Managing Change in Contemporary Organization - Essay Example

Anil Kr. Pandey 12.05.06 Managing Change in Contemporary Organization Change is a necessary way of life. We are perhaps aware of the axiom that the certainty in the world is that these will be change. The old order changeth, yielding place to new. In this process of change, the Darwinian principles of adaptation and natural selection are as true for the corporate world as they are for the animate. If we compare closely we will find that in many respects an organization is akin to a living organism. Just as any living organism need to keep harmony with the ever-changing environs for its survival. So dies in organization need to respond to changes in the market, governments, creditors, and communities even the weather, "Survival of the fittest is the unwritten but the radical rule of this gave. The environment, which engulfs an organisation, provides the resources and opportunities for the organizations existence. At the same time, the environment itself imposes sanctions determining what an organization can or cannot do. If an organization is to survive, grow and remain prosperous, if must adaft to the demands of the environment, since these demands are constantly changing, organizations must also change. The last decade has brought with it a time of totally unprecedented change. In every direction businesses are in turmoil, from computing to financial services, from telecommunications to health change is an accelerating and yet there is fundamental dilemma. People need time get used to change, but there is not anytime anymore. The pace of change is now so fast that business face constant market change and must respond very rapidly if they are to survive. Many don't make it. Evidence suggests that the average corporate life styles may be shrinking because of a mobility to change and adopt fast enough. For this reason managing change has now become a crucial part of competitive edge (Clarke, 2002). Some of the changes, which affected almost all organizations in the past few decades: 1. Technological innovations have multiplied; products and know how are fast becoming obsolete. 2. Basic resources have progressively become more expansive. 3. Competition has sharply increased. 4. Communication and computers have reduced the time needed to make decisions. 5. Environmental and consumer interest groups have become highly influential. 6. The drive for social equity has gained momentum. 7. The economic inter dependence among countries has because more apparent. These and scores of other changes compel an organization to cope with the environment and become more adaptive. Nature of organisational change : Organisational change is the alternation of work environment in the organisation. It implies a new equilibrium between different components of the organisation technology, structural arrangement, job design and people. Thus organisational change may have following features. 1. When change occurs is any part of the organization, it disturbs the old equilibrium necessitating the development of a new equilibrium depends on the degree of change and its impact on the organization. 2. Any change may affect the whole organization. Some parts of the organization may be affected more, others less; some parts are affected directly, others indirectly. 3. Organizational change is a continuous process. Newstrom and Davis (1997) have explained the impact of a change in any part of the organization of the total organization. They have illustrated it by comparing an organization to an air filled balloon. They have concluded that the whole organisation tends to be affected by the change in any part of it (Newstrom & Davis, 1997) However, the change in the organization does not occur purely on mechanical relationship. While managers as a change agent want to bring changes in the organization employees want to maintain a status quo. Factors in Organizational Change : Organizational changes are required to maintain equilibrium between various external and internal forces to achieve Organizational goals. Therefore, various factors which may be important for necessitating Organizational changes may be grouped into too categories external & internal. External Factors : Every Organization exists is some context. The present day environment is dynamic and will continue to be dynamic. Changes are social, political, economic, technological and legal environment force the Organizations to change themselves. Such changes may result in Organizational change like major functions, nature of competition, economic constrains, organization methods etc. In order to survive in the changing environment, organization must change. 1. Change in technology and marketing conditions : When there is change in technology in the organizational environment and also the marketing conditions, organizations have to face the technological change as well as competitive market. Hewlett Packard study: The computer Industry has experienced and extra ordinary dynamic rate of change. For example, between 1987 and 1992, both the number of computers in use and the memory of each have multiplied a thousand fold. Some of the nightly pioneers of the industry such as IBM and newcomers like Compaq have suffered through their failure to keep up with drastic technology and market change. In 1990, it looked as through Hewlett Packard might be among their number. The wall street journal had described the company as a torpid dinosaur amongst fleet fooled with predators. Since then however, the company has changed tack. It has recognized and even anticipated profound changes in the distribution channels through which competitors sell. Hewlett Packard used to sell around a dozen state efforts the measuring device each month to highly sophisticated specialists. Now it produces 125,000 LaserJet a week and distributes to mail order workhouse allover the world. If has become an adaptive Paragon. 