30 Organizational Change

Dr. Sulakshna Dwivedi

1.      Learning Outcome

2.      Introduction

3.      Meaning and definition of organizational change

4.      Triggers of change

5.      Perspectives on change

6.      Types of change

7.      Strategies of change

8.      Models and theories of planned change

9.      Resistance to change

10.  Summary

1. Learning Outcome

After completing this module the students will be able to:

• Understand the concept of change and organisational change. Understand triggers of change.
• Understand types and perspectives on organizational change. Understand various strategies of change.
• To know various theories and models of planned change.
• Understand the basis of resistance to change and method to overcome the resistance.

2. Introduction

Change is the only constant in this world. Change is the law of nature. Each one of us, be it individuals, groups and organizations all are facing change triggers. The magnitude and momentum of change or the change spectrum determines about the type of change.

One who doesn’t change cannot survive. “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change” – Charles Darwin. Changes are evolutionary, revolutionary, incremental etc. Human kind has evolved over the ages so are the civilizations. There was a time when mankind was struggling for his survival and was afraid of nature but with the developments in the field of science and technology, mankind has overcome those apprehensions and fears. No sector, no area is untouched with this force of change. Continuous evolutions, transformations are happening around us. Some changes are visible and some are still undercurrent.

So what should be the response to change? Should be resist it or accept it? Why we should accept it or resist it? Is it good for us and for our organization? How is change managed and implemented? How to overcome the resistance?

Change is inevitable and change is for good. Change creates balance. Triggers of change in our internal and external environment creates imbalance in our situation, be it in individual life or in organization’s life, therefore to balance that situation it demands change in individual or in the organizations. Even water starts stinking if it is restricted to one place, therefore we must learn to go with the flow or to change ourselves. Changing oneself requires changing one’s attitudes, beliefs, assumptions etc. and this process is not that simple because it takes time. Similarly organizations need to plan and manage the process of change in response to various forces of change be it on social front, process front, technology front or on system front. Making the individuals ready for change and taking whole of the organization in its stride needs concerted and planned effort on part of the organization and the role of change agent becomes much more critical here.

3.   Meaning and definition of organizational change

Change has been defined in many ways by many authors.

According to Arthure Chopenhauer, “Change alone is eternal, perpetual and immortal”.

“You must be the change you wish to see in the world” – Mahatma Gandhi.

Henri Bergsun opined “To exist is to change; to change is to mature, to mature is to go on creating one self endlessly”.

Changing our face can change nothing. But facing our change can change everything.

(Lolly Daskal – Leadership Executive Coach, 2014).

According to George Bernard Shaw, “Progress is impossible without change, and those who cannot change their minds cannot change anything”.

Alfred North Whitehead suggested “The art of progress is to preserve order amid change and to preserve change amid order”.

Changes in social, political, economic environment have a conspicuous impact on the organizations as well as on individuals. Some changes can be predicted which are called anticipatory changes and some cannot be which are called happened changes. What is change? The commonest of all definitions of change is “To make or become different, give or being to have a different from”.

Organizational Change:

According to Keith Davis, “The term organizational change refers to any alteration which occurs in the overall work environment of an organization”.

Change can be revolutionary or voluntary (Greiner, 1972). Change can be incremental or dramatic (Miller and Friesen, 1984).

Change may involve two types of learning viz. behavioural change and cognitive change (Fiol and Lyles, 1985). According to Dunphy and Stace (1988), change can be evolutionary and revolutionary. Gersick (1991) classified change as Gradual and Revolutionary. Change is of first degree and second degree (Levy, 1986); First order and second order change (Burke and Litwin, 1994).

4.  Triggers of Organizational Change Changes in the external environment:

Technological change: Changes in every field of technology be it in communications like 1G, 2G, 3G and 4G. Be it in bio- technology, nanotechnology, space science, robotics, machine sciences etc. have affected every sector of the business and the one who is not adapting to these technologies is loosing the big chunk in business or is out of the market.

Regulatory changes: Regulators like RBI, IRDA, SEBI etc. and their new regulations and policies have impact on the business. No business and individual was untouched with recent demonetisation policy of RBI. Similarly Govt.’s policies to promote certain businesses and strict rules for other malpractices affect the business.

Change in consumer behaviour: With the change in globalisation, technology, e-commerce and exposure of social media has opened up many arenas for consumers. Consumers demand new and different variety of products at comparable prices. Thus pressurised the traditional business to compete in the market.

