18
MANAGING CHANGE
CHAPTER SCAN
Organizations have to keep pace with current issues related to quality, technology, diversity,
globalization, and ethics. This requires managing both change and resistance to change. All
organizations experience external and internal forces for change. There are numerous
organization development interventions available to managers. Diagnosis and needs analysis
are essential first steps in any change management effort.
LEARNING OBJECTIVES
After reading this chapter, you should be able to do the following:
1. Identify the major external and internal forces for change in organizations.
2. Define the terms incremental change, strategic change, transformational change, and
change agent.
3. Describe the major reasons individuals resist change, and discuss methods organizations
can use to manage resistance.
4. Apply force field analysis to a problem.
5. Explain Lewin's organizational change model.
6. Describe the use of organizational diagnosis and needs analysis as a first step in
organizational development.
7. Discuss the major organization development interventions.
8. Identify the ethical issues that must be considered in organization development efforts.
361
362
Chapter 18: Managing Change
KEY TERMS
Chapter 18 introduces the following key terms:
planned change
unplanned change
incremental change
strategic change
transformational change
change agent
disengagement
disidentification
disenchantment
disorientation
unfreezing
moving
refreezing
organization development (OD)
survey feedback
management by objectives (MBO)
quality program
team building
process consultation
skills training
sensitivity training
management development
role negotiation
job redesign
THE CHAPTER SUMMARIZED
I.
THINKING AHEAD: Changing with the Times
II.
FORCES FOR CHANGE IN ORGANIZATIONS
The forces for change are everywhere in today’s highly competitive environment. Adaptiveness,
flexibility, and responsiveness are terms used to describe the organizations that will succeed in
meeting the competitive challenges faced by businesses. Planned change results from deliberate
decisions to alter an organization. Unplanned change is imposed on the organization and is
often unforeseen.
Chapter 18: Managing Change
A.
363
External Forces
The four themes of this text (i.e., globalization, workforce diversity, technological
change, and managing ethical behavior) are the major external drivers of change in
organizations. Two examples of planned change are the European Union (EU) and the
North American Free Trade Agreement (NAFTA). Regardless of the degree of planning
involved in these ventures, numerous unplanned circumstances still arise.
1.
Globalization
Multinational and transnational organizations are heavily involved in global
changes. Many of these organizations are pursuing joint ventures with firms from
other countries.
2.
Workforce Diversity
The workforce continues to see increased participation of females, persons with
physical challenges, and persons from many different cultures, as well as a rise in
the mean age of workers. All of these trends are expected to continue well into the
next decade.
3.
Technological Change
Technological changes alter the way in which we perform work, structure work
and organizations, and interact with each other. Examples include advances in
communication technology and information systems that allow for virtual teams,
and radio frequency identification tags that are significantly faster, more flexible,
reusable, and carry more information than bar codes.
4.
Managing Ethical Behavior
Society expects organizations to behave in an ethical manner in all of their
activities, both internal and external. Ethical dilemmas are sometimes highly
visible, public issues, but more often they are issues that arise in the everyday
lives of employees. Success in this area requires that organizations establish a
pervasive culture of ethical behavior that all employees embrace.
B.
Internal Forces
Internal forces for change include things like declining effectiveness, crises (e.g., strikes,
resignations, or major accidents), changes in employee expectations, and changes in the
work climate.
364
Chapter 18: Managing Change
III.
CHANGE IS INEVITABLE
A.
The Scope of Change
Change may take one of three forms. Incremental change is relatively small in scope,
and as such, results in small improvements. Strategic change is a larger scale approach
that is similar in magnitude to a restructuring effort. Transformational change moves
the organization toward a radically different, and sometimes, unknown, future state.
B.
The Change Agent’s Role
A change agent is an individual or group that undertakes the task of introducing and
managing a change in an organization. Change agents can be either internal or external,
and both have advantages and disadvantages. Internal change agents know the past
history of the organization, its political system, and its culture, but may be too close to be
objective or may not have the trust of coworkers. External change agents may have a
greater ability to be objective and impartial, but possess limited information about the
organization and may be view with suspicion.
IV.
THE PROCESS OF CHANGE IN ORGANIZATIONS
A.
Resistance to Change
Individuals often resist change because they feel that their freedom is threatened.
1.
Fear of the Unknown
All change brings some uncertainty and creates resistance because it introduces
ambiguity to what was a comfortable environment. Communication helps reduce
fear of the unknown.
2.
Fear of Loss
Employees often fear losing their jobs or their status as a result of change.
3.
Fear of Failure
Employees may experience anxiety as they anticipate increased workloads or task
difficulty, an increase in performance expectations, or they may fear that the
change itself will not occur.
