Chapter 10: CHNAGE in organizations
target elements of change chart
"which levers can we pull that will produce the change we want?" The four target elements (or "levers"), that managers may use to diagnose problems and effect solutions are: 1. People knowledge, ability, attitudes, motivation, behavior 2. Organizational arrangements-policies, procedures, roles, structure, rewards, physical setting 3. Methods-processes, workflow, job design, technology 4. Social factors-organizational culture, group processes, interpersonal interactions, communication, leadership Two important notes: Any change made in each and every . target element will ripple across the entire organization. • Consequently, all organizational change ultimately affects the people in it and vice versa.
Three forms of change
1. adaptive 2. innovative 3. radically innovative
5. Loss of Status or Job Security
Administrative and technological changes that threaten to alter power bases or eliminate jobs—as often happens during corporate restructurings that threaten middle-management jobs—generally trigger strong resistance.
Can an innovative go too far?
Are all innovations good innovations, or is it possible for innovation to cross a line? This is a question that businesses will continue to confront as technology evolves and allows us to do things that were once not possible. This question arose recently when two runners shattered existing marathon records. Nike Example: In fall of 2018, Eliud Kipchoge became the first person in history to run a marathon in less than 2 hours. One day later, Brigid Kosgei broke the women's world record to become the fastest woman in history. Both runners were wearing Nike shoes with the company's Vaporfly technology, which featured cutting-edge foam soles and embedded carbon fiber plates. According to Nike, the technology decreased a runners' effort by at least 4%. Track and field regulators grappled with the question of whether to allow this type of technology in official races going forward, and a 2020 World Athletics ruling ultimately limited both the thickness of foam soles and the number of embedded plates allowable in competition road shoes.
4.) offshore suppliers are changing the way we work
As we said in S Chapter 2, globalization and outsourcing are transforming whole industries and changing the way we work. China, India, Mexico, the Philippines, and other countries possess workers and even professionals willing to work twice as hard for half the pay, giving U.S. businesses substantial labor savings. While unquestionably some U.S. jobs have been lost, others have become more productive. Some engineers and salespeople, for example, have been liberated from routine tasks and can spend more time innovating and dealing with customers. Uruguay Example: Did you know that Uruguay is one of the largest software exporters per-capita in the world? It has been called the "Silicon Valley of South America," and cities like Montevideo, Uruguay's capital, are brimming with IT entrepreneurs and tech start-ups. The right combination of talent, infrastructure, and incentives makesthe country an ideal choice for companies looking to outsource IT functions. U.S. businesses also benefit from Uruguay's physical and time-zone proximity. 34 But as some jobs have moved cross-border, dozens in aerospace, chemicals, and other industries are moving to the United States. Page 421 Here are two examples: Company Examples: German automaker Daimler AG (Mercedes) manufactures SUVs for both its global and domestic markets in Tuscaloosa County, Alabama. The company employs almost 4,000 people in the region directly, and more than 20,000 people indirectly. 35 Pietro Fiorentini, an Italian company, makes natural gas metering and pressure regulating equipment in West Virginia.
The forces of change outside the organization (chart)
Demographic characteristics: Age • Education Skill level Gender Immigration Technological advancements: • Manufacturing automation • Information technology Shareholder, customer & broader stakeholder concerns: • Changing customer preferences • Domestic & international competition • Mergers & acquisitions Social & political pressures War: • Values • Leadership
Forces for innovation continued innovation system
Develop necessary human capital Human resource policies Appropriate resources
1. Individual's Predisposition Toward Change
How people react to change depends a lot on how they learned to handle change and ambiguity as children. If a child's parents were patient, flexible, and understanding, and if she learned there were positive outcomes associated with the loss of immediate gratification, then as an adult she may be more likely to associate making changes with love and approval. Conversely, if a child's parents were unreasonable and unyielding, forcing him to do things (piano lessons, for example) that he didn't want to do, then as an adult he may be distrustful of making changes if he associates them with demands for compliance.152
3. Evaluation
How well has the intervention worked? An OD program needs objective evaluation to see if it has done any good. Answers may lie in hard data about absenteeism, turnover, grievances, and profitability, which should be compared with earlier statistics. The change agent can use questionnaires, surveys, interviews. and the like to assess changes in employee attitudes.
Human Resource Policies, Practices, and Procedures
Human resource (HR) policies, practices, and procedures need to be consistent with and reinforce the other six components of an innovation system. Here's what research tells us about the alignment of HR with the overall innovation system: • Alignment is related to valued outcomes. Companies that align HR with the other components of the innovation system are more likely to be innovative and to have higher financial performance.140 - Performance management and incentives are often not designed to foster innovation. A company's performance management and incentive system are often at odds with an innovation culture and climate. Companies need to align their reward and recognition systems with innovation-related goals.141 Bringing people from different disciplines together to both brainstorm and train is a good way for a firm to foster the collaboration needed for innovation. Collaboration creates opportunities for communication and, thus, ideation, between unlikely parties. Collaboration also provides a safe space for risk taking. Economist John Galbraith once said, "In any great organization it is far, far safer to be wrong with the majority than to be right alone."142 Galbraith is telling us that it takes courage and the "right" organizational culture to be innovative.
