UNIT 3

Overview of Change Management

3.1 Meaning and implications
Change may be regarded as one of the few constants of recorded history. Often society’s
‘winners’, both historically and contemporary, can be characterized by their common ability to
effectively manage and exploit change situations. Individuals, societies, nations and enterprises
who have at some time been at the forefront of commercial, and/or technological expansion,
have achieved domination, or at least competitive advantage, by being innovative in thought
and/or action. They have been both enterprising and entrepreneurial.
Change management is never a choice between technological, organizational or people-oriented
solutions, but involves combinations for best fit; integrated strategies designed to produce
results. In this sense, the management of change adopts the contingency approach to
organizations: it all depends. However, recognition of what it depends on is the subject of this
book.
Successful exploitation of a change situation requires:
• Knowledge of the circumstances surrounding a situation;
• Understanding of the interactions; and
• The potential impact of associated variables.
Change is any alteration in the current work environment. The shift may be in the way things are
perceived or in how they are organized, processed, created, or maintained. Every individual and
organization experiences change. Sometimes change results from external events beyond the
control of a person or an organization. Other times the change results from planning. When a
company lowers its prices to increase market penetration, for example, the change in price is
purposeful.
The example about lowering prices indicates how complex a change can be. Lowering prices
may seem to be a simple matter, but it involves more than just printing a new price list. A
company lowers prices to increase sales. If sales increase, the company may need additional staff
or equipment (phone lines or computers) to handle the volume of orders. It might need more
production capacity to fill the orders, a more efficient technology to meet the needs, and so on.
Furthermore, the information system must communicate the new price throughout the
organization, and employees must receive briefings so they will know how to handle the
increase. Even an apparently mechanical change calls for adjustments throughout an
organization.

The Importance of Change

Change will not disappear nor dissipate. Technology, civilizations and creative thought will
maintain their ever-accelerating drive onwards. It could be argued that a state of continuous
change has almost become routine. Managers, and the enterprises they serve, be they public or
private, service or manufacturing, will continue to be judged upon their ability to effectively and
efficiently manage change. Unfortunately, for the managers of the early twenty-first century their
ability to handle complex change situations will be judged over ever decreasing time scales.
3.2 Forces for Organizational Change
Change originates in either the external or internal environments of the organization.
External Sources
Change may come from the political, social, technological, or economic environment.
Externally motivated change may involve government action, technology, competition, social
values, and economic variables. Developments in the external environment require managers to
make adjustments. New government regulations, for example, can require that a manufacturer
install pollution-control devices or that a restaurant raise the wages of its workers to meet a new
minimum. The actions of competitors certainly put demands on a business. When one U.S.
airline launches new low fares, other domestic airlines in the same markets feel compelled to
follow suit. Companies successful at coping with change take advantage of new technologies
earlier rather than later.
a. Political factors
The government in power, and the policies that the government pursues, can have a major
impact on organizations. A government decision, for example, to have low inflation as a chief
goal results in interest rates being set low, which in turn means that people are happy to borrow
more and spend more in the shops. They are also prepared to spend a lot more on housing, which
means an increase in business for estate agents, banks and building societies.
b. Economic factors
Some developments in the economy are dictated by government policies, notably measures
announced in the annual budget, such as a cut in corporation tax for small businesses, or an
increase in employers’ national insurance contributions. Other economic developments have
nothing to do with the government.

c. Social factors
Social factors may be long-term or fleeting. Among long-term factors are changes in the age
profile and ethnic composition of the population. As people live longer, the percentage of people
over the age of 50 is increasing considerably, and more and more businesses are now considering
how to address their needs. This particularly applies to people who have retired early, have a
good pension and lots of leisure time.
d. Technological factors
A great many changes that take place at work are driven by developments in technology.
You might have mentioned:
Various forms of transport, such as cars, aero planes and high-speed trains;
Space technology
Modern telecommunications, including permanent and mobile phones, and satellite links;
The Internet;
Automation and industrial robots;
Modern fabrics; or a hundred other inventions.
It is clear that technology is changing all our lives and promises to alter them even more
in the future.