4.
Disruption of Interpersonal Relationships
Change sometimes limits meaningful interpersonal relationships at work that are
important to employees, which can create additional anxiety.
Chapter 18: Managing Change
5.
365
Personality Conflicts
Conflict can occur because of the seemingly insensitive personality of the change
agent.
6.
Politics
Organizational change often involves shifting the balance of power. Threatened
loss of power can generate strong resistance to change.
7.
Cultural Assumptions and Values
Employees in cultures with high uncertainty avoidance may not be as receptive to
change as those in cultures with low uncertainty avoidance. Also, some
individuals tolerate ambiguity more readily than do others.
B.
Managing Resistance to Change
Communication, participation, and empathy and support are key strategies for effectively
managing resistance to change.
C.
Behavioral Reactions to Change
Disengagement is psychological withdrawal from change. Disidentification is the
feeling that one's identity is being threatened by a change. Disenchantment is a negative
feeling or anger toward a change. Disorientation involves feelings of loss and confusion
due to a change.
D.
Lewin's Change Model
The Lewin change model asserts that behavior is the product of two opposing forces, one
force pushing to preserve the status quo, and the other pushing for change. The model
includes three steps: unfreezing, moving, and refreezing. Unfreezing involves
encouraging individuals to discard old behaviors by shaking up the equilibrium state that
maintains the status quo. In the moving step, new attitudes, values, and behaviors are
substituted for old ones. Finally, refreezing establishes the new attitudes, values, and
behaviors as the new status quo.
V.
ORGANIZATION DEVELOPMENT INTERVENTIONS
Organizational development (OD) is a systematic approach to organizational improvement that
applies behavioral science theory and research in order to increase individual and organizational
well-being and effectiveness.
366
Chapter 18: Managing Change
A.
Diagnosis and Needs Analysis
Organizational development begins with the essential first step of diagnosis. Diagnosis
should include examinations of the organization’s purpose, structure, reward system,
support system, relationships, and leadership. Needs analysis involves careful
investigation into the skills and competencies employees must have in order to change
successfully.
B.
Organization- and Group-Focused Techniques
1.
Survey Feedback
Survey feedback is a widely used method of intervention method whereby
employee attitudes are solicited using a questionnaire. Individual responses should
be confidential and anonymous, feedback should be report on the group level,
employees should feel confident that they will suffer no repercussions from their
responses, and they should be informed of the purpose of the survey.
2.
Management by Objectives
Management by objectives (MBO) is an organization-wide intervention
technique that involves joint goal setting between employees and managers. It
clarifies what is expected of employees, provides knowledge of results, and
provides an opportunity for coaching and counseling by the manager. However,
the MBO process can be extremely time-consuming when done correctly.
3.
Product and Service Quality Programs
Quality programs embed product and service quality excellence in the
organizational culture. Success or failure of an organization is directly linked not
only to the quality of its product, but also to the quality of its customer service.
4.
Team Building
Team building is an intervention designed to improve the effectiveness of a work
group. Although very popular as an intervention, team building is a relatively new
OD technique, and the assessment of its effectiveness remains incomplete.
5.
Large Group Interventions
Large group interventions bring all of the key members of a group together in one
room for an extended period of time as a means of creating a critical mass of
people within the organization to support a change.
Chapter 18: Managing Change
6.
367
Process Consultation
Process consultation is an OD method that helps managers and employees
improve the processes that are used in organizations. In most instances, an
external organization consultant is used.
C.
Individual-Focused Techniques
1.
Skills Training
Skills training increases the job knowledge, skills, and abilities that are necessary
to do a job effectively. It can be accomplished in the classroom, on the job, or
through computer-based-training (CBT).
2.
Sensitivity Training
Sensitivity training is an intervention designed to help individuals understand
how their behavior affects others. Also known as T-groups, sensitivity training
seeks to change behavior through unstructured group interaction. The focus is on
enhancing interpersonal skills.
3.
Management Development Training
Management development encompasses many techniques designed to enhance
manager’s skills in an organization. It focuses on verbal information, intellectual
skills, attitudes, and development.
4.
Role Negotiation
Role negotiation is a simple technique whereby individuals meet and clarify their
psychological contract.
5.
Job Redesign
Job redesign is an OD intervention method that alters jobs to improve the fit
between individual skills and the demands of the job. Students may enjoy an
impromptu job redesign for positions like tollbooth operators, computer input
operators, or traffic directors. They quickly discover that the task is not as easy as
it appears.
6.
Health Promotion Programs
Companies are increasingly recognizing the importance of health promotion
programs for reducing their health care costs. The goal is to help employees
manage stress before it becomes a problem.