Changes in competitive scenario: With Globalisation, privatisation and Liberalization new form of businesses like e-commerce, start-ups, venture capitals etc. have got lost of boost thus giving fierce competition to existing traditional companies.

Changes in political arena: Recently Republic of India has got stable and majority govt. under the leadership of Mr. Narendra Modi in 2014. Before that there were alliances of various parties which had led to policy paralysis and subsequently led to stalling of major projects which ultimately proved detrimental to the growth rate of the country. Therefore changes in domestic and overseas political scenarios affect economic policies which in turn affect the business worldwide which make them bring changes to adapt to their policy issues.

Social changes: With the changes in different arenas of technology, prevalence of social media, social fabric of the society is also undergoing a sea change. Nuclear families, single siblings, dual career couples, live in relations, old age homes, materialistic and westernised trend among youngsters are norm these days. Therefore these changes have created demands for new products and services and thus force organisations to change according to new demands.

Changes in internal environment

Changes in staff: With the organizations going global, more and more expats are coming to India and our Indian citizens are getting chance to work abroad. With changing laws of working, more and more women employees are becoming part of workforce. Therefore managing this diverse workforce is big challenge for HR Managers hence changes are needed to be made in policies of managing this diverse workforce. Moreover employee turnover is very high in some of the industries hence retaining those employees also need changes in HR policies.

Changes in structures: Changes in the technology, processes, systems, management style and workforce also necessitate changes in the organizations structures from mechanistic to organic structures which are more suitable to present day situations where less hierarchical layers are there and people work in Self Managed Teams (SMTs).

Changes in products/services: With the change in consumer preferences and changing lifestyles, demand for new products and services is emerging which force organizations to change their processes and create new products and innovative services.

Changes in processes: Organizations work under certain set rules and regulations and procedures. With changing competitive scenario strategies need to be changed and hence goal, mission undergo revision thus in order to achieve those revised goals old processes may prove to be inadequate or insufficient hence needs to be changed.

5.    Perspectives on organizational change

• Contingency
• Population ecology Institutional
• Resource Dependency

Contingency Perspective of change: contingency perspective focuses on changes in the structure of an organization. Here, change is taken as synonym with restructuring. This perspective emphasise that restructuring is contingent upon many internal and external environmental factors e.g. change in strategy, size of the organization, technology etc. According to the changes in environment, strategies need to be changed, which in turn will necessitate change in the structure which will ensure smooth functioning of the business and will enhance organizational effectiveness.

Organization structure is based on two components one is specialisation and another is integration, therefore restructuring amounts to change in specialisation and integration patterns.

On the other hand environment is also assessed from two perspectives one is complexity and other is stability. Complexity refers to volume of organizations operating in the same environment. Volume of organizations is directly proportional to complexity of the environment. Further, stability refers to rate of change in the organizations in the same environment. Therefore, stability and complexity in the environmental factors will affect strategies and which in turn will affect policies, procedures, centralisation, flexibility, standardisation etc.

These parameters would determine that whether an organization should adopt a mechanistic or organic structure.

Resource Dependency Perspective: An organization is dependent upon various resources for its smooth functioning. Resources may be financial, human, material, technological etc. Organizations have to get these resources from various suppliers. Therefore there is dependency upon the suppliers and this is apparent through various measures that an organization take in the form of management control, resource allocation, budgeting etc.

This perspective focuses on strategies that an organization has to pursue in order to reduce these dependencies because higher the dependency higher is the uncertainty. Therefore aim of the change is to reduce uncertainty in this perspective “The key to organizational survival is the ability to acquire and maintain resources” (Pfeffer and Salancik, 1978). Pfeffer and Salancik (1978) have suggested various internal and external strategies to bring the desired change. Internal strategies are aimed at changing the organizations to fit with the environment and external strategies target at changing the environment to establish a fit with organization. These strategies include domain change, recruitment, environment scanning, buffering, smoothing, rationing, geographical dispersion, advertising, contracting, co-opting, coalescing and lobbying (for more detail of these strategies read “The external control of organizations: A resource dependence perspective by Pfeffer and Salancik, 1978)

Population ecology perspective:

Population ecology perspective focuses on three processes viz. variation, selection and retention to bring about a change in the organization. In this perspective,population means number of organizations in a particular industry or sector and ecology is the niche that each organization has created for itself. In order to survive in their particular niche organization (population) need to develop distinct capabilities because each one in the population is vying with each other to get their own pie.