Internal Sources
Internal sources of change include managerial policies or styles; systems and procedures;
technology; and employee attitudes. When managers change the standards by which they
measure job performance or when a new manager takes over a department or company,
employees must adapt their behavior to fi t the new situation. New conditions in the external
environment clearly can bring about changes within the organization; internal change can also
cause external change. Whether internal change affects the external environment depends on the
extent of the internal change and on whether the change affects a part of the organization that has
impact on the environment. New internal policies requiring employees to check their e-mail at
least once each day will unlikely have any impact on the external environment.
Types of Change
Change can also be understood on the basis of its focus, which can be strategic, structural,
process oriented, or people centered. Such changes can have dramatic impact on the
organizational culture.
a. Strategic Change
Sometimes managers find it necessary to change the strategy or the mission of the organization.
Organizations that decide to focus on a single mission often need to divest themselves of
unrelated businesses, as Motorola did when it sold off its semiconductor group. Managers who
want to expand operations to new areas may move to acquire another company, as eBay did in
its purchase of PayPal. Achieving strategic changes can require, in turn, a change in
organizational culture or other elements. When Motorola adopted quality as a key to its
competitive strategy, it had to adopt quality work as a corporate value.
b. Structural Change
Managers often find it necessary to change the structure of their organizations, as has been the
case in recent years, with the prevalence of team building and downsizing. These changes have
usually been made to make operations run more smoothly, improve overall coordination and
control, or empower individuals to make their own decisions. Because structural change has a
major impact on an organization’s social system and climate, it greatly affects organizational
culture.
c. Process-Oriented Change
Many changes aim at processes, such as using new technology, shifting from human to
mechanical labor in plants that employ robotics for manufacturing, or adopting new procedures.
If process-oriented change takes the form of reengineering, it may have dramatic effects on the
organization and its culture. Reengineering is the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in critical, traditional measures of
performance, such as cost, quality, service, and speed. Reengineering first determines what
process is necessary, then how to do it.
d. People-Centered Change
Many changes are directed at the attitudes, behaviors, skills, or performance of the company’s
employees. These changes can be achieved through retraining, replacing current employees, or
increasing the performance expectations of new employees. The task of changing attitudes and
behaviors falls into the domain of behavioral training. As an aspect of organizational
development, behavioral training will be discussed later in this chapter
Rates of Change
Change can also be viewed based on its pace—that is, either evolutionary or revolutionary.
a. Evolutionary change: focuses on the incremental steps taken to bring about progress
and change. Organizations like Johnson & Johnson show a strategy for incremental
change. Visionary companies have a philosophical commitment to constant change, but
at a measured pace. Kaizen, total quality management, quality circles, and benchmarking
are examples. Each technique has at its core a belief in continuous, gradual change.
b. Revolutionary change focuses on bold, discontinuous advances. To the observer, these
“leaps” bring about dramatic transformations in organizational strategies and structure.
Organizations and managers involved in revolutionary change push the envelope and
practice outside-of-the-box thinking.
Management and Change
Management and change are synonymous; it is impossible to undertake a journey, for in many
respects that is what change is, without first addressing the purpose of the trip, the route you
wish to travel and with whom. Managing change is about handling the complexities of travel. It
is about evaluating, planning and implementing operational, tactical and strategic ‘journeys’.
Each level of management faces change in a different way. Top-level managers tend not to
address minute details; instead, they focus on the broad outlines of the desired change. Top-level
managers are more likely to be involved in changes of strategy, structure, and process. Because
such changes have a major impact on culture and on the way an organization does business, the
effects of change decisions made by top managers’ ripple throughout an organization. Top
managers must be sensitive to the external environment; that is, they need to stay attuned to
changes in that environment. By scanning the external environment, they may be able to see
when internal changes are needed to fi t new circumstances and meet new opportunities.
The Impact of Change
What makes an organization want to change? There are a number of specific, even obvious
factors, which will necessitate movement from the status quo. The most obvious of these relate
to significant changes in the external environment. For example, global warming drives
regulatory, social and commercial forces to converge upon those perceived to be the key
producers of greenhouse gases.