368
Chapter 18: Managing Change
7.
Career Planning
Career planning benefits both the organization and the individual. Employees
identify skills and skill deficiencies. The organization plans training and
development efforts based on that information. Also, the career planning process
facilitates the identification and nurturing of talented employees for future
promotions.
VI.
ETHICAL CONSIDERATIONS IN ORGANIZATION DEVELOPMENT
OD methods must be chosen in accordance with the problem as diagnosed, the organization’s
culture, and the employees involved. Individuals should not be forced to participate, and
confidentiality for those who do participate is of the utmost concern. Finally, participants should
be given complete knowledge of the rationale for change, what to expect from the change
process, and the details of the intervention technique and process.
VII.
ARE ORGANIZATION DEVELOPMENT EFFORTS EFFECTIVE?
The success of any OD intervention depends on many factors, and no one OD method will be
effective in all cases. Research indicates that OD programs have positive effects on productivity
when properly applied and managed.
VIII.
MANAGERIAL IMPLICATIONS: MANAGING CHANGE
IX.
LOOKING BACK: Did the Change Process at Harley-Davidson Get Results?
Chapter 18: Managing Change
CHAPTER SUMMARY











Organizations face many pressures to change. Some forces are external, including
globalization, workforce diversity, technological innovation, and ethics. Other forces are
internal, such as declining effectiveness, crises, changing employee expectations, and a
changing work climate.
Organizations face both planned and unplanned change. Change can be of an incremental,
strategic, or transformational nature. The individual who directs the change, known as a
change agent, can be internal or external to the organization.
Individuals resist change for many reasons, and many of these reasons are rooted in fear.
Organizations can help manage resistance by educating workers and openly
communicating the change, encouraging worker participation in the change efforts, and
providing empathy and support to those who have difficulty dealing with change.
Reactions to change may be manifested in behaviors reflecting disengagement,
disidentification, disenchantment, and disorientation. Managers can use separate
interventions targeted toward each reaction.
Force field analysis states that when the forces for change are balanced by the forces
restraining change, an equilibrium state exists. For change to occur, the forces for change
must increase, or the restraining forces must decrease.
Lewin's change model proposes three stages of change: unfreezing, moving, and
refreezing.
A thorough diagnosis and needs analysis is a critical first step in any organization
development (OD) intervention.
OD interventions targeted toward organizations and groups include survey feedback,
management by objectives, product and service quality programs, team building, and
process consultation.
OD interventions that focus on individuals include skills training, sensitivity training,
management development training, role negotiation, job redesign, stress management
programs, and career planning.
OD efforts should be managed ethically and should preserve individual freedom of choice
and privacy.
When properly conducted, organization development can have positive effects on
performance.
369
370
Chapter 18: Managing Change
REVIEW QUESTIONS: SUGGESTED ANSWERS
1. What are the major external and internal forces for change in organizations?
The four major themes of the text are the four external forces: globalization, workforce diversity,
technological change, and managing ethical behavior. Internal forces are things like a crisis,
declining effectiveness, changes in employee expectations, and changes in the work climate.
2. Contrast incremental, strategic, and transformational change.
Incremental change is small in scope resulting in only small improvements. Strategic changes
occur on a large scale, such as organizational restructuring. Transformational changes move the
organization to a radical, and sometimes unknown, future state.
3. What is a change agent? Who plays this role?
The term change agent comes from Rosabeth Moss Kanter and refers to individuals or groups
who undertake the task of introducing and managing change in organizations. Change agents
may be outside consultants or organizational development experts, or they may be internal
employees who have the necessary skills to perform in such a role.
4. What are the major reasons individuals resist change? How can organizations deal with
resistance?
Individuals resist change because of fear of the unknown, fear of loss, fear of failure, disruption
of interpersonal relationships, personality conflicts, politics, and cultural assumptions and values.
Organizations can manage resistance to change through communication, participation, and
empathy and support.
5. Name the four behavioral reactions to change. Describe the behavioral signs of each reaction,
and identify an organizational strategy for dealing with each reaction.
Disengagement is psychological withdrawal from change and is evident in withdrawal behaviors.
Managers should confront disengaged employees to draw them out. Sadness or worry typifies
disidentification. Managers should encourage these employees to explore their feelings and to
transfer their positive feelings into the new situation. Disenchantment is displayed in angry
behavior. The anger of these employees must be neutralized. Disorientation is apparent when
individuals show confusion. Managers should explain the change to disoriented individuals in a
way that reduces the ambiguity of the situation.
