Change Management Efforts in Different Organizations - Term Paper Example

Management Table of Contents Introduction 4 Rate of failure of change in organizations 5 Critical analysis of why some change programs are more effective than others 5 Change management theories and models 6 Scale of change and style of management 6 Organizational Development Approaches 9 Political and Power Processes 10 Contingency approaches 11 Core Values Approaches 11 Successful change management initiatives- example 12 British airways 12 Change management failures- example 13 Citigroup 13 Features and conditions why some change management initiatives fail- Critical analysis 14 Managing survivors of change 18 Conclusion 20 Reference 22 Bibliography 25 Introduction Organizations and institutions work in extremely dynamic market places which call for the ability to make use of right change opportunities while demonstrating flexibilities to cater to the changing organizational requirements over time. The right selection of change initiatives is considered fundamental and crucial for the company’s success. Organizations are found to be successful even with large scale change initiatives and have also failed to undertake even small changes. It is the complexity of the change process which results in failures in managing the change initiatives (Yaeger, “The Complexities of Large-Scale Change”). Successful change organisations have realized the importance of inter-relationship between components and how changes in one component can impact on another. Strong rigor and methodology is identified as the prerequisite for a process which leads to well aligned decisions and possesses the required flexibility to meet the changing market needs (Yaeger, “The Complexities of Large-Scale Change”). The last decade has demonstrated an increasing flow in the extent of research on organizational change. This essay is a search for the general commonalities and differences on change management efforts in different organizations focusing on the extent of failure of such attempts and the reasons for the same. Apart from concentrating on the different sets of changes such as barriers and common mistakes while implementing certain types of changes, the main interest of the essay is focusing on the inhibitors and enablers of change, drivers of decisions for undertaking large scale change management programs and evaluation of the same. The study aims to find a link between the enablers and inhibitors causing the success or failures of change initiatives in organizations (CEP, “Why Change Fails or Succeeds”). The study provides a crucial literature on the subject highlighting on the arguments and views presented by researchers and authors. The analysis is done in the light of various organizational behavioural theories and their applications in real life organizational settings. Rate of failure of change in organizations As mentioned, given the numerous criteria for successful changes in organizations, all changes are not found to be successful. The rate of failure of change programs can be very high. According to Maurer (1997), technological changes demonstrate a failure rate of 20%, while 29% of all mergers and acquisitions fail. 30% of the attempts of business process re-engineering are found to fail while 50% of the initiatives to improve quality end in failures (Cook, Macaulay & Coldicott, “The rate of failure of change”). Kotter has identified some of the pitfalls in change management, such as lack of compelling reasons or issues for the change, unclear objectives or goals for the change, inadequate planning, unrealistic time scales, inadequate participation etc. Too much allowance for complacency, lack of short term whims, insufficient guidelines or instructions for the change have been identified as some of the other pitfalls in the management of changes in organizations (Cook, Macaulay & Coldicott, “The rate of failure of change”). Critical analysis of why some change programs are more effective than others Previous research reveals that much of the change initiatives taken by organizations have been subjected to failure. According to the words of Beer and Nohria (2001), change is something which organizations find difficulty in pulling off and that there are very few companies which manage the process as well as they would like to. Majority of the change initiatives, such as installation of new technologies, restructuring, downsizing, and corporate cultural change have demonstrated very low success rates. The hard fact is that 70% of all change initiatives fail (Cameron & Green, “What the research says”). A similar conclusion is also arrived at by Marks & Mirvis (2001), who says that out of every four merger and acquisition attempts, three of them fail to meet their desired financial or strategic objectives. Gartner Group, (2000), the independent IT Research firm has pointed out some of the factors why some change programs are more effective than others. The report reflected that 28% of the change processes were abandoned even before completion, while 46% of them were running behind schedule or were over budget, while 80% of them were not used in the process in which they were intended to be done. Certain negative emotions were also associated with change processes in organizations, as found by McKinsey survey (2006). The percentages of existence for such emotions like anxiety, confusion, frustration, and fatigue for the successful change processes were found to be much lower than the unsuccessful projects. Thus it can be said that