Consider changes that have impacted upon you, your family or your organization or networks
over the last year. How often were these changes a reaction to events outside your control? For
example, can you cite instances linked to your company’s, or your, response to:
• Changes in technology used;
• Changes in customer expectations or tastes;
• Changes as a result of competition;
• Changes as a result of government legislation;
• Changes as a result of alterations in the economy, at home or abroad;
• Changes in communications media;
• Changes in societies’ value systems;
• Changes in the supply chain;
• Changes in the distribution chain?
3.3 Process of organizational change
Change affects your most important asset, your people. Losing employees is costly due to the
associated recruitment costs and the time involved getting new employees up to speed. Each time
an employee walks out the door, essential intimate knowledge of your business leaves with them.

WHAT IS EFFECTIVE ORGANIZATIONAL CHANGE MANAGEMENT?

A change management plan can support a smooth transition and ensure your employees are
guided through the change journey. The harsh fact is that approximately 70 percent of change
initiatives fail due to negative employee attitudes and unproductive management behavior. Using
the services of a professional change management consultant could ensure you are in the winning
30 percent.
The six key steps to effective organizational change management are;
1. Clearly define the change and align it to business goals.
It might seem obvious but many organizations miss this first vital step. It’s one thing to articulate
the change required and entirely another to conduct a critical review against organizational
objectives and performance goals to ensure the change will carry your business in the right
direction strategically, financially, and ethically. This step can also assist you to determine the
value of the change, which will quantify the effort and inputs you should invest.
2. Determine impacts and those affected.
Once you know exactly what you wish to achieve and why, you should then determine the
impacts of the change at various organizational levels. Review the effect on each business unit
and how it cascades through the organizational structure to the individual. This information will
start to form the blueprint for where training and support is needed the most to mitigate the
impacts.
3. Develop a communication strategy.
Although all employees should be taken on the change journey, the first two steps will have
highlighted those employees you absolutely must communicate the change to. Determine the
most effective means of communication for the group or individual that will bring them on board.
The communication strategy should include a timeline for how the change will be incrementally
communicated, key messages, and the communication channels and mediums you plan to use.
4. Provide effective training.
With the change message out in the open, it’s important that your people know they will receive
training, structured or informal, to teach the skills and knowledge required to operate efficiently
as the change is rolled out. Training could include a suite of micro-learning online modules, or a
blended learning approach incorporating face-to-face training sessions or on-the-job coaching
and mentoring.
5. Implement a support structure.
Providing a support structure is essential to assist employees to emotionally and practically
adjust to the change and to build proficiency of behaviors and technical skills needed to achieve
desired business results. Some change can result in redundancies or restructures, so you could
consider providing support such as counseling services to help people navigate the situation. To
help employees adjust to changes to how a role is performed, a mentorship or an open-door
policy with management to ask questions as they arise could be set up.
6. Measure the change process.
Throughout the change management process, a structure should be put in place to measure the
business impact of the changes and ensure that continued reinforcement opportunities exist to
build proficiencies. You should also evaluate your change management plan to determine its
effectiveness and document any lessons learned.
3.4 Resistance to Change
An organization can create an operating environment, both internally and throughout its supply
chain, which encourages an opportunistic stance to be adopted. However, no matter how
welcoming an organization is to change, it will still face a degree of employee, supplier,
distributor, and stakeholder and consumer resistance to change. It may manage to reduce the
frequency and potency of such resistance but it will never eradicate the fear of the unknown.
Why do people resist change? Quite simply because they fear the unknown and are comforted by
the familiar. Also very often successes and power bases are routed in the past and present, not
necessarily in the future. Why risk losing position, control and reputation?
Resistance can occur at three levels:
1. Organizational
This would include resistance which is being triggered by power and conflict (perceived
or real), changes to function, structure and culture.
a. Power and conflict Resistance to change due to power and conflict occurs when a
change may benefit one department within the organization while harming another
department within the organization. One of the outcomes of power and conflict
within organizations during change process is organizational politics which we will
examine in some depth in the next chapter.
b. Function Resistance to change due to differences in the way separate departments
see problems and issues. Thus making it harder to come to an agreement regarding
change.
c. Organizational structure Resistance to change caused by recommendations because
employees working ‘within a mechanistic structure are expected to act in certain
ways and do not develop the initiative to adjust their behavior to changing conditions.
d. Organizational culture Resistance due to organizational culture occurs when
organizational change disrupts the values and norms within the organizational
culture.