Institutional perspective:

Institutional perspective underpins the role of socio-cultural factors in triggering the organizational change. Socio-cultural context or organization fields prescribe shared and socially acceptable ways to achieve organizational objectives. These ways are in the form of cognitive and normative framework (institutional logics). From the lens of these institutional logics organizations give meaning to their world and determine their moves to achieve organizational goals. Institutional logics are evident in the form of policies, procedures, roles, artefacts, espoused values etc. Thornton (2004) updated revised Friedland and Alford’s (1991) scheme of institutional logic to six institutional order namely market, the corporation, the professions, the state, the family and the religion and had recently added one more i.e. community (Thornton, 2012).

With the change in institutional logic or significance of particular logic over other, rebalancing of institutional logic takes place and this institutional complexity causes changes in the organizations. Therefore change is the outcome of relationship between organizations and organization field which consists of institutional framework and institutional complexity is the underlying cause of organizational changes.

6. Types of changes:

• Reactive Change
• Anticipatory Change Happened Change Planned Change
• Incremental Change Operational Change Strategic Change

Reactive Change:

Changes that are in response to some events or occurrences or group of events are called reactive change. Changes in the external environment for e.g. in technology, change in preferences of goods and services etc. Due to these changes company’s production or its demand suffers. So obviously to met out with such problem, organization takes certain steps e.g. incorporation of certain technology or change in production process in the market. Therefore, these changes are called reactive change because this is in reaction to changes in the external environment.

Anticipatory Change:

In reactive change, changes are already happened and in order to combat or deal with consequences, changes are made which are discussed above as reactive change. But in anticipatory change, some events or series of events are anticipated and on the basis of that necessary changes are made e.g. in some area, there is a proposal of announcement of some package where the start-ups will get various benefits e.g. tax exemption, subsidised electricity, sales tax exemption and various others. So in anticipation to that proposal companies may make plans to switch or to start new facilities in that particular area.

Happened Change:

This is a spontaneous change in an organization due to unpredictable forces and this takes place naturally. Its result is unknown and at the same time it is painful. For example sudden announcement of some government policy e.g. demonetizations has affected many businesses viz. reality sector and give boost to bullion market. Lifting of subsidy from gas cylinders has taken many gas geyser companies to verge of closure.

Planned Change:

This type of change is deliberate, planned and is also called developmental change. In this type of change current state of affairs is calculated and transition to future state of change is planned. That’s why this change is also called calculated change. This type of change is calculated from combination of proactive or anticipatory change. Here, constant changes are made in the organizations processes, system and structure so as to make it more adaptable to internal and external demands. Improving communications skills of employees, team building skills, launching new products and services, replacing technology, restructuring etc. are some of the examples under planned change.

Incremental Change:

As the very name suggests, it is small changes and carried out at micro levels. For example small units or sub units. These are gradual in nature and bring results steadily (not abruptly). “Slow and steady wins the race” applies well to such changes. These small incremental consistent changes keep the foundation for big changes in coming future. But here organizations and its people has to be patient enough and in a sense we can say these are not changes rather way of doing things or working which is consistent, disciplined and directional.

Operational Change:

Change which focuses on improving quality of its products, services, timeliness, efficiency, productivity, improvement in operations by bringing new technology, reengineering and some other related methods.

Strategic Change:

Change which focuses on changing the vision, mission, and purpose and in pursuance to that changing the structure or other elements of structure e.g. autonomy, decentralization, flexibility, and boundary less structure, use of SMTS in order to increase the efficiency of organization vis-a-vis other competitors and to create sustainable competitive advantage.

7.   Strategies of Change

According to Olmosk, there are number of comprehensive strategies of change and described them ‘seven pure strategies of change’, these are as follows

The fellowship strategy: Focus on good and warm interpersonal relations as the basis of change.

The Political strategy: If Influential leaders whether formal or informal are convinced to that something should be done, it (change) will definitely happen.

The economic strategy: Economic motives do propel changes if not fully but to some extent.

The academic strategy: People are rational and if counselled and informed about change then definitely change will take place.

The engineering strategy: In this strategy focus is not on much dealing with people rather changing the surrounding e.g. layouts, pattern of interactions. Focus is on changing the environment which will ultimately force the people to change.