2. Social Changes : Social changes reflect in terms of people's aspirations, their needs, and their way of working. Social changes have taken place because of the several forces like level of education, urbanization, feeling of autonomy and international impact due to new information sources. These social changes affect the behaviour of people in the organization. 3. Political and legal changes : Political and legal factors broadly define the activities, which an organisation can undertake, and the methods, which will follow by it, is accomplishing those activities. Any change in these Political and legal factors may affect the organizational operation. Internal Factors : It is a change occur because of two reasons : i) Change in managerial personnel ii) Deficiency in existing organization. Chain effect of change : Quite often, a change touches of a sequence of related and supporting changes. This is known as 'Domino effect'. It can be observed that a change will bring disequilibria; the organization has to modify many aspects of the organization. All these aspects are interrelated. Reactive and Proactive Changes : A reactive change is undertaken when it is pressed by some factors, either external or internal to all organization. Most of the organizations, which believe in traditional pattern of working often, go for reactive changes. Proactive changes are brought of the anticipation of the likely behaviour of the forces having impact on the organization. Such organizations are known as prospectors, which constantly interact with their environment to identify new opportunities and threats. (Raymonds and Charles, 1978) Planned Change : Thomas and Bennis have defined planned change as follows "Planned change is the deliberate design and implementation of a structural innovation, a new policy or goal or a change in operating philosophy, climate or style". (Thomas and Bennis, 1972) Planned change attempt at all aspects of the organization, which are closely interrelated: technology, task, structure and people. Objective of Planned changes : The planned change is needed to meet the overall objectives of the organization. Objectives of such changes are: i) Environment adoption ii) Individual adoption iii) Structural adoption IV) Technological adoption v) Task adoption Process of Planned change : The various steps involved in a planned change are: i) Identifying need for change ii) Element to be changed iii) Planning for change iv) Assessing change forces v) Change actions and vi) Feedback While assessing change forces, in a group process, there are some forces favoring and some opposing to maintain equilibrium. This has been referred to as 'field of forces' by kurl Levin in year 1947. He assumes that in any situation there are both driving and retraining forces which influence any change that many occur. Actions for change : It comprises three stages unfreezing, changing, and refreezing. Unfreezing : It is a process in which a person casts aside his old behaviour, which might be inappropriate, irrelevant or inadequate to the changing demands of the situation. Schien, (1968) has suggested some measures which all quite helpful in undertaking unfreezing process. 1. The physical removal of the individuals being changed from their accustomed routine, sources of information and social relationship. 2. The undermining and destruction of social support. 3. Demeaning and humiliating old attitudes and behaviours as unworthy and think to be motivated to change. 4. The consistent linking of reward with willingness to change and of punishment with unwillingness change. Changing : Smith, (1996) has provided guidelines for effective change, which are as: i) Recognize the primary purpose of change is to improve performance result. ii) Make individuals responsible for their own change. iii) Encourage improvisation, team performance and coordinated initiatives. iv) Ensure that people see now they fit in the larger organizational picture. v) Encourage learning by doing, provide just in time training for performance. vi) Use positive energy, meaningful language, and courageous leadership to drive change relentlessly. Refreezing : Refreezing means that what has been learned is integrated into actual practice. At this stapes individual internalize the new beliefs, feelings and behaviour learned during the changing phase. Responses to Change : In different organizations people reacts differently and response to a change is determine by the people's attitude towards the change. Each individual interprets the likely effect of a change in his how way. Willing Acceptance : Although people tend to resist a change this tendency is offset by their desire for new experiences and the rewards that come with the change. Resistance : This is a more general tendency and people's initial reaction is that of resistance. This appears to be a natural phenomenon because each individual or group establishes equilibrium and tries to maintain that. Forced Acceptance : Sometimes, people are forced to accept a change through they may show resistance at initial stage. Rejection : Another form of the result of the resistance to change is the rejection of change. If the change has been forced, it may generate counter pressure from the group. Resistance of Change : In the management of change effectively, the manager face