2. Group which would include resistance due to group norms, group cohesiveness and
groupthink.
a. Group norms Resistance due to group norms occurs when change alters interactions
between group members due to changes in task and role relationships within a group.
b. Group cohesiveness Resistance where the group members want to keep things the same
 within the group.
c. A feeling of invulnerability creates excessive optimism and encourages risk taking.
Discounting warnings that might challenge assumptions.
3. Individual individual-level resistance includes resistance to change due to uncertainty
and insecurity, selective perception and retention, and habit
When facing an uncertain personal change it is easy to forget mankind’s successes in shaping the
world. Unfortunately, organizations, individuals and groups often fear change for many rational
reasons:
It can result in organization redesign
Tampering with the design will modify, at least in the short term, existing power bases, reporting
structures and communications networks. In extreme cases issues regarding security of
employment will be raised and undoubtedly questions concerning redeployment and training
emerge.
It creates new technological challenges
New techniques, procedures and skills acquisition can bring out, no matter how briefly, the
‘Luddite’ that lurks just beneath our outer veneer of confidence. One should never underestimate
the power of technological change to cause disruption. Often the technology is well understood
by those promoting its introduction and they cannot understand the concerns of those who must
manage end use of it!
It confronts apathy
A great many employees grow apathetic in their approach to working life. Careers falter:
positions of apparent security and ease are achieved. Competencies are developed, and
employees become apathetic to their working environment. They do what they do well, or have
convinced their peers and manager that they do, and deep down they would prefer the status quo.
Change may have the audacity to wake them up from their slumbers!
It permeates throughout the supply chain
Change for change’s sake is both foolish and potentially expensive. The effective and efficient
management of the supply chain ensures that the final consumer is delivered a product or service
that meets their expectations. Stakeholders within the supply chain, including the final consumer,
tend to be skeptical of any change that results in the ‘equilibrium’ being disturbed. Management
must be careful to ensure that the effects of a change, although beneficial to a particular member,
do not cascade throughout the chain causing negative results further downstream.
It challenges old ideas
By their very nature organizations have traditionally encouraged stability, continuity and the
pursuit of security. Continuity of procedures, services, products and staff leads to a stable
operating environment. Remember that the basis of today’s success lies in the past and this
encourages management to reinforce the lessons of the past. For example, senior management do
not retire. They take up non-executive positions on the board; non-executive directors are
recruited for their past knowledge of the business environment; organizational design attempts to
reflect the perception of historical success; and, recruitment policies endeavor to reinforce old
beliefs by ensuring the appointment of likeminded personnel. Success in the future will depend
upon a management understanding the lessons of the past, but if too much emphasis is placed
upon the past then these lessons will simply reinforce old ideas.
It encourages debate
Debate is healthy when well-managed, but it does tend to identify those lacking in understanding
or knowledge. Once again the assumptions of the past and those who promote them will be
challenged.
3.5 Managing Resistance to Change
There are many other terms that have been used to denote those responsible for the effective
implementation of change. For example, change agents, problem owners, facilitators, project
managers. The focal point of a change need not be an individual; a work group could quite easily
be designated as a special task force responsible for managing the change. However, generally
within, or above, any work group there is still someone who ultimately is accountable and
responsible. What are the essential attributes of a change agent/master and are there any
guidelines for them?
Eight ways to reduce resistance to change:
1. Any change process needs to take into account the needs, attitudes, and beliefs of the
individual(s) involved as well as the forces of the organization. The individual must see
some personal benefit to be gained from the change before he or she will be willing to
participate in the change process.
2. The greater the prestige of the supervisor, the greater the influence he or she can exert
for change. However, the official leader of a group and the actual (although informal)
 leader need not be the same individual. Frequently, an unofficial leader with high prestige
and influence within the work group can be highly influential in the change process.