the occurrence of such negative emotions is the determinant of the extent or degree of success or failures of change processes in organizations. Change management theories and models Scale of change and style of management Various authors have put forth different thoughts and design of change processes. A very useful tool was developed and proposed by Dumphy and Stace (1990) drawing a link between the types pr scale of change with the change management styles. The four types of changes as outlined by the authors are fine-tuning, incremental adjustment, modular transformation and corporate transformation. The following figure would depict the four styles. Figure 1: Scale of change and style of management (Source: Harris, “Bringing the change models together”) Dumphy and Stace (1990) outlined the four categories of successful changes based on the research they conducted on Australian companies. Developmental transitions are considered as the continuous incremental change in organizations which helps them to fit into the business environment. It is also referred to as an approach used in the collegial types of organizations and services having adequate available time (Harris, “Bringing the change models together”). The task focus transitions are referred to as being strongly directed by the top management where the unit levels retain autonomy over operational and implementation matters. It is considered more of a consultative approach at the lower levels (Harris, “Bringing the change models together”). Charismatic transformations are referred to as the radical changes which are initiated by charismatic leaders in the organizations who are able to influence the minds and hearts of staffs. This mode is generally used by small and new institutions as compared to the established industries. Turnarounds is a mode which is used when organizations need dramatic and radical changes but has very little craving for the same. The major reshaping of the organization is conducted by coercive or directive means which includes restructuring, downsizing or de-layering (Harris, “Bringing the change models together”). The following section would provide examples of change management in organizations and sectors in relevance to the above theory. Research conducted on a number of US hospitals by the Institute of Medicine in 2001, reached at certain conclusions. The results depict a picture of failure of the turnaround more of transition in American hospitals. The situation reveals a poor application of the Turnaround mode of change in the organizations. In majority of the hospitals, the management behaviours and organizational culture tended to establish the already existent vigorous system of individual attention. Firstly 70% of the nurses who were interviewed were of the opinion that their managers were not willing to hear their problems and expected that they would have to deal with the regular disruptions on their own and solve them in their own way. Speaking about the problem was regarded as incompetence of the nurse. Nurses were encouraged to bring up small issues or discuss about small problems unless they were considered out of control. Since these were established and large organizations, the situation demanded active and aggressive ‘turnaround’ mode of transition by the management authorities. Since people were actually against the progress of any change initiatives, management would have to implement orders and them mandatory to be followed by all. It is seen that people belonging to the US hospitals were actually against radical changes which makes it perfect for the implementation of turnaround change process (Tucker & Edmondson, “An Illusory Equilibrium Created by Responses to Process Failures”). The change management initiatives of Enron can be sighted in this context. The basic reason for the failure of implementing changes in the organization was the failure to emotionally connect with the external business environment. It failed to build a culture in which there would be a strong relationship between the employer and the stakeholders. The company also failed to meet its ethical commitment which could not be changed. On the other hand some of the successful change initiatives depicting trust and accountability were depicted by organizations like SC Johnson, Novo Nordisk, and Timberland. The turnaround strategies implemented by the top management of these organizations were able to bring about dramatic alteration of the mental health of the organizations. The success of the change initiatives can be mainly attributed to the encouragement and support of the CEOs, senior executives and management of the organisations. They were able to implement the changes through directive and coercive means making the process mandatory and compelling for all. Resistances were handled carefully and it was ensured that each one participated in the process so as to ensure its full success (Laszlo, “The leadership challenge”). Organizational Development Approaches Various organizational development approaches can be explained in the context of change management. As mentioned by Nadler & Tushman (1995), the managing process of change in organizations has their own strategy and mix of style and methods which are specifically tailored to fit into the organizational context considering the characteristics of the change, namely adaptation, tuning, re-orientation or re-creation (Harris, “Change management theories and models”). According to Robbins (2004), the OD approaches in organizations emphasizes on the humanistic