Chapter 18: Managing Change
371
6. Describe force field analysis and its relationship to Lewin's change model.
This process categorizes events in terms of forces that push for the status quo, versus those that
push for change. For change to take place, the factors pushing for change must outweigh the
factors pushing against change. In Lewin's change model, the unfreezing step requires that
individuals be convinced to give up their old behaviors (forces for change must overcome forces
against change) in favor of a new set of behaviors.
7. What is organization development? Why is it undertaken by organizations?
Organizational development is the systematic approach to organizational improvement that
applies behavioral science theory and research in order to increase individual and organizational
well-being and effectiveness. OD is needed to guide employees through significant change in the
organization.
8. Name six areas to be critically examined in any comprehensive organizational diagnosis.
The organization's purpose, structure, reward system, support systems, relationships, and
leadership must be examined.
9. What are the major organization-focused and group-focused OD intervention methods? The
major individual-focused methods?
Organization-focused and group-focused interventions include survey feedback, management by
objectives, product and service quality programs, team building, and process consultation.
Individual-focused methods include skills training, sensitivity training, management
development training, role negotiation, job redesign, stress management programs, and career
planning.
10. Which OD intervention is most effective?
No single method of OD is effective in every instance. It is typically best to use multiple-method
OD approaches.
372
Chapter 18: Managing Change
DISCUSSION AND COMMUNICATION QUESTIONS: SUGGESTED ANSWERS
1. What are the major external forces for change in today’s organizations?
Students may include competition as one of the forces, along with globalization, technology,
ethics, and workplace diversity.
2. What are the advantages of using an external change agent? An internal change agent?
External consultants can be more objective and are not suspected of having political loyalties. On
the other hand, they may not fully understand the organization and culture as well as an internal
agent. Internal agents have better knowledge of the organization, its history, its culture, and its
political processes, but may experience difficulty in being objective, and may lack the necessary
expertise to handle the change effectively.
3. Review Challenge 18.1. What can you learn from this challenge about how individuals’
tolerance for ambiguity can lead to resistance?
Students’ own experiences of dealing with change will be instructive here. They might also
consider others they have observed dealing with change and make some assumptions about the
relationship between those individuals’ tolerance for ambiguity and their resistance to change.
4. Can organizations prevent resistance to change? If so, how?
There are many techniques, including the utilization of professionals (OD specialists) to assist
with resistance to change. Communication is an essential aspect of helping employees adjust
effectively. Research substantiates the need for participation from those who will be involved in
the change. Emotional support is also critical to acceptance of change. It is probably unrealistic to
think that organizations can prevent all resistance to change.
5. What organization development techniques are the easiest to implement? What techniques are
the most difficult to implement? Why?
Survey feedback is non-threatening and allows for anonymity. There is little investment on the
employees’ part. Management by objectives is a high investment technique that requires training
and involves a lengthy process. Quality programs are certainly in vogue, yet a number of
companies have been disappointed with the time required and the slowness of change.
6. Suppose your organization experiences a dramatic increase in turnover rates. How would you
diagnose the underlying problem?
Students could mention any of the techniques that have been listed for organizational analysis. A
thorough process of information gathering should be emphasized.
Chapter 18: Managing Change
373
7. Downsizing has played a major role in changing U.S. organizations. Analyze the internal and
external forces for change regarding downsizing an organization.
Students may tend to focus on the external forces that lead to downsizing. Be sure they are aware
that internal factors may also serve as forces for downsizing.
8. If you were in charge of designing the ideal management development program, what topics
would you include? Why?
Students may select trendy topics rather than topics based on theories. Be sure they provide
justification for their responses.
9. Find an article that describes an organization that has gone through change and managed
it well. Develop an “Organizational Reality” feature of your own about the example you find
using the format in the book. Prepare a brief oral presentation of your Organizational
Reality for your class.
Following the class presentations, discuss the similarities and differences that exist in how
the companies managed change. Students should consider why different approaches to
change were effective and identify any commonalties that they see in managing change
effectively.
10. Think of a change you would like to make in your life. Using Figure 18.1 as a guide,
prepare your own force field analysis for that change. How will you overcome the forces for
the status quo? How will you make sure to “refreeze” following the change? Summarize your
analysis in an action plan.
Students should be very specific in the action plan. You may also want students to consider a
plan for evaluating their effectiveness at implementing the change.
ETHICS QUESTIONS: SUGGESTED ANSWERS
1. What constitutes abuse of a change agent's power? How can organizations prevent this?
Unlike some professions, OD specialists do not have to pass an exam to qualify for practice,
although reputations are critical. When change agents attempt to insert their own values into the
process, they are manipulating the process. Violating confidentiality is also an abuse of power.