3. Strong pressure for change in behavior can be established by providing specific
information desired by the group about itself and its behavior. The more central, relevant
and meaningful the information, the greater the possibility for change. For example, if
properly used, data obtained through a survey questionnaire may be much more
meaningful to a particular work group than data about attitudes in general.
4. Strong pressures for change can be established by creating shared perceptions by the
group members of the needs for change, thus making the pressure come from within the
unit. In particular, the participation in analysis and interpretation helps to reduce or by-
pass resistance which comes from proceeding either too rapidly or too slowly.
5. The amount of opposition to change is reduced when those people who are to be changed
and those who are to exert influence for a change have a strong sense of belonging to the
same group. Change, which comes from within, is much less threatening and creates less
opposition than change that is, proposed from the outside.
6. Group cohesiveness or ‘togetherness’, may operate either to increase or reduce
resistance to change, depending on the issue and the way in which the group sees the
change as being valuable or harmful.
7. A group that has a continuing psychological meaning to an individual has more
influence than a group with only temporary membership. Therefore, a change process
that involve bringing individuals together, off the job, in temporary groups, has less force
for lasting change than those change processes that involve the individual in the
immediate job situation.
8. All relevant people in the group must share information relating to the need for change,
plans for change, and consequences of change. A change process ordinarily requires the
specific and deliberate opening of communication channels. Blocking these channels
usually leads to distrust and hostility. Change processes which provide specific
knowledge on the progress to date, and specify the criteria against which improvement is
to be measured are more likely to be successful.
The core tasks facing a change agent, or project manager are to reduce the uncertainty associated
with the change situation and then encourage positive action.
They suggest a number of steps to assist
1 Identify and manage stakeholders Gains visible commitment.
2 Work on objectives Clear, concise and understandable.
3 Set a full agenda Take a holistic view and highlight potential difficulties.
4 Build appropriate control systems Communication is a two-way process, feedback is required.
5 Plan the process of change
Pay attention to:
• establishing roles – clarity of purpose
• building a team – do not leave it to chance
• Nurturing coalitions of support – fight apathy and resistance
• communicating relentlessly – manage the process
• recognizing power – make the best use of supporting power bases
• handing over – ensure that the change is maintained
3.6 Planned Change
A company can deal with change by trying to anticipate the need for it and plan for it. A
company and its managers can adopt a philosophy of planned change, which involves trying to
anticipate what changes will occur in both the external and internal environments and then
developing a response that will maximize the organization’s success. When managers plan for
change—whether employing an evolutionary approach or a revolutionary style—they more
likely can predict the results and control events. The alternative—management by reaction— can
invite disaster.
The change agent implements planned change. The change agent could be;
The manager who conceived of the need to change;
Another manager within the organization who is delegated the task;
An outsider, a consultant brought in specifically to help an organization adopt a new
way of doing things;
Someone other than a consultant, hired from the outside to change the organization.
An outside change agent is considered to be more objective, less influenced by existing politics
and people, and committed to the goals agreed to upon hiring. Inside change agents often cannot
see the correct actions to take or are reluctant initiators.
The next section will examine planned change by looking at the kinds of changes that managers
can expect throughout the life of the organization, the steps involved in planned change, and the
attitudes that underlie an effective approach to change.
Need for Change: Diagnosing and Predicting It
Managers can diagnose and predict the need for organizational change by studying the typical
phases of change. Recall the organizational life cycle of birth, youth, midlife, and maturity and
some of the crises commonly experienced by organizations at each stage. Management
consultant Larry Greiner has graphed these predictable phases of organizational evolution.
Anticipating these phases can help managers prepare for change rather than simply reacting to it.
Greiner has identified five phases of growth.
Phase 1: Creativity
This birth stage of the organization is marked by concerns for product and market, by an
informal social system, and by an entrepreneurial style of management. Soon the need for
capital, new products, new markets, and new employees forces the organization to change. A
crisis of leadership occurs when management becomes incapable of reacting to the growing
organization’s need for structure. The organization enters a new phase.
Phase 2: Direction
The second phase is characterized by the implementation of rules, regulations, and procedures.
