Change Management-MBA625 LECTURE # 11 PHASE 4

Change Management-MBA625
This evolutionary phase is characterized by the use of formal system for achieving greater
coordination, and by top executives taking responsibility for the initiation and
administration of new systems. For e.g. decentralized units are merged into product-groupformal planning procedures are established and intensely reviewed. Other features of this
phase are:
Numerous staff managers are hired at headquarters (HQ) to initiate company- wide
programs of control and review for line managers.
Capital expenditure related decisions are carefully made.
Each product group is treated as an investment centre where return on investment
(ROI) is an important criterion for funds allocation.
Stock options and profit-sharing schemes used to encourage identity with the firm
as a whole. HO-subsidiary dynamics (HQ- branch relationship) come to play as a
factor in organization growth or performance
4. Red Tape Crisis
Lack of confidence and trust between line and staff, and between HQ and field; systems,
program and procedures go beyond their utility, and become end in itself. Line managers
resent heavy directions by staffs, which are unaware of local conditions. Staffs on the other
hand complain about uncooperative and uninformed line managers. Therefore procedure
takes precedence over problem solving, and innovation is dampened
Lawrence & Lorsch highlighted this in their study as the problem of differentiation and
integration. As organizations become large, vertical and horizontal differentiation becomes
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Change Management-MBA625
pronounced. The problem at this stage is higher the differentiation, higher will be the need
for integration.
To overcome crisis of red-tape crisis – strong inter-personal collaboration is suggested in
this phase. Now the question is; what is the difference between Phase 4 of Coordination
and Phase 5 of collaboration? The difference is that Coordination phase was managed more
through formal system and institutional procedures while Phase 5 (collaboration
emphasizes greater spontaneity in managerial actions through teams and the skillful
confrontation of interpersonal differences.
Social control and self-discipline take over from control. This transition is very difficult for
those who create and believe on the formal methods of report and answers. The phase
evolution builds more flexible and behavioral approach to management. Here are some of
its features:
The focus is on problem-solving quickly through team-thinking and team-actions
Teams are combined across-functions
HQ-staff experts are reduced in numbers-combined in cross-functional teams to
consult (not to direct) field units
Formal systems and procedures are simplified to focus on tasks
Conference of key managers are held on major organizational issues
Reliance on educational and training programs for conflict-resolution and better team
Real-time information system are integrated into daily decision-making
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Change Management-MBA625
Rewards are geared more towards team performance than individual achievement
Experiment with new practices are tolerated and encouraged
The Crisis
What will be the revolution in this stage of evolution?
Many large and mature multinational (MNCs) are in this phase.
Any way whatever the answer is, the sole focus is that each evolutionary period culminates
into a revolutionary period, which is short and spasmodic and transformative for the
existing managerial system, and the processes are never ending and perpetual ones.
For Compulsory and Further Readings
1. Miles Raymond E., Organization Development Reading 8.1
2. _________ Developing an Organization that contribute to long run effectiveness
Chapter 8
3. Greiner, Larry E., Evolution and Revolution as Organizations Grow Reading 8.2
4. Also published in HBR July – Aug 1972 (can be accessed through J-Store HEC
Digital Library)
5. Drucker, Peter F, The Need to Prepare for Growth, Reading 8.3
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Change Management-MBA625
@ Copyright St. Paul’s University
Change Management-MBA625
@ Copyright St. Paul’s University