2. Is it ethical for an organization to coerce individuals to change?
Coercion implies manipulation through power. Students might want to review the chapter on
power.
374
Chapter 18: Managing Change
3. You are leading a management development seminar, and the supervisor of one of the
participants asks how his employee is performing in the seminar. Should you reveal this
information?
It would probably depend on the type of seminar being conducted. If it is a sensitivity training
workshop the information is absolutely confidential. However, if it is training for new computer
applications, it becomes a factual question rather than a behavioral attitude question.
4. Suppose you are a consultant, and an organization asks you to deliver a team-building
intervention. You know a little about team building, but not a lot. You do know that a competitor
will probably get the job if you do not do it. What should you do?
This is extremely dangerous and risky for you and those involved with the process. It is better to
let the competitor have the program if you are not trained for the intervention. There is a good
chance your lack of knowledge will backfire on you if you proceed.
5. Suppose you are a consultant, and a company asks you to assist in rewriting its policies and
procedures manual to help eliminate the company’s excessive absenteeism. From your limited
knowledge about the company, you suspect that the problem lies elsewhere, and that changing
the manual will not solve the problem. What should you do?
Go through the logical steps for needs analysis and outline those issues with the individuals who
are encouraging the project.
CHALLENGES
18.1 TOLERANCE FOR AMBIGUITY
This scale will give students a sense of their comfort level with change. This challenge might be
a good lead-in to a class discussion of the reasons individuals resist change and how
organizations can better manage the change process, given that everyone does not tolerate
ambiguity to the same degree.
18.2 APPLYING FORCE FIELD ANALYSIS
This challenge can be tied to Discussion and Communication Question #10 that asks students to
prepare a force field analysis of a change they desire to make in their lives. Prior to students
completing this analysis, select an example and walk the students, as a class, through a force field
analysis so that they understand better how to apply this type of analysis to their own experience.
Chapter 18: Managing Change
375
EXPERIENTIAL EXERCISES
18.1 ORGANIZATIONAL DIAGNOSIS OF THE UNIVERSITY
Instructor's Notes:
This exercise is intended to give students experience in organizational diagnosis with an
environment in which they are familiar. It is useful to point out that they may not know enough
about all aspects of the university to proceed through the diagnosis. You might want to query
them on how they would gather significant information on the areas where they are least
comfortable. It is also interesting to ask them if they believe they are too biased in any of the
areas because of personal experiences that may not be true for the majority of students. Finally,
would they be better change agents than an outside consultant?
18.2 TEAM BUILDING FOR TEAM EFFECTIVENESS
Instructor's Notes:
This exercise is a team building effort that stresses change. This is a good closure exercise for
the end of the semester. If you use peer evaluation or group grading this might be a good
follow-up to the evaluation. Most students have a tendency to paint a better picture of their
group than where they actually performed because they believe we expect them to be
positive. Emphasize that if their group was a disaster, it is useful to analyze why this
happened, and how they could have prevented the outcome knowing what they know at the
end of the semester.
ALTERNATIVE EXPERIENTIAL EXERCISE
CRUSTY RUSTY
Adapted from Ken Kozar, The University of Colorado, Boulder
This exercise points out the difficulties for individuals in dealing with change. Students are
divided into groups of three or four, with one person as Crusty Rusty, the curmudgeon opposing
the computer change, and Jesse, the young junior accountant sent to convince Rusty that a change
is needed. In addition, there is an observer that records the interactions. I ask the Jesses to leave
the room with me, and have the Rustys spread out across the room and the observers select a
group to observe. The Jesses are instructed to approach the Rustys as if they are actually in their
office, beginning with hello.
Students enjoy this exercise. Try to assign students to roles that they would least likely be in.
376
Chapter 18: Managing Change
CRUSTY RUSTY
ROLE FOR JESSE BECKER, JUNIOR ACCOUNTANT
You are a junior accountant for the National Quik Service Company (QSC) out of Dallas. You
have been working at this job for six months, this being your first "real" job since graduating
from the University. You have just completed a computerized statistical analysis system for
payroll that was well received by the terminal managers. It provided more relevant and current
information than they have ever had before. Both you and the managers are enthusiastic about the
success of the system and the potential of other computerization for the company. Suddenly, your
opportunities have expanded throughout the organization.
This afternoon you have a meeting with Rusty Griffen, the specialist in the division concerning
dispatching, which is the next project the managers have jokingly said "couldn't be undertaken
before Rusty retires." At the present time, dispatching is determined manually, resulting in
numerous errors and requiring a great deal of memory for one individual. The major problem is
that often two trucks would be dispatched to pick up the same loads at different times. You feel
that a computerized inventory system similar to ones used by other transportation industries
could be used as a model.