the problem of resistance to change. It has generally been perceived that resistance is always bad but the fact have two sides as resistance as a cost and as a benefit. Resistance as cost : Since all changes have some cost so is the resistance to change. It people resist to change the organization may not be able to introduce new phenomena in order to adopt environmental requirement and its basis survival may be jeopardized. Resistance as Benefit : On the other hand resistance to change is a costly affair but it also provides some benefit to the organization and its change agent. i) It may signal the need for more effective communication about the meaning and purpose of change or need to rethink precisely how a proposed change will affect the organization and its members. ii) It also highlights real inadequacy. In the proposed change and suggest better ways for develop and introducing change. Factors in Resistance to change : The reasons underlying resistance to change may be identified at these two levels: Individual Resistance : i) Economic: a) Skill obsolescence b) Fear of economic loss, c) reduced opportunity for incentives. ii) Psychological Factors: a) Ego defensiveness b) Status quo c) Low tolerance of changes d) Lack of trust in change agent e) fear to unknown. iii) Social factor: a) Desire to maintain existing social interaction b) Feeling of outside interference. Group Resistance : The effect of group as a source of resistance may be analyzed in terms of nature of group dynamics and vested interests. Organizational Resistance of Change : Not only individuals and groups within an organization resist change, even the organization itself resists changes because of following reasons: i) Counting Past successes ii) Stability of systems iii) Resource limitations iv) Sunk Cost v) Inter-organizational agreements. Overcoming resistance to change : One of the basic problems in managing change is to overcome people's resistance to change successfully. Unless this problem is overcome properly, the effect of the change may not be as functional as envisaged by the management. In many cases, even the impact of a change may be dysfunctional if change in imposed upon the people by the use of formal authority. Lacovini, 1993observes that "the secret to real success is effective management of the emotional vulnerability that accompanies organizational change. Problems of overcoming the resistance to change can be handled at two levels: at the individual level and at the group level through group dynamics. Both these attempts are complementary and sometimes these efforts may be overlapping because every individual is a member of some of the groups, both at the formal and informal levels. Efforts at individual level : When the resistance comes from the people at individual levels, the problem can be solved at the same level. Following steps to be taken: 1. Involvement: Involvement is a process through which those who are affected by the change are brought to understand change. However this is not a one-time action, rather should be looked upon as a dialogue, which continues over a period of time. If implies discussion and explanation of the proposed change. It is a trust building task and as the process goes, the level of resistance to change tends to decrease, understanding of change increases and personal involvement in the change increases. 2. Obtaining commitment: Commitment is an agreement to take an active part in the actual mechanics of the change. The design to commit oneself is a dynamic process. It grows slowly along with relationship. 3. Leadership: The role of leadership in getting acceptance for a change is very important as a capable leader reinforces a climate of Psychological support for change. A transformational leader can use personal reasons for change without arousing resistance. An effective leader tries to time a change to fit the psychological needs of his followers. (Appendix: Case study-2). 4. Training and Psychological Counselling: The management can change the basic values of the people by training and Psychological counseling. People should be educated to because familiar with change, its process, and working. They must be thought new stalls, helped to change attitudes and indoctrinated in new relationship. However, to become effective, education must be post of the manager's everyday activity on the job. This helps in creating receptive environment in the organization. (Appendix: case study-1) Efforts at Group level : Although agreement to change can be obtained individually, it is more meaningful it is done through groups usually more than one person is involved in the change. Instead of solving problem at individual level, it is desirable at the group level to get better acceptability to change. Based on the characteristic of a group as a means of change, the managers can form strategies for over coming resistance as follows: i) Group Contact: Any effort to change is likely to succeed if the group accepts that change. For this purpose, the group itself should be the point of contact. Group contact offers some specific advantages a) Through groups, one can communicate with more people per unit of time. b) In groups, there may be some person who may support the idea of change even if others resist it. c) Group can get at the basic problem very rapidly as compared to single individual. Through the group contact, many things about change can be made clear such as the reason of change, benefit of change. And how the benefits of change will be shared between organization and its members. For this purpose meaningful and continuous dialogue are necessary. Free