Military strategy: The focus here is physical force or genuine threats.

The confrontation strategy: By mobilising anger in enough people and force them to look at the problem but by using non-violent methods is one of the strategy that can help follow change.

The Applied behavioural Science (ABS) Model: In this strategy the focus is on inclusion of as many numbers of people as possible who are party in decision-making. This strategy considers all the information or theory that helps reach a decision.

According to Chin and Benne, change can be brought about by 3 kinds of strategies.

1.      Empirical- Rational Strategy

2.      Power-Coercive Strategy

3.      Normative- Re educative Strategy

Empirical- Rational Strategy:

This strategy assumes that people are rational and they can take their decisions on the basis of information. Change is possible by informing them about change. Therefore through communication, information, persuasion and incentives, successful change is possible.

Power-Coercive Strategy

Power –coercive strategy implies that a leader can have employees accept or  follow the change by pressure tactics. This is stick side of carrot-stick approach of motivation and management. Hence, this strategy is applicable in short term and brings result for a momentary period.

Normative- Re educative Strategy

The basic idea of this strategy is that people are social beings and they follow their cultural norms and values. People adapt to particular changes if these changes are in sync with already existing cultural norms and values. Successful change is based on redefining, reinterpreting and rewriting of cultural norms and values.

8. Models and theories of planned change

Planned and systematic change is essential element for the growth and development of an organization. An organization development practitioner use various theories and models which provide a framework for change process.

This section mainly focuses on following models.

• Kurt Lewin’s organizational change Model
• Burke Litwin’s model of organizational change
• Porras and Robertson’s model of Organizational Change Based on work setting Ralph Kilmann’s Model of change

Kurt Lewin’s organizational change Model

Amongst these theories and models the oldest and the most frequently used change model is Kurt Lewin’s three stage model. Three stages consist of unfreezing, moving and refreezing.

In unfreezing stage, an attempt is made to do away with the old behavior/ situation through lack of confirmation and creation of guilt and readiness is created for new behavior (moving) and finally new level of behavior is reinforced so that it become relatively permanent (Refreezing), thus results in new personality and relationship

Fig.1    Kurt Lewin’s three stage Model of Change

Besides this Kurt Lewin gave Force field analysis for organizational change where to change the status quo (Stable condition) driving and restraining forces are assessed and then to change the status quo driving forces needs to be enhanced than restraining forces or an attempt should be made to lessen the effect of restraining forces. When both driving forces and restraining forces are balanced then this condition is called maintenance of status quo.

Kurt Lewin’s three stage Model of Change, later on expanded into seven-stage model by Ronald Lippitt, Jeanne Watson and Bruce Westley

“Seven stage model representing the consulting process

Phase 1 Developing a need for change.

Phase 2 Establishing the change relationship.

Phase 3 Diagnosing the client system’s problem.

Phase 4 Examining alternative routes, establishing goals and intentions of action.

Phase 5 Transforming intentions into actual change efforts.

Phase 6 Stabilizing change.

Phase 7 Achieving a terminal relationship.”

Burke Litwin’s model of Organization change

Warner Burke and George Litwin in their model of individual and organizational performance emphasized on First Order Change and Second Order Change.

First order change (Evolutionary, adaptive, incremental, or continuous change) happens when some features of the organization change leads to transactional change and change in Organizational climate. OD interventions directed towards structure, management practices, and systems (policies & procedures) result in first order change.

Second order change (revolutionary Radical, discontinuous change) takes place when the organization undergoes certain fundamental changes which leads to transformational change and change in organizational culture .OD interventions directed towards mission and strategy, leadership, and organization culture result in second order change.

Ralph Kilmann’s Model of change

A total systems change model focusing on five sequential stages & critical leverage points (tracks) is mentioned in Ralph Kilmann’s Book ‘Managing Beyond the Quick Fix’. These five stages are:

1. Initiating the program: securing commitment from the top management
2. Diagnosing the problem: thorough analysis of the problems & opportunities facing the organization
3. Scheduling the ‘tracks’: overseeing the functioning of critical leverage points-

(a) Culture track

(b) Management skills tracks

(c) Team building track

(d) Strategy-structure track

(e)  Reward system track

(a) Culture track: encourages trust, communication, information sharing & willingness to change among members

(b)   Management skills tracks: provides new ways of dealing with complex problems

(c) Team building track instills the new culture & state of the updated management skills    into each work unit to deal with complex problems

(d) strategy-structure track: develops fresh or modified strategic plan & then synchronises divisions, depts, work groups & resources with the new strategy.