and democratic values, a spirit of enquiry, participative process and the emphasis on organizational and personal growth. It relies greatly on the environment of openness, trust, and complete commitment towards the missions and vision of the organization on the whole. Moreover it also depends on the degree of active leadership to create this climate (Harris, “Organizational Development Approaches”). Political and Power Processes The process emphasizes the importance of manipulation, leverage, influence, negotiation and bargaining as the key aspects of all successful change initiatives, especially when the organizations remain in a situation of discontinuity and flux. Proponents of the power and political approaches considers the specific methods of change as being less important as compared to the demonstration of visionary and strong leadership to what is proposed. They focus on the use of symbols and ceremonies for substantiating the change process and especially highlight on the aspects and importance of participation and motivation and extending rewards for the same. According to the views of the political change theorists, the development of systematic plans and implementing change facilitators are considered to enhance better management of the transition process and greater possibility to get to the desired state. According to the opinions of Pfeffer (1981), the power and political approach is especially useful in those organizations which demonstrate high differences in terms of corporate interests and values and professional relationships among organizational members. This description is particularly applicable for health care organizations in which managing the stakeholders powers are considered to be complex and crucial (Harris, “Political and power processes”). Contingency approaches According to this approach the most important problem faced by the change manager is to recognise whether the change methods fit into the circumstances and goals of the organization. The focus lies in the determination of organizational variables and contexts and then choosing the most appropriate change management strategies accordingly. In this context the four frames model has been extended by theorists like Dumphy and Stace (1990). According to their views the making of decisions about the methods of change management to be chosen is assisted only when the leaders are able to identify and analyse the need and urgency of change and can forecast the degree of resistance that can arise (Harris, “Contingency approaches”). Core Values Approaches As opined by Senge (1990), this approach is applicable when organizations want to renew or rebuild its structure at the same time ensuring that the core values and visions and shared among the committed employees in the organization. Senge acknowledges the fact that individuals are motivated by their own visions and objectives and that collective vision is required for this approach. The central point in this approach is the fact that decision making in the organization is shared by all members and it emphasizes on two main aspects. First is the leader which the envisioning agent for supporting and rewarding employees for adopting the values of self management. Second is the role of leaders as the facilitators for encouraging the negotiation of the shared meaning in the organization (Harris, “Contingency approaches”). Successful change management initiatives- example British airways Among the most successful change management initiatives, mention must be made of British Airways. Since 1981, the company was seen to demonstrate falling profits. There was great loss of efficiencies as well and the company was also losing out valuable resources. The company undertook aggressive organizational restructuring for eliminating the occurring problems, enhancing efficiencies and productivity. The organization began reducing its workforce systematically and this was done through the implementation of effective change management leadership programs. The idea was to re-invent ways in which the organization operated. The development of a leaner organization having a high performing and distinctive culture accounted for the main aspect of the change program. The change management initiatives in British Airways are a strong depiction of the ‘Political and Power Process’ theories, as discussed in the previous section in organizational development approaches. The organization primarily sought to develop its leaders to make the organization contend with its present trading conditions and achieving its long term objectives and vision. The case reflects the application of ‘Political and Power Process’ theory on the ground that in British Airways leaders accounted for the main proponent, advocate and supporter of the initiatives. British Airways even introduced the high performance leadership (HPL) in the same year (British Airways, “Leadership development”). The main three purposes for the development of leaders were to communicate the common vision, agreeing accountabilities, and motivating and inspiring others. Change management failures- example Citigroup One of the significant change management failures was depicted by the merger between Schroders and Saloman Smith Barney (SSB), which is the investment bank in Citigroup. The merger reflects a perfect picture of failure to integrate cultural differences between the two organizations which consequently led to the failure of the change efforts. Schroders and SSB were significantly different in terms of their company cultures and