flow of information helps people to understand the real picture of change and many misunderstanding may be avoided. ii) Participation: Participation helps to give people involved in the organizational change a feeling of importance. Those people who directly affected by the change should be given opportunity to participate in the change before the final decisions are reached. The organization must regard the participation as meaningful and share the results of the change with its members. They must be made a party to the change rather than an agent for resistance to change. iii) Group dynamics training for change: Group dynamics also helps is providing various training programs for accepting and implementing change. Such training techniques include role-playing, Psychodrama, and sensitive or T-group training. Change Agents : Any planned change needs change agents. These are the persons who initiate change in the organization. Through the management as a whole is involved with innovations as a continuous process, its role is somewhat limited to regular change. In a planned change however, the type of requirements may be different and internal management has to take the help of external change agents. Thus there may be two types of change agents: External and internal. External change agents are in the form of consultants for change. There are the persons who are normally experts in the specific area of organizational change. The internal change agents are from the existing organizational personnel, from any level or department depending upon the needs of the change. Often both these agents work in harmony. Afterwards, the internal change agents are trained by the consultants to implement the change as an on going process. Roles of change agent : The objectives of the change agents are to bring desired change in the organization. However, for this purpose a specific role is required to be performed by the change argents, both external and internal. Role of External Change agent : External Change agent is in a position to view the organization meant for change from a total systems viewpoint, and is much less affected by organizational norms. He is likely to have easy access to top management since it is top management on whose initiative the consultant is contacted. The role of the consultant may include diagnosis of the situation planning strategy for change, intervening in the system for change and even the evaluation of the change efforts in the contest of various outcomes. The role of the consultant may be quite comprehensive. Schien,1969 observed that the problem will stay solved longer and be solved more effectively, if the organization solves its own problems. The consultant has a role in teaching diagnostics and problem solving skills but he should not work on the actual concrete problem himself. Role of Internal Change Agent : The internal change agents are more likely to accept the system as given and try to accommodate their change tactics to the need of the organization. There may be two categories of persons who may act as internal change agents: Chief executive of the organization and change advisors from among the organizational Manager. Chief Executive : The Chief executive sponsors the change programme and provides support and leadership for its success. The change programme has a greater chance of success it is sponsored by the Chief Executive. Change advisors : Apart from the Chief executive, the change advisors have important role to play in change process. These are the internal personnel, initially selected to work in close Harmony with external consultant. These consultants train them for implementing the change. He helps managers to develop appropriate behaviour and skills for change process. The role of the change advisor is quite complex. He has to achieve the performance in terms of in fluency members of organization to accept and internalize the new values, concepts and practice. The change agent needs to develop skills to negotiate, persuade, and mobilize. Walton has described some qualities of change agents, which are: i) Diagnostics skills ii) Behavioral skills iii) Attitude of acceptance iv) Personal quality to provide emotional support and reassurance. (Walton, 1969) Strategies of implementing change : Most managers who have been responsible for implementing change have developed personal perspective consisting of assumption and strong feeling about how change should be introduced. These philosophies fall into two camps: The Top-down Strategy : The advocate of this strategy believe that, in general, people resist change and require direction and structure for this well-being as well as to work efficiently and effectively. It is the managements responsibility to design the changes it deems appropriate and to implement these thoroughly but quickly by directives from the top, It has certain advantage i.e. less time consuming, provides general direction to change but have certain disadvantages also i.e. changes may not be long lasting, internal resistance to change always be there etc. Gobachevs 1987 passionate attempts for Perestroika area case in point. The Bottoms up strategy : The people welcome change and the opportunity to contribute to their productivity, especially if the changes give them make variety in their work and more autonomy. These managers assume an expectation that they be involved in designing change as well as in implementing it, commitment to change follows from involvement and essentially the successful implementation. But the correct strategy of change depends on the circumstances. Change Management Strategy to