(e) Reward system track: establishes performance based reward system to approve the new culture in order to sustain new initiatives.

4.  Implementing tracks

5. Evaluating the results

Jerry Porras and Robertson’s model of Organizational Change

“The current state of things at any point is the result of opposing forces.” Porras and Robertson Model

• This model states that “OD Interventions alter features of work setting causing changes in individual and organizational improvements.” (Porras and Robertson).
• The work setting plays a central role in this model and consists of four factors.
• Organizing arrangements 2 Social factors 3 Physical setting 4 Technology
• Organizing arrangements covers Goals, strategies, structure, policies, procedures; Social Factors includes Culture, management style, informal networks, individual attributes; Physical Settings comprises of Space configuration, physical ambiance and Technology factors covers Machinery, tools, IT, job design

9. Resistance to change

Reaction to change:

Depending upon individuals, groups and organizational norms, different reactions surfaces to the changes. Some individuals are very insular in nature and don’t like change; in some groups some members are proactive while others are against change and; in some organizations changes are not welcomed hence resistance to change comes. It can come from any of the three facts viz. individual, group and organizations. Now why people resist change, is it good and what the ways to overcome the resistance.

Causes of Individual Resistance:

1. Fear of failure
2. Fear of unknown
3. Selective perception
4. Fear of breaking of comfort zone
5. Lack of information

Causes of Group Resistance:

1. Threat of Group friendship stakes
2. Threat to group dependency
3. Threat to group cohesion
4. Difficulty in adjusting with new group members

Causes of Organizational Resistance:

1. Change may cause structure instability
2. Change in balance of power may be threatening
3. Change in organizational culture
4. Change in management style may not be acceptable to some
5. Group norms may not favor some groups

How to Overcome Resistance:

There are many ways to overcome the resistance to change but the most effective ways are given as following:

(1) Education and Communication:

Educating and communicating the people regarding change, change process, its consequences, its positive impacts so that they can take it positively and counseling them about any sort of anxiety, fear or apprehension. This method helps them in preparing them mentally and ready for the change. As Nelson Mandela says, “Education is the most powerful weapon which you can use to change the world.” Harold Wilson has portrayed the importance of change beautifully, in his own words, “He who rejects change is the architect of decay. The only human institution which rejects progress is the cemetery” and this speaks volume about educating people about change.

(2) Participation and Involvement:

This is the second most effective way to overcome the resistance. Rather than forcing change on people, making them part and parcel of change; taking their participation, suggestion and involving them whole heartedly reduces their anxiety and bring a sense of ownership and belongingness to them.

(3)  Facilitation and Support:

Supporting people art every stage, helping them, counseling them that all the problems that they are facing are natural and common to all make them feel at ease and hence will easily adapt to change.

(4) Negotiation and Agreement:

Sometime some groups of people may have powerful resistance to change hence some another strategy like negotiating and striking some deal with them makes the work easy e.g. perks, incentives, promotions will be provided to those who will use new technology or new methods.

(5) Manipulation and Cooperation:

When above techniques doesn’t work then management have to opt for manipulation of information, resources or favours to overcome the resistance. Sometimes organization may co-opt a person who is influential in a group by giving him a desirable position to drive change. But this option has long term ramifications.

(6) Coercion:

When none of the method work then last resort with management is coercion. It can be explicit or implicit for e.g. threat or actual of loss of job, promotion, transfer, layoff, demotion of those persons who come in the way of change.

10. Summary:

Change is the only constant in this world. With the passage of time, many changes have been witnessed around us and worldwide. Similarly, organizations are daily facing many changes. To cope up with these forces of change is the essence of change management. Changes are of many types and there are many factors that trigger change. To survive and being competitive, organizations need to continuously change, renew and update themselves. People resist change because as they say “change is hard in the beginning, messy in the middle and gorgeous in the end”. To overcome resistance, various methods are used by the management. In organizations, changes should be planned, no doubt, sometime changes are unprecedented. Various methods and models of planned change are discussed above. Overall people, structure, system should always be ready for change and a learning attitude should be created in the organization so that they can easily adapt to any sort of change. The role and commitment of top management and change agent is of paramount importance in change management.

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