You have tried to work with Griffen in the past. You feel all of your ideas have been bucked at
every opportunity, particularly regarding anything remotely involving change. You feel Griffen's
idea of automation is to get a larger piece of paper divided into more columns and a copier that
could reproduce this master to the same size in color.
Rusty does not trust the computer ever since there was a deduction taken out of a paycheck in
1982. Rusty will retire in 8 years and it seems to you that any change now will threaten the
security that this position has built over the years. With Rusty’s attitude toward change, you feel
the trucking industry would still be in the pony express days. You sincerely believe the proposed
system could improve and set your organization apart in the freight hauling industry.
Well, time to head up to Rusty’s office for that chat.
Chapter 18: Managing Change
377
CRUSTY RUSTY
ROLE FOR RUSTY GRIFFIN, SENIOR DISPATCHER
You are the dispatcher in charge of 400+ trucks. In another 8 years you will be retiring from the
company with 30 years service. Prior to the dispatcher job, you worked as an independent
operator and were noticed by your supervisors for your meticulous and accurate reporting of your
trips, and consequently, you were promoted to the dispatcher position. You have the task of
summarizing the day to day activities and projecting future loading points. You have quite a
system worked out with west coast trucks indicated in blue, inbound noted by red, unloaded and
ready for the trip back, another color, etc.
This afternoon you are to meet with Jesse Becker, the new computer whiz. Your supervisor heard
about a computer system used to manage another company at a recent conference. You feel the
afternoon will be wasted since you have many trucks to record and update since a fluid was not
pure that was pumped into 15 outgoing trucks. You feel these computer kids don't understand the
first principles of the trucking industry. If they did, they would not have all these fancy and costly
ideas. Anyhow, you feel that if you put the data in the computer, you would never really be sure
it's there, just like the time your paycheck got mixed up and then those computer people couldn't
correct it.
Well, it is time for the meeting. You hope the kid, whose total years of age don't even come close
to your years of experience, doesn't try to tell you how to do your job.
378
Chapter 18: Managing Change
CRUSTY RUSTY
QUESTIONS FOR ROLE PLAY OBSERVERS

Did Jesse introduce himself/herself?

Were the objectives for the interview clear to Rusty?

Who talked the most?

Was there any small talk?

Were there any non-verbal indicators expressed by either person?

Was more time spent on obtaining information or obtaining acceptance?

What change strategy did Jesse take?

What conflict style did Jesse and Rusty adopt?

What type of power do each of the individuals have?

Other comments?
Chapter 18: Managing Change
379
MBTI EXERCISE:
Exercise Learning Objectives:
a. Students will understand that managing change is not the same for everyone.
b. Students will understand that "change" is defined differently by various groups.
c. Students will comprehend that to affect an organizational change, managers must be attuned
to the different ways change affects people.
Exercise Overview:
1. Students will form teams of like functional pairs (ST, SF, NF, and NT). The instructor should
ensure that no more than six students are in a particular group. If necessary, make two groups of
the same functional pair.
2. Students will construct a "Force Field Analysis" chart concerning managing change.
3. Students will report out their results and the instructor will summarize the exercise.
4. The instructor should know how to construct and interpret a force field analysis. We
recommend that the students use Experiential Exercise 18.2 before this exercise.
Exercise Description:
a. Individually and silently, students will develop two lists. The first list is entitled, "reasons that
I welcome change" and the second list is titled, "reasons that I resist change." Each list should
take about five minutes. It is important that silence be enforced. Remember that those people
who prefer introversion need time to reflect. This gives them that time and allows them to better
participate in the exercise.
b. Students form teams of like functional pairs (ST, SF, NF, and NT).
c. On flip chart paper, students will first list the reasons they welcome change. The students
should report in some sequential order until everyone states every item on his or her list.
d. Students do the same thing for the reasons that they resist change.
e. Using one piece of flip chart paper, students will draw a vertical line in the center and title the
left side of the paper "change welcomers" and on the right side the title is "change resistors."
f. Students will review their consolidated lists and pick out 10 items to write on each appropriate
half of the paper. The instructor should encourage students to list the strongest "welcomers" and
the strongest "resistors."
380
Chapter 18: Managing Change
g. Students should now spend 10 minutes (5 minutes per side) talking about why these
"welcomers" and "resistors" are so important to them.
h. Students report out.
g. Instructor summarizes the lesson.