The forces of change inside the organization (chart)
Human resource concerns: Unmet needs Job dissatisfaction Absenteeism & turnover Productivity Participation/suggestions Managers' behavior: Conflict Leadership Reward systems Structural reorganization
improvement innovations
Improvement innovations enhance or upgrade an existing product, service, or process. These types of innovations are often incremental and are less likely to generate significant amounts of new revenue at one point in time. Stitch Fix has used improvement innovation to remain competitive in recent years. Stitch Fix Example: CEO Katrina Lake is capitalizing on her company's data analytics abilities to increase the personalization of customers' experiences. Now, instead of just receiving a box with five new items each month, customers can opt-in to the company's "Shop Your Looks" sub-service that periodically recommends an additional piece based on the items they already own. The service adds value by continuing to build customers' wardrobes around previous purchases, and the company will benefit from increased impulse purchases. 117
5. Knowledge, not information, is becoming the new competitive Advantage
In 2012, an Intel white paper predicted that "a technological change tsunami is rolling towards us that will wash away many previous perceptions of the world. The way we work will be swept into this new reality, and the knowledge worker is positioned to be the primary agent of change."37 Was this prediction about the importance of knowledge workers accurate? Indeed, McKinsey research shows that knowledge jobs continue to grow in today's economy, and one analyst at Forrester recently suggested that jobs requiring empathy, intuition, and mental agility (all of these are components of the career readiness competencies shown in S Table 1.2) will add approximately 300,000 jobs to the economy by 2030.38 Two key points about knowledge work to consider: • The definition of knowledge work has changed-As information technology does more of the work formerly done by humans, even in high-tech areas (such as sorting data for relevance), many low-level employees previously thought of as knowledge workers are now being recognized as "data workers," who contribute very little added value to the processing of information. Unlike routine information handling, knowledge work is analytic and consists of problem solving and abstract reasoning-exactly the kind of task required of skillful managers, professionals, salespeople, and financial analysts. • Al has not replaced knowledge workers-The rise of knowledge workers is accelerating despite the proliferation of automation. 39 Indeed, the number of people in knowledge-work jobs-nonroutine cognitive occupations-now exceeds 1 billion across the globe. 40 According to one expert, rather than eliminate knowledge work, Al "empowers workers to do things that only humans can do."41 In industries where companies are struggling to compete with foreign manufacturers or bigger rivals that outsourc
4. Fear of Failure
Intimidating changes on the job can cause employees to doubt their capabilities. Self-doubt erodes self-confidence and cripples personal growth and development.
9. Lack of tact or poor timing
Introducing changes in an insensitive manner or at an awkward time can create employee resistance. Employees are more apt to accept changes when managers effectively explain their value, as, for example, in demonstrating their strategic purpose to the organization.
8. Personality Conflicts
Just as a friend can get away with telling us something we would resent hearing from an adversary, the personalities of change agents can breed resistance.
The marketplace is becoming more segmented.
Moving towards more niche products the recent past, managers could think in terms of mass markets-mass communication, mass behavior, and mass values. Now we have "demassification," with customer groups becoming segmented into smaller and more specialized groups responding to more narrowly targeted commercial messages. These marketing messages may even be shaped and personalized by artificial intelligence (AI) technology, allowing bots, for instance, to engage in conversations with individually targeted consumers or small groups of consumers. Some suggest that this kind of customer-centric marketing can help create relationships that result in loyal customers and repeat business.
4. OD Is Affected by Culture
OD effectiveness is affected by cross-cultural considerations. Thus, an OD intervention that worked in one country should not be blindly applied to a similar situation in another country.
2. Management support
OD is more likely to succeed when top managers give the OD program their support and are truly committed to the change process and the desired goals of the change program.? Using employee feedback during the change process is one way to demonstrate this support.
