational systems
• Systems/structures reinforce status quo
• Career, reward, power, communication systems
15-8
Creating an Urgency for Change

Inform employees about driving forces

Most difficult when organization is doing well

Customer-driven change
• Adverse consequences for firm
• Human element energizes employees

Sometimes need to create urgency to change
without external drivers
• Requires persuasive influence
• Use positive vision rather than threats
15-9
Minimizing Resistance to Change
Communication

Learning


Involvement

Stress Mgt
Highest priority and first
strategy for change
Generates urgency to change
Reduces uncertainty (fear of
unknown)
Problems -- time consuming
and costly
Negotiation
Coercion
15-10
Minimizing Resistance to Change
Communication


Learning

Involvement

Stress Mgt
Provides new knowledge/skills
Includes coaching and other
forms of learning
Helps break old routines and
adopt new roles
Problems -- potentially time
consuming and costly
Negotiation
Coercion
15-11
Minimizing Resistance to Change
Communication

Learning

Involvement

Stress Mgt

Negotiation
Employees participate in change
process
Helps saving face and reducing
fear of unknown
Includes task forces, future
search events
Problems -- time-consuming,
potential conflict
Coercion
15-12
Minimizing Resistance to Change
Communication

Learning
Involvement

When communication, learning,
and involvement are not enough
to minimize stress
Potential benefits
• More motivation to change
• Less fear of unknown
Stress Mgt
• Fewer direct costs
Negotiation

Problems -- time-consuming,
expensive, doesn’t help everyone
Coercion
15-13
Minimizing Resistance to Change
Communication
Learning
Involvement
Stress Mgt
Negotiation

Influence by exchange -reduces direct costs
 May be necessary when people
clearly lose something and won’t
otherwise support change
 Problems
• Expensive
• Gains compliance, not
Coercion
commitment
15-14
Minimizing Resistance to Change
Communication
Learning

Involvement
Stress Mgt
Negotiation
When all else fails
 Assertive influence
 Radical form of “unlearning”
 Problems
• Reduces trust
• May create more subtle resistance
Coercion
• Encourage politics to protect job
15-15
Refreezing the Desired Conditions
Ray Davis, Umpqua Bank
We tend to revert to previous behaviors and practices,
unless systems and structures hold (refreeze) the
desired changes.
“Even when we want to change, and do change, we tend
to relax and the rubber band snaps us back into our
comfort zones.” (Ray Davis, CEO, Umpqua Bank)
15-16
Change Agents

Change agent -- anyone who possesses
enough knowledge and power to guide and
facilitate the change effort

Involves transformational leadership
• Develop the change vision
• Communicate the vision
• Model the vision
• Build commitment to the vision
15-17
Strategic Vision & Change

Need a vision of the desired
future state

Identifies critical success
factors for change

Minimizes employee fear of
the unknown

Clarifies role perceptions
15-18
Social Networks and Viral Change

Change agents need a
guiding coalition
• Representative across the firm
• Influence leaders – respected

Viral change
• Information seeded to a few
people is transmitted to others
based on patterns of friendship
• Relies on social networks -- high
trust, referent power
• Change also occurs through
behavior observation
15-19
Diffusion of Change

Begin change as pilot projects

Effective diffusion considers MARS model
• Motivation – Pilot project employees rewarded;
motivate others to adopt pilot project
• Ability – Train employees to adopt pilot project
• Role perceptions – Translate pilot project to new
situations
• Situational factors – Provide resources to implement
pilot project elsewhere
15-20
Action Research Approach

Action orientation and research orientation
• Action – to achieve the goal of change
• Research – testing application of concepts

Action research principles
1. Open systems perspective
2. Highly participative process
3. Data-driven, problem-oriented process
15-21
Action Research Process
Form
clientconsultant
relations
Diagnose
need for
change
Introduce
intervention
Evaluate/
stabilize
change
Disengage
consultant’s
services
15-22
Appreciative Inquiry Approach
Frames change around positive and possible future,
rather than traditional problem focus.
1.
Positive principle – focus on opportunities, not
problems
2.
Constructionist principle – conversations shape reality
3.
Simultaneity principle – inquiry and change are
simultaneous
4.
Poetic principle – we can choose how to perceive
events and situations
5.
Anticipatory principle – people are motivated by
desirable visions of the future
15-23
Four-D Model of Appreciative
Inquiry
Discovery
Dreaming
Designing
Delivering
Discovering
the best of
“what is
Forming
ideas about
“what might
be”
Engaging in
dialogue
about “what
should be”
Developing
objectives
about “what
will be”
15-24
Large Group Interventions

Future search, open space, and other
interventions that involve “the whole system”
• Large group sessions
• May last a few days
• High involvement with minimal structure

Limitations of large group interventions
•
•
•
•
Limited opportunity to contribute
Risk that a few people will dominate
Focus on common ground may hide differences
Generates high expectations about ideal future
15-25
Parallel Learning Structure
Approach

Highly participative social structures

Members representative across the formal
hierarchy

Sufficiently free from firm’s constraints

Develop solutions for organizational change
which are then applied back into the larger
organization
15-26
Cross-Cultural and Ethical Concerns
with Managing Change

Cross-Cultural Concerns
• Linear and open conflict assumptions different from
values in some cultures

Ethical Concerns
• Privacy rights of individuals
• Management power
• Individuals’ self-esteem
15-27
Organizations are About People
“Take away my people, but
leave my factories, and soon
grass will grow on the factory
floors. Take away my factories,
but leave my people, and soon
we will have a new and better
factory.”
Andrew Carnegie (1835-1919)
15-28
Organizational
Change
Discussion of
Team Exercise
15.2
Strategic Change
Incidents
Scenario #1: “Latté Troubles”

Refers to Starbucks, which
suffered from the financial
downturn and competition,
resulting in closing 900 stores
and laying off staff.
 Chairman Howard Schultz
lamented that aggressive growth
had led to “a watering down of
the Starbucks experience.”

Shultz stepped back into the
CEO role with an agenda for
change.
15-31
Starbucks’ Change Strategy

Schultz publicly apologized to
employees for “letting our people
down”; stated his commitment to
transform the company.

Sought customer feedback. Specially
trained employees (“idea partners”)
hosted conversations and act as
advocates for customers’
suggestions.

Introduced new products and quality
control processes.

Empowered employees to design
better Starbucks experience.
15-32
Scenario #2: “Greener Telco”

Scenario #2 refers to Bell
Canada’s Zero Waste
program, which successfully
changed employee behavior
by altering the causes of
those behaviors.

Pilot project in Toronto – 12
floor building of 1000 staff
reduced waste from 1800 lb
per day to just 75 lb per day
within 3 years.
Courtesy of Bell Canada
15-33
Bell Canada’s Change Strategy
Relied on the MARS model to
alter behavior:

Motivation -- employee
involvement, respected steering
committee (photo)

Ability -- taught paper reduction,
email, food disposal

Role perceptions – made waste
reduction salient (everyone’s
job) through banners, training

Courtesy of Bell Canada
Situation -- created barriers to
wasteful behavior (e.g. Coffee
mugs, removed garbage bins)
15-34
Scenario #3: “Go Forward Airline”

Scenario #3 refers to
Continental Airline’s “Go
Forward” change strategy,
which catapulted the
company “from worst to
first” within a couple of
years.
15-35
Continental Airlines’ Change Strategy

Communicate, communicate,
communicate

Introduced 15 performance
measures

Established stretch goals
(repainting planes in 6 months)

Replaced 50 of 61 executives

Rewarded new goals (on-time
arrival, stock price)

Customers as drivers of change
15-36