What the instructor should expect:
a. "ST" groups may list in the resistor column such concepts/ideas as: goals are unclear, my job
will change, I'll have to physically move, our organizational structure will change, I've never seen
this before, it costs too much, and too much uncertainty.
b. "SF" groups may list in the resistor column such concepts/ideas as: I won't be working near or
with my friends, I don't know anyone in that department, the boss is real hard to get along with, I
don't know enough details, managers always keep us in the dark about these things, and it won't
be fun any more.
c. "NF" groups may list in the resistor column such concepts/ideas as: our organizational
structure will change, they never take into account the "human costs" of change, we won't know
our role and place in the new organization, I don't understand how this will help the organization
perform better, and the change will disrupt all of my work relationships.
d. "NT" groups may list in the resistor column such concepts/ideas as: we’re changing just for
the sake of changing, no thought was added to this process, we could have fixed the existing
structure easier if someone had just asked us, I don't understand the reason for the change, this
change doesn't fit the other things we're doing, and our energies are directed away from system
improvement--we'll have to start all over again.
e. The "welcomers" side of the chart should list opposite ideas and concepts.
Instructor’s Summary:
We can see from the discussion that the ST and SF groups have several things in
common. These groups want to know the details concerning why we must move. Neither of
these groups embraces change unless you can prove to them in "black and white" that this change
is necessary. The "STs" will want a logical explanation and the "SFs" will want you to show
them how this change will enhance the working relationships of the employees.
Chapter 18: Managing Change
381
We can see from the NF and NT groups that they also have a lot in common. Both of these
groups want to know how this change will affect the internal and external relationships of the
organization. The "NFs" wish to also ensure that any anticipated move clearly addresses the
human engineering aspects. The "NTs" want to make sure that the change is logically planned
and executed.
Remember that all organizations are composed of people who possess these MBTI functional
pairings. In order to properly affect change, a manager needs to make sure that the concepts and
ideas of the three pairs he or she does not prefer are taken into account.
EXTRA EXPERIENTIAL EXERCISES
Marcic, Dorothy, Seltzer, Joseph, & Vaill, Peter. Organizational Behavior: Experiences and
Cases, 6th Ed. South Western College Publishing Company, 2001.
An Ancient Tale. p. 225-226. Time: 40 minutes.
Purpose: To analyze issues of organization, boundary, membership, and responsibility
for change.
Fandt, Patricia M. Management Skills: Practice and Experience. West Publishing Company,
1994.
In Basket Exercise 1: Working with New, Changing and Ambiguous Situations. p. 44.
Exercise 1: Planning for Change. p. 461.
382
Chapter 18: Managing Change
CASE QUESTIONS: SUGGESTED ANSWERS
ORGANIZATIONAL CHANGE AT ENRON
1. Describe the external forces for change that seem to be affecting Enron.
The following external forces have affected, or are affecting, Enron:








Declining energy prices at the beginning of the 1990s.
Deregulation of the power industry in some countries.
The energy sector changed from being a mature and slow-growth sector to one
that has exploded into high-demand energy sources with integrated
production, distribution, and supply.
Opportunities exist in “other industries that need a more efficient way to
deliver commodities and manage risk, such as metals, forest products, and
bandwidth capacity and steel.”
Development of the Internet.
The potential impact of energy usage on global climate change.
Dynegy Corporation’s initial interest in merging with Enron and its
subsequent withdrawal from the merger agreement.
Dynegy’s lawsuit against Enron.
2. Describe the internal forces for change that seem to be affecting Enron.
The following internal forces have affected, or are affecting, Enron:





A corporate culture that emphasizes fast movement, flexibility, efficiency,
innovation, and environmental awareness.
A commitment to innovation.
Use of the Internet to expand to more product categories.
Internal pressure for and interest in a merger with Dynegy Corporation.
Questionable accounting practices and financial dealings on the part of Enron.
3. Explain Enron’s development from the perspectives of incremental change, strategic change,
and transformational change.
Incremental change involves making small improvements in the organization or fine-tuning
the organization. Strategic change involves moving the organization from an old state to a
known new state during a controlled period of time. Transformational change occurs when
the organization moves to a radically different, and sometimes unknown, future state.
No substantive evidence exists regarding incremental change. Several instances of strategic
and/or transformational change exist in this case. All of the following could be considered
examples of strategic change:
Chapter 18: Managing Change






383
Enron becoming America’s largest trader of natural gas and electricity.
Enron making markets in “other industries that need a more efficient way to
deliver commodities and manage risk, such as metals, forest products, and
bandwidth capacity and steel.”
Enron developing a partnership with Blockbuster Inc., to deliver movies to
consumers over a high-speed communications network.
Enron’s use of the Web to expand far beyond its traditional businesses.
Enron’s proposed merger with Dynegy Corporation.