Transform a Heavily Beaurocratic Manufacturing Industry: Administrative reform is a through going program of change intended to shake up inert beaurocracies, to battle vested interests, to tackle systematic shortcomings and failures, and to other some aspects of the prevailing administrative culture (Caiden, 1991) the broad scale administrative reforms undertaken in English speaking countries during 1980's &1990's. Determining the effectiveness of different types of change strategy is a daunting proposition both theoretically and methodologically . Our response to this problem was to assume that the change outcomes are likely to be a product both of conscious management strategies or choices and of pre-existing and environmental factors over which managers have much less control. The case study on change management in public sector/heavily beaurocratic industry suggested greater complexity and ambiguity and pointed to the importance of the specific environment of each agency. Change Management Strategy: Manufacturing organization whose future largely depends on improving products by updating its cost effective technology and marketing strategies. So the targeted strategy to drive change will be to improve product line and marketing strategies. The industry is facing unprecedented environmental change or external threats so CEO of the industry see the need for radical transformation. Beaurocratic organizations have hierarchies, with a well-defined chain of commands. Change plan is to be decided by the CEO or a small group of managers from the top. First the most significant point to change is the broader political and governmental imperative required agencies to improve their efficiency so as to produce the same (or more) output with fewer staff. In this environment, CEO has the dual responsibility of implementing centrally mandated change while maintaining and where possible improving. In a beauracratic-controlled industry the decision to implement change follow top down approach and normally the top management decides about the key lever for change, whether it will be a complete transformation or a mere incremental reordering. In a heavily beaurocratic industry primarily the top management has to be sensitize for change. CEO role is very important in driving change. He must have quieter style of functioning and commands respect in the organization may able to achieve the required change. The involvement of the chief executive as a change agent will fulfill the primary requirement of change. Involving the employees and free communication with them about the need of the change and have room for negotiations and compromise and efforts put into communicating the plan and the extent to which specialized change agents were trained and deployed results in lesser resistance. REFERENCES: 1. Clarke, Liz (2002). The Essence of Change, 1994 prentice hall, Indian reprint. 2. Newstrom, John W. and Keith Davis (1997).Organisational Behaviour: Human Behaviour at Work. New York: MC Graw Hills. 3. Raymonds, Emiles and Charles C. Snow (1978). Organizational Strategy: Structure, New York, MC Grew Hill. 4. Thomas, John M. and Worren G. Bennis (1972) (eds.) The Management of Change and Conflict. Baltimore, Penguin. 5. Levin, Kurl (1947). Frontiers in Group Dynamics: Concept, Method and Reality in Social Sciences, Social Equilibria and Social Change, Human Relations. 6. Schien, Edgar H (1968). Management development as process of influence in David R. Hamptin (ed.) Behavioral concepts in management, Belmont : Dickinson. 7. Smith, Douglas K (1996). Taking Charge of Change. Reading mass: Addison -Wesley. 8. Lacovini, John (1993). "The human sides organisational change", training and development, January, P.G.S. 9. Schien, Edgar H. (1969). Process Consultation, its role in Organizational Development, Reading mass Addison Wesley. 10. Walton, R. (1969). Inter Personal Peace Making, Confrontation and Third Party Consultation. Reading Mass: Addision , Wesley. 11. Gorbachev, Mikhail (1987). Perestroika, Fontana/ Collins, London. 12. Caiden, Gerald E. (1991). Administrative Reform Comes of Age. New York: Walter de Gruyter. 13. Freiberg, Kevin & Freiberg, Jackie. "Nuts! Southwest Airlines" Crazy Recipe for Business and personal success. Brad Press Inc, Texas. 14. Harward Business School Case 9-694-023, Dec. 1993. 15. Gittell, Jody Hoffer (2003). The Southwest Airlines Way- Using the Power of Relationship to achieve high Performance, McGraw Hill Companies, Jan. 16. Kanter, Rosabeth Moss (1985). The Change Masters- Corporate Entrepreneur at Work, London,. 17. Plant, Roger (1987). Managing Change and Making it Stick, Fontana, London,. 18. (Accessed on 11.05.06) 19. (Accessed on 9.05.06) 20. (Accessed on 11.05.06) ***************** Appendix Case studies Case-1: Change through Training In the early 1980's ICL, the only remaining computer manufacturer in the U.K. was struggling to survive. In 1983 ICL was rescued from the brink of disaster by a combined city and government deal, and sir Michael Edwards was put in as chairman. The ICL culture in 1982 was resistant to change .So much so that when the chairman pulled hard on the lever for change, nothing happened. This represented a sizeable problem of organizational inertia, which jarred harshly with ICL,s need to respond fast or go out of business. Even while the managing director, Robb Wilmot was announcing that every part of our business has changed, is changing and will continue to change, people with ICL perceived change as a temporary and unnecessary disruption of the status quo. In trying to make change happen chief executive Robb Wilmot had somehow to get