Change agent
Often OD is put into practice by a person known as a change agent, a consultant with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new ways. Other organizations actually employ organizational development specialists who help the company to lead and manage change. Whether they are change agents, OD specialists, or other types of experts, the people who help organizations implement change must work to understand both the interpersonal and situational factors that have shaped the organization and that continue to influence its decision makers.88
Required structure and processes
Organizational structure and internal processes can promote innovation if they foster collaboration, cross-functional communication, and agility. Flagship Pioneering is a good example. Flagship Pioneering Example: Flagship Pioneering (FP) creates new ventures based on cutting-edge, or "pioneering," science. FP uses a formal process to evaluate opportunities for innovation. Exploration begins with the identification of a major social issue followed by a deep dive into the existing literature. Teams formulate hypotheses throughout this stage and work through them with • a group of scientific advisers. The key rule at this stage is that every idea is entertained as long as its execution would create value. Later in the process, scientists run experiments designed to expose holes in the ideas, and employees are taught to respect what the data ultimately show. 132 Organizational processes are an organization's capabilities in management, internal processes, and technology that turn inputs into outcomes. Processes play a critical role in innovation. The design and consulting firm IDEO, for example, employs a unique process when it helps companies to innovate
2.) more competitors are offering targeted products.
Requiring faster speed to market Julie Bashkin, a McKinsey & Company senior external adviser, said many of the big, established companies McKinsey works with are experiencing a "head slap" moment because the start-ups that didn't concern them five years ago are now coming out in a "bee swarm." She added, "[T]hey seem to have come out of nowhere, and they seem to be moving fast with no resources. And they seem not to be weighed down by the baggage of their own success, like our big clients are." 19 Some of these competitors may be in and out of a market in a matter of days or months-like pop-up stores, "here today, gone tomorrow" retailers, such as those selling Halloween products. Consider how Hasbro has responded to this trend.
foster an innovative culture and climate
Results of a recent McKinsey survey suggest that more than 90% of executives are unhappy with their firms' innovation performance. Several factors serve as barriers to innovation, but one of the key obstacles is inertia-defined in LM 1 as an organization's resistance to making the strategic changes necessary to remain competitive in a changing environment. 126 Toys R Us suffered from inertia when it failed to invest in its own e-commerce experience and opted instead to sell its toys on Amazon, which ultimately drove all of its business to other toy vendors on Amazon. 127 Explained one executive, firms are "organized to deliver predictable, reliable results-and that's exactly the problem."128 Organizations that wish to create new products and ideas need an innovative culture and climate.129 Academic research findings reflect the fact that innovation requires experimentation, failure, and risk taking, and these are all aspects of an organization's culture. 130 Many senior leaders understand this link.
2.) innovative CHNAGE
Somewhat threatening "this is something new for this company" Innovative change is the introduction of a practice that is new to the organization. Innovative change is: • Moderately difficult to implement. This form of change is characterized by moderate complexity, cost, and uncertainty. • Somewhat threatening to employees. Because it is less familiar than adaptive change, innovative change is apt to trigger some fear and resistance among employees. Innovative changes may arise when an organization adopts a policy or practice that other organizations have embraced, but that is new for the firm.
2. Revitalizing Organizations
Technology is changing so rapidly that nearly all modern organizations are having to adopt new ways of doing things in order to survive. OD can help by opening communication, fostering innovation, and dealing with stress. Pacific Surf School Example: At Pacific Surf School in San Diego, instructors' ultra-chill attitudes were causing process issues and inefficiencies. The owners felt that surfing class time could be used more efficiently, and they hired the Lean Enterprise Institute (LEI) to teach instructors to apply lean principles a set of five steps aimed at improving workforce efficiency and delivering value quickly) to their work. Within a short time, Pacific Surf School was able to increase class sizes by 50%, and students were spending more time on the water. Instructors also found more time to deal with issues like surfboard repairs.
1.) employee characteristics
The characteristics of a given employee consist of his or her individual differences (discussed in l Chapter 11), actions and inactions, and perceptions of change. 147 The next section discusses a variety of employee characteristics that relate to resistance to change. One of them involves personal adaptability, the career readiness competency that one columnist recently called an "underrated superpower in business."148
2. Change agent characteristics
The characteristics of the change agent-the individual who is a catalyst in helping organizations change-also consist of his or her individual differences, experiences, actions and inactions, and perceptions of change. Such characteristics that might contribute to employee resistance to change include leadership style, personality, tactfulness, sense of timing, awareness of cultural traditions or group relationships, and ability to empathize with the employee's perspective.149
supertrends specifically shaping the future of business:
The marketplace is becoming more segmented. 2. Competitors offering specialized solutions require us to get our products to market faster. 3. Some companies are unable to survive disruptive innovation. 4. Offshore suppliers are changing the way we work. 5. Knowledge, not information, is becoming the new competitive advantage.