various issues generated when the two were merged together. Schroder was more driven by the market and tended to follow its own cultural norms while SSB was more products driven. The employees in Schroders commented that they felt they were thrown out of the family in which they belonged to. The clash in culture had resulted in injecting a sense of insecurity in the minds of employees in both companies. Another threat associated with the merger was that the rival bankers were picking off some of the best and the most prized financiers of the country. Not only did the merger efforts inject fear, anxiety and apprehensions within the company but also make the process a complete failure. It resulted in huge employee turnovers and attritions making the situation even worse (Song, “Threats from culture clash to the merger”). This case is a depiction of a failure of the ‘Core Values Approach’ theories in organizational development. The ‘core values approach’ is especially applicable for situations of mergers and acquisitions. This approach seeks to integrate individual visions, values and sharing them among the committed employees in the organization. A collective vision is required in this approach for success of the change efforts. It is collective vision which is seen to be missing in this approach employees are encouraged to undertake self management and adopting the values in self management. However, the condition in Citygroup is alarmingly different. Not only did the organization fail to encourage employees to participate in the change efforts and empower them with change responsibilities, it also failed to provide them with the required rewards or motivation for taking up additional responsibilities. People issues were given insufficient attention which resulted in the failure of the merger process. Features and conditions why some change management initiatives fail- Critical analysis Both secondary research analysis and analysis of the above cases reveals the fact majority of the change efforts in organization end up in failures. Even the most complex change initiatives might succeed while some of small change initiatives might end up in failures. It is difficult to arrive at a conclusion as to identify the exact reasons why some change efforts are more successful from others. It differs between organizations and various according to the external and internal conditions that they thrive in. In the case of Citigroup is it can be said that lack of delegation is the major cause behind the failure of the process. The situation depicts lack of clarity about the responsibilities and roles which employees had to inculcate for driving the change. Rather there were culture clashes where each group was resistant to move from its position as demanded by the situation. Also there was lack of clear and adequate downward communication and also minimum coordination between the various departments after the merger process. Conflicting, missing and ineffective leadership has been recognized as one of the most important and prospective for change failures. Among all the change initiatives discussed above, it is seen that leadership plays a major role in the same. The change successes that have been attained have been primarily due to strong leadership efforts which have guided participants through the change process. The role played by leaders is especially visible in the case of British Airways which actually made it a tremendous success. The situation in Apple Inc also resembles the same situation in which leaders have played an active role in communicating, leading and guiding employees through the change process. In case of failure of effective leadership the change processes have either not progressed or has retarded and came to a halt abruptly. Prior research reveals that effective leadership has played the most important and crucial role in managing change in organizations. Some of the greatest change management success stories have been borne out of high quality and effective leadership (Remenyi & Brown, “seeking the explanatory variables”). Hiatt and Creasey (2003), belonging to the Change Management Learning Centre has provided valuable insight into some of the crucial aspects for the success of change initiatives in organizations (Cameron & Green, “When change goes right”). Under the Prosci Research studies, they looked into the change management initiatives undertaken in 400 companies across the world. The research highlighted upon the factors which accounted for the maximum contribution towards change successes in these organizations. Firstly they highlighted on the importance of effective sponsorship from the senior management and their active support throughout the duration of the process of change. They has especially highlighted on their importance of acting as role models and communicators of the change process and also acting as ambassadors for the change (Cameron & Green, “When change goes right”). The crucial responsibility of the senior management is also to buy in from the employees and front line managers who are responsible for keeping the change process running and maintaining the momentum of the same. The researchers have also emphasised on the importance of targeted and continuous communication by the management throughout the duration of the project. Team work has been given importance for maintaining of internal working relationships and also for networking in the organization. Lastly Hiatt and Creasey (2003) have highlighted on the importance of an organized and well