Enron’s financial collapse.
One might also argue that Enron’s use of the Web to expand far beyond its traditional
businesses is a transformational change. The proposed then aborted merger with Dynegy
Corporation. might be considered to be a transformational change as well.
4. How could Enron have used force field analysis as an aid to understanding and managing
the changes that are necessary for a successful merger of the two companies?
Students can adapt Challenge 18.2: Applying Force Field Analysis in discussing this
question. Students can begin developing an answer to this question by drawing on the
discussion of questions (1) and (2). Nearly all of the items mentioned in the suggested
responses to these two questions were are forces driving change. However, the size and
complexity of the two merged companies may be forces that restrain change. The dominant
forces that restrained change were Enron’s questionable accounting practices and financial
dealings.
Students should be encouraged to speculate a bit and go beyond the case facts. They could
brainstorm on the forces restraining change and the forces driving change in the global energy
industry in general and in the other commodities (e.g., as metals, forest products, bandwidth
capacity, and steel) in which the combined company makes markets.
Since the Enron bankruptcy is the largest in business history, its effect will be widespread and
long term. In addition, new developments in the Enron situation occur on almost a daily
basis. Therefore, students should be encouraged to look to current business news regarding
Enron to update their knowledge of how Enron is dealing with change.
384
Chapter 18: Managing Change
COHESION CASE -- PART IV
PROCTER & GAMBLE (D)
1. What useful managerial and/or organizational lessons are provided by Procter & Gamble’s
Organization 2005 initiative?
Three very powerful lessons evolve from P&G’s Organization 2005 initiative. First, as a
complex multinational business organization, P&G has discovered what may be an important
key to true global success. P&G is seeking to simultaneously be both global and local in its
operations. It is global in the sense of developing and marketing product lines around the
world. It is local in terms of developing strategies and establishing distribution channels to
effectively market the company’s entire portfolio of products to customers in different
countries and regions. Second, organizational change efforts should improve a company’s
capability to achieve challenging goals. In this context, the intent of the Organization 2005
initiative is to improve P&G’s ability to attain its stretch, innovation, and speed objectives.
Third, achieving the stretch, innovation, and speed objectives requires a highly integrated
organization. The Organization 2005 initiative is intended to create such an organization
through its emphasis on a holistic approach to change that reaches throughout the company.
Moreover, the components of the change program (i.e., the four structural pillars and cultural
change) should be mutually supportive and reinforcing.
2. From your perspective, how are the stretch, innovation, and speed objectives related to the
four structural pillars? How are they related to cultural change?
Stretch involves reaching “for the highest upside possible on all the opportunities” that P&G
pursues. Innovation involves setting the toughest product performance standards in the world,
and then continually exceeding those standards with improvements on existing products and
the development of new products. Speed concerns getting P&G’s products into the global
marketplace faster than any competitor anywhere.
The structural pillars work together in achieving the stretch, innovation, and speed objectives.
The global business units focus on developing and marketing product lines for sale
throughout the world. The market development organizations work in tandem with the GBUs
in developing and implementing marketing strategies and distribution channels to serve the
tastes and preferences of customers in each local market. global business services centers and
corporate functions support the work of the GBUs and MDOs.
Cultural change also facilitates the achievement of the stretch, innovation, and speed
objectives. P&G focuses on creating a culture that rewards appropriate goal attainment,
supports risk taking, stimulates innovations, encourages visionary leadership, values speed,
fosters fast streamlined decision making, and capitalizes on diversity. Collectively, these
cultural features support and reinforce the stretch, innovation, and speed objectives.
Chapter 18: Managing Change
385
3. Several cultural changes are mentioned in the case. In your opinion, what implications will
these cultural changes have for the organizational challenges of globalization, technology,
diversity, and ethics?
As noted in the solution for question (2), P&G has focused on creating a culture that rewards
appropriate goal attainment, supports risk taking, stimulates innovations, encourages
visionary leadership, values speed, fosters fast streamlined decision making, and capitalizes
on diversity. Most, if not all, of these cultural changes (or in some instances, cultural
refinements) will enhance P&G’s ability to address the challenges of globalization and
technology. Capitalizing on diversity confronts this challenge head-on; it makes diversity an
asset rather than a liability. The ethics challenge will also be affected to the extent that these
cultural changes promote, support, and reinforce ethical actions.
Of particular interest is the fact that P&G is willing to change anything that influences the
nature of work and work relationships except its core values and guiding principles [see
Procter & Gamble (A) for information on P&G’s guiding principles]. These guiding
principles imply enduring commitments to corporate actions that clearly and directly reflect
actions in the globalization, technology, diversity, and ethics arenas.