3. Radically innovative change
Very threatening. "This is a brand new thing in our industry" Radically innovative change introduces a practice that is new to the industry. Radically innovative change is: • Very difficult to implement. It is the most complex, costly, and uncertain form of change. - Highly threatening to employees. It will be felt as extremely threatening to managers' confidence and employees' job security and may well tear at the fabric of the organization.72
4) social and political pressures
War, values, leadership Social events can create great pressures. Consider the example of soda taxes. Soda Taxes Example: Poor diet choices, such as reliance on sugary sodas, have led to more than 42% of U.S. adults and almost 20% of children from ages 2 to 19 being obese, which in turn has contributed to an epidemic of type 2 diabetes. 64 Several big U.S. cities, including Philadelphia, Boulder, San Francisco, Seattle, and Berkeley, have already passed special taxes on soda, often against well-funded opposition from soda companies. 65 Many are watching the UK with interest. Its two-tier soda tax, unlike others designed to raise revenue or discourage the purchase of soda, encourages soda makers to reduce the sugar content of their products to avoid the tax. It shems to be working, and proponents are now calling for a similar tax on baked goods like cakes and
1. Diagnosis:
What is the problem? To carry out the diagnosis, OD consultants or managers use some combination of questionnaires, surveys, interviews, meetings, records, and direct observation to ascertain people's attitudes and to identify problem areas. A problem is defined as a gap between an outcome or result desired by managers and the actual status of the outcome or result. For example, if your goal was to lose 10 pounds over 6 months and you only lost five, your problem is to lose five more pounds.
Outputs book
What results do we want from the CHNAGE Outputs represent the desired goals of a change, which should be consistent with the organization's strategic plan. Results may occur at the organizational, group, or individual level (or all three) but will be most difficult to effect at the organizational level because changes will mostly likely affect a wide variety of target elements.
2.) intervention
What shall we do about it? "Treatment," or intervention, is the attempt to correct the diagnosed problems. Often this is done using the services of an OD consultant who works in conjunction with management teams. Some OD activities for implementing planned change include: • Communicating survey results to employees to engage them in constructive problem solving. • Observing employee communication patterns and teaching employees skills to improve them. • Helping group members learn to function as a team. • Stimulating better cohesiveness among several work groups. • Improving work technology or organizational design. Coaching is often employed to improve interpersonal relationships and leadership.94
fundamental change
What will you be called on to deal with? . The marketplace is becoming more segmented & moving toward more niche products 2. There are more competitors offering targeted products, requiring faster speed-to-market 3. Some traditional companies may not survive radically innovative change 4. China, India, & other offshore suppliers are changing the way we work 5. Knowledge, not information, is becoming the new competitive advantage
2. Surprise and Fear of the Unknown
When radically different changes are introduced without warning-for example, without any official announcements-the office rumor mill will go into high gear, and affected employees will become fearful of the implications of the changes. It is essential for change leaders to explain the rationale for change, to educate people about the personal implications of change, and to garner commitment to change, 153 Pate 447
product innovation
a change in the appearance or the performance of a product or a service or the creation of a new one. Managers often need to improve a product or service they offer in response to competition or customer feedback. This response often amounts to a technological innovation. Or managers may need to improve the process by which a product is made or a service is offered. This need typically leads to a process improvement. Ex: W. L. Gore Example: You may recognize W. L. Gore & Associates (Gore) as the company that manufactures Gore-Tex-the waterproof fabric used by companies like Patagonia, The North Face, and L.L.Bean. But the company's latest project is a far cry from outdoor apparel. Gore is currently working on developing a revolutionary type of corneal transplant with the same polymer it uses in surgical patches. The material has the right transparency, is flexible, and bends light just like human corneal tissue. The implant is revolutionary because (1) it is inert and therefore won't be rejected by the donor's body, and (2) it integrates itself into the dono. s eyeball. The company hopes to bring the product to market by 2026.114
System
a set of interrelated parts that operate together to achieve a common purpose. The systems approach can be used to diagnose what to change and determine the success of the change effort.
1. Demographic Characteristics
age, education, skill level, gender, immigration occurring among U.S. workers, with the labor force becoming more diverse. Example: The number of young Americans aged 18 to 34 living with their parents) (rather than in a household shared with a spouse or partner) has increased by 1 million in the past two decades.50 How might this affect their spending habits?
resistance to chnage
an emotional/behavioral response to real or imagined threats to an established work routine. Resistance can be as subtle as passive resignation and as overt as deliberate sabotage. As you will learn, change experts believe that resistance does not primarily reside within the individual but instead is a result of the context in which change occurs.145
managers behavior
conflict, leadership, reward systems, structural reorganization Excessive conflict between managers and employees or between a company and its customers is another indicator that change is needed. Perhaps there is a personality conflict, so that an employee transfer may be needed. Or perhaps some interpersonal training is required. Behavior issues often persist until stakeholders-be they customers, associates, or society at large-decide that enough is enough.