planned approach suitable for the kind of change that is being incorporated (Cameron & Green, “When change goes right”). One of the most striking conclusions that was reached was that was reached by the authors was that employees must be communicated about the change mainly from two people, first is the line manager and secondly the most senior people who is involved in the change. In other words it can be said that the strategic vision and direction communicated must be translated into a local context. According to the views of Prosci (2007), change must be incorporated through a very structured process, including open and frequent communications and using dedicated resources and complete participation of the employees (Cameron & Green, “When change goes right”). Apart from the above aspects, Roberto and Levexque (2005) were of the suggestion that the plans for change would have to be developed much before it would be implemented. They are of the opinion that the organization must implant the seed for effective change into the procedures and behaviours of the organization much before the initiative is actually taken. On the other hand, Pfiefer and Schmitt (2005) have highlighted on the aspects of difference in the extent of successful change attained in organizations. They have said that most often organizations have not been found to be ready to accept the change (Cameron & Green, “When change goes right”). According to the findings of Sirkin, Keenan & Jackson, there are certain critical factors which keep some organizations to implement changes successfully. In the recent years, the change management initiators have primarily focussed on the soft issues like leadership, motivation and culture as being crucial for its success. Although these elements are considered important for successful changes, however, they are not considered sufficient for the same. They have argued that these soft systems do not generally influence of results or outcomes of the change programs in the organization. Moreover changing the attitudes, behaviours and relationships is not considered an easy task as they remain ingrained in the minds and culture of the people and organizations (Sirkin, Keenan & Jackson, p.2). They have argued that organizations have failed to focus on some of the more crucial factors like the ‘hard factors’ which have three distinctive characteristics. Firstly they can be measured in with direct or indirect ways. Secondly companies can communicate their criticality with within or outside the organization as well. Thirdly they are also characterized by the fact that these elements can be influenced by businesses easily. These hard facts which can influence change initiatives are the time needed for implementing the process of change, the number of people required for implementing and executing the change program, and also the financial results that is expected to be attained through the process. Research conducted showed that the change projects in organizations fail because organizations fail to cater to the hard factors or neglects them. It is also true that if organizations fail to pay attention to the hard issues the transformation programs would not proceed further and fail to operate even before the soft issues would come into play (Sirkin, Keenan & Jackson, p.2). Managing survivors of change Different people accept change differently. Some people might accept the change process willingly on grounds that they would get additional and new opportunities in the process. On the other hand, some might have difficulty in accepting the change process. This is especially true for cases when organizations downsize their workforce as part of their change process. ‘Survivors of change’ or the employees who are retained after downsizing get de-motivated and detached easily. It is the way these people are managed that determines whether the change process would succeed or fail. Different authors have opined differently about the ways of handling the change survivors in organizations. According to Fisher (1991), although workers who are laid-off have to pay a high price, the impacts of such lay-offs on the existing employees in the organization is also significantly large. Fisher has commented that morale and trust of employees are completely eroded as downsizing consequently results in increasing additional workloads and escalates job insecurity. According to Cascio (1993), majority of such survivors are seen to complain of job stress and burnout symptoms due to such changes (Mishra & Spreitzer, p.567). However according to the views of authors like Emshoff (1994), Henkoff (1994) & Isabella (1989), some of these survivors do not experience any such emotional stress or distress out of these change initiatives. In fact they are fond to be greatly energized and consider the change as an opportunity towards their personal growth and progress (Mishra & Spreitzer, p.567). In fact empirical research has demonstrated contradictory responses from survivors to downsizing. According to Brockner, Grover & Blonder (1988), after the announcement of a downsizing strategy, employees have either responded by working harder and putting in greater efforts, reduced their efforts or have kept their efforts unchanged. According to the views of Bies, Martin and Brockner (1993), employees were seen to enhance their citizenship behaviours after a downsizing announcement while some reacted by withdrawing from their work activities. According to a survey conducted on 1321 private and public service organization in Australian