A functional organizational structure is introduced; an accounting system is created; incentives,
budgets, and work standards are established; and formal, impersonal communications begin.
Eventually, lower-level managers demand greater decision-making authority, which brings on
another crisis and launches the organization into the next phase.
Phase 3: Delegation
Decentralization is the key to the third phase, in which top management creates profit centers
under territorial managers who are given leeway to act and held accountable for the results.
Communication from the top becomes less frequent. Eventually, top managers sense that they
have lost control of the organization. This realization brings on another crisis and another major
change.
Phase 4: Coordination
Responding to their sense of loss of control, managers attempt to seize control by emphasizing
coordination. Decentralized work units are merged, formal organization wide planning is
introduced, capital expenditures are restricted, and staff personnel begin to wield greater power.
The price of this phase: Red tape and interpersonal distance between line and staff and between
headquarters and the field develop. A new crisis takes place.
Phase 5: Collaboration
The final phase introduces a new people-oriented and flexible system, with managers exhibiting
more spontaneity. Characteristics of this phase include problem solving by teams, reductions in
headquarters staff, simplification of formal systems, and encouragement of an attitude of risk
taking and innovation. The heart of Greiner’s model shows a key point about change. The
solution to one set of problems eventually creates another set of problems that require solving. In
other words, the need for change is constant.

3.7 Strategies for Planned Organizational Change

Once committed to planned change, a manager or an organization must create a step-by-step
approach to achieve it. Figure 9.18 presents the steps and strategies that a manager can use to
implement change. As an example, the following paragraphs will show how Wendy, a manager,
can use this process to change her company’s policy about smoking.
1. Recognizing the Need for Change
The first step in the change-implementation process is to identify the need for a change.
Recognition can come as a result of factors inside or outside an organization. In Wendy’s case,
suppose the company’s health insurance carrier notifies her that it will conduct a rate-structure
review in light of research about the effects of smoking. Meanwhile, an internal force, a group of
employees, requests a policy statement about smoking in the workplace. In this case, external
and internal forces contribute to the recognition of the need for change.
2. Developing Goals
As in any planning process, a key step is the identification of goals. Managers must ask what
they wish to achieve. In Wendy’s case, the manager’s goals become (1) to develop a smoking
policy for the organization that will be widely accepted, and (2) to prevent insurance costs from
rising.
3. Selecting a Change
Agent with goals in mind, the next issue is to determine who will manage the change. Wendy
asks the leader of the group concerned about smoking to assist her as a change agent.
4. Diagnosing the Problem
In the next step, the manager gathers data about the problem and analyzes the data to identify
the key issues. The two change agents in the current example find that other companies control
health insurance costs by instituting smoking restrictions. They also learn that whether
employees support or oppose smoking in the workplace, smoking is an emotional issue.
5. Selecting the Intervention
Method In the fifth step, the manager must decide how to achieve the change. Because smoking
is such an emotionally charged issue, the change agents in the current example decide not to
create the needed policy themselves. Instead, they form a task force that includes representatives
from all departments. They believe that large-scale participation will help ensure the facilitation
of the change.
6. Developing a Plan
This step involves actually putting together the “what” of the change. The task force must decide
if the company will have a no smoking policy or will designate areas that permit smoking.
7. Planning for Implementation
In this phase, the decision maker must decide the “when,” “where,” and “how” of the plan. The
task force in Wendy’s case must decide when the policy will go into effect, how it will be
communicated, and how its impact will be monitored and evaluated.
8. Implementing the Plan
After a plan is created, it must be put into effect. Implementing the plan requires notifying the
employees who will be affected by the change. Notification may consist of written messages,
briefings, or training sessions. The choice depends on the depth of the change and the impact it
will have on people. With a major change, such as the adoption of work teams, training might be
necessary for some time. In Wendy’s case, the task force decides to settle the smoking issue by
announcing the plan and holding briefings.
9. Following Up and Evaluating
Once a change has been implemented, the manager must follow up by evaluating it. Evaluation
consists of comparing actual results to goals. If the new smoking policy receives widespread
employee acceptance and holds the line on insurance costs, then the change was worthwhile.