1. Unfreezing
create the motivation to change In the unfreezing stage, managers try to instill in employees the motivation to change, encouraging them to let go of attitudes and behaviors that are resistant to innovation. For this "unfreezing" to take place, employees need to become dissatisfied with the old way of doing things. Managers also need to reduce the Barriers to change
Crowdsourcing
defined as the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people typically via the Internet, is being used by more companies to help innovate. Enable Makeathon Example: The Enable Makeathon is a contest sponsored by the Global Disability Innovation Hub. Its purpose is to accelerate the innovation of assistive technology for people with disabilities. The 2018 winning idea was Bleetech —a low-cost. digital encyclopedia for the hearing impaired. The platform allowed users to sign questions and receive answers back in sign language. 133
3.) goals geared to both short and long term results
engage in organizational change for the sake of change. Change efforts should produce positive results. 101 By now you know that organizations are having trouble finding career-ready employees. Although new college graduates rate themselves as being proficient in a range of important career readiness competencies, employers indicate that the majority of new hires do not possess adequate levels of these competencies. 102 Recent research suggests that employers are particularly troubled by new hires' lack of soft skills, such as critical thinking/problem solving, teamwork, leadership, creativity, and adaptability.
seven components of an innovation system
innovation strategy; committed leadership; innovative culture and climate; required structure and processes; necessary human capital; human resource policies, practices, and procedures; and appropriate resources.121
Process innovation
is a change in the way a product or a service is conceived, manufactured, or distributed. McDonald's is experimenting with two process innovations: McDonald's Example: Food delively is expected to be a $76 billion business by 2022. McDonald's wants to ensure customers can • experience their Big Mac meals and fries still piping hot by engaging drones to deliver its meals. The company is partnering with Uber Elevate (Uber's aerial division) and is hoping to gain FAA approval for broad implementation by 2023.115 The chain is also experimenting with robotic fryers that it hopes will free up its workers to focus more on customer service. 116
Force Field Analysis
is a technique to determine which forces could facilitate a proposed change and which forces could act against it. Force-field analysis consists of two steps: 1. Identify thrusters and counterthrusters. The first step is to identify the positive forces (called thrusters) and the negative forces (called counterthrusters). We recommend brainstorming them separately, and then selecting the top three to five in each category. 2. Remove the most important negative forces and increase positive forces. The second step may sound simple, but it can be tricky to identify the forces at work.
Organizational development (OD)
let of techniques for implementing planned change to make people and organizations more effective. Note the inclusion of people in this definition. OD focuses specifically on people in the change process. (Some scholars apply the term "organizational development" to techniques designed to improve organizational effectiveness and the term "change management" to techniques designed to improve people effectiveness-techniques that will help them, in one definition, to adopt "new mindsets, policies,
3) some traditional companies may not survive radical change
professor, argued that when successful companies are confronted with a giant technological leap that transforms their markets, all choices are bad ones. Indeed, he thought, it's very difficult for an existing successful company to take full advantage of a technological breakthrough such as digitalization-what he called disruptive innovation. 21 Some companies that have the resources to survive disruption-to build "the next big thing"— fail to do so-while others are able to pivot successfully.
New-direction innovations
take a totally new or different approach to a product, service, process, or industry. These innovations focus on creating new markets and customers and rely on developing breakthroughs and inventing things that didn't already exist. Orbital Insight is an example. Orbital risight Example: Orbital Insights uses satellite images to watch, capture, and analyze activity on Earth. It can, for Page 440 example, tell you how many cars drove in and out of a particular shopping center parking lot over a busy weekend, or monitor production at a factory. Founder and CEO James Crawford said that his company's analyses provide more accurate data than traditional measures of economic activity. The technology is powered by Al, and Orbital recently launched a consumer version called Orbital Go that allows users to research answers to their own questions about what's happening on the planet. 118
Human resource concerns:
unmet needs, job dissatisfaction, absenteeism and turnover, productivity, participation/suggestions Is there a gap between the employees' needs and desires and the organization's needs and desires? Job dissatisfaction-as expressed through high absenteeism and turnover-can be a major signal of the need for change. Recall from Chapter 9 that as the firm's strategy evolves, a strategic HRM perspective suggests the need to evaluate existing human and social capital and the HR practices being used to generate them. The right HR practices are the ones that generate the social processes and behaviors the organization needs to accomplish
innovation
when a new solution to an existing problem is valuable enough that consumers are willing to pay for it. 112 This definition underscores that innovations must be both novel and useful. We now take a closer look at innovation and the way organizations foster it. You will learn that innovation is more likely to occur when organizations create and support a system of innovation, which includes tailoring the characteristics of the physical environment to support innovation.
B corporation, or benefit corporation,
which the company is legally required to adhere to socially beneficial practices, such as helping consumers, employees, or the environment. Among the leading B Corps in the United States are Patagonia, Eileen Fisher, Allbirds, Bombas, Ethique, and Uncommon Goods
How od works
• Diagnosing the organization's ills. • Prescribing treatment or intervention. - Monitoring or evaluating progress.