and New Zealand on the effects of de-layering and downsizing on survivors, the resulting trends were seen to be completely different in the two countries. Australian firms have depicted negative human resource management implications out these attempts while firms in New Zealand employees began showing greater motivation and commitment after the downsizing (Littler, et al, “Abstract”). Researchers have primarily focussed on the role of leaders and the senior management in tackling the effects of downsizing or handling the grievances of survivors of downsizing. According to the views of Cameron, Freeman and Mishra (1993), the critical role before the senior management is to create a vision about the future prospects of the organization and motivating employees to embrace that vision. It is important that employees are made to know about the rationale behind the downsizing or the reasons why their job roles and responsibilities have undergone a change (Auster & Taylor, p.18). Researchers have emphasised on the need to provide the survivors of downsizing with greater career progression opportunities to motivate them to handle the harmful effects of downsizing. Employees must be communicated about the ways in which they would benefit from the same in terms of their growth within the organization and opportunities for the same. The need to listen to the concerns of the surviving employees was realized by researchers (Appelbaum, “Abstract”). According to Jones (1998), provision of attractive incentives packages is a primary way of reducing the workforce. It is considered to be a more humane way of downsizing which also results in minimising harmful effects of downsizing. It becomes less threatening for those employees who are retained in the organization. Certain suggestions have been provided by researchers like Appelbaum, Delage, Labib and Gault (1997) on combating the effects of downsizing on employees or survivors in the process. Firstly employers must seek to attain trust of the employees on the management. This can be done by increasing visibility of the senior management, explaining the reasons for downsizing elaborately, and explaining the criteria for which employees were terminated. One way of handling the problem would be to empower employees through the change process. The provision of training and cross training is specifically important for survivors on their newly acquired responsibilities and roles (Appelbaum, Delage, Labib and Gault, p.284). Conclusion Analysis of the project reveals some of the reasons why change initiatives succeed or fail in organizations. It is imperative that a complex change process has lesser chances of succeeding than a simple one. However, the trend shows that organizations undertaking large scale and complex change initiatives pass through the process while some of the very small initiatives fail. It is seen that some of the very crucial human resource factors are associated with the process. Employers need to look into these human resource elements before and after implementation of the change process in order to make the process successful. It is seen that 70% of the change initiatives in organizations have failed. Research reveals that 20% of the technological changes fail, and 29% of all mergers and acquisition processes also fail. 30% of the business process re-engineering attempts fail while 50% of all changes on quality aspects also fail. Thu it is seen that the rate of failure of change initiatives is very high almost in all sectors of the market. Out of the many reasons of failures, mention must be made of such factors like poor planning, adequate budget, inadequate implementation, etc which have kept some organizations from attain change targets while others have succeeded fast. However, the predominant factor which has been identified to retard the progress of change initiatives or catalyses it is leadership. Effective leadership has been identified as the most crucial and important for the success of the processes. The case of British Airways demonstrates very strong leadership initiative which played a vital role in driving the entire organization though the change process. On the other hand the failure of change process in Citigroup is because of the managements failure to integrate the separate values and culture of the two organizations and at the same time respecting them both. Thus it is also important that the core values held by employees are not hampered nor disrespected during the period of change. Lastly researchers have highlighted on the issues of survivors of change by employers. They have suggested that employees must be provided with attractive incentive packages in order to ensure minimizing the spill over effects on employees who are retained in the organization. Moreover, empowering employees thorough the change process, creating a new vision for employees, training them on the newly acquired roles and responsibilities and providing them with growth opportunities could be some of the ways of managing the issues of survivors of downsizing in organizations. Reference Appelbaum, S. H. Abstract. 1999. Downsizing: an examination of some successes and more failures. Management Decision, Vol. 37 Iss: 5, pp.424 – 437. October 21, 2011. < http://www.emeraldinsight.com/journals.htm?articleid=865079&show=abstract>. Appelbaum, S. H., Delage, C., Labib, N. and Gault, G. Solutions to the survivor syndrome: employee empowerment. 1997. The survivor syndrome: aftermath of downsizing. 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