his people as familiar with the reasons for change as he was. He put 2,200 of his managers through a core programme, known variously as 'mind expansion' and the 'sheep dip'. It started top down and ran for three years. A number of training programmes, change workshop had been planned to teach managers how to do change to their staff. Presently chairman of ICL puts a lot of the credit for success on this huge investment in training. Case -2: Change through Leadership Jaguar, now part of ford group, has had a long and chequered history. The era of 1928- 72 was typified by immense loyalty to owner. The BL era of 72-80 saw commitment to a vision of a luxury racing car wither. In year 1980, when Sir john Egan took over at jaguar cars as chairman and chief executive, he took time to communicate the new vision through a hearts and minds program for all jaguar employees and their families. Here is just a flavor of the sheer scale of the sporting and social program during 1982 and 1983 alone. Jaguar fun nights (280 runners plus spectators) Bone fire night celebrations (17,000 attended) Open day attended by 36,000 people History of jaguar cars, a free hard back for employees Interdepartmental sporting competitions (1,700 people) Case -3:Southwest airlines Introduction: In 2004, a Southwest airline was by all accounts America's best-managed airline. In the early 2000s, southwest market capitalization was bigger than those of the major us airlines, American, united and continental combined. Since 1973, the Dallas based airline made profits without a break. This was an astounding feat in a difficult industry plagued by price wars, recessions, oil crisis and the most recently, the WTC attack. Indeed, southwest was the only airline in the U.S. to report profit in the difficult third quarter of 2001. History: Rollin King, a San Antonio entrepreneur and his banker John Parker developed the idea of starting an airline company called Air Southwest Co. (later southwest airline company.) in 1967.Initially southwest operations were not profitable and found getting embroiled in a price war. Airline gets big break in 1971 & in 1974. After deregulation of the US airline industry airline faces some problem by Wright amendment but had been able to overcome it. During the period 1990-94, the airline industry went through a tough period. War in the Middle East caused fuel prices to go up sharply. The US economy went into recession. But by remaining lean and mean and keeping cost under control, southwest sailed through comfortably. Kelleher's philosophy of managing well in good times to be ready for bad times seemed to be paid off. Form early 90's upto September 2001 airlines business was increasing. But after 2001 WTC attacks airline business has been dropped. In the year 2003 airline industry again had faced lean patch due to Iraq war, SARS, weak economy higher energy cost and terrorism related concerns all airlines struggled for survival. Despite these challenges, Southwest reported profit year after year. Organizational analysis: Airlines CEO says that "we look for attitudes: people with sense of humor who do not take themselves too seriously. We'll train them according to our requirements but the one thing we cannot change in people is inherent attitudes." We look for people with other-oriented, outgoing personalities, individuals who become part of an extended family of people who work hard and have fun at the same time. Southwest always looks for a team player. Training played an important role at southwest. Both functional expertise and team building skills were emphasized. The airline used various programmes to promote cross-functional communication. Some training programme tried to inculcate leadership qualities among employees by teaching them how to lead with integrity, care for customer and respect for company's core values. Southwest had tried to encourage discretion and authority among the lower level employees. Southwest laid extraordinary emphasis on coordination. Effective coordination required frequent, timely, problem-solving communication carried out through relationships based on shared goals, shared knowledge and mutual respect. Southwest employed a lean organization structure. There were only four layers of management between a frontline super wiser and the CEO. The company sought to eliminate inflexible work rules and rigid job descriptions. Southwest believes it was important to give its employees access to information about the company, competitors and the industry. To promote a feeling of ownership among employees southwest introduced an employee profit sharing plan way back in 1973.It had instituted many awards to motivate its employees. Culture is the glue, which holds the organization together. It encompasses beliefs, expectations, norms, rituals, communication patterns, symbols, heroes and reward system. Southwest had attempted to promote a close-knit family like culture. A culture committee was setup to reinforce the spirit of southwest by communicating the airlines mission, vision, values, norms and philosophy. Southwest encourages his employees to challenge conventional wisdom, encouraged to implement new ideas quickly. It viewed integrity as a core value. It builds confidence in his employees so as to get things done faster. Leadership played a major role in shaping the strong southwest culture. Southwest succeeded in an intensely competitive industry. Strong relationship among employees, managers, unions and suppliers had enabled the airline to be extraordinarily good in cutting cost and improving customer's satisfaction. ******************************* Read More