Feedback
"How Is the Change Working and What Alterations Need to Be Made?" Not all changes work out well, of course, and organizations need to monitor their success. This is done by comparing the status of an output such as employee or customer satisfaction before the change to the same measurable output sometime after the change has been implemented.
Apply system model of CHNAGE (2 ways)
1. As an aid during the strategic planning process. Once a group of managers identifies the organization's vision and strategic goals, group members can consider the target elements of change when developing action plans to support the accomplishment of goals. 2. As a diagnostic framework to identify the causes of an organizational problem and!propose solutions. We highlight this application by considering a consulting project conducted by one of your authors, Angelo Kinicki. Page 434 Example: Dr. Kinicki was contacted by the CEO of a software company and asked to figure out why the presidents of three divisions were not collaborating with each other-the problem. It seemed two of the presidents had submitted the same proposal for a $4 million project to a potential customer. The software company did not get the work because the customer was appalled at having received two proposals from the same firm. Kinicki decided to interview employees by using a structured set of questions that pertained to each of the target elements of change. The interviews revealed that the lack of collaboration among division presidents was due to the reward system (an organizational arrangement), a competitive culture and poor communications (social factors), and poor workflow (a methods factor). Kinicki's recommendation was to change the reward system, restructure the organization, and redesign the workflow.
What Can OD Be Used For?
1. Improving individual, team, and organizational performance 2. Revitalizing organizations 3. Adapting to mergers
Ten Reasons Employees Resist Change
1. Individual's Predisposition Toward Change 2. Surprise and Fear of the Unknown 3. Climate of Mistrust 4. Fear of Failure 5. Loss of Status or Job Security 6. Peer Pressure 7. Disruption of Cultural Traditions or Group Relationships 8. Personality Conflicts 9. Lack of Tact or Poor Timing 10. Nonreinforcing Reward Systems
Systems approach to change
1. Inputs 2. Target Elements of Change 3. Outputs 4. Feedback Change creates additional change-that's the lesson of systems theory. Promoting someone from one group to another, for instance, may change the employee interactions in both (as from cordial to argumentative, or the reverse). Adopting a team-based structure may require changing the compensation system to pay bonuses based on team rather than individual performance. A systems approach to change presupposes that any change, no matter how small, has a rippling effect throughout an organization.
Innovative system.
A set of interdependent processes, practices, and structures that dictate how a company seeks out problems and solutions, synthesizes ideas into a business concept and product design, and chooses projects for funding is a(n
Inertia
As an organizations resistance to making the strategic changes necessary to remain competitive in a changing environment. Barriers to innovation; key obstacle. Ex: toys r us suffered from inertia when it failed to invest in its own e-commerce experience and opted to sell toys on Amazon instead
3. Change Agent-Employee Relationship
As you might expect, resistance to change is reduced when change agents and employees have a trusting relationship-faith in each other's intentions. Mistrust, on the other hand, encourages secrecy, which begets deeper mistrust, and can doom an otherwise well-conceived change.
3.) shareholder customer in broader stakeholder concerns.
Changing customer preferences, domestic and international competition, mergers and acquisitions A firm's shareholders, customers, and broader stakeholders can all exert significant pressure for change. As you learned in Learning Module 1, in recent years, much of this pressure has centered on shifting perspectives about the purpose of a corporation and whether a firm's obligations go beyond shareholder wealth creation to include shared value and sustainable development. 55 • Shareholders have begun to be more active in pressing for organizational change. Some shareholders may form a B corporation, or benefit corporation, in which the company is legally required to adhere to socially beneficial practices, such as helping consumers, employees, or the environment. Among the leading B Corps in the United States are Patagonia, Eileen Fisher, Allbirds, Bombas, Ethique, and Uncommon Goods 56 Shareholders in the oil and gas industry have recently called for their firms to do more to tackle climate change:- Broader stakeholders' needs are becoming increasingly important for many corporations. The model of creating shared value (CSV) we presented in Learning Module 1 demonstrates how firms can simultaneously tackle global social issues and maximize shareholder wealth. Recent research suggests consumers may form deeper connections with brands that they perceive as creating shared value.
1. Improving individual, team, and organizational performance
Conflict is inherent in most organizations. Sometimes an OD expert, perhaps in the guise of an executive coach, can help advise on how to improve relationships or other issues within the organization. Start-Up Example: Successful tech entrepreneur Jeff Wald said in a recent interview, "I've counted Fred Wilson as an investor, raised over $60 million in funding and sold my start-up WorkMarket to ADP... But before all that, earlier on in my career, I had a start-up implode, leaving me bankrupt, depressed, and on the verge of moving back in with my parents."89 Wald's first start-up, Spinback, was eventually acquired by Salesforce, but his memories of the company consist mostly of the constant conflict between two of his co-founders that eventually turned into a nasty legal battle. Wald later also experienced conflict with his WorkMarket co-founder and revealed that these types of interpersonal issues are incredibly common in the start-up community. Wald's board eventually forced him to hire a coach-an idea he first scoffed at, but that he now credits with helping him to move past his business failures and grow into a better leader and co-worker.
