Chapter 13
MANAGING
CHANGE AND
INNOVATION
© Prentice Hall, 2002
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Learning Objectives
You should learn to:
– Contrast the calm waters and white-water rapids
metaphors of change
– Describe what managers can change in
organizations
– Explain why people are likely to resist change
– List techniques for reducing resistance to change
– Describe the situational factors that facilitate
cultural change
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Learning Objectives (cont.)
You should learn to:
– Explain how process reengineering is related to
change
– Describe techniques for reducing employee stress
– Differentiate between creativity and innovation
– Explain how organizations can stimulate and
nurture innovation
© Prentice Hall, 2002
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What Is Change?
Change
– alterations in people, structure, or technology
– change is an organizational reality
– managing change is an integral part of every
manager’s job
• complicates the jobs of managers
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Forces For Change
External Forces
– marketplace - adapt to changing consumer desires
– governmental laws and regulations - frequent
impetus for change
– technology - source of change in almost all
industries
– labor markets - HRM activities must change to
attract and retain skilled employees in the areas of
greatest need
– economic - uncertainties about interest rates,
budget deficits, and currency exchange rates
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Forces For Change (cont.)
Internal Forces
– originate from the operations of the organization
– forces may include strategy, workforce, new equipment,
or employee attitudes
Manager as Change Agent
– change agents - act as catalysts and assume
responsibility for change
• manager may serve as change agent
– may be more thoughtful, overcautious
• outside consultant - used for systemwide changes
– produce more drastic changes than insiders
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Two Views Of The Change Process
The Calm Waters Metaphor
– Lewin’s three-step model
• unfreezing - preparing for the needed change by:
– increasing the driving forces that direct behavior
away from the status quo
– decreasing the restraining forces that push
behavior towards the status quo
» status quo - conceived to be an equilibrium
• changing - move to another equilibrium level
• refreezing - make change permanent
– objective is to stabilize the new situation
– change is a break in the organization’s equilibrium state
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The Change Process
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Two Views Of The Change Process (cont.)
White-Water Rapids Metaphor
– consistent with uncertain and dynamic
environments
– consistent with a world increasingly dominated by
information, ideas, and knowledge
– managers must continually maneuver in
uninterrupted rapids
• managers face constant change
– today, managers must be ready to efficiently and
effectively manage the changes facing their
organizations or their work areas
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Three Categories Of Change
Structure
Work specialization,
departmentalization,
chain of command, span of
control, centralization,
formalization, job redesign,
or actual design
Technology
Work processes, methods,
and equipment
People
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Attitudes, expectations,
perceptions, and
behavior
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Managing Change
Initiating Change:
– identifying what organizational areas might need
to be changed
– putting the change process in motion
– managing employee resistance to change
Types of Change
– changing structure - organization’s formal
design, centralization, degree of formalization,
and work specialization
• structural components and structural design
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Managing Change (cont.)
Types of Change (cont.)
– changing technology - modifications in the way work is
performed
• alterations in the methods and equipment used
– consequence of competitive factors or innovations
within an industry
– automation - replaces tasks done by people with
machines
– computerization - recent visible changes in
information systems
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Managing Change (cont.)
Type of Change (cont.)
– changing people - changes in employee attitudes,
expectations, perceptions, and behavior
• organizational development (OD) - techniques
or programs to change people and the nature
and quality of interpersonal work relationships
–intended to help individuals and groups
work together more effectively
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Organizational Development Techniques
Sensitivity
Training
Survey
Feedback
More
Effective
Interpersonal
Work
Environment
Process
Consultation
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Team
Building
Intergroup
Development
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Managing Change (cont.)
Dealing with Resistance to Change
– Why people resist change
• change replaces the known with ambiguity and
uncertainty
• change threatens investments in the status quo
• belief that change is incompatible with the
goals and interests of the organization
– Techniques for reducing resistance
• a variety of actions available to managers to
deal with dysfunctional resistance
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Managerial Actions to Reduce Resistance to Change
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Contemporary Issues In Managing Change
Changing Organizational Culture
– culture resistant to change because it is made up
of relatively stable and permanent characteristics
– strong cultures are particularly resistant to change
– Understanding the Situational Factors - makes
cultural change more likely
• dramatic crisis occurs
• leadership changes hands
• organization is young and small
• culture is weak
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Contemporary Issues (cont.)
Changing Organizational Culture (cont.)
– How Can Cultural Change Be Accomplished?
• requires a comprehensive and coordinated
strategy
–unfreeze the current culture
–implement new “ways of doing things”
–reinforce those new values
• change, if it comes, is likely to be slow
• protect against any return to old, familiar
practices and traditions
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The Road to Cultural Change
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Contemporary Issues (cont.)
Continuous Quality Improvement Programs
– continuous, small, incremental changes
– fix and improve current work activities
– rely on participative decision making from the bottom
levels
Process Reengineering
– dramatic shift in the way an organization does its work
– begins with the redesign of work
• define customer needs
• design work processes to best meet those needs
– requires participation from managers and workers
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Continuous Quality Improvement Versus
Reengineering
Continuous Quality Improvement
• Continuous, incremental change
Reengineering
• Radical change
• Fixing and improving
• Redesigning - starting over
• Mostly “as is”
• Mostly “what can be”
• Works from bottom up in
organization
• Initiated by top management
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Contemporary Issues (cont.)
Handling Employee Stress
– What is Stress?
• a dynamic condition a person faces when confronted
with an opportunity, constraint, or demand related to
what s/he desires
– outcome is perceived to be both uncertain and
important
– typically associated with constraints and demands
• stress is not necessarily bad
• potential stress becomes actual stress when:
– outcome is both uncertain
– outcome is important
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Contemporary Issues (cont.)
Handling Employee Stress (cont.)
– Causes of Stress
• found in organizational and personal factors
• change of any kind is potentially stressful
• uncertainty around important matters
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Causes Of Stress
Personal Factors
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STRESS
Job-Related
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Symptoms Of Stress
Physiological
Psychological
Symptoms
of Stress
Behavioral
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Contemporary Issues (cont.)
Handling Employee Stress (cont.)
– Reducing stress
• controlling certain organizational factors
– employee’s abilities should match job requirements
– improve organizational communications
» reduce ambiguity
– performance planning program
» clarify job responsibilities
» provide performance feedback
– job redesign
» reduce boredom or work overload
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Contemporary Issues (cont.)
Handling Employees Stress (cont.)
– Reducing stress (cont.)
• offering help for personal stress
– general considerations
» difficult for manager to control this source of
stress
» ethical considerations
– available approaches
» employee counseling
» time management program
» sponsored wellness programs
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Stimulating Innovation
Creativity versus Innovation
– creativity - ability to combine ideas in a unique
way or to make unusual associations between
ideas
– innovation - process of transforming creative
ideas into a useful product, service, or method of
operation
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Systems View Of Innovation
Inputs
Creative individuals,
groups,
organizations
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Transformation
Outputs
Creative process Creative product(s)
Creative situation
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Stimulating Innovation (cont.)
Stimulating and Nurturing Innovation
– must focus on inputs
• creative people and groups within the organization
– requires appropriate environment
• structural variables
– organic design
– plentiful resources
– frequent inter-unit communication
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Stimulating Innovation (cont.)
Stimulating and Nurturing Innovation (cont.)
– requires appropriate environment (cont.)
• cultural variables
– encourage experimentation
– reward success and failures
– celebrate mistakes
• human resource variables
– promote training and development of employees
– offer high job security
– encourage individuals to become idea champions
» self-confident, persistent, risk taking
» energize others with visions of innovation
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Innovation Variables
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