6. Peer Pressure
Even people who are not themselves directly affected by impending changes may actively resist in order to protect the interests of their friends and co-workers.
4.) feedback
How can the diagnosis and intervention be further refined? If evaluation shows that the diagnosis was wrong or the intervention was not effective, the OD consultant or managers need to return to the beginning to rethink these two steps.
2.) changing
Learning new ways of doing things In the changing stage, employees need to be given the tools for change: new information, new perspectives, new models of behavior. Managers can help here by providing benchmarking results, role models, mentors, experts, and training. Change is more likely to be accepted if employees possess the career readiness competencies of proactive learning orientation and openness to change.
Approaches to innovation
Product - improvement and new directions Process- improvement and new directions
Innovation system
The supporting focus for innovation Innovation won't happen as a matter of course. It takes dedicated effort and resources, and the process must be nurtured and supported. Organizations do this best by developing an innovation system. An innovation system is a set of mutually reinforcing structures, processes, and practices that drive an organization's choices around innovation and its ability to innovate successfully,
Develop necessary human capital
We defined human capital in Chapter 9 as the productive potential of an individual's knowledge and actions. Research has identified several employee characteristics that can help organizations innovate. For example, innovation has been positively associated with the individual characteristics associated with creativity, creative-thinking skills, intrinsic motivation, the quality of the relationship between managers and employees, and international work experience. 138 Hackerone Example. Companies like AT&T, Hyatt, Goldman Sachs, and Capital One hire HackerOne when they want to be sure their users' information is protected according to the highest security standards. This company doesn't build network security systems. Rather, HackerOne hires skilled hackers to test the vulnerability of its clients' existing systems. Organizations reward these benevolent hired hackers for finding security weaknesses before malicious hackers discover them.
7. Disruption of Cultural Traditions or Group Relationships
Whenever individuals are transferred, promoted, or reassigned, it can disrupt existing cultural and group relationships.
Methods
processes, workflow, job design, technology
Two types of change
reactive and proactive
Outputs chart
"What do we want from the change?" Change may be designed to occur at the level of.... The organization The group The individual ....or all three
Input book
"Why change?" A systems approach always begins with the question of why change is needed at all-what the problem is that needs to be solved. (Example: "Why change? Because our designers are giving us terrible products that we can't sell.") Whatever the answer, the systems approach must make sure the desired changes align with the organization's mission statement, vision statement, and strategic plan-subjects we discussed in * Chapter 5.81 A second question is "How willing and able are management and employees to make the necessary change?" Readiness for Page 431 change is defined as the beliefs, attitudes, and intentions of the organization's staff regarding the extent of the changes needed and how willing and able they are to implement them. 82 Readiness has four components: 1. How strongly the company needs the proposed change. 2. How much the top managers support the change. 3. How capable employees are of handling the change. 4. How pessimistic or optimistic employees are about the consequences of the result.
Inputs chart
"Why should we change, & how willing & able are we to change?" Inputs are the organization s.... • Mission statement • Vision statement • Strategic plan • Analysis of organization's readiness for change
Steps for innovation system
-create unnovation strategy -commitment from senior leaders -foster an innovative culture and climate -required structure and processes
cause of resistance to chnage
1. Employee characteristics. 2. Change agent characteristics. 3. The change agent-employee relationship.
Effectiveness of OD
1. Multiple interventions 2. Management support 3. Goals geared to both short and long term results 4. OD is affected by culture
10. Nonreinforcing Reward Systems
Employees are likely to resist when they can't see any positive rewards from proposed changes, as, for example, when one is asked to work longer hours without additional compensation.
1.) adaptive change
Least threatening "we've seen stuff like this before" Adaptive change is the reintroduction of a familiar practice-the implementation of a form of change that has already been experienced within the same organization. Of the three forms of change discussed in this section, adaptive change is the: • Easiest to implement successfully. This form of change is lowest in complexity, cost, and uncertainty. • Least threatening to employees. Because it is familiar, adaptive change is likely to create the least resistance. Adaptive change is fairly common and often arises due to predictable, seasonal flustuations in demand.
Proactive change
Managing anticipated problems and opportunities change, or planned change, involves making carefully thought-out changes in anticipation of possible or expected problems or opportunities.' 48 The anticipation of increased automation has spurred proactive changes in the aerospace manufacturing industry. Consider the example of Airbus. Airbus Example: The process for manufacturing passenger jets has changed very little over time. Much of the work is still done by hand, and rigorous safety standards and government certification requirements mean that precision, rather than efficiency, is paramount. But Airbus recently built a new facility for its A320 model that will help the company keep up with increasing demand while simultaneously readying itself for the future. Robots and remote-control-operated assembly platforms stand in the place of fixed cranes and assembly lines, and 20% fewer workers are needed to complete the job. Further, the open layout of the facility ensures maximum flexibility for any future changes to the manufacturing process. Experts believe that increases in automation across the industry will continue to unfold very slowly, and Airbus plans to be prepared. Said CEO Guillaume Faury, "This is one of the building blocks of our digital trajectory and robotization of our production."49
Create an innovative strategy
Many companies fail in their improvement efforts because they lack an innovation strategy. 122 An innovation strategy, which amounts to a plan for being more innovative, requires a company to integrate its innovation activities into its business strategies. This integration encourages management to invest resources in innovation and generates employee commitment to innovation across the organization. Consider the example of how Reckitt Benckiser innovates using a well-defined strategy. Reckitt Benckiser Example: Reckitt Benckiser (RB) is the British company that owns brands such as Lysol, Woolite, and Clearasil. Its innovation strategy is characterized by small, incremental improvements. Specifically, rather than pursue massive innovations, RB focuses on taking its most successful products and tweaking them in modest ways that better solve consumers' problems. For example, the company's Finish dish detergent brand has gone from Finish 2-in-1, to Finish 3-in-1, to Finish All-in-1. With each Iteration, RB made a small but valued improvement, and the company's sales and profits from the product have continued to increase.
3.) adapting to mergers
Mergers and acquisitions (M&A) are associated with increased anxiety, stress, absenteeism, turnover, and decreased productivity." They're also quite common-in the United States alone, more than 12,000 M&A transactions occurred in 20199 Imagine how employees at Sprint and T-Mobile must have felt as they waited two years for their firms to merge. It's likely employees at both firms encountered one or more of the multiple articles predicting "massive job cuts" as a result of the transaction.93 OD experts are often called upon in such situations to help integrate two firms with varying cultures, products, and procedures.
1. Multiple interventions
OD success stories tend to use multiple interventions. Goal setting, feedback, recognition and rewards, training, participation, and challenging job design have had good results in improving performance and satisfaction. 98
Commitment from senior leaders
One of the biggest lessons we have learned from our consulting experience is that the achievement of strategic goals is unlikely without real commitment from senior leaders. 124
appropriate resources
Organizations need to put their money where their mouths are. If managers want innovation, they must dedicate resources to its development. Resources can include people, dollars, time, energy, knowledge, and focus. Amazon Example: Amazon recently pledged that it would invest $700 million to upskill its workforce by 2025. Machine Learning University is one of a list of possible initiatives that employees can participate in. It was designed to encourage innovation by giving employees the skills necessary to work with and create Al.
Readiness for change
Readiness for change is defined as the beliefs, attitudes, and intentions of the organization's staff regarding the extent of the changes needed and how willing and able they are to implement them. 82 Readiness has four components: 1. How strongly the company needs the proposed change. 2. How much the top managers support the change. 3. How capable employees are of handling the change. 4. How pessimistic or optimistic employees are about the consequences of the result.
3. Climate of Mistrust
Trust involves reciprocal faith in others' intentions and behavior. Mistrust encourages secrecy, which causes deeper mistrust, putting even well-conceived changes at risk of failure. Managers who trust their employees make the change process an open, honest, and participative affair. All told, employees who feel fairly treated by managers during change are less likely to resist.
problem
defined as a gap between an outcome or result desired by managers and the actual status of the outcome or result.
People
knowledge, ability, attitudes, motivation, behavior
Reactive change
making changes in response to problems or opportunities as they arise
3.) refreezing
making the new ways normal In the refreezing stage, employees need to be helped to integrate the changed attitudes and behavior into their normal ways of doing things. Managers can assist by encouraging employees to exhibit the new change and then, through additional coaching and modeling, by reinforcing the employees in the desired change, as we'll discuss in
2.) technological advancements
manufacturing automation, information technology Technology is not just computer technology; it is any machine or process that enables an organization to gain a competitive advantage in changing materials used to produce a finished product. Ginni Rometty, former CEO of IBM, recently said, "We face an imminent and profound transformation of the workforce over the next five to 10 years as analytics and artificial intelligence change job roles at companies in all industries," adding that she expects AI will change "100 percent of jobs" in the coming decade.
Social factors
organizational culture, group processes, interpersonal interactions, communication, leadership
Organizational arrangements-
policies, procedures, roles, structure, rewards, physical setting
Lewins change model
unfreezing, changing, refreezing
